Superior Court judge declares OAH adjudication as unconstitutional

In an appeal* by CAI attorneys of an OAH decision questioning the constitutionality of OAH hearing** HOA complaints, the Superior Court appellate decision said it was a violation of the separation of powers of Art III of the Arizona Constitution, and all other constitutions for that matter.

 

Essentially, relying on the AZ Cactus Wren*** case and its citations of Hancock^ and a California case, McHugh^^, the trial judge said the statute did not grant any regulatory powers over HOAs and, therefore, OAH cannot hear HOA disputes.  Regulation is a prerequisite for executive adjudication, said the judge.  The judge stated that regulation of HOAs was non-existent within the statute.  (DBFLS, under the statute is the actual agency granted powers to hear complaints to be submitted to OAH, in accordance with its powers under the AZ Adm. Procedures Act.)

 

At the same time the judge dismisses any “valid policy reason” for allowing OAH to hear disputes and characterized the statute as simply the parking of adjudication for HOAs within OAH. Such reasons as providing for justice under the Constitution, since the Legislature refused to allow JP courts to hear HOA disputes and denying homeowners the equal protection of the laws, was not her concern.  The judge ignored a justification in the Cactus case, which she explicitly quotes, saying that,

 

“[A]s a practical matter, the Department’s objective of administering compliance with the Act is furthered by inclusion of its hearing officer function. This purpose would be less easily met if matters relating to the Act were left to the judicial process.”  (emphasis added).

  

While Judge Downey cites the burden against constitutionality, she fails to apply it to her decision:

 

The party challenging the constitutionality of a statute bears the burden of overcoming a strong presumption of constitutionality.  Doubts are resolved in favor of upholding a statute against constitutional challenges.

 

What can homeowners expect from this decision?  While it’s not precedent and only applies to this case, the decision has broad application to every case brought before OAH.  CAI/HOA attorneys will respond with, “OAH is exceeding its authority under the constitution” and ask that the case be dismissed.  This decision must be appealed!

 

Doing justice was not the judge’s concern.  Arizona homeowners must write the Attorney General, who had filed a memorandum in the appeal, demanding Appellate Court review of the judge’s decision, in support of justice.

 

 

References

*     Troon Village v.Waugaman, LC2007-000598-001, Maricopa County, October 3, 2008.

**   OAH case number, No. 07F-H067029-BFS (not mentioned in any of the Superior Court filings or judge’s decision, like they do not want anyone to read the ALJ’s basis for his decision).

***  Cactus Wren Partners v. Arizona Dept. of Building & Fire Safety, 177 Ariz. 559, 869 P.2d 1212 (App. Div. 1 1993).

^     J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 690 P.2d 119 (App. 1984).

^^    McHugh v. Santa Monica Rent Control Board,  777 P.2d 91 (1989).

 

OAH 08F-H089001-BFS: failing to understand adjudication

 

Once more I’ve witnessed a Pro Per failing to understand what adjudication is all about.  I cannot over emphasize the following paragraph.

 

Adjudication, whether civil court, OAH, or ADR,  is not a social club committee meeting.  There are rules that must be followed.  “Adjudication” is not the judge cheering the Pro Per with “Right on!”, but an evaluation after hearing both sides.  Empty allegations carry no weight.  Authoritative evidence is needed — statutes, governing documents, sworn witnesses and pertinent dispute related documents like emails, notices, etc.  This is precisely why the parties are informed that the decision is based “on the preponderance of the evidence.“  Get the evidence or don’t file a complaint!

 

IN OAH 08F-08901, a question of interpretation was raised involving the exceptions to open meeting requirements — ARS 33-1804(A) pertaining to pending litigation, employees and attorney advice.  These terms are not defined within the governing documents nor Title 33, Ch. 9 and 16, the only 2 chapters allowed to be heard by OAH.  Consequently, civil court is required.  In this case, however, the definitions were not challenged until the last minute of the hearing when the Pro Per asked the ALJ how his complaint fell under one of the exceptions. The ALJ, after already deciding against the homeowners, replied, “I’m not really in a position to answer that  question.”  Grounds for an appeal.

 

A second major issue was the interpretation of the ADR provisions within the Declaration. Did they apply to this complaint?  The ALJ read the documents involved in the closed meeting, the subject of the complaint, in private, and made his decision that the closed meeting was not a violation.  The Pro Per failed to present any substantive argument that his understanding of grammar was faulty. That the ADR provision only applied to construction issues.

 

Do not waste your time filing a complaint or any civil action if you do not plan to diligently heed my warnings in the above second paragraph.

 

 

Year 2 AZ OAH cases on HOA disputes – homeowners still win 43%

As a result of the efforts of two homeowners, Bill Brown and Walt Kearns, Arizona HOA case statistics for the first two years (22 months) have been developed based on 59 cases, of which 42 were decided by the Administrative Law Judges ( 4 split decisions were ignored).  In spite of some minor differences in views, the analysis showed some 43% of the cases were won by the petitioner, the homeowner.  (18 decisions for the homeowner; 24 for the HOA).

