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John W. Shamrock, et al. v. Wagon Wheel Park Homeowners Association: HOA Court Case Guide

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Membership & CC&Rs | A.R.S. §§ 10-3601, 33-1801 to -1808 | 206 Ariz. 42

Division One affirms summary judgment for lot owners, holding that mandatory HOA membership must come from a recorded deed restriction-the declaration or a validly adopted amendment-and not from a corporation’s articles or bylaws.

Arizona Court of Appeals | 206 Ariz. 42, 75 P.3d 132 (App. 2003) (No. 1 CA-CV 02-0403) | Decided 2003-08-26

Read the source opinion FAQ

Scope note: This educational page summarizes John W. Shamrock, et al. v. Wagon Wheel Park Homeowners Association, a Arizona Court of Appeals HOA-related authority. It is not legal advice.

Source note: The page keeps the public source URL but does not provide a local ruling PDF because no source PDF passed the file gate.

The takeaway

Mandatory membership in a newly created homeowners’ association can be imposed on owners of lots within an existing subdivision only through a deed restriction contained in a recorded instrument-a declaration or a validly adopted amendment to it. Articles of incorporation and bylaws purporting to compel membership are insufficient, because a nonprofit corporation cannot impose membership without consent under A.R.S. § 10-3601(B), and the Planned Communities Act (A.R.S. §§ 33-1801 to -1808) defines but does not create such associations. Because no recorded restriction required membership before the November 30, 2001 amendment, the plaintiff lot owners were not members, A.R.S. § 10-3304’s member-standing threshold did not bar their declaratory-judgment action, and summary judgment for the owners was affirmed.

Case Participants

Petitioner Side

  • Wagon Wheel Park Homeowners Association (Appellant)
    Nonprofit Arizona corporation and defendant-appellant; incorporated in 1971 by six lot owners and later sought to impose mandatory membership, assessments, and liens on Park lot owners.
  • Jonathan J. Olcott (Counsel)
    Olcott & Shore, PLLC
    Counsel for the Association (defendant-appellant), Olcott & Shore, PLLC, Phoenix.
  • William F. Shore, III (Counsel)
    Olcott & Shore, PLLC
    Counsel for the Association (defendant-appellant), Olcott & Shore, PLLC, Phoenix.

Respondent Side

  • John W. Shamrock, et al. (Wagon Wheel Park lot owners) (Appellee)
    Plaintiffs-appellees; a group of Park lot owners (including the Gilcrease Family Trust, David H. Hemmings, the Pollard Family Trust, J.C. & C. Investments, Edward and Margaret Smith, the Lewis Revocable Trust, Joe and Ada Kaczmarski, and William R. Detor) who sought a declaration that membership was voluntary.
  • James L. Tanner (Counsel)
    Jackson White, P.C.
    Counsel for the lot owners (plaintiffs-appellees), Jackson White, P.C., Mesa.

Neutral Parties

  • Ann A. Scott Timmer (Judge)
    Arizona Court of Appeals, Division One
    Authored the opinion of the Court.
  • Daniel A. Barker (Judge)
    Arizona Court of Appeals, Division One
    Presiding Judge; concurred in the opinion.
  • William F. Garbarino (Judge)
    Arizona Court of Appeals, Division One
    Judge; concurred in the opinion.

What happened

Wagon Wheel Park is a platted, residential subdivision of 180 lots in Lakeside, Navajo County. In July 1960, Northern Arizona Title Company recorded a declaration of restrictions (the ‘1960 Declaration’) addressing the development and maintenance of lots. That declaration did not provide for the formation of a homeowners’ association to enforce the restrictions or to maintain common areas.

In 1971, six lot owners incorporated the Wagon Wheel Park Homeowners Association and recorded articles of incorporation with Navajo County. The articles stated that ownership of one or more lots would entitle the owner to membership in the corporation.

In 1980, upon a vote of a majority of lot owners, a revised declaration of restrictions (the ‘1980 Declaration’) was recorded. Its preamble acknowledged that an association had been formed and had reviewed the 1960 restrictions, but, like its predecessor, the 1980 Declaration did not provide for the formation of a homeowners’ association or require membership.

During the 1990s the Association recorded original and amended bylaws. The amended bylaws recorded in 1999 stated that all property owners in the Park were automatically members, that each member had to pay assessments levied by the Association, and that unpaid assessments-together with collection costs and attorneys’ fees-would become a lien against the member’s property.

In March 2001, a group of lot owners sued, claiming the Association was not a valid mandatory homeowners’ association. They sought a declaration that membership was voluntary and that the Association could not impose assessments on, or record liens against, non-member lot owners, along with corresponding injunctive relief. The Association counterclaimed for declaratory relief and, against one owner, for breach of contract based on his refusal to pay assessments.

On November 30, 2001, while the suit was pending and pursuant to a majority vote of lot owners, the Association recorded an amendment to the 1980 Declaration providing that the Association would administer the restrictions and maintain the common property and that lot owners would automatically be members. Meanwhile, the trial court granted the owners’ motion for summary judgment, ruled that all encumbrances the Association had recorded against Park lots were void from recording until November 30, 2001, held that A.R.S. § 10-3304 did not deprive the owners of standing, and awarded the owners attorneys’ fees.

On appeal, the Court of Appeals, Division One, affirmed the summary judgment. It held that mandatory membership could be imposed only by a recorded deed restriction, that neither the 1960 nor the 1980 Declaration required membership, and that the articles and bylaws did not effect a change in the recorded restrictions before the November 30, 2001 amendment. The court reversed and remanded the fee award for recalculation for the reasons stated in a companion memorandum decision, and it granted the owners their attorneys’ fees on appeal under A.R.S. § 12-341.01.

Shamrock is a leading Arizona statement of a foundational rule: the owners of lots in an existing subdivision can be bound to mandatory HOA membership-and to the assessments and liens that come with it-only through a recorded deed restriction, meaning the declaration (CC&Rs) itself or a validly adopted amendment to it. Corporate documents such as articles of incorporation and bylaws, even when recorded and even when they state that membership is ‘automatic,’ cannot by themselves convert voluntary owners into mandatory members. The decision rests on two independent principles: nonprofit-corporation law requires consent to membership (A.R.S. § 10-3601(B)), and covenant law requires that burdens running with the land appear in a recorded instrument and be changed only in the manner the declaration allows. For Arizona homeowners and boards, the case shows why the source and the procedure of an obligation matter. An association seeking mandatory membership must secure it through the declaration-amendment process the CC&Rs specify-often a majority or supermajority vote of owners-rather than through internally adopted bylaws. The opinion also clarifies the limited role of the Planned Communities Act: it regulates mandatory-membership associations but does not itself create the obligation. Finally, the case illustrates that the standing gate in A.R.S. § 10-3304, which restricts who may challenge a nonprofit corporation’s acts, did not apply where the plaintiffs were not members; the court noted that the Legislature later amended § 10-3304 to exempt planned-community members’ challenges to board action, effective September 18, 2003. Because this is a published opinion, it is binding precedent in Arizona.

Litigation record

Step 1 1960-07

Northern Arizona Title Company records the 1960 Declaration of Restrictions for Wagon Wheel Park; it does not create or require a homeowners’ association.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 2 1971

Six lot owners incorporate the Wagon Wheel Park Homeowners Association and record articles of incorporation stating that lot ownership entitles the owner to membership.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 3 1980

By majority vote of lot owners, a revised 1980 Declaration of Restrictions is recorded; like its predecessor, it does not provide for or require an association.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 4 1999

The Association records amended bylaws providing for automatic membership, mandatory assessments, and liens for unpaid assessments.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 5 2001-03

A group of lot owners files a complaint seeking a declaration that membership is voluntary and that the Association cannot assess or lien non-members; the Association counterclaims.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 6 2001-11-30

By majority vote, the Association records an amendment to the 1980 Declaration providing for automatic membership and Association administration of the restrictions.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 7 2002

The trial court grants summary judgment for the owners, voids encumbrances recorded before November 30, 2001, rules § 10-3304 inapplicable, and awards the owners fees; the Association appeals (No. 1 CA-CV 02-0403).

