Sycamore Hills Estates Homeowners Ass’n v. Zablotny (D2 1.22.21)

Our curiosity is piqued whenever we see “affirmed in part; vacated in part and remanded,” and we expect something interesting is coming. So often we find ourselves disappointed – as we do here. It isn’t the court’s fault. The shallowness comes from the parties. The court tells us very little about the underlying dispute between the Zablotnys and their homeowners association the Sycamore Hills Estates Homeowners Ass’n. The Zablotnys sued the Association for breaching the CC&Rs for some reason the court does not explain. The case is settled and as part of the settlement, a consent judgment is entered. Two years later the Association changes its mind. The Association argues the judgment was beyond the scope of the pleadings because it can be characterized as a declaratory judgment and should not have been entered. Although the Association stipulated to it, it argues the court did not have jurisdiction to do what it asked. The Association then argues it really did not have authority to enter into such a settlement.

The court of appeals holds the trial court had authority to hear the underlying case; the parties had agreed to the stipulated judgment to resolve the dispute; and thus, the judgment was not void for lack of jurisdiction. As for the ultra vires challenge by the Association against itself, it’s a corporation and Arizona statutes limit challenges for lack of authority. A member can challenge the corporation’s action, but the corporation cannot challenge itself. Finally, the trial court had entered a supplemental award of fees against the Association before the time had expired for the Association to file a response. (Why wasn’t this fixed earlier when the court of appeals told the parties they had to go back to the trial court and get a final judgment because the first one wasn’t signed? ) The trial court is directed to give the Association the opportunity to be heard on this. We expect there will be more litigation because when the Association proclaims it acted without authority, it is sending its members a litigation invitation.

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