Will IJ victory in Pagedale class action lawsuit lead to protection of rights for HOA residents?

Institute for Justice recently filed a similar federal against Doraville, Georgia

Both lawsuits aimed at upholding Constitutional protections for residents

Commentary By Deborah Goonan, Independent American Communities

Institute for Justice has recently scored a legal victory for victims of abusive nuisance fines and code enforcement by the small town government of Pagedale, Missouri.

A similar lawsuit has also been filed against Doraville, Georgia.

As referenced in the featured articles below, the profiles of behavior by local governments such as Pagedale and Doraville closely mirror abusive practices of association-governed communities (homeowners,’ condominium, and cooperative associations) commonly known as HOAs.

Both lawsuits have presented evidence to back up allegations of what IJ calls “policing for profit.”

Both Pagedale and Doraville have relied upon collection of fees and fines — to include legal fees and costs — associated with traffic tickets and property code violations. Many of the code violations have been imposed upon residents for minor or harmless infractions, such as having torn screens in windows, holding a barbecue in the front yard, having a basketball hoop in the driveway, or not repairing cracks in the driveway.

Both cities hired private contractors to identify violations and collect fines. The private contractors had a strong incentive to find as many code violations as possible.

Both cities benefitted financially from collection of nuisance fees. In fact, IJ uncovered evidence that the frequency and amount of fines collected by Pagedale and Doraville provide significant revenue to the budgets of these struggling small towns.

But, at the same time, steep financial penalties, backed up with the threat of criminal charges resulting in probation or jail time, resulted in abuse of power, and cruel and unusual punishment inflicted upon poor residents in both towns.

Sound familiar?

No money empty pockets poor

HOA abuse mirrors abuse of residents in Pagedale, Doraville

When you read today’s reference articles, which summarize complaints filed in these IJ lawsuits, you’ll immediately notice a familiar pattern that mirrors the abuse that is so common in association-governed, common interest communities.

Make no mistake about it. HOA behavior is almost identical to that of small town officials in Pagedale and Doraville.

Instead of local codes and ordinances, HOAs enforce CC&Rs, rules, and architectural standards for the profit of attorneys, OR as a way to for association board members to exercise power and control over residents.

The only difference between HOAs and the towns of Pagedale and Doraville: city leaders abused their power to incarcerate (imprison) owners for minor code violations, while HOAs instead use the threat and the hammer of property liens and foreclosure to collect their money.

You’ll read about how Pagedale engaged in needless probation or incarceration,  making it difficult for residents to find and retain employment, and nearly impossible for any resident to pay off debts to the city.

Of course, HOAs cannot arrest homeowners for unpaid fines or assessments. But HOAs do exploit the threat of foreclosure to force homeowners to pay thousands of dollars in fines, assessment collection costs, and attorney fees. Unable to pay thousands of dollars in fees, many former residents have lost their homes to HOA foreclosure for relatively minor debts, sometimes related to petty enforcement of rules and restrictions.

Being homeless, or under constant stress of losing one’s home, creates similar employment and financial challenges for residents of association-governed communities.

One of the reasons that HOAs have become so common — and nearly impossible to avoid in some housing markets — is because cities have not wanted the hassles or the limitations of enforcing city codes. And historically, as privately governed communities, the HOA industry has argued that HOAs can get away with enacting and enforcing its covenants, restrictions, and rule for aesthetic standards, without little threat of legal challenge.

HOA leaders know that most homeowners and residents simply don’t have the money to fight legal battles with their HOAs.

And some unethical HOA board members, management agents, and attorneys have learned how to make big money exploiting homeowners. That included buying up homes at HOA foreclosure auctions for a mere fraction of their value.

You’ll also read that IJ and the courts have recognized that abusive local governments violate Constitutional rights of residents. And that’s a very good thing.

But what about the Constitutional rights of residents and homeowners under the local governance regime of homeowners,’ condominium, or cooperative associations?

US Constitution (pixabay.com)

Unintended consequences?

IJ continues to come down hard on cities for “policing for profit,” while dismissing similar offenses of association-governing bodies, simply because HOAs are not officially chartered as official governments or recognized as state actors.