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 8 2003-08-26

The Arizona Court of Appeals, Division One, affirms summary judgment, reverses and remands the fee award per a companion memorandum decision, and grants the owners fees on appeal.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

FAQ

What did Shamrock v. Wagon Wheel Park HOA decide?

The Arizona Court of Appeals held that mandatory membership in a newly created homeowners’ association can be imposed on owners of lots in an existing subdivision only through a deed restriction contained in a recorded instrument-that is, the declaration (CC&Rs) or a validly adopted amendment to it. The Association’s articles of incorporation and bylaws, standing alone, could not make the owners mandatory members. Because no recorded restriction required membership until a November 30, 2001 amendment, the plaintiff owners were not members, and the court affirmed summary judgment in their favor.

Can an HOA make membership mandatory just by adopting or recording bylaws?

No. The court explained that a nonprofit corporation cannot admit a member without that person’s express or implied consent under A.R.S. § 10-3601(B), so recorded bylaws stating that every owner is ‘automatically’ a member do not, by themselves, create membership. Mandatory membership that runs with the land must appear in a recorded deed restriction (the declaration or a proper amendment), and a declaration can be changed only in the manner it prescribes-here, by a vote of the majority of lot owners.

What role does the Arizona Planned Communities Act play in this decision?

The court held that the Planned Communities Act (A.R.S. §§ 33-1801 to -1808) defines the kinds of associations it governs-those with mandatory membership and required assessments-but does not prescribe how to create such an association. In other words, the Act regulates mandatory-membership associations; it does not itself impose mandatory membership. To decide whether membership existed, the court therefore looked to common-law restrictive-covenant principles.

What is A.R.S. § 10-3304, and why didn’t it bar the owners’ lawsuit?

A.R.S. § 10-3304 provides that a nonprofit corporation’s power to act may generally be challenged only by members holding at least ten percent of the voting power or by at least fifty members. The Association argued the owners fell below that threshold. The court held the statute did not apply because the owners were not members-neither involuntarily (no recorded restriction required membership) nor voluntarily-so the standing limit never came into play.

What happened to the assessments and liens the Association had recorded?

The trial court ruled that all encumbrances the Association had recorded against Park lots were void from the date of recording until November 30, 2001-the date the owners adopted an amendment to the 1980 Declaration providing for automatic membership. The Court of Appeals affirmed the summary judgment on membership. The court did not decide the validity or effect of the November 30, 2001 amendment, because that issue was not raised in the complaint or ruled on below.

Is this decision binding precedent in Arizona?

Yes. Shamrock v. Wagon Wheel Park Homeowners Association is a published opinion of the Arizona Court of Appeals, Division One (206 Ariz. 42, 75 P.3d 132 (App. 2003)), so it is citable, binding authority on the point it decides. A separate, unpublished companion memorandum decision addressed the attorneys’-fee award and does not create precedent.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation206 Ariz. 42, 75 P.3d 132 (App. 2003) (No. 1 CA-CV 02-0403)
Court / tribunalCourt of Appeals
Decision / key dateAugust 26, 2003
Judge / panelAnn A. Scott Timmer (author), Daniel A. Barker (Presiding Judge), William F. Garbarino
PartiesJohn W. Shamrock and other Wagon Wheel Park lot owners (Plaintiffs-Appellees) v. Wagon Wheel Park Homeowners Association (Defendant-Appellant)
Governing law
Topics
MembershipCC&RsAssessmentsCovenantsAmendments
Outcome / holding

Mandatory membership in a newly created homeowners’ association can be imposed on owners of lots within an existing subdivision only through a deed restriction contained in a recorded instrument-a declaration or a validly adopted amendment to it. Articles of incorporation and bylaws purporting to compel membership are insufficient, because a nonprofit corporation cannot impose membership without consent under A.R.S. § 10-3601(B), and the Planned Communities Act (A.R.S. §§ 33-1801 to -1808) defines but does not create such associations. Because no recorded restriction required membership before the November 30, 2001 amendment, the plaintiff lot owners were not members, A.R.S. § 10-3304’s member-standing threshold did not bar their declaratory-judgment action, and summary judgment for the owners was affirmed.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source packageNo raw source-folder files found for this slug
Step-by-step docket roadmap8 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases0 download links

Key Issues & Findings

Case Summary

Wagon Wheel Park is a 180-lot platted subdivision in Lakeside, Navajo County. A recorded 1960 declaration of restrictions, replaced in 1980 by a majority-approved revised declaration, governed the lots; neither declaration provided for a homeowners’ association or required membership in one. Six lot owners incorporated the Wagon Wheel Park Homeowners Association in 1971, and in the 1990s the Association recorded bylaws-amended in 1999-stating that every lot owner was automatically a member obligated to pay assessments, with unpaid assessments becoming liens against the owner’s property. In March 2001, a group of lot owners sued for a declaration that membership was voluntary and that the Association could not levy assessments or record liens against non-members. The Association counterclaimed and argued the owners lacked standing under A.R.S. § 10-3304, which allows only members holding at least ten percent of the voting power, or at least fifty members, to challenge corporate action. The Court of Appeals, Division One, affirmed summary judgment for the owners. A nonprofit corporation cannot impose membership without consent (A.R.S. § 10-3601(B)); the Planned Communities Act defines but does not create mandatory-membership associations; and under common-law covenant principles, automatic membership must appear in a recorded deed restriction, changeable only as the declaration allows. Because no such restriction existed until the November 30, 2001 recorded amendment, § 10-3304 did not bar the owners’ suit.

Key Issues & Findings

The court framed the dispositive question as whether any facts supported finding the owners to be involuntary or voluntary members of the Association, because A.R.S. § 10-3304’s standing limit applies only to members. It first held that under A.R.S. § 10-3601(B) a nonprofit corporation cannot admit a member without that person’s express or implied consent, so the Association’s 1999 amended bylaws could not, standing alone, confer membership on the owners.

The court then rejected the Association’s argument that Arizona’s Planned Communities Act supplied mandatory membership. The Act’s definitions in A.R.S. § 33-1802 merely identify the kinds of associations the Act governs-those with mandatory membership and required assessments-but the Act does not prescribe how to create such an association. The court therefore looked to common-law restrictive-covenant principles, under which automatic membership must appear in a deed restriction embodied in a recorded instrument, citing Duffy v. Sunburst Farms, Hueg v. Sunburst Farms, and Horton v. Mitchell (quoting Arizona Biltmore Estates Ass’n v. Tezak).

Because the 1960 and 1980 Declarations contained no membership requirement, and because a declaration may be modified only in the manner it prescribes-here, by a vote of the majority of lot owners under the 1980 Declaration’s amendment clause-the Association’s articles of incorporation and amended bylaws never effected that change. The record reflected no majority amendment requiring membership until November 30, 2001. The owners’ awareness that the bylaws purported to confer membership, and their counsel’s uncertainty at a hearing, did not create a genuine issue of material fact. Accordingly, § 10-3304 did not deprive the owners of standing, and summary judgment was affirmed; the court reversed and remanded the attorneys’-fee award for the reasons stated in a companion memorandum decision and granted the owners their fees on appeal under A.R.S. § 12-341.01.

