The Arizona Department of Transportation has agreed to pay the Foothills Reserve homeowners association $6.5 million – more than three times it initially offered – for 13 acres of land it desperately needs to continue construction of the South Mountain Freeway.
Only the HOA can’t get its hands on that money – or start proceedings in which 591 homeowners could collect individual damages totaling anywhere from $15 million to $19 million – because one man stands in the way.
Now, the HOA has ratcheted up what has become a nasty legal fight by telling homeowner Dietmar Hanke that if he continues his court battle against ADOT, he’ll be assessed its lawyer’s fees at the rate of $520 an hour plus additional costs that could total thousands of dollars more.
“The association has been incredibly patient with your arguments, but at this point your arguments against possession are financially detrimental to the association,” HOA attorney Dale Zeitlin wrote to Hanke in a July 19 letter, warning that the Foothills Reserve Masters Association “is entitled to recover attorneys’ fees, court costs, costs of investigation and other related expenses incurred in connection with, including but not limited to, the Association’s administrative costs and fees.”
Further warning Hanke that the HOA would slap a lien against his home to recover those costs, Zeitlin said, “This letter puts you on notice that if you do not immediately withdraw your appeals, withdraw your cross-claim against the state, and waive all claims with prejudice, except your claim for severance damages to your home, the association has authorized me to seek all remedies against you.”
Hanke is not backing down.
“It’s absolutely crazy, and I think they have both gone too far in all of this,” Hanke said of the HOA and Zeitlin. “I will not stand for it no matter how much they threaten me.”
He sent a letter to the HOA board the day after receiving Zietlin’s warning that said, “This is a matter affecting my personal property rights” and that “no contract or contractual relationship is superior to my constitutional rights to protect my property interests.”
He called Zietlin’s description of his arguments “irrelevant and uninformed” and demanded the board tell him in writing how his fight with ADOT is financially harming the HOA.
At issue is a piece of HOA common grounds that ADOT needs as it homes in on the South Mountain Preserve and prepares to cut through the park, ultimately carving a 200-foot-wide path across two mountain peaks as it continues to work toward a late-2019 completion of the 22-mile freeway connecting the Chandler and West 59th Street interchanges of Interstate 10.
ADOT several years ago acquired 21 Foothills Reserve homes throough negotiations and has continued other work virtually on the community’s edge.
Hanke contends that ADOT has failed to justify taking the common grounds, claiming state law forbids a government agency from seizing public land unless it can show a public need.
But two Superior Court judges have disagreed, allowing ADOT to take the land immediately and continue the freeway work.
Hanke has asked the state Court of Appeals to stop the agency and order a full hearing on his case – something, he says, Superior Court has not allowed because it denied his request for discovery, the process by which lawyers can obtain documents and other evidence from the other side in order to bolster their case.
Hanke, who is not an attorney, told the appeals court, “Contrary to the incessant ADOT propaganda, the historical layout of the Phoenix metropolitan freeway system some 30 years ago was nothing more than the product of ... blue sky thinking and planning ... There was/is no public need.”
Zeitlin in an interview said, “His claims were never in good.”
“He’s trying to stop the freeway using arguments that were already adjudicated in federal court,” Zeitlin said, referring to the prolonged and ultimately unsuccessful battle waged against the freeway by the Gila River Indian Community and Ahwatukee residents who belonged to Protect Arizona’s Resources and Children.
In a statement to AFN, the HOA board said it needs that $6.5 million immediately because it has only a small window to make certain improvements for the homeowners’ benefit.
“Our community’s current southern perimeter walls and fences are located somewhere near the middle of what will be Loop 202,” the board said through its president, Galen Schleim. “We must replace these walls for our residents, especially residents at the ‘taking’ line, or they will be looking at a barbed wire wildlife fence, water retention ponds and freeway landscaping.
“We have a small window of opportunity to find a vendor to build the necessary wall and work with ADOT so that a barbed wire fence is not erected,” the statement continued. “Once the barbed wire fence is in place, we may not have the authority to take it out.”
The board also said Hanke’s “claims are obstructing the association’s rights to access the funds as the state will not let the association have access to our settlement funds until all claims are resolved...even ones that have no merit. Thus, Mr. Hanke’s arguments – which the court found have no merit – are detrimental to our community.”
“He is challenging the state’s right to continue with their project,” it also said, “and the HOA’s right to handle issues regarding the sale of our common areas which are owned solely by the HOA. He signed declarations when he purchased his home giving the HOA’s board the authority to negotiate and sell common areas under the threat of condemnation by the state. He’s trying to throw a wrench into that process. His actions are now harmful to our community.
Hanke contends the board has harmed the homeowners by siding with ADOT in the land dispute.
In court papers, he characterized ADOT’s actions as “physically invading the association to demolish homes, erase streets, destroy a perimeter wall and mail kiosk owned by the Association, violate numerous Association rules and covenants and install an industrial concern within the lands of the Association. All this without any invitation, permission or privilege.”
He labeled those actions “uninvited, unprivileged, unauthorized, abusive, arrogant and surreptitious.”
He also asserts that while ADOT has been forced to put up a $15 million bond to cover any homeowner’s claims of damages for the diminished value of their homes, the total from those claims could be as high as $19 million.
Zeiltlin said it’s far too early to talk about money because the individual claims for damages will comprise a complex case that could take years to resolve.
Those claims could involve not just construction-related damage to driveways, foundations or landscape but also the freeway’s overall impact the homes’ worth. Zeitlin said, to his knowledge, all homeowners were advised when they bought their houses that ADOT would be building the freeway.
The attorney general in June told the court, “Mr. Hanke’s arguments cannot prevent the state from acquiring possession and building the freeway,” but admitted the homeowners’ claims will be another matter – claims that Zeitlin and the HOA say Hanke is free to pursue.
“The ultimate result may be that the claims are higher because of the rules regarding condemnation blight,” the AG’s office said. “But that is not something that should prevent the state from building the project.”