Case Summary
| Case ID | 20F-H2020049-REL-RHG |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2021-03-08 |
| Administrative Law Judge | Jenna Clark |
| Outcome | loss |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Michael J Stoltenberg | Counsel | — |
|---|---|---|---|
| Respondent | Rancho Del Oro Homeowners Association | Counsel | Nicole Payne, Esq. |
Alleged Violations
CC&Rs Section 14.8
Outcome Summary
The Administrative Law Judge denied the petition, concluding that the Association did not violate CC&Rs Section 14.8. The provision was determined to be inapplicable, governing the Association’s obligation to provide notice, not the methods homeowners must use to send payments.
Why this result: Petitioner failed to meet the burden of proof. CC&Rs Section 14.8 was inapplicable, and Petitioner's chosen restricted delivery method for assessment payments caused delays, which were not the responsibility of the Respondent.
Key Issues & Findings
Whether the Association violated CC&Rs 14.8 concerning notice obligations.
Petitioner alleged the Association violated CC&Rs 14.8 by improperly handling or failing to receive his monthly assessment payments, which he sent via restricted delivery to a board member despite receiving instructions to mail payments to the Association's designated P.O. Box address.
Orders: Petitioner's petition was denied because he failed to sustain his burden of proof that the Association violated CC&Rs Section 14.8.
Filing fee: $500.00, Fee refunded: No
Disposition: respondent_win
- ARIZ. REV. STAT. § 32-2102
- ARIZ. REV. STAT. § 32-2199 et seq.
- ARIZ. REV. STAT. § 32-2199.05
- ARIZ. REV. STAT. § 33-1243
- CC&Rs 14.8
Analytics Highlights
- ARIZ. REV. STAT. § 32-2102
- ARIZ. REV. STAT. § 32-2199 et seq.
- ARIZ. REV. STAT. § 32-2199.05
- ARIZ. REV. STAT. § 32-2199.02
- ARIZ. REV. STAT. § 33-1243
- ARIZ. REV. STAT. § 41-1092 et seq.
- ARIZ. REV. STAT. § 10-3842
- CC&Rs 14.8
- Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
Video Overview
Audio Overview
Decision Documents
20F-H2020049-REL Decision – 811290.pdf
Stoltenberg v. Rancho Del Oro HOA: Case Analysis and Legal Findings
Executive Summary
This document provides a comprehensive analysis of the administrative legal case Michael J Stoltenberg v. Rancho Del Oro Homeowners Association (Case No. 20F-H2020049-REL). The central dispute arose when Mr. Stoltenberg, a homeowner, was assessed late fees on his monthly dues after unilaterally altering his payment method. He began sending payments via restricted U.S. Postal Service delivery to a specific volunteer board member, which resulted in significant processing delays and non-deliveries.
The petitioner alleged the Association was acting in “bad faith” and violating Section 14.8 of its Covenants, Conditions, and Restrictions (CC&Rs). An Administrative Law Judge (ALJ) conclusively found that Section 14.8, which governs notices sent from the Association to its members, was entirely inapplicable to payments sent by a member to the Association. The ALJ determined that the petitioner’s own “volitionally took” actions were the direct cause of the payment delays and subsequent late fees.
The petitioner’s initial petition was denied. A subsequent request for rehearing was granted, but the rehearing affirmed the original decision. The ALJ reiterated that the cited CC&R section was inapplicable, noted a lack of jurisdiction over other statutes the petitioner raised, and concluded that the petitioner had failed to meet his burden of proof in either proceeding.
Case Background and Procedural History
Parties and Governing Documents
• Petitioner: Michael J. Stoltenberg, a condominium owner within the Rancho Del Oro development and a member of the homeowners’ association.
• Respondent: Rancho Del Oro Homeowners Association (“the Association”), a condominium association in Yuma, Arizona, governed by its CC&Rs and overseen by a Board of Directors.
• Governing Authority: The CC&Rs form an enforceable contract between the Association and each property owner. The specific provision at the center of the dispute is Section 14.8 of the Bylaws, titled “Notices.” This section has remained unamended since the original CC&Rs were recorded on August 30, 1985.
Initial Petition and Jurisdictional Scope
On March 2, 2020, Mr. Stoltenberg filed a petition with the Arizona Department of Real Estate, alleging the Association “fail to do their job, and are acting in bad faith.” The petition cited violations of Arizona Revised Statutes (ARIZ. REV. STAT.) §§ 10-3842 and 10-801, as well as Section 14.8 of the Association’s CC&Rs. Mr. Stoltenberg sought an order compelling the Association to comply with these regulations and the issuance of a civil penalty.