Why It Matters

Shamrock is a leading Arizona statement of a foundational rule: the owners of lots in an existing subdivision can be bound to mandatory HOA membership-and to the assessments and liens that come with it-only through a recorded deed restriction, meaning the declaration (CC&Rs) itself or a validly adopted amendment to it. Corporate documents such as articles of incorporation and bylaws, even when recorded and even when they state that membership is ‘automatic,’ cannot by themselves convert voluntary owners into mandatory members. The decision rests on two independent principles: nonprofit-corporation law requires consent to membership (A.R.S. § 10-3601(B)), and covenant law requires that burdens running with the land appear in a recorded instrument and be changed only in the manner the declaration allows.

For Arizona homeowners and boards, the case shows why the source and the procedure of an obligation matter. An association seeking mandatory membership must secure it through the declaration-amendment process the CC&Rs specify-often a majority or supermajority vote of owners-rather than through internally adopted bylaws. The opinion also clarifies the limited role of the Planned Communities Act: it regulates mandatory-membership associations but does not itself create the obligation. Finally, the case illustrates that the standing gate in A.R.S. § 10-3304, which restricts who may challenge a nonprofit corporation’s acts, did not apply where the plaintiffs were not members; the court noted that the Legislature later amended § 10-3304 to exempt planned-community members’ challenges to board action, effective September 18, 2003. Because this is a published opinion, it is binding precedent in Arizona.

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Swain v. Bixby Village Golf Course, Inc.: HOA Court Case Guide

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CC&R Enforcement & Amenity Covenants | Powell v. Washburn / Decker v. Hendricks | 247 Ariz. 405 (1 CA-CV 18-0397)

Division One holds that a recorded community covenant can compel an owner to affirmatively operate a golf course, and that self-created economic hardship is not a “material change in circumstances” that lets a buyer escape the restriction.

Arizona Court of Appeals | 247 Ariz. 405, 450 P.3d 270 (App. 2019) (No. 1 CA-CV 18-0397) | Decided 2019-09-19

Read the source opinion FAQ

Scope note: This educational page summarizes Swain v. Bixby Village Golf Course, Inc., a Arizona Court of Appeals HOA-related authority. It is not legal advice.

Source note: The page uses verified public opinion text or citation materials. No local ruling PDF is provided because no source PDF passed the file gate.

The takeaway

A restrictive covenant in a community declaration can impose an affirmative duty, here a duty to actually operate a golf course, and not merely prohibit other uses. Covenants are construed under Powell v. Washburn to effectuate the parties’ intent and the covenant’s purposes. A “material change in circumstances” is measured by the common-law standard of Decker v. Hendricks, which requires changes so fundamental that they defeat the covenant’s purpose; mere economic hardship, especially self-created hardship incurred by a buyer who took title with notice, is insufficient. The Court of Appeals affirmed a mandatory permanent injunction to restore and operate the course and rejected the owner’s Thirteenth Amendment involuntary-servitude challenge.

Case Participants

Petitioner Side

  • Bixby Village Golf Course, Inc. (Defendant-Appellant)
    Bought both Ahwatukee golf courses in 2006 and in 2013 closed and dismantled the Lakes course before selling the parcel to TTLC; defendant/appellant.
  • TTLC Ahwatukee Lakes Investors, LLC (Defendant-Appellant)
    Development entity that bought the Lakes parcel with notice of the covenant and pending litigation, sought residential redevelopment, and counterclaimed material change in circumstances; defendant/appellant.
  • Chris R. Baniszewski (Counsel)
    Warner, Angle, Hallam, Jackson & Formanek PLC
    Counsel for defendants/appellants TTLC Ahwatukee Lakes Investors, LLC and Bixby Village Golf Course, Inc. (Phoenix).

Respondent Side

  • Linda W. Swain (Plaintiff-Appellee)
    Ahwatukee homeowner and enforcing “Benefitted Person” under the Declaration; sued to enforce the golf-course covenant. Reportedly paid roughly a $26,000 premium for a golf-course-adjacent lot.
  • Eileen Breslin (Plaintiff-Appellee)
    Ahwatukee homeowner and co-plaintiff/appellee who joined Swain in the CC&R enforcement action.
  • Timothy H. Barnes (Counsel)
    Timothy H. Barnes PC (now Fletcher Barnes Law)
    Counsel for plaintiffs/appellees Swain and Breslin (Phoenix).
  • Daniel D. Maynard (Counsel)
    Maynard, Cronin, Erickson, Curran & Reiter PLC
    Counsel on the homeowner/appellee side (Phoenix); FindLaw lists him for a co-appellee, likely in connection with a cross-appeal.

Neutral Parties

  • Randall M. Howe (Judge)
    Presiding Judge, Arizona Court of Appeals, Division One; authored the opinion.
  • Jennifer M. Perkins (Judge)
    Judge, Arizona Court of Appeals, Division One; joined the opinion.
  • David D. Weinzweig (Judge)
    Judge, Arizona Court of Appeals, Division One; joined the opinion.

What happened

Ahwatukee is a large master-planned community in the Phoenix area, roughly 5,200 homes developed around two golf courses, including the Ahwatukee Lakes course. Beginning in 1986 the original developer recorded deed restrictions on the golf-course land, and in 1992 those restrictions were memorialized in a Declaration of CC&Rs limiting the Lakes parcel to golf-course use. The restriction served the community twice over: it helped secure favorable Arizona golf-course property-tax valuation, and it protected the value and setting of the surrounding homes, whose owners were expressly named as enforcing “Benefitted Persons” under the Declaration.

In 2006 Bixby Village Golf Course, Inc. purchased both Ahwatukee golf courses. In 2013 Bixby closed the Ahwatukee Lakes course and dismantled it, draining the lakes, removing turf and irrigation, and installing barbed-wire fencing. What had been a manicured amenity backing dozens of homes became a fenced-off, weed-covered expanse, and the surrounding owners lost the golf-course views and setting they had relied on and, in some cases, paid a premium to obtain.

Homeowners Linda W. Swain and Eileen Breslin sued to enforce the CC&Rs, contending the Declaration obligated the owner not just to refrain from other uses but to actually operate a golf course on the Lakes parcel. Because the Declaration designated adjoining owners as “Benefitted Persons” with enforcement rights, the homeowners were able to bring the covenant-enforcement action directly, without an HOA entity as the named plaintiff.

While the litigation was pending, Bixby sold the Lakes parcel to TTLC Ahwatukee Lakes Investors, LLC, a development entity that wanted to redevelop the land for residential housing. The Declaration allowed the golf-course restriction to be modified only with the approval of at least 51% of the affected homeowners. TTLC could not obtain that approval. It instead counterclaimed, arguing that a “material change in circumstances” had rendered continued golf-course operation impractical and justified judicial modification or termination of the covenant.

The superior court sided with the homeowners. It granted summary judgment and entered a mandatory permanent injunction ordering the golf course to be restored and operated in compliance with the CC&Rs. The court rejected TTLC’s changed-circumstances theory and its constitutional defense, and TTLC and Bixby appealed to Division One of the Arizona Court of Appeals.

On September 19, 2019, Division One affirmed in a published opinion authored by Presiding Judge Randall M. Howe, joined by Judges Jennifer M. Perkins and David D. Weinzweig. The panel held the covenant imposed an affirmative operating duty under Powell v. Washburn; that under Decker v. Hendricks the owner’s self-created economic hardship was not a material change in circumstances; that compelling a buyer who took encumbered land with notice to comply did not violate the Thirteenth Amendment; and that the prevailing homeowners could recover attorneys’ fees under the Declaration. The United States Supreme Court denied certiorari on November 9, 2020.

