AZ Supreme Court landmark HOA opinion

For the times they are a-changin’”[1]

The Arizona Supreme Court opinion in Kalway[2] is, in my view,  a landmark opinion supporting and protecting individual property rights of homeowners in HOAs that are subject to a broad, procedural CC&Rs amendment procedure.  The boilerplate CC&Rs in an intentional denial of fundamental property rights strip away eminent domain protections by ignoring the content of CC&Rs amendments —  anything and everything goes!

Referring to AZ statute 33-1817(A) that allows amendments solely based on a majority vote of the members, the Court stated:

“But § 33-1817(A) does not displace the common law, which  prohibits some amendments even if passed by a majority vote. The original declaration must give sufficient notice of the possibility of a future amendment; that is, amendments must be reasonable and foreseeable.”

The Court cited its 2010 opinion in Dreamland,[3]

“We agree that these cases tend to support the homeowners, in that each refuses enforcement of a new covenant that markedly changed the obligations of the implicated lot owners. . . . in those cases where courts disallowed the amendment of covenants, the impact upon the objecting lot owner was generally far more substantial and unforeseeable than the amendment at issue [in the case before it]

I had addressed these concerns  regarding the Dreamland decision in my 2009-2010 Commentaries that provide  details on these substantive issues.[4]

Although not stated were issues of due process, equal protection of the laws, and eminent domain takings — not raised in the initial complaint or appeal, so the courts  did not offer a direct opinion —  this  opinion strikes at HOA eminent domain takings of homeowner property rights.  It also dealt with the question of homeowner notice (due process) and unexpected and unreasonable modifications to the CC&Rs (lack of equal protection under CC&Rs private eminent domain rights).

* * * *

The above represents my perspective as a longtime 22-year homeowner rights advocate and activist.  CAI Arizona has a different perspective favoring HOAs and their decisionmakers, the board of directors.[5]. Its presentation starts with the overall court opinion.

“Based on this recent case law, CC&R amendments must be reasonable and foreseeable in order to be enforceable. In other words, community associations can no longer amend CC&Rs to create new obligations where the original CC&Rs did not provide owners notice that they may be subject to the new obligations.”

But then adds its spin and advertising appeal:

“Please note that these amendments are specific to Calabria Ranch and its CC&Rs. In other words, an amendment that the Arizona Supreme Court found invalid in the Calabria Ranch case may be found valid for a different community association. Again, we strongly recommend consulting with the CHDB team to analyze your community association’s specific CC&Rs and any proposed, or previously adopted, amendments.”

Looking at the tremendous value toward HOA reform, the Court’s opinion would apply to any instance where the broad conditions — no notice and unexpected and unreasonable — apply, above and beyond those specific amendments dealt with in Kalway.  I’ve found the most prevalent are unexpected and unreasonable amendment modifications, and a failure to provide notice to the homeowner that abounds in the CC&Rs. It falls into those discretionary areas where the CC&Rs are silent, which the Court has declared doesn’t give the BOD unlimited rights.

This opinion presents a powerful tool, a powerful argument before the courts and before state legislatures when seeking HOA substantive reforms.

Yes, and how many times can a man turn his head
And pretend that he just doesn’t see?

The answer, my friend, is blowin’ in the wind
The answer is blowin’ in the wind

(Bob Dylan, Blowin’ In the Wind,  1963)

Notes


[1] Bob Dylan,  “For the times they are a-changin’”  (1964).  It’s interesting to note the coincidences of publication years for this song and The Homes Association Handbook.

[2] Kalway v. Calbria Ranch, CV-20-o152-PR (Ariz. March 22, 202).

[3] Dreamland Villa Community Club, Inc. v. Raimey, 224 Ariz. 42, 51 ¶ 38 (App. 2010).

[4] HOA principalities where there’s no ex post facto or eminent domain protections and AZ court ends open-ended “ex post facto” HOA amendments.

[5] “CC&R Amendment Update from the Arizona Supreme Court,” March 29, 2022 By Carpenter Hazlewood I News.