But, for all practical purposes, most residential HOAs serve as a fourth layer of government, at the hyper-local level. And, by law, states have granted many powers, historically reserved for government, upon HOA boards, despite the fact that the HOA governance model lacks the division of power that is necessary to keep HOA leaders fair and honest.

At the same time, U.S. government at all levels continues to ignore its obligations to protect private property rights and to ensure equal protection of rights to all Americans, no matter where they happen to reside.

IJ’s actions to hold cities accountable could have unintended consequences.  Specifically, Pagedale’s consent order could motivate other cities to offload even more of their infrastructure maintenance and code enforcement responsibilities to private association-governed communities.

And, as long as HOAs and their management agents retain the excessive power to fine, to engage in unrestricted debt collection, and to foreclose on property without adequate due process, we can expect more and more profit-making activity by dishonest boards, managers, and HOA attorneys. That’s like to lead to even more abuse of HOA residents.

The added financial pressure on residents, living under a constant state of fear, will only make HOA housing even less affordable, less secure, and less desirable to own. That, in turn, will reduce property values across the U.S., especially in highly populated, HOA-saturated states such as Florida, California, Illinois, and Texas.

HOA power hungry bully

Can the trend of HOA abuse be reversed?

Given the striking similarities between abusive behavior patterns of small town governments and association-governed communities, and the fact that, in many cases, HOAs serve the interests of local government, it makes sense to challenge the power of HOA governing boards and agents on similar Constitutional grounds.

Such challenges would serve to rein in excessive powers, invalidate CC&Rs that serve no public purpose, and, in some cases, justify complete dissolution of dysfunctional or defunct associations.



Federal Court Approves Historic Consent Decree Ending “Policing for Profit” in Pagedale, Mo.

Pagedale officials agree to substantial structural reforms to city’s ticketing, housing code, and court system

On Friday afternoon, Federal Judge Rodney W. Sippel granted final approval to a groundbreaking consent decree that will significantly reform the city of Pagedale, Missouri, and its ticketing policies, housing code, and municipal court. The consent decree is the end result of a class-action lawsuit brought in 2015 by people ticketed and threatened with tickets by the city. The suit alleged that the city identified, ticketed, prosecuted, and convicted its residents and others not for legitimate health and safety reasons but rather to raise revenue for the city.

“Judge Sippel’s approval finally brings the city of Pagedale’s criminal and civil justice system into compliance with the requirements of the Constitution,” said Bill Maurer, a senior attorney at the Institute for Justice, which represented the class. “The consent decree provides defendants with meaningful protections as they move through the city’s justice system. We appreciate the city’s willingness to come to the table and agree to implement these critical and sweeping reforms.”

In 2015, three Pagedale residents—Valarie Whitner, Vincent Blount, and Mildred Bryant—sued the city on behalf of themselves and all others similarly situated. Represented for free by the national public interest law firm the Institute for Justice and a St. Louis team from the global law firm Bryan Cave Leighton Paisner LLC, the residents brought a class action suit alleging that the city’s reliance on revenue from fines and fees violated the Fourteenth Amendment’s due process guarantee by interjecting an impermissible institutional financial interest into the city’s civil and criminal justice system. The suit also alleged that the city’s policy of making harmless conditions around residents’ homes subject to fines and fees violated the Excessive Fines Clause of the Eighth Amendment to the U.S. Constitution.

After over two years of litigation, the parties negotiated the consent decree approved by Judge Sippel on Friday.

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How the municipal court money machine burdens city residents

Lawsuits allege that small towns across the U.S. cracking down on “nuisance law” violations unfairly burden homeowners

By Patrick Sisson May 24, 2018, 8:37am EDT

Hilda Brucker didn’t know she had been fined until she received a call telling her to rush to court. On October 10, 2016, the 58-year-old freelance writer was working on a ghostwriting project at her home in Doraville, Georgia, a modest ranch house in the forested suburb just northeast of Atlanta, when the phone rang.