Swain confirms that Arizona restrictive covenants can compel affirmative action, not merely forbid it. An owner who takes land burdened by a recorded continuous-use or “shall operate” covenant may be ordered to actually perform, here to restore and run a shuttered golf course, rather than simply pay damages. For residents of communities built around amenities such as golf courses, lakes, open space, or clubhouses, the decision is a powerful tool: where the governing documents designate them as “Benefitted Persons,” individual owners can enforce amenity covenants directly, even when no HOA entity is a party to the suit. The case also narrows the “changed circumstances” escape hatch. A developer or investor cannot dismantle an amenity, declare that the market has changed, and expect a court to rewrite the covenant, particularly after buying with full notice and failing to secure the homeowner vote the documents require for an amendment. The ruling underscores that self-created economic hardship is not a material change, that recorded restrictions run with the land against successors, and that fee-shifting clauses can make covenant enforcement financially viable for ordinary owners. Boards and buyers alike should treat amenity-use covenants as durable, affirmative obligations that survive changes in ownership and market conditions.

Litigation record

Step 1 1986

The original developer records deed restrictions on the Ahwatukee golf-course land, limiting the Lakes parcel to golf-course use.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 2 1992

The restrictions are memorialized in a Declaration of CC&Rs that ties the Lakes parcel to golf-course use, references favorable golf-course tax valuation, and designates adjoining homeowners as enforcing “Benefitted Persons.”

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 3 2006

Bixby Village Golf Course, Inc. purchases the two Ahwatukee golf courses.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 4 2013

Bixby closes and dismantles the Ahwatukee Lakes course, draining the lakes and installing barbed-wire fencing.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 5 2015

Homeowners Linda W. Swain and Eileen Breslin sue to enforce the CC&Rs; Bixby sells the Lakes parcel to TTLC Ahwatukee Lakes Investors, LLC, which seeks residential redevelopment.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 6

TTLC fails to obtain the 51% homeowner approval the Declaration requires to amend the golf-course covenant and counterclaims that a “material change in circumstances” justifies modifying it.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 7 2018

The Maricopa County Superior Court grants summary judgment for the homeowners and enters a mandatory permanent injunction to restore and operate the course; TTLC and Bixby appeal (docketed 1 CA-CV 18-0397).

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 8 2019-09-19

Division One of the Arizona Court of Appeals affirms in a published opinion by Presiding Judge Howe, joined by Judges Perkins and Weinzweig.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 9 2020-11-09

The United States Supreme Court denies certiorari, leaving the affirmed injunction in place.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

FAQ

What was Swain v. Bixby Village Golf Course about?

It was a dispute over the Ahwatukee Lakes golf course in Phoenix. Recorded CC&Rs limited the parcel to golf-course use and named surrounding homeowners as enforcing “Benefitted Persons.” After the course was closed and dismantled in 2013, homeowners Linda Swain and Eileen Breslin sued to enforce the covenant. The parcel’s new owner, TTLC Ahwatukee Lakes Investors, wanted to build housing and argued the covenant should be modified. The courts ordered the course restored and operated.

Can an Arizona covenant force a property owner to actually operate an amenity?

Yes. The Court of Appeals held that a properly drafted, recorded covenant can impose an affirmative duty, such as a duty to operate a golf course, not just prohibit other uses. Reading the Declaration under Powell v. Washburn to effectuate the drafters’ intent and purposes, the court affirmed a mandatory injunction requiring the owner to restore and run the course.

Why didn’t the “material change in circumstances” argument work?

Under the common-law standard from Decker v. Hendricks, only changes so fundamental that they defeat the covenant’s purpose will excuse performance. The court found continued golf-course operation remained economically feasible, and TTLC’s hardship was economic and largely self-created: it bought the land with notice of the covenant and pending litigation and failed to obtain the 51% homeowner approval the Declaration required to amend the restriction.

How could individual homeowners sue when no HOA was a party?

The Declaration expressly designated adjoining owners as enforcing “Benefitted Persons.” That gave individual homeowners the right to enforce the golf-course covenant directly, so Swain and Breslin could bring the action themselves without an HOA entity as the named plaintiff.

Did the Thirteenth Amendment prevent the court from ordering the owner to operate the course?

No. The court rejected TTLC’s involuntary-servitude argument. Because TTLC voluntarily acquired land already encumbered by the recorded covenant, and with notice of it, an order compelling compliance with the restriction did not amount to involuntary servitude under the Thirteenth Amendment.

Is Swain v. Bixby Village binding precedent, and who paid the attorneys’ fees?

Yes. It is a published opinion of the Arizona Court of Appeals, reported at 247 Ariz. 405, 450 P.3d 270 (App. 2019), and the U.S. Supreme Court denied certiorari in November 2020, so it remains citable authority. The court confirmed that the prevailing homeowners were entitled to recover their attorneys’ fees under the fee-shifting provision in the Declaration.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation247 Ariz. 405, 450 P.3d 270 (App. 2019) (No. 1 CA-CV 18-0397)
Court / tribunalCourt of Appeals
Decision / key dateSeptember 19, 2019
Judge / panelRandall M. Howe (Presiding Judge, author), Jennifer M. Perkins, David D. Weinzweig
PartiesLinda W. Swain and Eileen Breslin (neighboring homeowners / CC&R “Benefitted Persons”; Plaintiffs/Appellees) v. Bixby Village Golf Course, Inc. and TTLC Ahwatukee Lakes Investors, LLC (golf-course/property owners; Defendants/Appellants)
Governing law
  • A.R.S. §§ 42-13151 to -13154 (golf-course property-tax valuation; referenced in the CC&Rs)
  • U.S. Const. amend. XIII (involuntary servitude)
Topics
CC&RsCovenantsAmendmentsGood Faith & Fair DealingAttorney Fees
Outcome / holding

A restrictive covenant in a community declaration can impose an affirmative duty, here a duty to actually operate a golf course, and not merely prohibit other uses. Covenants are construed under Powell v. Washburn to effectuate the parties’ intent and the covenant’s purposes. A “material change in circumstances” is measured by the common-law standard of Decker v. Hendricks, which requires changes so fundamental that they defeat the covenant’s purpose; mere economic hardship, especially self-created hardship incurred by a buyer who took title with notice, is insufficient. The Court of Appeals affirmed a mandatory permanent injunction to restore and operate the course and rejected the owner’s Thirteenth Amendment involuntary-servitude challenge.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source packageNo raw source-folder files found for this slug
Step-by-step docket roadmap9 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases0 download links

Key Issues & Findings

Case Summary

Ahwatukee is a Phoenix master-planned community of roughly 5,200 homes built around two golf courses. Starting in 1986 the developer recorded deed restrictions, later memorialized in a 1992 Declaration of Covenants, Conditions & Restrictions, limiting the Ahwatukee Lakes parcel to golf-course use. The restriction served two purposes: it secured favorable Arizona golf-course property-tax valuation, and it protected adjoining homeowners, who were expressly designated as enforcing “Benefitted Persons.” In 2006 Bixby Village Golf Course, Inc. bought both courses, and in 2013 it closed and dismantled the Lakes course, draining its lakes and installing barbed-wire fencing. Homeowners Linda W. Swain and Eileen Breslin sued for breach of the CC&Rs. Bixby then sold the parcel to TTLC Ahwatukee Lakes Investors, LLC, which wanted to redevelop the land for housing. After failing to obtain the 51% homeowner approval needed to amend the covenant, TTLC counterclaimed that a “material change in circumstances” justified modifying it. The trial court granted summary judgment to the homeowners and entered a mandatory permanent injunction ordering the course restored and operated. Division One of the Arizona Court of Appeals affirmed. It held the covenant imposed an affirmative duty to operate the course, construed under Powell v. Washburn to effectuate the drafters’ intent and purposes. Applying Decker v. Hendricks, it rejected the material-change defense because operation remained feasible and TTLC bought with notice of the restriction and pending litigation. The court also rejected a Thirteenth Amendment involuntary-servitude challenge and confirmed the prevailing homeowners’ right to recover attorneys’ fees under the Declaration.

