Beware the Heavy Hand: HOA board members and property managers can be personally liable for damages.

By Gavin Wenzel, attorney at Miller Harrison

            Recently, a Federal District Court in Nevada made clear that homeowners associations, their boards of directors, and their management companies should ensure that their actions and omissions are reasonable, even when dealing with residents that may not be acting in good faith.  This article summarizes a case where an HOA initially prevailed in the face of a frivolous assistant animal request, but later was heavily penalized for subsequent unreasonable treatment of the homeowner.

The key takeaways from this case are first, when an owner makes a request under the Americans with Disabilities Act (“ADA”)[i] or Fair Housing Act (“FHA”)[ii], HOAs should ensure that they do not require more information or documentation from a resident than the ADA or FHA actually require. Additionally, although early HOA action in a dispute may be defensible, subsequent improper or negative action can lead to significant personal liability.

            In Sanzaro v. Ardiente Homeowners Ass’n, LLC,[iii] the Sanzaro’s filed a federal lawsuit against their HOA, all members of the board, the management company, and the owner of the management company alleging 102 causes of action. The federal court dismissed all but six causes of action prior to trial. After trial, however, the court awarded the Sanzaros $350,000 in non-economic damages against all of the defendants, jointly and severally. In addition, the court also awarded punitive damages against defendants in the total amount of $285,000, allocating specific amounts of punitive damages against each of the defendants.

            What led to an award of $635,000 in damages, plus attorneys’ fees? Mrs. Sanzaro became disabled in 2004 and, as a result, utilizes a walker to assist her mobility. At the end of 2008, Mrs. Sanzaro acquired a Chihuahua named Angel. Angel was not much bigger than a can of Coke. Mrs. Sanzaro alleges that Angel was trained to retrieve her walker (is this physically possible for a Chihuahua?) and her car keys.

            In Spring of 2009, Mrs. Sanzaro attempted to enter the community clubhouse with Angel. The community manager asked Mrs. Sanzaro why the dog was in the clubhouse and Mrs. Sanzaro responded that Angel was a service animal. The manager asked for documentation that Angel was a service animal and Mrs. Sanzaro indicated that she did not have any service animal documentation for Angel. Mrs. Sanzaro was asked to leave the clubhouse with Angel. The Sanzaros filed a complaint with the Nevada Real Estate Division regarding access to the clubhouse with Angel and the matter was submitted to arbitration.

            In July of 2009, at the arbitration hearing Mrs. Sanzaro “testified that Angel provided assistance by helping Mrs. Sanzaro manage acute pain attacks arising from her disability.”[iv] After her arbitration testimony, and for the first time, Mrs. Sanzaro provided “a doctor’s statement requesting that Angel be registered as a service dog . . . [and] a statement from Mrs. Sanzaro explaining how Angel has been trained to assist her with her disabilities.”[v] The arbitrator found that Mrs. Sanzaro’s testimony and evidence regarding her need for Angel as a service animal was “self-serving” and “unpersuasive” and upheld the HOA fines against the Sanzaros and awarded attorneys’ fees against the Sanzaros. The Sanzaros appealed the arbitration award all the way to the Nevada Supreme Court, but the arbitration findings and award were upheld.

            So far, so good, for the HOA, right? After arbitration, Mrs. Sanzaro continued to attempt to access the clubhouse with Angel as her service animal and the HOA continued to deny her access. Beyond the denial of access, however, HOA board members and the HOA manager continued to request additional documentation from Mrs. Sanzaro and sent various letters to the community regarding the incident generating widespread awareness. As a result, the Sanzaros began being harassed and receiving anonymous messages and threats from members of the community. The messages to the Sanzaros included demands that they leave the community, profanity, threats against the life of Angel, and a message painted on the door of the Sanzaros garage “telling them to get out of the neighborhood . . . [and] included a death threat against Angel and the Sanzaros.”[vi] The board president, allegedly informed other owners that he would not stop them from heckling the Sanzaros at an upcoming board meeting and the group “heckled and yelled obscenities” at the Sanzaros to prevent them from speaking at the meeting. Immediately after the arbitration award, the HOA placed a lien against the Sanzaros home and less than two months later recorded a Notice of Default and Election to Sell. The Sanzaros filed for Chapter 11 bankruptcy to prevent their home from being foreclosed and over the course of the next three years, paid the HOA lien.

            The Sanzaros claims under ADA were not successful, however, they prevailed on their FHA claim. The court found that an accommodation to the HOA policies was necessary for Mrs. Sanzaro to “realize her expectation to use and enjoy the Ardiente clubhouse.”[vii] The court also found that Angel was a “service animal” and that the request to allow Angel into the clubhouse was a reasonable accommodation to request, especially because Angel “was so inconspicuous due to her small size and quiet disposition.”[viii] The defendants repeatedly refused to accommodate Mrs. Sanzaro’s request to have Angel accompany her into the clubhouse and repeatedly asked for additional documentation regarding Angel’s training and status as a service animal.[ix]

The court found that it was not lawful for the defendants to refuse “to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford [a handicapped] person equal opportunity to use and enjoy a dwelling.”[x]

In explaining the damages awarded against the defendants, the court pointed out that “The Board also took no action to address or mitigate the hostility and threats expressed by other members of the Ardiente community toward the Sanzaros, and in fact fomented this hostility. Additionally, Ardiente failed to train its Board members on the requirements of discrimination law.”[xi] Punitive damages were warranted because the defendants “acted with reckless indifference as to the rights of disabled individuals seeking reasonable accommodations.”[xii] After listing four types of defendant conduct that warranted imposition of punitive damages, the court added “The Court further finds that these Defendants acted with personal animus toward the Sanzaros, which fueled the antagonism among the community.”[xiii]

The sharp contrast between the arbitration decision and the federal court’s decision seems to be driven by the abundance of bad facts that paint the defendants (HOA board and managers) as vindictive and unreasonable. Because of the extremely negative treatment of the Sansaros, it appears that the court was more willing to find the necessary elements to support the Sanzaros cause of action for refusal to make a reasonable accommodation.

HOAs and property managers interacting with residents requesting accommodations under the ADA or FHA should carefully consider how their decisions and interactions might be viewed by a judge. Because of the potential for significant liability when ADA or FHA requests are mismanaged, HOAs and property managers would be wise to seek competent legal advice in responding to resident requests for accommodation.

[i] 42 U.S.C. § 12182.

[ii] 42 U.S.C. §§ 3601-19.

[iii] 364 F. Supp. 3d 1158 (D. Nev. 2019)

[iv] Id. at 1170 (emphasis added).

[v] Id.

[vi] Id. at 1169.

[vii] Sanzaro, 364 F. Supp. 3d at 1178.

[viii] Id. at 1179.

[ix] Id.

[x] Id. at 1175 (quoting 42 U.S.C. § 3604(f)(3)(B) (2009)) (emphasis added).

[xi] Id. at 1181.

[xii] Id. at 1182.

[xiii] Id. at 1183.