Management Case Study #2 –  court HOA receivership; attorney sued; case sealed

“The events of 2008 – 2012 presented here span wrongful acts by an Arizona HOA and its attorney resulting in a court appointed receivership, and leading to the attorney being sued for aidding and abetting, among other things.  The case then disappears from county court public records and the outcome remains unknown.

“‘Defendants have conspired to take over their homeowners association . . . for improper purposes. Defendants have utilized the Association to gain control of as much property in the community as possible, through improper means .’

“[The HOA atorney] was personally sued for: ‘Breach of Ethical Duties: Disgorgement; Aiding and Abetting; Professional Negligence; Breach of Contract; Breach of Fiduciary of  Duty.’ 

“I do not have any additional court filings, either updates or final disposition.  In May 2012, after 1 ½ years of silence,  I looked into the court records only to discover that the case disappeared from public view.”

Read the full 5-page case study here.

Mgmt case study #1 – update2

Management Case Study #1 update2 — BOD good faith conduct

George K. Staropoli, December 31, 2021

MUST READ FOR CONCERNED MEMBERS

SCG BOARD UNEQUIVALLY DEMONSTRATED THAT IT’S A ROGUE BOD

SCG members, as a PUD, do not have title to any of the assets of the association. SCG, as represented by its board, owns title. Members have  beneficial interest, but not title to some $22 million in revenues, $21 million in reserve funds (cash equivalents), and $64 million in assets as reported on its IRS 990 filing for 2019.

The tone of  Thursday’s board CHAT meeting was clearly secretive for the Directors only and to say as little as possible for member consumption — on a “need to know basis” and the members didn’t need to know.  The president came across as the man-in-charge and making statements that ignored the statutes and governing documents; misstating that the CHAT was not a legal board meeting, just a chat amongst the directors, with a few acceptable attendees allowed to speak. 

Much to the arrogance and  naiveté of the president and the directors, I have had over 10 years dealing with Arizona legislature, proposing bills, and testifying for HOA reforms.  I played an important role in the establishment of OAH hearing HOA member complaints, vehemently opposed by CAI. The SCG “clique” has some 13 CAI members, former and current.

Read this important update that serves a warning to all those large active-adult or master planned HOAs that this could be happening to you.

The people at CAI working against member interests

CAI Advocacy Blog for 11/23/2021, email (Click on this link to see state members).

Thank you to these incredible volunteer leaders and CAI members. Wishing you, your family, and friends a Happy Thanksgiving. We’re so thankful for you!

Government and Public Affairs Committee
Mr. T. Peter Kristian, CMCA, LSM, PCAM

Ms. Sally L. Balson
Mrs. Marilyn E. Brainard
Mrs. Wendy Bucknum, CMCA, AMS, PCAM
Ms. M. Katherine Bushey, Esq.
Mr. Joseph Carleton, Esq., CCAL fellow
Mr. Joseph Crawford, CMCA, AMS, PCAM
Ms. Sandra K. Denton, CMCA, LSM, PCAM
Ms. Jennifer Eilert, CIRMS
Mr. Michael Johnson, CMCA, AMS, PCAM
Mr. John Krueger
Ms. Lisa A. Magill, Esq., CCAL fellow
Mr. Nathan R. McGuire, Esq.
Ms. Janet L. Newcomb
Mr. Matt D. Ober, Esq.
Mr. Scott J. Sandler, Esq., CCAL fellow
Mr. Todd A. Sinkins, Esq., CCAL fellow
Ms. Wendy W. Taylor, CMCA, AMS, LSM, PCAM
Mr. Michael Laurence Traidman
Mr. Craig F. Wilson Jr., CMCA, AMS, PCAM
Mr. Ronald L. Perl, Esq. CCAL fellow
Mr. J. David Ramsey, Esq., CCAL fellow
 

