Calif. holds HOA elections as protected free speech public elections

Speaking of HOA members and public voting rights, “Why Are HOA Members Allowed A Public Vote?”[1], let’s look at the reverse side and ask, Why aren’t HOA elections equivalent to public elections?  This is another example of how successful constitutional challenges can lead to and bring about broad HOA reform legislation.

Many of us are aware of the treatment of dissenting and opposing voices with respect to BOD actions and elections. There are the threats by rogue BODs of harm, and of  slanderous and libelous statements aimed to discredit and injure the dissenter’s reputation. And then, in true attack the attackers,  there are the lawsuits by the BOD claiming that the dissenter’s speech was harmful and injured the reputation of the HOA and/or BOD members.

Anti-SLAPP

These lawsuits are referred to as Strategic Lawsuits Against Public Participation – SLAPP —  whose purpose is to silence the dissenting homeowner(s) by arguing that the HOA/BOD was defamed.[2]  In the name of justice, or the appearance of justice, many states have adopted anti-SLAPP statutes to protect the dissenters; in our case here, the homeowners. The common criteria to file an anti-slapp suit includes (my emphasis):

A moving party may file a special motion to dismiss [the HOA suit] under [the state’s] antiSLAPP statutes “if an [HOA] action is filed in retaliation to the exercise of free speech [homeowner dissent].” In considering a special motion to dismiss, a district court must undertake a two-prong analysis. First, the court must determine whether the moving party [homeowner] has, by a preponderance of the evidence, established that the action [anti-slapp motion] is based upon a good faith communication in furtherance of the right to free speech in direct connection with an issue of public concern.

Furthermore, 1)  the statement must be made without knowledge of falsehood or truth with respect to a public concern, 2) the statement must be made in a place open to the public or in a public forum, and 3) “aimed at procuring any governmental or electoral action, result or outcome.” WOW! No chance in hell to bring an anti-Slapp suit against an HOA.

HOA elections are public

However, as expected, the anti-slapp statutes vary from state to state with Arizona adopting the very strict government election requirement while California has held, over several court cases, that (my emphasis):

California courts have repeatedly held in the context of anti-SLAPP litigation that board meetings of a homeowners association “serve[] a function similar to that of a governmental body. As [the California] Supreme Court has recognized, owners of planned development units “‘comprise a little democratic subsociety.”‘ … A homeowners’ association board is in effect ‘a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government.”[3]

The use of mail or internet – social media or websites open to the public —  have been held by the California courts to be “ a public forum.”   Nextdoor was held to be a public forum in spite of the fact it functions as a closed group, but its intent is clearly to be open to anyone.[4]

This is another important tool for homeowners and advocates to use in CA, and to lobby for the same return to justice anti-slapp laws in other states.

Notes

[1] George K. Staropoli, “Why are HOA members allowed a public vote?” HOA Constitutional Government (July 20, 2019).

[2] See in general, Colorado’s anti-Slapp statute, Colorado becomes 31st State.

[3] Quoted Appellant’s Opening Brief,  Kosor v. Olympia Companies, LLC, (Nev. SC NO.75669, Feb. 8, 2019). At this writing Kosor has not yet been accepted to be heard by the Nevada Supreme Court.

[4] Id, Part C, vii, printed page 33.  See Kronemyer v. Internet Movie Data Base, Inc., 59 Cal. Rptr. 3d 48 (2007).

Protecting HOA political free speech on matters of general community interest

Should matters of concern and interest to the general HOA member-community be protected from suits designed to stifle participation in HOA governance?  Homeowners in HOAs should be protected from these suits, called SLAPP suits, just as the general public is protected in most states that have anti-SLAPP laws.

The question becomes: will the courts hold issues of HOA governance to be a matter of general public interest and concern?  A failure of the courts to do so puts HOA governments solidly into the category of independent principalities, where members are not permitted free speech on community public issues, especially about their governing body, the HOA.

The expected defenses are 1) that HOAs are private, contractual governing bodies not subject to the 14th Amendment protections, which the members have agreed to obey; and disregarding the Ruiz opinion above,  2) the local HOA community cannot be considered as a public body that is interested in and concerned with matters of public interest; it’s a local, private matter.

There are several California cases holding that HOA concerns amount to public speech because it affects the community at large.  The following are anti-SLAPP suits.