Key Issues & Findings

The court construed the covenant under Powell v. Washburn, reading the Declaration as a whole to give effect to the drafters’ intent and the covenant’s purposes. Because the restriction existed to preserve golf-course use for the benefit of adjoining owners and to secure favorable golf-course tax valuation, it imposed an affirmative duty to operate the course, not merely a passive limitation on other uses. The court rejected the argument that a covenant can only forbid conduct: nothing in Arizona law prevents a properly drafted, recorded covenant from compelling an owner to maintain and run an amenity.

On the counterclaim, the court applied the common-law changed-conditions standard from Decker v. Hendricks. Only changes so radical that they defeat the essential purpose of the restriction will excuse performance. Continued operation of the Lakes course remained economically feasible, and the hardship TTLC identified was economic and largely self-created: it bought the parcel with record notice of the golf-course covenant and with the homeowners’ enforcement litigation already pending, and it failed to obtain the 51% homeowner approval the Declaration required to amend the restriction. Self-inflicted economic disadvantage is not a material change in circumstances.

Equitable considerations supported the mandatory injunction. The homeowners had reasonably relied on the golf-course setting and paid for it, with one plaintiff having paid roughly a $26,000 premium for a golf-course-adjacent lot, and Arizona policy protects reasonable reliance on recorded residential restrictions. Finally, because TTLC voluntarily acquired encumbered land with notice, an order compelling compliance did not amount to involuntary servitude under the Thirteenth Amendment, and the fee-shifting provision in the Declaration entitled the prevailing homeowners to recover their attorneys’ fees.

Why It Matters

Swain confirms that Arizona restrictive covenants can compel affirmative action, not merely forbid it. An owner who takes land burdened by a recorded continuous-use or “shall operate” covenant may be ordered to actually perform, here to restore and run a shuttered golf course, rather than simply pay damages. For residents of communities built around amenities such as golf courses, lakes, open space, or clubhouses, the decision is a powerful tool: where the governing documents designate them as “Benefitted Persons,” individual owners can enforce amenity covenants directly, even when no HOA entity is a party to the suit.

The case also narrows the “changed circumstances” escape hatch. A developer or investor cannot dismantle an amenity, declare that the market has changed, and expect a court to rewrite the covenant, particularly after buying with full notice and failing to secure the homeowner vote the documents require for an amendment. The ruling underscores that self-created economic hardship is not a material change, that recorded restrictions run with the land against successors, and that fee-shifting clauses can make covenant enforcement financially viable for ordinary owners. Boards and buyers alike should treat amenity-use covenants as durable, affirmative obligations that survive changes in ownership and market conditions.

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Raimey v. Ditsworth (Dreamland Villa Community Club, Inc.): HOA Court Case Guide

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Arizona Court of Appeals – Division One

A special-action ruling confirming that an invalid CC&R amendment fails community-wide, entitling homeowners to restitution and fee recovery.

Arizona Court of Appeals | 227 Ariz. 552, 261 P.3d 436 (App. 2011) | Decided 2011-07-21

Download the ruling PDF FAQ

Scope note: This educational page summarizes Raimey v. Ditsworth (Dreamland Villa Community Club, Inc.), a Arizona Court of Appeals HOA-related authority. It is not legal advice.

Publication note: Raimey v. Ditsworth is a published, precedential Arizona Court of Appeals opinion; it is not memo.

The takeaway

On special-action review of a judgment entered on remand, the Court of Appeals held that the Dreamland Villa Second Amended Declarations are invalid and unenforceable as to all homeowners in sections 7, 14, 15, 16, 17, and 18 – regardless of each owner’s purchase date or whether the owner participated in the prior cross-appeal – because deed restrictions must be enforced uniformly and DVCC, as a party to the earlier suit, is precluded from enforcing covenants already declared invalid. The court further held that owners who paid assessments under the invalid declarations are entitled to restitution with interest, that petitioners may record a notice of invalidity, and that they may pursue their pre- and post-appellate attorneys’ fees.

Case Participants

Petitioner Side

  • Daryle G. Raimey, et al. (Dreamland Villa homeowners) (Petitioners)
    Homeowners in the Six Sections who brought the special action to enforce the Raimey mandate community-wide; prevailed.
  • Steven W. Cheifetz (Counsel)
    Cheifetz Iannitelli Marcolini, P.C.
    Counsel for petitioners (homeowners); Phoenix.
  • Stuart F. Gross (Counsel)
    Cheifetz Iannitelli Marcolini, P.C.
    Counsel for petitioners (homeowners); Phoenix.

Respondent Side

  • Dreamland Villa Community Club, Inc. (Real Party in Interest)
    Arizona non-profit community association that recorded and sought to enforce the Second Amended Declarations; aligned with the respondent and opposed the petition.
  • Charles E. Maxwell (Counsel)
    Maxwell and Morgan, P.C.
    Counsel for real party in interest DVCC; Mesa.
  • Brian W. Morgan (Counsel)
    Maxwell and Morgan, P.C.
    Counsel for real party in interest DVCC; Mesa.

Neutral Parties

  • Hon. John Ditsworth (Judge)
    Maricopa County Superior Court judge named as nominal respondent; entered the judgment on mandate under review.
  • Michael J. Brown (Judge)
    Court of Appeals judge; authored the opinion.
  • Diane M. Johnsen (Judge)
    Presiding Judge; concurred.
  • John C. Gemmill (Judge)
    Court of Appeals judge; concurred.

What happened

Dreamland Villa is a large retirement subdivision near Mesa, Arizona. For decades after it was first developed, the Dreamland Villa Community Club (DVCC) operated as a voluntary club with voluntary membership. Homeowners had no right, appurtenant to owning a lot, to club membership or to the recreational facilities; there were no common areas and no mandatory assessments, only voluntary dues paid by those who chose to use the facilities. Many owners chose not to join or participate.

DVCC later recorded amendments known as the “Second Amended Declarations” that purported to make membership and assessments mandatory for owners in six sections of the subdivision – sections 7, 14, 15, 16, 17, and 18 (the “Six Sections”). When some owners did not pay, DVCC filed collection actions in Maricopa County Superior Court (consolidated under Cause Nos. CC2006-211780 and related numbers), obtaining judgments against homeowners for unpaid assessments, late charges, and interest.

In the first appeal, Dreamland Villa Cmty. Club, Inc. v. Raimey, 224 Ariz. 42, 226 P.3d 411 (App. 2010), DVCC appealed the denial of its attorneys’ fees and the homeowners cross-appealed, arguing the Second Amended Declarations were invalid because the original declarations never alerted owners that they could be subjected to assessments. The Court of Appeals agreed with the homeowners, holding the Second Amended Declarations invalid and unenforceable and awarding the homeowners their appellate fees. The mandate directed the trial court to comply with the decision.

On remand, the parties disputed the scope of that ruling. DVCC argued the decision bound only the homeowners who had actually cross-appealed, while the homeowners argued the declarations were invalid as to everyone in the Six Sections. The trial court (the Honorable John Ditsworth) sided with DVCC, entering a judgment on mandate that invalidated the declarations only as to the cross-appellants and declined to address the homeowners’ requests for restitution and for their trial-court attorneys’ fees. The homeowners then filed this petition for special action.

The Court of Appeals first explained why it had jurisdiction: a special action, not an appeal, is the appropriate way to review a trial court’s judgment entered on remand under an appellate mandate, because such a judgment is based on the appellate court’s specific directions and is not itself appealable. Reviewing the trial court’s compliance with the Raimey mandate presented a pure question of law.

On the merits, the court held the trial court had erred. Deed restrictions are a contract among all lot owners and, absent contrary language, must apply uniformly to every lot; a covenant cannot be invalid as to some owners yet enforceable against others without creating a “patchwork quilt” of restrictions. Because Raimey conclusively held the declarations invalid, DVCC was collaterally estopped from enforcing them against anyone in the Six Sections – the court compared this to a facial invalidation of a statute, which bars all enforcement, not just enforcement against the challenger. The court rejected DVCC’s “voidable” theory and its reliance on the dicta in Armstrong v. Ledges about later purchasers with notice, holding the declarations invalid as to all owners regardless of purchase date, and correcting the trial court’s omission of section 18.