Upon filing, the Department advised the petitioner that the HOA Dispute Process lacks jurisdiction over disputes arising from Title 10 of the Arizona Revised Statutes. Consequently, the case was narrowed to a single issue, and the petitioner was assessed a $500 filing fee. The sole issue for the hearing was formally defined as: “Whether the Association violated CC&Rs 14.8.”
Chronology of Legal Proceedings
Outcome
March 2, 2020
Petition filed by Michael Stoltenberg.
The case is initiated.
July 14, 2020
Initial evidentiary hearing is held.
Both parties present arguments.
August 3, 2020
Amended ALJ Decision is issued.
The petitioner’s petition is denied.
August 28, 2020
Petitioner submits a rehearing request.
Grounds cited: errors of law and an arbitrary decision.
September 9, 2020
Rehearing request is granted.
A new hearing is scheduled.
February 16, 2021
Rehearing is held.
The same issue is re-examined.
March 8, 2021
Final ALJ Decision is issued.
The petitioner’s petition is denied again; the order is binding.
Factual Analysis of the Dispute
Payment Instructions and Petitioner’s Actions
On January 4, 2016, the petitioner was advised that the Association’s “primary address for receiving all correspondence and all assessment payments from its members” was PO Box 4333, Yuma, Arizona 85366. The correspondence explicitly stated, “Please send your payments to the above address.”
Despite these clear instructions, beginning in November 2019, the petitioner began sending his monthly assessment payments to this P.O. Box via restricted delivery through the United States Postal Service (USPS), designated for pickup by board member Rhea Carlisle only.
The petitioner’s stated rationale for this change was a belief that an agent of the Association’s property management company (PMC) had previously thrown away one of his mailed payments. However, the petitioner was aware of several key facts:
• The Association employed a PMC to pick up its mail.
• Ms. Carlisle was an unpaid volunteer board member, not an employee of the PMC.
• Diana Crites was the Association’s listed Statutory Agent for 2019 and 2020.
Consequences of Restricted Delivery
The petitioner’s unilateral decision to restrict delivery caused significant disruption to the receipt of his payments. This led to his assessments being recorded as untimely, which in turn resulted in the Association assessing late fees against his account. Additionally, each late payment occurrence placed his residence “in danger of foreclosure by the Association.”
A timeline of payment delivery issues presented as evidence includes:
Payment Period
USPS Action
December 2019
Picked up.
January 25, 2020
Returned to petitioner by USPS.
January 30, 2020
Picked up.
February 26, 2020
Picked up.
April 17, 2020
Picked up.
June 8, 2020
Returned to petitioner by USPS.
Legal Rulings and Core Arguments
Central Legal Text: CC&Rs Section 14.8 (“Notices”)
The entire case hinged on the interpretation of Section 14.8 of the Association’s Bylaws. The text reads:
“Any notice permitted or required by this Declaration or the Bylaws may be delivered either personally or by mail. If delivery is by mail, it shall be deemed to have been delivered seventy-two (72) hours after a copy of the same has been deposited in the United States mail, postage prepaid, addressed to each person at the current address given by such person to the secretary of the Board or addressed to the Unit of such person if no address has been given to the secretary.”
ALJ’s Interpretation: In both the initial decision and the rehearing decision, the ALJ found the language of Section 14.8 to be clear, “neither vague nor ambiguous,” and definitively inapplicable to the case. The ruling stated that the “language of Section 14.8 speaks specifically to the Association’s notice obligation to its members when mailing them information. Section 14.8 has no binding authority or control over homeowners sending mail to the Association.”
Arguments Presented
• He had always technically mailed his monthly payments on time to the correct P.O. Box.
• He filed the petition out of concern over incurring late fees and the potential loss of his home.
• During the rehearing, he argued that the initial decision failed to properly interpret Section 14.8 and should have also applied ARIZ. REV. STAT. § 10-3842 (concerning standards of conduct for nonprofit officers).
• Section 14.8 of the CC&Rs was entirely inapplicable to the facts presented, as it governs the Association’s outbound notice obligations, not a member’s inbound payments.
• The Department and the Office of Administrative Hearings lack jurisdiction under Title 10 of the ARIZ. REV. STAT.
• The petitioner failed to sustain the burden of proof required to show a violation.
Final Conclusions and Order
The Administrative Law Judge’s decisions in both the initial hearing and the rehearing were definitive. The core conclusions of law were as follows:
1. Burden of Proof: The petitioner bore the burden of proving by a preponderance of the evidence that the Association violated the CC&Rs and failed to meet this burden.