“A SLAPP suit (strategic lawsuit against public participation) is a lawsuit brought primarily to chill a party’s constitutional right of petition or free speech. The anti-SLAPP statute was enacted to prevent and deter lawsuits that chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances and provides “an efficient procedural mechanism to obtain an early and inexpensive dismissal of nonmeritorious claims” arising from the exercise of those constitutional rights. . . . . The resident’s front lawn is a public forum for purposes of the First Amendment. . . . Moreover, it is now well established that the anti-SLAPP statute protects private conversations as well as those occurring in a public forum.” (Santa Barbara).

“’Public interest’ within the meaning of the anti-SLAPP statute has been broadly defined to include, in addition to government matters,  ‘private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity.’ (Ruiz; according to California statutes).

[My emphasis]

“[W]e hold the trial court properly determined the anti-SLAPP statute applied because the evidence showed the alleged defamatory statements were made “in a place open to the public or in a public forum” and concerned “an issue of public interest. . . .  The two locations where the alleged defamatory statements were made–at the Board meetings and in the Village Voice newsletter [HOA] –were open to the public and constituted “public forums.” Additionally, because each of the allegedly defamatory statements concerned [*11] the manner in which a large residential community would be governed, they concerned “issue[s] of public interest.”  (Damon).

A homeowners association board is in effect ‘a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government’ (citing Cohen v. Kite Hill Community Assn).”  (Damon).

My quick survey of state anti-SLAPP laws shows AZ, IL, HI, GA and MD as having strict laws relating to only issues before the legislature or a law, as petitioning rights.  A host of other states contain the much broader right to file an anti-SLAPP suit for issues of public interest. They are: CA, FL (as of 7/2015), IN, LA, OR, RI, TX, VT, and WA.  Check current status.

Case references:

  1. Santa Barbara Beach Club HOA v. Freeman, 2d Civil No. B212972 (Cal. App. 2nd 2010)
  2. Ruiz v. Harbor View CA, 37 Cal.Rptr.3d 133 (2005)
  3. Damon v. Ocean Hills [an HOA], 102 Cal.Rptr.2d 205 (2000)

CAI concerned about growing strength of advocate arguments for HOA reforms?

Please understand that the proactive efforts by advocates across the country, especially the new reform legislation, are making CAI very nervous.  Look what CAI has done to get more $$$ to fight advocate legislation.

Issues Advancement Fund (IAF) 

What is the Issues Advancement Fund? CAI’s Board of Trustees established the Issues Advancement Fund to help support and advance CAI’s legislative, regulatory and legal advocacy efforts and programs. It was established to provide a resource base to enable CAI to respond to challenges, which, if unmet, could undermine community associations, their residents and member professionals. The Issues Advancement Fund works to support efforts at both the state and federal levels.

Who can contribute to the IAF? The Issues Advancement Fund accepts voluntary contributions from individuals, associations and businesses that wish to directly support CAI’s government affairs initiatives.

The very powerful CAI California LAC (CLAC) admits to the need for its top-line – CAI’s view – lawyers in CCAL to defend the HOA legal concept that flies in the face of our constitutional system of government (my emphasis).

How CLAC Benefits from CCAL Attorneys

“CCAL attorneys have played a significant role in CAI-CLAC and provided countless volunteer hours and dedication since the formation of this organization,” says current CLAC Chair Darren Bevan. “These attorneys offer their expertise and real world experiences as this organization works towards smart legislation that preserves community.

CCAL lawyers commit themselves to raising the bar of professional and ethical conduct in representing community associations in such areas as education, advocacy, governance, and career mentorship.

Being recognized as a CCAL Fellow is the pinnacle of the legal profession for the community association lawyer.”

(http://www.caionline.org/govt/advocacy/Pages/IssuesAdvancementFund%28IAF%29.aspx).

Earlier this year in Arizona, 2013 CCAL President Scott Carpenter hit the nail on its head when he cautioned his audience in Top 10 For 2015 (Arizona Carpenter Hazlewood online seminar).

“What we are seeing is that the [homeowner] attorneys are becoming more sophisticated and making more sophisticated arguments, and the litigation is becoming more and more challenging in the sense they are raising arguments that are harder for us to beat back . . . .” (7:31 – 8:10)

CAI can be beat easily with fundamental constitutional arguments and avoiding CAI’s narrow real property approach to community government. CAI still speaks of community associations while arguing HOAs are businesses. Doesn’t make common sense, does it?  Just demand CAI answer this obvious contradiction, reminding them that advocates are not stupid.

When do majority CC&R amendments trample minority rights?

 

The generally accepted legal doctrine upheld by the courts in many states is that any CC&Rs amendment validly passed by the amendment procedures in the CC&Rs is binding on non-consenting homeowners.  This doctrine ignores the content and relevancy of the amendment to the intent and purposes of the drafters, the developer.