Federal Legislative Action Committee
Mr. Ronald L. Perl, Esq., CCAL fellow
Mrs. Pamela D. Bailey, CMCA, AMS, PCAM
Mr. Jeffrey A. Beaumont, Esq., CCAL fellow
Mrs. Marilyn E Brainard
Mrs. Wendy Bucknum, CMCA, AMS, PCAM
Mr. Robert M. Diamond, Esq., CCAL fellow
Mr. Andrew S. Fortin, Esq.
Mr. T. Peter Kristian, CMCA, LSM, PCAM
Ms. Lisa A. Magill, Esq., CCAL fellow
Mr. Stephen M. Marcus, Esq., CCAL fellow
Mr. George E. Nowack Jr., Esq., CCAL fellow
Mr. J. David Ramsey, Esq., CCAL fellow
Mr. Stefan Richter, Esq., CCAL fellow
Mr. Clifford J. Treese, CIRMS

Champlain Tower South Task Force Leadership and Committee Contributors
Ms. Lisa Magill, Esq., CCAL fellow
Mr. Bob Browning, PCAM, RS
Mr. Mitchell Frumkin, RS
Mr. Robert Diamond, Esq., CCAL fellow
Mr. Stephen Marcus, Esq., CCAL fellow
Ms. Jennifer Eilert, CIRMS
Ms. AJ Scott, CIRMS
Mr. Phil Masi, CIRMS
Mr. Cliff Treese, CIRMS

(The following underlined are NOT links. See above link.)

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The post Happy Thanksgiving: Feeling Grateful for CAI Volunteer Advocacy Leaders appeared first on CAI Advocacy Blog.

Can HOA members expect justice in Arizona courts?

“HOA members in Arizona should not expect justice from the courts”

If you are a member of an Arizona HOA/condo, or soon plan to be one, you should pay heed to the above quote made in response to the Arizona Supreme Court’s denial to hear the Bendt appeal petition for review.[i]  In my Commentary, trying to understand the rationale for the denial,

“The homeowner, Bendt, is punished for speaking out, in admittedly harsh terms, [relating to issues of HOA governance]. Yet the judicial system stands by looking at a distance and allowing Trump and his followers to function as vexatious litigants; allowing them to  raise allegations, which are not only laughable but blatantly false under Rule 11, is shameful conduct.[ii]

What message is being sent by this disturbing decision? To the public? To the homeowners in HOAs seeking the equal protection of the laws under the Constitution? To the national lobbying trade group, CAI, who can breathe easy with respect to any challenges to the constitutionality of the HOA legal scheme that  contains denials of fundamental rights and privileges?

Professor Randy Barnett wrote, speaking of justice and judicial legitimacy,

A constitution that lacks adequate procedures to ensure the justice of valid laws is illegitimate even if it was consented to by a majority …. A law may be ‘valid’ because it was produced in accordance with all the procedures required by a particular lawmaking system, [the HOA amendment procedure, for example] but be ‘illegitimate’ because these procedures were inadequate to provide assurances that a law is just.[iii]  

And we must not ignore the effect of precedent on court opinions. Hansford and Spriggs found [that] the doctrine of stare decisis, itself, falls victim to the preferences of the judges. The closer the precedent was to the judges views, the more the precedent would be followed, and vice versa. Additionally, the research found that “the justices are more likely to negatively treat [modify or reject] a precedent they dislike on ideological grounds if that precedent is quite vital [how often cited in support]” by the judges (p. 75).[iv]  Bad HOA laws abound leading to favorable anti-homeowner decisions.

And still we see “Equal justice under the law” emblazoned on the façade of the US Supreme Court building. It contains a major defect, a misleading fallacy,  and a presumption of supreme court infallibility [without error].  Bad laws — unjust laws — will not produce justice for all!  And that is just what we face in the HOA-Land Nation.