2. Inapplicability of CC&Rs Section 14.8: The provision cited by the petitioner was found to be wholly irrelevant to the matter of a homeowner mailing payments to the Association.
3. Assignment of Responsibility: The ALJ concluded that the petitioner’s own choices were the cause of the issue. The decision states, “By restricting the delivery of his monthly assessment payments, Petitioner inadvertently caused delay in their ability to be picked up by the Association.” There was “no credible evidence in the record to suggest that the action(s) Petitioner volitionally took are Respondent’s responsibility.”
4. Rehearing Findings: In the final decision, the ALJ noted that the petitioner “did not introduce any evidence tending to suggest that there was an ‘error in the admission or rejection of evidence or other errors of law…'” or that the prior decision was arbitrary or capricious.
Final Order: Based on the foregoing, the ALJ ordered that the petitioner’s petition be denied. The order issued on March 8, 2021, was binding on the parties, with any further appeal requiring judicial review in superior court within 35 days.
Study Guide: Stoltenberg v. Rancho Del Oro Homeowners Association
This guide provides a detailed review of the administrative case Michael J Stoltenberg v. Rancho Del Oro Homeowners Association, Case No. 20F-H2020049-REL, including the initial hearing and a subsequent rehearing. It is designed to test and deepen understanding of the facts, legal arguments, procedures, and outcomes presented in the official decisions.
Short-Answer Quiz
Instructions: Please answer the following questions in two to three complete sentences, drawing information exclusively from the provided legal documents.
1. Who were the primary parties in this legal dispute, and what was their relationship to one another?
2. What was the specific allegation Michael Stoltenberg made against the Rancho Del Oro Homeowners Association in his petition?
3. What specific action did the Petitioner take regarding his monthly assessment payments starting in November 2019?
4. According to the Association, why was Section 14.8 of the CC&Rs not applicable to the Petitioner’s complaint?
5. What were the negative consequences the Petitioner faced as a result of his payments being received late by the Association?
6. What was the legal standard of proof the Petitioner was required to meet, and did the judge find he had met it?
7. What were the two grounds upon which the Petitioner requested a rehearing after the initial decision?
8. Why was the Petitioner’s citation of Arizona Revised Statutes (ARIZ. REV. STAT.) § 10-3842 dismissed during the proceedings?
9. What was the final ruling in the Administrative Law Judge Decision issued on March 08, 2021, following the rehearing?
10. After the final order was issued, what was the Petitioner’s sole remaining avenue for appeal?
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Answer Key
1. The primary parties were Michael J Stoltenberg, the Petitioner, and the Rancho Del Oro Homeowners Association, the Respondent. Mr. Stoltenberg was a condominium owner and a member of the Association, which governed the residential development where he lived.
2. In his petition filed on March 2, 2020, Stoltenberg alleged the Association violated Section 14.8 of its CC&Rs and Arizona Revised Statutes §§ 10-3842 and 10-801. He specifically claimed the Association “fail to do their job, and are acting in bad faith.”
3. Beginning in November 2019, the Petitioner began sending his monthly assessment payments to the Association’s P.O. Box via restricted delivery from the United States Postal Service. He specified that the mail was for board member Rhea Carlisle’s pickup only, despite knowing she was a volunteer and not an employee of the property management company that handled mail.
4. The Association argued that Section 14.8 of the CC&Rs was inapplicable because it governs the Association’s notice obligations to its members. The judge agreed, stating the section has no binding authority over how homeowners send mail to the Association.
5. Each time the Petitioner’s monthly assessment was received late, he was assessed a late fee by the Association. Additionally, each late payment occurrence placed his residence in danger of foreclosure.
6. The Petitioner bore the burden of proving his case by a “preponderance of the evidence,” which means showing the contention is more probably true than not. The judge concluded in both decisions that the Petitioner failed to sustain this burden of proof.
7. The Petitioner requested a rehearing on the grounds that there was an alleged “Error in the admission or rejection of evidence or other errors of law occurring during the proceeding” and because “[t]he findings of fact or decision is arbitrary, capricious, or an abuse of discretion.”
8. The citation of ARIZ. REV. STAT. § 10-3842, which concerns standards of conduct for officers of nonprofit corporations, was dismissed because it falls outside the jurisdiction of the Arizona Department of Real Estate’s HOA Dispute Process. The Petitioner was advised of these jurisdictional limitations when he filed his petition.
