OAH-07-029 update: HOA appeals that OAH is unconstitutional

 

In this OAH decision, the ALJ invalidated the board’s interpretation of a declaration voting provision that was based on attorney advice. (See OAH-029 Review).  The HOA appealed this administrative decision to the Arizona Superior Court, as permitted under the statutes.

 

Among other things in its appeal, the HOA alleged that

 

The decision is arbitrary, irrational and capricious in that it exceeds the agency’s legislative authority in the scope of its remedial power and in that it ignores the plain language of the contract at issue; and

 

The legislative authority for the proceeding violates the Arizona Constitution by improperly delegating judicial functions to the executive branch as the agency does not have authority that is auxiliary to and dependent upon the proper exercise of legitimate regulatory power.

 

The HOA argued in its brief, in addition to the interpretation by the ALJ of the initial covenant in dispute,

 

1. that the OAH lacked judicial authority to adjudicate HOA disputes since the agency involved, the Dept. of Fire, Building and Life Safety was set up to regulate mobile homes and not to regulate homeowners associations.  Further, OAH adjudication violated the separation of powers doctrine and Arizona Constitution.
2. the ALJ exceeded its authority by ignoring a provision of the declaration that said that the board had exclusive say over the interpretation of the meaning of its covenants.
3. that the OAH was not a “court of competent jurisdiction”, as expressed ion the declaration as the exception to board interpretation of covenants.
4. that the ALJ could only order compliance with the declaration, but not issue a declaratory injunction that the election was invalid.

 

These are serious allegations by the HOA attorney, a CAI member.  In this layman’s view, with some knowledge of federal and state case law on the powers and authority of administrative agencies,

 

1.  allegation (1) is weak, based on the enabling statutes and OAH statutes (ARS 41-2198 et seq.). 

 

2.  Allegation (2) above is based on the allegation that OAH was not a court of competent jurisdiction, see allegation (3) above. However, based on Black’s Law Dictionary definition of this term, the OAH statutes clearly grant the authority and power to OAH to act as a court of competent jurisdiction.

 

3.  Finally, if the ALJ could not issue a declaration as a result of its adjudication of a homeowner association problem, allegation (4) above, then the entire due process by means of OAH adjudication is without meaning.  This was clearly not the intent of the Arizona Legislature.

 

Contrary to the above defense of the HOA and its attempt to undercut OAH adjudication of disputes, OAH has been very successful in its limited area of application, and its powers and authority must be increased, not decreased. (See first year OAH statistics). These powers must include substantial penalties to serve as a detriment to HOA abuse, and to include reliance on the common law of equitable servitudes, which govern many areas of homeowner association law. 

 

The objective here is a fair and just application of the law to protect homeowners from abusive HOA boards, not to defend HOAs as independent city-states.