Examining the Waugaman decision in the interest of doing justice

 

I find it necessary to comment on the events and perceptions surrounding the two superior court decisions holding the Arizona OAH adjudication of HOA complaints as unconstitutional.  Both rest on the Waugaman decision. It appears that the absence of the Attorney General and Legislature defense of the statutes reflects a public policy that finds that the HOA legal scheme and statutes do no wrong or injustice to homeowners.

Analysis of Waugaman*

 

Both superior court decisions were bad law, law that did not do justice for homeowners subject to HOA abuse.  In defense of the Downie decision in Waugaman, since Merritt was decided by default without argument except for the HOA’s justification for the order, a commenter to my “AZ HOA Case Reviews” blog, identified as J. E. Smith (recall that the HOA attorney in both cases was Jason E. Smith) wrote,

 

Let’s be clear:  the rulings by Judge Downie and now by Judge McMurdie are not “faulty”.  The legislation was “faulty”.  The sponsors of this bill in the legislature failed to properly vet the bill’s constitutional validity before voting it into law.  The bill was so fundamentally in violation of the separation of powers doctrine that the Attorney General would not even attempt to defend it in the Phoenix Townhouse case.

 

Absent from this imperious statement of legislative fault, and the presumption of rock solid trial judge decisions, is any reference to the grey areas of law that the Arizona appellate court wrestled with in the underlying Hancock precedent (J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 690 P.2d 119, 1984),

 

While providing the necessary flexibility to government, the test preserves the essential goal of the separation of powers theory-i.e., preventing the concentration of the whole power of two or more branches in one body.

 

This precedent served as the guide for the  Cactus Wren (Cactus Wren Partners v. Arizona Dept. of Building & Fire Safety, 869 P.2d, 1993) decision regarding an earlier DFBLS challenge to the violation of the separation of powers doctrine.  In applying this non-exclusive four-part test of a violation, Downie begins to hold that Merritt deviates from Cactus Wren, parts 3 and 4, and rather than being open to what is called “this case is distinguished from” analysis, Downie rests her decision on Cactus.  This non-lawyer quickly recognized this “rush to judgment” approach with concerns about a made-up mind on the part of the judge.  (See the Waugaman Decision).

 

For example, in considering the third test concerning the legislature’s intent, Downie quickly moves to regulatory concerns and does not address the legislature’s intent behind the statute.  The only occurrence of legislative intent is in the judge’s decision where she used the HOA attorney’s argument.  In the underlying Hancock precedent, the judges wrestled with,

 

A third consideration of importance is the nature of the objective sought to be attained by the legislature.  Is the intent of the legislature to cooperate with the executive . . . or is the objective of the legislature obviously one of establishing its superiority over the executive department in an area essentially executive in nature?

 

Third, we must consider the nature of the legislature’s objective.

 

Similarly, one can argue that Downie analysis of the fourth part of the test dealing with “a blending of powers”  was faulty.   In Hancock, the court wrote,

 

We find that the limited ancillary power to construe contracts does not threaten the core functions of the courts. . . . We also believe public policy favors such a blending of powers here.

 

Interestingly, Downie, in her analysis, refers to Cactus Wren but omits the citation, “’[T]he limited ancillary power to construe contracts does not threaten the core functions of the courts.’ [citation omitted]“, which reads directly from Hancock.  However, the second sentence pertaining to public policy is not cited, although as quoted  below, Downie makes her own statement about public policy as applied here. Again, there’s a quick move to regulatory concerns with,

 

The legislature may have had valid policy reasons for devising a different system for resolving homeowner association disputes. But it appears that the Department of Fire, Building and Life Safety is a mere figurehead or ‘parking lot’ for those disputes.  

 

without any discussion of the application of the citation to Merritt.  Downie ends her analysis with, “In the final analysis, the court concurs with the following argument by the Association:”

 

It is obvious that the Downie decision is not a “slam dunk”, or a “done deal”, or an unchallengeable, “solid as a rock” decision as J. E. Smith would like everyone to believe.  It’s shaky, very shaky.  And worthy of a challenge by competent attorneys in the interest of doing justice for the people, the homeowners in HOAs.

 

 

 

*  Legal Disclaimer
 
The information contained in this written or electronic communication, and our associated web sites  and blogs, is provided as a service to the Internet community, and does not constitute legal advice. We try to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this web site and its associated sites. As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided herein should be used as a substitute for the advice of competent counsel. No person associated with AHLIS or Citizens for Constitutional Local Government, Inc. is an attorney nor is employed by an attorney.  All communications will be kept confidential, but is not protected by attorney-client privilege and can be subpoenaed by the courts.

