Couple forced from condominium taking fight to court

Jie Cao and Haining “Frazer” Xia did not want to leave their home. But after an investment company bought the majority of the units in the couple’s condominium complex and voted to sell the unwilling remaining residents’ units to themselves, Cao and Xia were forced out. 

The couple sued the investment company, PFP Dorsey Investments, and their condominium association, Dorsey Place Condominium Association in 2019, claiming Arizona’s condominium law allowing the unwitting sale was unconstitutional.  

After a denial at the superior court and only marginal success at the Court of Appeals, the Xias petitioned the Arizona Supreme Court for review. The court is slated to decide whether to take the case on Tuesday.  

“These are people who literally did nothing wrong, didn’t break a single rule. They didn’t miss a single mortgage payment. They own their homes, and they own it free and clear. And they’re losing their homes,” Eric Fraser, attorney for the Xias said.  

The Xias bought their condo at Dorsey Place in January 2018. In November, PFP Dorsey bought 90 of the 96 units.  

Under Arizona law, a condominium agreement may be terminated given an affirmative vote from 80% of unit owners. PFP Dorsey had 90 votes. The Xias had one. The condominium agreement was terminated, and the remaining units were sold to PFP.  

The Xias sued in Maricopa County Superior Court in November 2019, claiming the sale violated the condominium act, or in the alternate, was unconstitutional as applied. But the judge dismissed the case as the condominium association followed Arizona law.  

On appeal, the Xias argued the law was an unconstitutional taking of private property, citing the Arizona constitutional provision that holds, “private property shall not be taken for private use.” 

And they saw slight success. The appellate panel found that the law was “unconstitutional on its face,” in the opinion authored by presiding Judge Paul J. McMurdie.  

The court, though, declined to deem the law unconstitutional as the Xias signed a contract agreeing to and granting the condo association the powers in statute, including the right to sell given an adequate percentage of willing residents.  

For that reason, they found the statute was not unconstitutional as applied to the Xias.   

In a petition to the Arizona Supreme Court, the Xias ask the court to answer whether a contract granting the “rights, powers and duties” of statute will still be enforced if the statute is deemed “unconstitutional on its face.” 

They argue a contract should not override an unconstitutional law. And they further spar with the ruling from the superior court and the Court of Appeals that the contract essentially renders the law constitutional as applied.  

The Xias further contend the contract only grants the power of statute to the association but does not explicitly name the powers.  

“It’s a really comprehensive piece of litigation. One little, small sliver of it is this termination provision,” Fraser said. “In our view, if you are just saying that a person has the powers under a statute, that only extends to the legitimate powers, the constitutional powers.”  

In a cross petition, attorneys for PFP Dorsey and the Dorsey Condominium Association disagreed with the Xias’ characterization of the sale as a “taking.”  

“PFP exercised its private contractual rights under the Declaration,” attorney Stephanie Gintert wrote. “This is a private dispute between private parties, pursuant to private contracts, which should be enforced.” 

The Arizona Supreme Court justices will issue their decision on whether to grant review tomorrow.