I have argued (2009) for a judicial system that adhere to the following:

Before we can decide, we must examine some of the myths and realities of the American judicial system.  First, we have the concept of justice, the very foundation of any judicial system, although some have argued it is to uphold the law.  Philosophically, a judicial system cannot exist in a democracy if it does not uphold justice and correct the wrongs of the past.  In fact the people are told “Equal Justice Under Law”, the motto on the Supreme Court building; “to secure justice”, the commonplace stated purpose of court rules of procedure;   “to establish justice”, the opening purpose in the Preamble to the US Constitution; and we designate the members of the Supreme Court as “justices”. Notice that “to uphold the law” is not included in the above.  This is the argument, along with the insistence on precedent, used by those special interests who favor unjust laws.[v]

. . . .

So, in particular, what is wrong with the AZ  supreme court denial in Bendt?  A lot!

An amicus brief is submitted, and subject to approval by the Court and the parties, to advise the Justices in better understanding the conditions and factors relevant its opinion that it may not be aware of. The following is a summary of arguments presented in my amicus brief[vi] seeking the Court to review the petition in the name of justice for the homeowner, Bendt, and for all other citizens living n Arizona HOAs.

“The Hannaman 2002 study (NJ) was quite frank and revealing describing problems and complaint still in existence some 19 years later in spite of efforts by the self-proclaimed HOA experts and educators, national CAI. “

“[Referring to Nevada Supreme Court in Kosor v. Olympia Companies, 478 P.3d 390 (2020)]. Because we conclude that each of Kosor’s statements was “made in direct connection with an issue of public interest in a place open to the public or in a public forum,” we reverse the district court’s decision to the contrary and remand for further proceedings consistent with this opinion.

“As our [California] Supreme Court has recognized, owners of planned development units ” ‘comprise a little democratic subsociety . . . .’ ” (citations omitted).” (Damon v. Ocean Hills Journalism Club, 102 Cal. Rptr. 2d 205 (Ct. App. 2000) at “A. Public Forum”).

“Among its findings [South Carolina HOA study committee] were . . . While the Community Association Institute (CAI) and other private entities offer educational resources to homeowners and managers, state government cannot place the sole responsibility of educating homeowners and board members on a private entity.

“Although not presented by the Appellant where three plaintiffs who] are lawyers, and based on claims of false and inexcusable character assassination against Tarter . . . this Court has reasonable suspicion to remand the case for a determination the validity of an anti-slapp motion.

“This Court, or any court, cannot allow a group of individuals or organizations to create a devise in order to escape constitutional protections and enter into a contract, constitutionally valid in all other aspects, to form private local governments whose members remain citizens of this country as well as of their respective states. It, as it stands in regard to HOAs, makes a mockery of the Constitution and our principles of a democratic society.

“The free speech issues of limited-purpose public figure and of HOAs and social media as public forums with respect to political HOA governance issues have been raised and need to be addressed.

“As with Brown [v. Bd of Educ.], America’s culture and environment has changed dramatically from 1964’s Homes Association Handbook and the formation in 1973 of Community Associations Institute (CAI) to deal with rising HOA problems and constitutional concerns after only 9 years. In 1992 CAI dropped its 501(c)3 educational status for 501(c)6 trade organization so it could lobby state legislators.”

I cannot understand the Supreme Court’s denial of Bendt’s petition and the opportunity to rule or to further investigate these issues, by orders or by request to the Legislature — as it has so ordered in the past —  and thereby fulfilling its obligation to defend the Arizona and US Constitutions.  Instead, it seems that the Justices have allowed their opinions to be guided by the prevailing public policy favoring private government HOAs that are independent of the two Constitutions.[vii]

References


[i] See AZ supreme court denies hearing HOA case raising limited-purpose public figure doctrine.

[ii] Id.

[iii] Randy Barnett, Restoring the Lost Constitution, Princeton Univ. Press, (2004).

[iv] Hansford and Spriggs, The Politics of Precedent on the U.S. Supreme Court, Princeton Univ. Press (2006).

[v] See in general,  HOAs, justice, and judicial myth and precedent.

[vi] Staropoli Amicus brief Tarter  v. Bendt

[vii] See in general, The HOA-Land Nation Within America and Establishing the New America of Independent HOA Principalities.