The questionable word game involved in this issue deals with the meaning and use of ‘modify’ or ‘change’ as compared to ‘new.’  Does your CC&RS say modify or change, or does it also include the words add or new?  Some courts make no distinction and thereby unconstitutionally modify the CC&Rs contract by depriving non-consenting homeowners of their property rights that they believed they possessed at the time of purchase.

(In general, the dictionaries define ‘modify’ as a change, and ‘change’ to mean ‘to make different,’ but excluding any reference to ‘new.’)

With this presumption in favor of the HOA, these courts fail to determine if this is what the unsuspecting home buyer understands, and that he has been given appropriate notice. Is he aware that ‘change’ also means ‘new’ or ‘add’?  Simply said, we are dealing the ex post facto CC&Rs amendments that deprive a homeowner of his rights without his consent and without any compensation.

In the April 2014, the Washington State Supreme Court opinion in Wilkinson v. Chiwawa,[i] said, wait a minute with respect to rentals.  ‘Change’ or ‘modify’ does not mean ‘add’ or ‘new.’  It held that,

While Chiwawa homeowners knew that existing restrictive covenants could be changed by majority vote so long as the changes were consistent with the general plan, they did not buy into the creation of new restrictions unrelated to existing ones. . . . When the governing covenants authorize a majority of homeowners to create new restrictions unrelated to existing ones, majority rule prevails “provided that such power is exercised in a reasonable manner consistent with the general plan of the development.”

This rule protects the reasonable, settled expectation of landowners by giving them the power to block “`new covenants which have no relation to existing ones'” and deprive them of their property rights.

The Association could not adopt the restriction without unanimous consent. This is the contract into which the parties bought and the expectation that we must uphold.

One of the most notorious examples of this type of amendment occurred in OSCA[ii] where mobile homeowners were forced to pay dues for a country club, owned by the developer and not owned by the HOA, and open to the public on a fee basis.  It helped increase the value of the HOA, was the justification for the amendment.

What does your CC&Rs say?  Watch for those CAI attorney rewrites that sneak these words into your CC&Rs without proper notice, as for example, Arizona requires.

And remember, who writes these state laws?   The  HOA stakeholders that do not include the homeowners!

References

[i] Wilkinson v. Chiwawa, Wn.  No.86870-1, p. 6,7 (April 17, 2014). The issue was an amendment that prohibited short-term rentals when the CC&Rs were silent on duration.  Was it a new covenant or a modification to the one that simple said renting was allowed.

[ii] OSCA Development v. Blehm, No. E320843 (Cal. App. Dist. 4 1999).

Letter criticizes CLRC rewrite of Davis-Stirling (HOA) statutes

Below are excerpts from my January 30th  4-page letter to CLRC.

“I read Ms. Vanitzian’s LA Times column of December 29, 2013, Attempt to Simplify California Condo Laws Ends in Confusion and your response contained in MM14-09. As you may be aware I commented on her article in two parts. . . .  If you are looking for facts, allow me to introduce a few.  I recall Susan French’s study in 2000 (H-850), at the request of CLRC, that started the ball rolling ‘to clarify the law [and] establish a clear, consistent, and unified policy with regard to formation and management of these developments.’ 

“Still, much of her report aside from the need for clarity, Part II, sections C and D, called for protections of homeowner rights and a bill of rights statute in the rewrite of Davis-Stirling. . . .  Whatever happened to the proposed ‘Chapter 2, Members Rights, Article 1, Bill of Rights,’ (MM06-25)?

“There was my letter (MM05-25s1) arguing for the need for this equal rights chapter, to which you answered with, ‘Beyond the scope of this project’ even though French had recommended protecting homeowner rights. . . . It is obvious that this rework by stakeholders without meaningful homeowner input easily leads to clarifications and simplifications as interpreted solely by this group, from its perspective, which would not protect the homeowner. The new D-S cannot be seen as the result of an unbiased effort and with integrity.

“The approach used by CLRC has the smell of corporatism, the rule by a handful of corporations.  It is a form of government that flows from fascism as defined by its founder, Italy’s Benito Mussolini, Il Duce.  ‘Fascism combats the whole complex system of democratic ideology, and repudiates it . . . . Thus understood, Fascism is totalitarian, and the Fascist State . . . interprets, develops, and potentiates the whole life of a people.