Finally, the court addressed remedies. It held that owners who had paid the vacated judgments were entitled to restitution with interest (subject to equitable reduction if DVCC could show a particular owner used the facilities); that petitioners could record a notice of invalidity so the public record would reflect the ruling; and that petitioners’ broadly worded appellate fee request preserved their right to seek the attorneys’ fees they had incurred in the superior court, warranting reconsideration of pre- and post-appellate fees on remand. The court awarded petitioners their fees for the special action and denied DVCC’s request for sanctions.

Raimey is one of the leading Arizona decisions – frequently paired with Kalway v. Calabria Ranch – limiting a community association’s power to use a generic amendment provision to impose new affirmative burdens, such as mandatory assessments, that owners were never alerted to when they bought. It confirms that once a court holds such an amendment invalid, the invalidity runs to the whole affected community: the association cannot enforce the covenant against later purchasers or against neighbors who sat out the litigation, because deed restrictions must be applied uniformly and an invalid restriction is not cured by the timing of a lot purchase. The decision is also a practical roadmap for what happens after a homeowner wins. It confirms that a special action – not an appeal – is the proper vehicle to police a trial court that misreads an appellate mandate on remand; that owners who already paid assessments under the invalidated declarations are entitled to restitution with interest; that owners may record a notice of invalidity so the title record reflects the ruling; and that a broadly worded appellate fee request can preserve the right to recover trial-court fees, even where the specific pre-appellate fees were not itemized. For associations and owners alike, it underscores that CC&R amendments creating new financial obligations are vulnerable, and that the consequences of losing extend community-wide.

Litigation record

Step 1 2006

DVCC files collection actions in Maricopa County Superior Court against Dreamland Villa homeowners for unpaid assessments under the Second Amended Declarations (consolidated Cause Nos. CC2006-211780 et al.).

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 2 2007

A related action (Cause No. CC2007-090680) is filed; the cases are consolidated – 27 cases in all.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 3 2010

In Dreamland Villa Cmty. Club, Inc. v. Raimey, 224 Ariz. 42, 226 P.3d 411, the Court of Appeals holds the Second Amended Declarations invalid and unenforceable and awards the homeowners their appellate attorneys’ fees.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 4 2010

On remand, the trial court (Hon. John Ditsworth) enters a judgment on mandate that invalidates the declarations only as to the homeowners who cross-appealed and declines to address restitution and trial-court fees.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 5 2010

The homeowners file this petition for special action (No. 1 CA-SA 10-0255, Department B).

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Step 6 2011-07-21

The Court of Appeals, Division One, accepts special-action jurisdiction and grants relief, holding the declarations invalid as to all homeowners in sections 7, 14, 15, 16, 17, and 18.

Filed by: Court record

Part of the record summarized for homeowners, boards, and counsel.

Download source
2026-07-01_001_opinion.pdf

Complete uploaded source-document index

This index is generated from every public-facing source file currently present in assets/court_case_downloads/raimey-v-ditsworth/raw/: 1 PDF. Files are ordered by the date/sequence embedded in the normalized filename; AI-generated review materials are labeled separately and should not be treated as court filings.

Source 1 2026-07-01

Opinion

Type: Decision or judgment

Opinion holding that on special-action review of a judgment entered on remand, the Court of Appeals held that the Dreamland Villa Second Amended Declarations are invalid and unenforceable as to all homeowners in sections 7, 14, 15, 16, 17, and 18 – regardless of each owner’s purchase date or whether the owner participated in the prior cross-appeal – because deed restrictions must be enforced uniformly and DVCC, as a party to the earlier suit, is precluded from enforcing covenants already declared invalid.

Download source file
2026-07-01_001_opinion.pdf

FAQ

What did Raimey v. Ditsworth decide?

The Court of Appeals held that the Dreamland Villa “Second Amended Declarations” – amendments that tried to impose mandatory association membership and assessments – are invalid and unenforceable as to all homeowners in sections 7, 14, 15, 16, 17, and 18, not just the homeowners who had previously cross-appealed. It also directed restitution for owners who had paid, allowed a recorded notice of invalidity, and permitted recovery of trial-court attorneys’ fees.

Does the ruling protect homeowners who never joined the lawsuit?

Yes. The court reasoned that deed restrictions are a contract among all lot owners and must be applied uniformly. Because the association was a party to the earlier case and the amendments were declared invalid, it is collaterally estopped from enforcing them against anyone in the affected sections – the invalidation deprives the association of the power to enforce, rather than conferring a benefit on nonparties.

Does it matter when a homeowner bought their lot?

No. The court held the Second Amended Declarations invalid as to all homeowners regardless of purchase date. It declined to follow dicta from the North Carolina case Armstrong v. Ledges suggesting an amendment could bind later buyers who purchase with notice, holding that an invalid restriction does not become valid based on the timing of a lot purchase.

Why was this brought as a “special action” instead of an appeal?

A judgment a trial court enters on remand, to carry out an appellate court’s specific directions, is generally not itself appealable. The court explained that a special action is the appropriate vehicle to review whether the trial court correctly followed the appellate mandate, and that the scope of the prior ruling was a pure question of law.

Could the homeowners get their money and attorneys’ fees back?

Yes. Owners who had paid the vacated judgments were entitled to restitution with interest, subject to equitable reduction if the association could show a particular owner used the facilities. The court also held that the homeowners’ broadly worded appellate fee request preserved their right to seek the attorneys’ fees they had incurred in the superior court, and it awarded them their fees for the special action.

Is Raimey v. Ditsworth a binding, published decision?

Yes. It is a published, precedential opinion of the Arizona Court of Appeals, Division One, reported at 227 Ariz. 552, 261 P.3d 436 (App. 2011). It is one of the leading Arizona authorities – often discussed alongside Kalway v. Calabria Ranch – limiting an association’s power to impose new assessment obligations through generic amendment provisions.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation227 Ariz. 552, 261 P.3d 436 (App. 2011)
Court / tribunalCourt of Appeals
Decision / key dateJuly 21, 2011
Judge / panelMichael J. Brown (author), Diane M. Johnsen (Presiding Judge, concurring), John C. Gemmill (concurring)
PartiesDreamland Villa homeowners (petitioners) v. Dreamland Villa Community Club, Inc. (real party in interest), on special-action review of a Maricopa County Superior Court judgment entered on remand (Hon. John Ditsworth, respondent judge).
Governing law
Topics
CovenantsCC&RsAmendmentsAssessmentsAttorney Fees
Outcome / holding

On special-action review of a judgment entered on remand, the Court of Appeals held that the Dreamland Villa Second Amended Declarations are invalid and unenforceable as to all homeowners in sections 7, 14, 15, 16, 17, and 18 – regardless of each owner’s purchase date or whether the owner participated in the prior cross-appeal – because deed restrictions must be enforced uniformly and DVCC, as a party to the earlier suit, is precluded from enforcing covenants already declared invalid. The court further held that owners who paid assessments under the invalid declarations are entitled to restitution with interest, that petitioners may record a notice of invalidity, and that they may pursue their pre- and post-appellate attorneys’ fees.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source package1 PDF
Step-by-step docket roadmap6 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases1 download link

Key Issues & Findings

Case Summary

Raimey v. Ditsworth arose from a long-running dispute in the Dreamland Villa retirement community near Mesa, Arizona, over whether recorded amendments called the “Second Amended Declarations” could impose mandatory association assessments on homeowners in six sections of the subdivision (sections 7, 14, 15, 16, 17, and 18). In an earlier appeal, Dreamland Villa Cmty. Club, Inc. v. Raimey, 224 Ariz. 42 (App. 2010), the Court of Appeals held those amendments invalid because owners had never been alerted, when they took title, that they could be subjected to such assessments. On remand, the trial court read the appellate mandate narrowly, invalidating the declarations only as to the homeowners who had actually cross-appealed. A group of homeowners then brought this special action. The Court of Appeals accepted special-action jurisdiction, explaining that a special action, not an appeal, is the proper way to review a judgment entered on remand under an appellate mandate. On the merits, it held that because deed restrictions operate as mutual, community-wide servitudes that must be applied uniformly, the invalidity reaches every homeowner in the six sections regardless of purchase date or participation in the prior case. The court also directed restitution to owners who had paid assessments under the invalid declarations, permitted them to record a notice of invalidity, and allowed them to seek the attorneys’ fees they incurred in the superior court.