According to Brucker’s legal complaint, a city official told her she was due in court, and, afraid that a warrant might be issued for her arrest, she decided to show up. The reason for this sudden call? A week before, Brucker had evidently been fined $100 for rotted wood and chipped paint on her home’s facade, high weeds in her backyard, and cracks in her concrete driveway, which had been virtually unchanged since she moved in 26 years prior. Unbeknownst to her, local code enforcement officials had inspected her home on October 3 and alleged they sent the citations via certified mail (Brucker says she never received the letter, and her complaint alleges that there are no records the certified letter was ever sent).

Brucker went to the Doraville Courthouse, pleaded no contest, and paid the $100 fee.

She was also given six months of criminal probation for a series of small aesthetic complaints about her own home, according to her complaint, meaning she couldn’t leave the state without the permission of her probation officer. In full, the cracked concrete and chipped paint would cost her thousands in legal costs as she tried to get the sentence vacated.

“It was very hypocritical,” she says of the overbearing attitude the city had about her property. “The parking lot in front of City Hall is full of cracks.”

Jeff Thornton, who also lives in Doraville, became enmeshed in the city’s legal system over a pile of wood, according to the legal complaint he filed against Doraville. One of his neighbors chopped down a large oak tree in July 2015, and Thornton asked if he could use it for firewood.

It proved to be an expensive acquisition. Thornton would be subject to a series of citations for improperly storing wood in his backyard, beginning on July 25, 2015. He then spent a day with a wood splitter, chopping and stacking logs. City officials returned, checked his yard, and warned him about improperly stacking (they provided exact measurements for future reference).

The cycle continued for nearly a year, with every attempt at a fix found lacking. He restacked and added plastic guards to his fence to block the view from the street. He didn’t hear back from the city until he got a letter in the mail in July 2016 saying he had a warrant out for his arrest because he missed a court date and didn’t pay for a pair of tickets (which, Thornton says in his complaint, arrived in the mail more than a month later). At one point, he was threatened with a $3,000 fine and 12 months of probation. Eventually, the court dismissed the fine after a code enforcement official came to his house and confirmed that everything had been fixed.

According to a new lawsuit filed in federal court, this aggressive enforcement wasn’t just a nuisance. Organized by the Institute for Justice, a nonprofit legal firm based in Arlington, Virginia, the suit, which lists Brucker, Thornton, and two others as co-defendants, claims the city violated due process by “using its law enforcement and municipal court system for revenue generation.” The mechanisms of local justice have been turned into a cash machine for the city’s budget, the suit alleges.

Doraville also hired a private firm to serve as a probation company that acts as a collection agency. Many of these types of private arrangements, where the amount of money these companies earn is directly related to the amount of money they collect from city residents, creates a subtle systemic bias.

“Once we start thinking of government servants as needing to produce economically, then they’ve lost the disinterested neutral appearance of a government servant, and they’ve become almost a private actor,” House says.

Pagedale exhibited a similar income shortfall, according to the complaint, having failed to balance its budget in 2009 and from 2012 to 2016, and running a nearly $400,000 deficit in 2012 (the city increased number of non-traffic tickets it issued in 2013 by 160 percent).

“When the city has complete control over its court for all these misdemeanors, it can manipulate that municipal court system in a way that maximizes revenue,” says House.

“Here, you’re ticketed by a city-hired police officer, arraigned and prosecuted by city-hired prosecutors, and convicted by a city-hired judge. All three of those people ultimately serve the city council as an ultimate authority. So there’s not even the semblance of separation of powers.”

The Institute for Justice’s Doraville case relies on precedents from two previous Supreme Court cases. Rulings in both Tumey v. Ohio (1927) and Ward v. Village of Monroeville (1972) argued, that on a local level, a decision-maker can’t have a financial interest in cases that come before the court.

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1 thought on “Will IJ victory in Pagedale class action lawsuit lead to protection of rights for HOA residents?

  1. Karin Barendrick June 25, 2018 — 4:12 pm

    Deborah, you mentioned above: “….HOA governance model lacks the division of power that is necessary to keep HOA leaders fair and honest”. We are personally experiencing unfair, arbitrary harassment and lying about the actual rules in a Phoenix AZ condo assn. This has gone on for a year. Do you have or know of a “good” hoa that has revised their cc&r’s to reduce board misconduct? If only we could school all of the tens of thousands “bad” hoa “governments” to self-educate and monitor their rules and board members Thank you for the amazing work you do!..

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