9. The final ruling issued on March 8, 2021, denied the Petitioner’s petition once again. The judge affirmed the original findings, concluding there was no violation of Section 14.8 and that the Petitioner had not introduced any evidence to support his grounds for a rehearing.
10. After the final order resulting from the rehearing, the Petitioner’s only remaining recourse was to seek judicial review by filing an appeal with the superior court. This appeal had to be filed within thirty-five days from the date the order was served upon the parties.
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Essay Questions
Instructions: The following questions are designed for a more in-depth analysis. Formulate a comprehensive essay response for each prompt, using specific evidence and details from the source documents to support your arguments.
1. Analyze the legal reasoning of Administrative Law Judge Jenna Clark in her interpretation of Section 14.8 of the CC&Rs. Explain why this section was deemed inapplicable to the Petitioner’s situation and how this interpretation was central to the case’s outcome in both the hearing and rehearing.
2. Discuss the concept of “burden of proof” as it applied in this case. Explain who held the burden, what the “preponderance of the evidence” standard required, and why the Petitioner ultimately failed to meet this standard in the judgment of the court.
3. Trace the complete procedural history of this case, starting from the initial petition. Detail the key dates, filings (petition, answer, rehearing request), hearings, and decisions, explaining the significance of each step in the administrative legal process from March 2020 to March 2021.
4. Examine the actions of the Petitioner, Michael Stoltenberg, beginning in November 2019. Evaluate his rationale for unilaterally changing his payment method, the specific steps he took, and how his choices directly led to the late fees and risk of foreclosure he sought to avoid.
5. Explain the roles and jurisdictional limitations of the Arizona Department of Real Estate (the Department) and the Office of Administrative Hearings (OAH) in this dispute. Why were certain statutes cited by the Petitioner, such as those under Title 10 of the ARIZ. REV. STAT., dismissed by the court as being outside its purview?
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
An independent judge, in this case Jenna Clark, who presides over administrative hearings, reviews evidence, and issues decisions for state agencies.
Answer
The formal written response filed by the Respondent (the Association) on March 24, 2020, denying all items in the Petitioner’s complaint.
Arizona Department of Real Estate (Department)
The state agency authorized by statute to receive and decide petitions for hearings regarding disputes within homeowners’ associations in Arizona.
Arizona Revised Statutes (ARIZ. REV. STAT.)
The collection of laws enacted by the Arizona state legislature. Specific statutes were cited by the Petitioner and referenced by the court.
Association
The Rancho Del Oro Homeowners Association, a condominium association responsible for governing the real estate development and enforcing its CC&Rs.
Board of Directors (the Board)
The governing body that oversees the Homeowners Association.
Burden of Proof
The legal obligation of a party in a trial (in this case, the Petitioner) to produce evidence that proves the claims they have made against the other party.
An acronym for the Declaration of Covenants, Conditions and Restrictions. These are the governing legal documents that form an enforceable contract between the Association and each property owner.
Conclusions of Law
The section of the judge’s decision that applies legal principles and statutes to the established facts of the case to reach a final judgment.
Findings of Fact
The section of the judge’s decision that details the factual background, procedural history, and evidence presented during the hearing.
Hearing
A formal proceeding before an administrative law judge where parties present evidence and arguments. In this case, hearings were held on July 14, 2020, and February 16, 2021.
Jurisdiction
The official power to make legal decisions and judgments. The Department’s jurisdiction was limited and did not extend to disputes arising from Title 10 of the Arizona Revised Statutes.
Office of Administrative Hearings (OAH)
An independent state agency that provides administrative law judges to conduct hearings for other state agencies, ensuring impartiality.
The final, binding command issued by the judge at the conclusion of the decision. In this case, the order was to deny the Petitioner’s petition.
Petitioner
The party who initiates a legal action by filing a petition. In this case, Michael J Stoltenberg.
Petition
The formal legal document filed by the Petitioner on March 2, 2020, to initiate the hearing process with the Department.
Preponderance of the Evidence
The standard of proof in this civil administrative case. It is defined as evidence that is sufficient to incline a fair and impartial mind to one side of the issue rather than the other.
Rehearing
A second hearing granted to a party to re-examine the issues of a case, typically requested on grounds of legal error or an unjust decision. The Petitioner’s request for a rehearing was granted.
Respondent
The party against whom a petition is filed. In this case, the Rancho Del Oro Homeowners Association.
Restricted Delivery
A service offered by the United States Postal Service (USPS) that ensures mail is delivered only to a specific addressee or their authorized agent.
Statutory Agent
An individual or entity designated to receive legal notices and service of process on behalf of a corporation or association. For the Association, this was Diana Crites.