 

 

ALERT: New AZ court decision quashes OAH adjudication

On January 29, 2009, Maricopa Superior Court Judge Paul J. McMurdie entered an injunction prohibiting the Arizona Department of Fire, Building and Life Safety and the Office of Administrative Hearings from taking any action on pending matters regarding condominiums and planned communities in Arizona, or accepting any new petitions for the administrative adjudication of disputes between condominiums and planned communities and the homeowners in those associations.

The judge ordered in LC2008-000470,

The Arizona Department of Fire, Building and Life Safety and Office of Administrative Hearings are enjoined from taking any further action in any pending administrative adjudication and from accepting any new petitions for administrative adjudication.

 

The AG’s office that had filed a brief in favor of constitutionality did not file in this case.  Probably because the DFBLS Director, Barger, in an abuse of authority, did not seek the AG’s involvement.  And neither has the Arizona Legislature intervened!  There is a 30  day appeal period for the AG to act.  Don’t hold your breath. The State of Arizona has demonstrated where it stands on your individual property rights.

see-no-evil: Arizona government

Arizona has taken one more step toward the realization of the New America of independent HOA principalities! 

Demand your legislator to correct this faulty and unjust ruling based on the Waugman unjust ruling.  Demand new legislation that will grant that protection of the rights for all Americans within the Constitution.

Yes, the case was brought by the CAI member law firm of Carpenter, Hazelwood.

Answers from AZ DFBLS on HOA constitutionality

I met with DFBLS Director Barger, and his staff — Deputy Director John Stahmer (an attorney), Beth Soliere and Debra Blake — along with Ass’t AG Camila Alacon for about 45 minutes this morning.

 

In short –

 

1.  Approval was withdrawn because of money shortages, and that Judge Downey had ruled that DFBLS doesn’t regulate HOAs.  Furthermore, Mr. Barger believed that they “would not win.” an appeal.  The AAG added that the AG cannot act independently and must be requested to act by the agency.

 

A discussion followed regarding Judge Downey’s bias that DFBLS doesn’t regulate HOAs.  I countered with the fact that the two precedents used by Downey ignored other pertinent elements of these decisions. From her decision:

 

“The legislature may have had valid policy reasons for devising a different system for resolving homeowner association disputes. But it appears that the Department of Fire, Building and Life Safety is a mere figurehead or ‘parking lot’ for those disputes”,

 

I also argued that justice was not done by Downey nor by the refusal to appeal the decision.  There are ample grounds for an appeal, since the AG’s office had already argued in favor of constitutionality.  This was a question of justice for homeowners living in HOAs.

 

 

2.  DFBLS is still hearing complaints, and will file a correction with the AZ Republic article that told the public otherwise.  No answer was given regarding the number of any constitutionality appeals based on the Downey decision.  As for a return of fees to Ms Waugaman, or the status or prior OAH decisions, and any future confusion, there was no meaningful answer.  What is is what is, and what happened happened.

 

3.  With respect to the AG’s office, I pointed out the repeated replies for help by homeowners to Terry Goddard, the AG, resulted in a statement that he  he could do nothing and to get new legislation.  Yet, the OAH legislation exists and the AG will not assist homeowners in their quest for justice.   I pointed out that the AG’s webpage, under Consumer Protection, included AG investigsation to consumer misrepresentation and fraud with regard to real property (“Merchandise may include any objects, wares, goods, commodities, intangibles, real estate or services“), yet the AG does nothing in regard to HOA fraud. 

 

I pointed out that the Real Estate Department has refused to enforce its own Rules and Regulations with respect to disclosing material information (“R4-28-1101. B. A licensee participating in a real estate transaction shall disclose in writing to all other parties any information the licensee possesses that materially or adversely affects the consideration to be paid by any party to the transaction . . . .”).

 

4.  The Director, and staff, said that they would adopt a more homeowner friendly website to help petitioner’s understand the process.  That the question of fees was beyond its control in that it must be self-paying.  I pointed out the injustices of the current process and legislation, and how CAI/HOA attorneys were using it to deny homeowner justice.  I asked DFBLS to do what it could to bring these inequities to the attention of the legislators, within their agency restrictions. They said that they are not against homeowners.

 

 

Ladies and gentlemen, new legislation is needed to fix the weaknesses of the current OAH law:

 

1.   Include the Restatement Third, Property: Services that governs HOAs in addition to Title 33.

 

2.   Clarify the priority of Title 33 over Title 10 in areas of conflict.

 

3.   Adopt last year’s SB 1162 and its restrictions to level the litigation playing field.

 

4.  HOAs should be made accountable for for monies as are real estate firms and escrow companies, with state agency recordkeeping and reporting requirements, and surprise state audits.