 

This result is consistent with the results found in September 2007 by this writer based on the first-year cases (32 decisions), which showed a 42% win percentage by homeowners.  (See https://azhoaoah.wordpress.com/2007/09/24/first-year-oah-statistics-on-hoa-cases/).

 

In Arizona in 2005, a bill to permit Justice of the Peace Courts to hear HOA disputes was defeated by claims by CAI attorney lobbyists of a huge flood of complaints that would destroy the effectiveness of the JP courts.  This was a dramatic and marked reversal of the CAI position, maintained for years, that only 5% of the HOAs were bad, so why make new laws.  It appears that CAI, Community Associations Institute, that national lobbying trade group proclaimed as the experts on homeowner associations matters, got it all wrong.  What else are the CAI attorneys telling the legislators that’s has no basis in fact?

 

In 2006, the bill to authorize OAH resolution of HOA disputes had a tough battle — Chairmen of both the Senate and House attempted to not hear the bill, based on their rights as Chairman of the Rules committee.  They failed and the bill was overwhelmingly passed by the Arizona Senate and House.

 

Just this past week, Senator Obama stated the problem with the American political system quite succinctly.  Referring to current political attitudes as “You’re on your own“, he said,

 

Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves – protect us from harm . . . .  Our government should work for us, not against us. It should help us, not hurt us.

 

There are more necessary reforms to the OAH procedures.  The CAI attorneys have challenged the constitutional rights for OAH to adjudicate HOA disputes.  They have attempted to turn OAH into a civil court with its strict Rules of Civil Procedure.  The OAH cannot hear disputes raising questions of constitutional issues, but more importantly, it is restricted by the enabling act from applying the Restatement (Third) of Laws, Property: Servitudes to these disputes. Yet,  HOAs owe their power and oppression based on this common law source.  For example, Chapter 3 deals with the Validity of Covenants, and Chapter 6 deals with HOA structure, functions, etc.

 

When will the legislators, the courts, the media, and the various public interest nonprofits going to wake up and face the reality before them?

 

OAH-08-08-011: claims must be stated in petition; strict focus on statutes and governing documents

In this case dealing with Gainey Ranch and painting home and door with an approved color, as stated in the Rules, ALJ would not permit homeowner to raise the issue of discrimination against the homeowner. Other homes were painted with colors not approved by the HOA.  Homeowner had to explicitly show that discrimination was not allowed by governing documents.  Furthermore, ALJ said that the discrimination issue was not raised in the petition with an explicit reference to the governing document provision, although supporting documents contain such statements.  “Violates due process” if homeowner did not follow the procedures.  

IMPORTANT: 

Since the HOA does not have to be fair, just or equitable in its decisions and actions, in the absence of any provisions in the govening documents or statutes, the ALJ cannot deal with justice as we the people expect, and is provided under our system of jurisprudence.  Why?  Because in our efforts to get this important due process procedures for homeowners, this strict application of jursidiction had to be accepted.  All the while, the opposition, the CAI attorneys, well knew that the Restatement of Laws – Property governs HOAs in the absence of state laws. Yet the homeowner’s recourse to this common law is precluded by the OAH enabling statute.  This gross injstice must be corrected!

In this master planned community, the sub-HOA acceptance of the approved color was rejected by the master-HOA board.  Was this before or after the painting? If the master rule was in place, doesn’t the homeowner have a claim of equitable relief because he relied on the sub-board in good faith, and it was the error of the board not the homeowner.  If after the fact, this is another ex post facto amendment.  In fact, the evidence showed a misinterpretation of the rules by the sub-HOA, and an eventual compliance to avoid litigation between the 2 HOAs.

 

The witness was a board member testifying against HOA.  The attorney said that the witness was violating his fiduciary duty to the board.

 

The HOA attorneys have managed to turn the OAH process into a strict judicial process, away from “let’s sit down and talk this over”.  HOA attorney was aggressive and intimidating, treating the witness in a hostile manner.  The HOA attorney, in a haughty manner, was intimidating and condescending to ALJ.  Attorney asked the witness what he advised the homeowner.  Claim of attorney-client privilege was rejected.  BEWARE.  HOA attorney thus showed bias by witness.  No kidding! 

 

 

Advocates are fighting to level the litigation playing field, and SB1162 is one such issue.  Where is the justice??  It’s oblivious that the HOA was acting unreasonably with respect to the issue, and was seeking a punishment against the homeowner because he didn’t first ask, “May I?” — get prior approval.  RULES is RULES, otherwise we have chaos, so said the HOA attorney.  If it were raised, the HOA attorney would have replied that it IS reasonable to enforce the rules, that’s the job of the HOA.  Homeowners just can’t win.

 

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.