Key Issues & Findings

The court reasoned that deed restrictions constitute a contract among all lot owners in a subdivision and, absent contrary language, must apply uniformly to every lot; allowing a covenant to be invalid as to the cross-appellants yet enforceable against their neighbors would create an impermissible “patchwork quilt” of restrictions. Because Raimey conclusively held the Second Amended Declarations invalid, DVCC – a party to that suit – is collaterally estopped from enforcing them against anyone in the Six Sections. The court analogized this to a facial invalidation of a statute, which bars the government from enforcing the law at all, not merely against the challenger. It rejected DVCC’s argument that the declarations were merely “voidable” and therefore enforceable against nonparties absent a timely challenge, treating “invalid” as meaning the covenants simply cannot be enforced, and it rejected reliance on the dicta in Armstrong v. Ledges about subsequent purchasers who buy with notice, holding that an invalid restriction does not become valid based on the timing of a lot purchase.

Why It Matters

Raimey is one of the leading Arizona decisions – frequently paired with Kalway v. Calabria Ranch – limiting a community association’s power to use a generic amendment provision to impose new affirmative burdens, such as mandatory assessments, that owners were never alerted to when they bought. It confirms that once a court holds such an amendment invalid, the invalidity runs to the whole affected community: the association cannot enforce the covenant against later purchasers or against neighbors who sat out the litigation, because deed restrictions must be applied uniformly and an invalid restriction is not cured by the timing of a lot purchase.

The decision is also a practical roadmap for what happens after a homeowner wins. It confirms that a special action – not an appeal – is the proper vehicle to police a trial court that misreads an appellate mandate on remand; that owners who already paid assessments under the invalidated declarations are entitled to restitution with interest; that owners may record a notice of invalidity so the title record reflects the ruling; and that a broadly worded appellate fee request can preserve the right to recover trial-court fees, even where the specific pre-appellate fees were not itemized. For associations and owners alike, it underscores that CC&R amendments creating new financial obligations are vulnerable, and that the consequences of losing extend community-wide.

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Janis Wolf, Plaintiff, v. Carpenter Hazlewood Delgado & Bolen LLP, Defendant.: HOA Court Case Guide

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FCRA & HOA Assessments | 15 U.S.C. § 1681b | CV-20-00957-PHX-DLR

How a delinquent homeowner’s Fair Credit Reporting Act suit against her HOA’s collection law firm turned on whether the installment assessment was a voluntary credit transaction—and why the firm’s credit-report pull was permitted.

Last updated July 1, 2026. Case: Janis Wolf, Plaintiff, v. Carpenter Hazlewood Delgado & Bolen LLP, Defendant.; No. CV-20-00957-PHX-DLR.

Download the ruling PDF

Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

An HOA annual assessment payable in installments is a voluntary “credit transaction” under the Fair Credit Reporting Act, and a debt collector—here the HOA’s retained law firm—that obtains a delinquent homeowner’s credit report to locate her for a collection action has a permissible purpose under 15 U.S.C. § 1681b. Summary judgment was therefore granted for the defendant firm, and the putative class claims were denied as moot.

Case Participants

Neutral Parties

  • Carpenter Hazlewood Delgado & Bolen LLP (Defendant)
    HOA collection law firm retained by the Neely Farms HOA to collect Wolf’s unpaid assessments; prevailing party on summary judgment.
  • Janis Wolf (Plaintiff)
    Homeowner in the Neely Farms subdivision who stopped paying HOA assessments; sued the firm under the FCRA individually and on behalf of a putative class.
  • Neely Farms HOA (Non-party (underlying HOA client))
    The Neely Farms subdivision homeowners’ association that imposed the annual assessment under its CC&Rs and retained the defendant law firm to collect Wolf’s unpaid assessments; not a named party in this suit.
  • Jonathan A. Dessaules (Counsel)
    Dessaules Law Group
    Counsel of record for Plaintiff Janis Wolf. (The D. Ariz. order contains no counsel block; counsel sourced from public filings per record metadata.)
  • Thomas E. Raccuia (Counsel)
    Dessaules Law Group
    Counsel for Plaintiff Janis Wolf. (Sourced from public filings; not listed in the D. Ariz. order.)
  • Ashley C. Hill (Counsel)
    Dessaules Law Group
    Counsel for Plaintiff Janis Wolf. (Sourced from public filings; not listed in the D. Ariz. order.)
  • David M. Schultz (Counsel)
    Hinshaw & Culbertson LLP
    Counsel for Defendant Carpenter Hazlewood Delgado & Bolen LLP. (Sourced from public filings; not listed in the D. Ariz. order.)
  • Brett J. Larsen (Counsel)
    Hinshaw & Culbertson LLP
    Counsel for Defendant Carpenter Hazlewood Delgado & Bolen LLP. (Sourced from public filings; not listed in the D. Ariz. order.)
  • Douglas L. Rayes (Judge)
    United States District Judge, District of Arizona; authored the summary judgment order.

What happened and why it matters

Janis Wolf bought a home in the Neely Farms subdivision, which was subject to recorded Covenants, Conditions, and Restrictions (CC&Rs) requiring homeowners to pay an annual HOA assessment in installments over the year. Before buying, Wolf read the CC&Rs “from cover to cover” and knew she would owe those assessments. In 2017 she stopped paying, and the Neely Farms HOA hired the law firm Carpenter Hazlewood Delgado & Bolen LLP to collect the unpaid assessments. In September 2019, before filing a justice-court collection action, the firm obtained Wolf’s credit report—without her consent—to confirm her current address. Wolf then sued the firm under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681b, individually and on behalf of a putative class, arguing the firm lacked a permissible purpose to pull her report. On cross-motions for summary judgment, the U.S. District Court for the District of Arizona (Judge Douglas L. Rayes) framed the case around two questions: whether the HOA assessment was a voluntary “credit transaction” under the FCRA, and whether there was a “direct link” between that transaction and the credit-report request. The court answered both yes. It held that the assessment involved deferred payment through installments and was voluntary—because Wolf freely chose to buy a home she knew was bound by the CC&Rs—and that the firm pulled the report to locate her for a collection suit. The court granted the firm summary judgment, denied Wolf’s class-certification and summary-judgment motions as moot, and directed entry of judgment terminating the case.

The court framed the case around the Fair Credit Reporting Act’s permissible-purpose provision. Under 15 U.S.C. § 1681b, a third party may obtain a consumer’s credit report without consent when it intends to use the information in connection with a credit transaction involving the consumer and involving the extension of credit to, or the review or collection of an account of, the consumer. Courts have added a requirement that there be a “direct link” between the credit transaction and the collector’s request for the report (Baron v. Kirkorsky). The court therefore reduced the many pending motions to two questions: (1) whether the Neely Farms HOA assessment was a voluntary “credit transaction,” and (2) whether a direct link existed between that transaction and the firm’s request for Wolf’s report.