 

5.  Enforceable laws against violations of the governing documents and state laws by HOA boards, with meaningful fines and “disbarment” of offending directors. (When the members must fork up assessments to pay for board wrong-doing, then they will take charge of their HOAs).

6.  And correct the constitutionality issue for OAH adjudication!

 

WRITE YOUR LEGISLATOR TODAY!!!!

 

AZ DFBLS: Failing to serve the HOA public

How many remember the phrases and guidelines for those seeking public office?  Like:  civil servants, civic duty, civic responsibilities, serving the public.  I don’t see them anymore.  What I see and hear are more along the lines of” “what is my legacy”?, and “how will I be remembered?”

 

A very good example of this failure to understand that government agencies exist to serve the public, and not to get a cushy job, is Arizona’s DFBLS webpage.  Viewing the Arizona’s Dept of Fire, Building an Life Safety’s webpage, http://www.dfbls.az.gov/, reveals a minimalistic approach to serving the public, the people, who seek the protection of the state to avoid financial and physical harm.  For one, there are no email contact addresses to help with obtaining info or to contact the agency.  Is that because they do not want anything in writing? 

 

People have been reporting that only a verbal response is available in regard to the acceptance of HOA complaints.  There is nothing in writing at all about this position adopted by the agency, and ordered by the Director himself.  In fact, it’s hard to find anything on the “home” page with respect to filing HOA complaints that was granted the agency over 2 years ago in Sept. 2006.  Clicking on “Consumer complaints” gets you only a manufactured home complaint page.  No  links to HOA complaints.  This is not surprising given the fact that it’s short statement of purpose of its mission says nothing about HOAs, but includes, “It is also the purpose of the department to establish a procedure to protect the consumer of such products and services”. How about mentioning that it was also granted an additional mission of handling HOA complaints? 

 

Only if the viewer clicks on “Administration” and reads the short last paragraph on that page will he find any info on the HOA complaint process.  The FAQ link takes you directly to the Office of Administrative Hearings (OAH) information site, loaded with very helpful consumer information.  Oh, yes, you can also get the complaint petition downloaded.

 

I understand that the agency will accept HOA complaints and that the OAH will continue to hear them.  But, there is nothing on the DFBLS webpage –  no record at all.  I think this reversal came about as a result of a handful of advocates seeking answers and publicizing the wrongful refusal to hear complaints based on a superior court decision.  Especially publicizing that the agency’s own attorney, the Attorney General, wrote the court opposing the CAI member attorney’s request for a blanket order to prohibit the DFBLS from accepting complaints. 

 

 

The new Arizona legislative session begins in January.  We must obtain reforms to the OAH statute to balance the playing field. 

 

1.  This year’s bills, HB2724 and SB1162, must be re-introduced. 

2.  The right to include the HOA common law decisions contained in the restatement of laws, servitudes must be permitted.

3.  A clarification of the relationship between Title 10’s nonprofit statutes and Title 33’s condo/planned community statutes must clearly point to Title 33 as prevailing in the absence of wording to the contrary in any bill.

 

 

Constitutionality challenge update

CAI lobbyist and HOA attorney Carpenter filed for an order rendering the Judge’s decision in this case to be applied to all cases before Arizona’s OAH.  Here’s the AG’s objection to this order:

 

“The Complaint requested the Court to reverse the final decision of the Administrative Law Judge issued in case no. HO 06-7/029 (Nancy Waugaman v. Troon Village Master Association). The scope of the requested relief was limited to the decision in that matter only. Under A.R.S. § 12-911(E), the Court’s authority is to “affirm, reverse, modify or vacate and remand” the challenged agency decision. The Court’s October 2, 2008, decision is consistent with the scope of review and is limited to a reversal of the final administrative decision in case no. HO 06-7/029. It does not order the injunctive relief proposed by Plaintiff/Appellant that would affect other similar administrative proceedings.”

 

Homeowners are waiting for the Attorney General to appeal that decision.  Homeowner complaints are still not being accepted.

 

Such an action appears frivolous and taking up  the court’s time needlessly.  CAI opposed this year’s SB1162 and HB 2724 that would have imposed penalties on such conduct by any party in an OAH hearing, or in an appeal of such hearing.  The bills were defeated.  See videos at http://youtube.com/hoagov.

For more info, see Superior Court judge declares OAH adjudication as unconstitutional.