“CLRC responded with, ‘However, a bill of rights would probably go beyond the substantive rights that are currently provided in the law’ (MM05-03), but in the next sentence dismissed the US Bill of Rights as non-existent substantive law. The obvious answer – as there were a number of published books, papers and journals from nationally recognized researchers and political scientists relating to this issue – was to recognize that indeed HOAs were de facto governments and to subject them to the Constitution.”

****

The cry “no government interference” while accepting HOA private government interference is irrational.  This acceptance of undemocratic, authoritarian HOA government with less protection of individual rights and freedoms than public government is a rejection of the Constitution, the Declaration of Independence, and the Bill of Rights. These people have lost their common sense!

Neither CLRC nor CAI will go down in history as Heroes of the American Republic, but perhaps may be remembered as Heroes of HOA-Land

The complete critical letter can be found at MM14-09s1.

CA CAI opposes fair election protection for homeowners

In last month’s California appellate court decision in Wittenberg v. Beachwalk HOA,[i] the court upheld HOA fair elections procedures.  Homeowners are to be given equal opportunity to express opinions in opposition to those of the board, in and on the same media as used by the board. The common practice in most HOAs is to deny members equal access, which has extended in many cases to the denial of membership records and intimidating members from conducting door-to-door campaigning.

The record shows that Beachwalk had engaged in practices found in many other HOA instances:

1.      Holding multiple elections until the proposed amendment was finally passed,

2.      The ballot and cover letter expressed only the board’s recommendations on the amendment,

3.      The board made exclusive use of the HOA newsletter to promote its views, refusing a request by a member to comment on the election, and

4.      Denying a member the use of a fee paid “renter” room to hold a rally against the amendment.

 

The court explained, my emphasis,

This plain English definition [of advocacy], which we adopt, is consistent with the overall nature and purposes of section 1363.03. Subdivision (a)(1) was part of a bill that sought to “provide substantial new voting protections” to members of homeowner associations designed to “guarantee that basic democratic principles are in place during elections,” which had previously been “contaminated by manipulation, oppression and intimidation of members, as well as outright fraud.” It is thus remedial in nature. “A statute which `is remedial in nature and in the public interest is to be liberally construed to the end of fostering its objectives . . . . `The rule of law in the construction of remedial statutes requires great liberality, and wherever the meaning is doubtful, it must be so construed as to extend the remedy.””

 

The intent of the court is clearly an example of the Enlightenment Movement after some 49 years since the creation of the first HOAs in this country.  While the court upheld California’s HOA fair elections statutes, the California CAI Legislative Action Committee opposed the decision in support of democratic functions in HOAs.[ii]  This position is in conflict with the CAI policy that HOAs are “one of the most representative and responsive forms of democracy in America today.”[iii] Unless, of course, CAI has some distorted view of democracy. In fact, CAI California is seeking support to appeal the decision to the California Supreme Court. 

 Notes


[i] Wittenberg v. Beachwalk HOA,  NO. G046891 (Cal. App. 4th Dist. June 26, 2013).

[ii] “Appeals Court Ensures Equal Access During Elections”, Blog of the Community Associations Institute California Legislative Action Committee, July 9, 2013. (http://caiclac.wordpress.com/2013/07/09/appeals-court-ensures-equal-access-during-elections/).

[iii]A FORM OF DEMOCRACY. Community associations are one of the most representative and responsive forms of democracy in America today. Residents of a community freely elect neighbors to serve on the board of directors of the community. Numerous other owners or residents  serve on committees and help with special tasks as they arise.”, Section 8 in An Introduction to Community Association Living (2006),  http://www.caionline.org/events/boardmembers/Documents/IntroToCALiving.pdf.

 

HOA debt and member consequences

From the April L.A. Times column, ASSOCIATIONS, by Donie Vanitzian — Can titleholders pay their share of loan directly to bank?  Here’s a peek.

HOA issue

Even with an annual income of more than $2 million, our association is in a big mess. There’s a several-million-dollar loan inclusive of our reserve account the association is paying off that has a variable interest rate currently at 6.85%. The association can’t touch the reserves because the bank says it’s garnisheed as collateral for the loan.

 The board says we have to pay this money back because the bank is holding our reserve account hostage. If it is borrowed and we can’t touch this high-interest money, can the association just give it back?

Response

 California homeowner associations cannot declare Chapter 7 bankruptcy and wipe out their debt. California appellate courts have ruled that because the association has an unending source of money — the titleholders — with which to pay its obligations, at most it can file for Chapter 11 reorganization. The court can order an association to make an emergency assessment against all the titleholders to pay off its obligation.