On the first question, the court noted that the definition of “credit transaction” under the FCRA was one of first impression. Because the FCRA and the Equal Credit Opportunity Act share the same definition of “credit” (15 U.S.C. §§ 1681a(r)(5); 1691a(d)), and because the Ninth Circuit in Brothers v. First Leasing held that the hallmark of a credit transaction is deferred payment, the court applied Brothers. It found the assessment satisfied both required elements. First, deferred payment: the HOA sets the assessment on a yearly basis and homeowners pay it in installments over the year, which the court analogized to the installment lease in Brothers. The court rejected Wolf’s argument that “nothing is deferred,” reasoning that the annual imposition triggers the obligation and the installments defer payment, and that the HOA “regularly extends credit.” It distinguished Ollie v. Waypoint Homes (a residential lease with no grace period), noting the HOA arrangement was a consumer transaction that allowed a fifteen-day grace period. Second, voluntariness: debt collection is a permissible reason to pull a report only where the debt arose from a transaction in which the debtor voluntarily and directly sought credit (Pintos; Baron). Applying Arizona law that a buyer who accepts a deed with restrictions assents to them (Heritage Heights Home Owners Ass’n v. Esser), the court found Wolf acted of her own accord: she liked the home, read the CC&Rs “from cover to cover,” knew she would owe assessments, and conceded no one forced her to buy. It distinguished involuntary debts such as police-initiated towing (Pintos) and court costs (Baron).

On the second question, the court found the direct-link requirement satisfied because it was undisputed that the firm obtained Wolf’s credit report to confirm her whereabouts before filing the justice-court collection action. Having answered both questions affirmatively, the court granted the firm’s motion for summary judgment, which mooted Wolf’s motions for class certification and summary judgment as well as the pending motions for leave to file supplemental briefing, and directed the clerk to enter judgment and terminate the case.

For Arizona homeowners and HOAs, the decision addresses a recurring question: whether an HOA’s collection law firm may pull a delinquent owner’s credit report without consent. By treating the installment-based annual assessment as a voluntary “credit transaction,” the court gave collection firms a permissible-purpose basis under the FCRA to obtain credit reports in order to locate debtors. That conclusion rests on a first-impression reading of “credit transaction” that leans on the Ninth Circuit’s broad definition of credit in Brothers v. First Leasing and on the Arizona rule that a buyer who accepts a deed with recorded CC&Rs is bound by them (Heritage Heights).

Because this is a federal district-court order, it is persuasive rather than binding authority. According to the case’s subsequent history reflected in the record metadata, the Ninth Circuit later affirmed (No. 22-15233, 2023) and Wolf filed a petition for certiorari (No. 23-109). The case illustrates the intersection of HOA assessment collection and federal consumer-credit law—relevant to owners weighing whether an HOA’s law firm may access their credit information during collection, and to boards and firms weighing the limits of the FCRA’s permissible-purpose provisions. Note that the specific statute at issue here is the Fair Credit Reporting Act, not the Fair Debt Collection Practices Act, even though the dispute arises out of HOA debt collection.

Step-by-step litigation record

Before her purchase — Janis Wolf became interested in a home in the Neely Farms subdivision, learned it was within an HOA that imposed an annual assessment under recorded CC&Rs, and read the CC&Rs “from cover to cover” before deciding to buy.
Step 2017 Wolf stopped making payments on the Neely Farms HOA annual assessment.
The Neely Farms HOA retained the law firm Carpenter Hazlewood Delgado & Bolen LLP to collect the unpaid assessments.
Step 2019-09 The firm obtained Wolf’s credit report—without her consent—to learn her current address before filing a collection action.
Step 2019-10 The firm received a bill for a second credit inquiry on Wolf, which it said was for the same address-confirmation purpose (undisputed).
Step 2019-11 The firm filed a justice-court action against Wolf to collect the outstanding HOA debt.
Wolf sued the firm under the Fair Credit Reporting Act and moved for class certification; both parties later moved for summary judgment, and several motions for leave to file supplemental briefing were filed.
Step 2022-01-18 Judge Douglas L. Rayes granted the firm’s motion for summary judgment, denied Wolf’s motions for class certification and summary judgment as moot, and directed entry of judgment terminating the case (order filed January 19, 2022).
Step 2023-03-17 Per the case’s subsequent history in the record metadata, the Ninth Circuit affirmed (No. 22-15233); Wolf later filed a petition for certiorari (No. 23-109).

Complete uploaded source-document index

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Source 1 2022-01-18

Opinion

Type: Decision or judgment

Opinion holding that an HOA assessment payable in installments is a credit transaction and that the HOA’s law firm had a permissible purpose to obtain the homeowner’s credit report for collection litigation.

Download source file
2022-01-18_001_opinion.pdf

FAQ

Who won Wolf v. Carpenter Hazlewood Delgado & Bolen LLP?

The defendant law firm won. The U.S. District Court for the District of Arizona granted the firm’s motion for summary judgment and denied the homeowner’s motions for class certification and summary judgment as moot, directing entry of judgment terminating the case.

What was the case about?

The homeowner, Janis Wolf, sued under the Fair Credit Reporting Act after the HOA’s collection law firm obtained her credit report without her consent to locate her before filing a collection action for unpaid Neely Farms HOA assessments. The core dispute was whether the firm had a permissible purpose under 15 U.S.C. § 1681b to pull the report.

Why did the court find the HOA assessment was a “credit transaction”?

The court applied the Ninth Circuit’s Brothers v. First Leasing standard, under which the hallmark of a credit transaction is deferred payment. Because the annual assessment was payable in installments over the year, it involved deferred payment, and because Wolf voluntarily bought a home she knew was bound by the CC&Rs (Heritage Heights), the transaction was also voluntary.

Was the firm allowed to pull the credit report without consent?

Yes. The FCRA permits obtaining a report without consent for use in connection with collecting an account, provided there is a “direct link” between the credit transaction and the request. The court found that link because the firm undisputedly pulled the report to confirm Wolf’s whereabouts before filing a justice-court collection action.

Is this an FDCPA case?

No. Although the dispute arises from HOA assessment debt collection by the HOA’s law firm, the claim was brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681b, not the Fair Debt Collection Practices Act (FDCPA). The opinion never mentions the FDCPA.

Is this decision binding precedent?

No. It is a federal district-court summary judgment order, which is persuasive rather than binding. According to the case’s subsequent history in the record metadata, the Ninth Circuit later affirmed (No. 22-15233) and Wolf filed a petition for certiorari (No. 23-109).

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citationNo. CV-20-00957-PHX-DLR
Court / tribunalFederal Court
Decision / key dateJanuary 18, 2022
Judge / panelDouglas L. Rayes
PartiesJanis Wolf (Plaintiff) v. Carpenter Hazlewood Delgado & Bolen LLP (Defendant)
Governing law
  • 15 U.S.C. § 1681b (FCRA permissible purpose)
  • 15 U.S.C. § 1681a(r)(5) (FCRA definition of ‘credit’)
  • 15 U.S.C. § 1691a(d) (ECOA definition of ‘credit’)
  • Fed. R. Civ. P. 56(a)
Topics
AssessmentsCC&RsProcedureFDCPA
Outcome / holding

An HOA annual assessment payable in installments is a voluntary “credit transaction” under the Fair Credit Reporting Act, and a debt collector—here the HOA’s retained law firm—that obtains a delinquent homeowner’s credit report to locate her for a collection action has a permissible purpose under 15 U.S.C. § 1681b. Summary judgment was therefore granted for the defendant firm, and the putative class claims were denied as moot.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source package1 PDF
Step-by-step docket roadmap9 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases1 download link

Key Issues & Findings

Case Summary

Janis Wolf bought a home in the Neely Farms subdivision, which was subject to recorded Covenants, Conditions, and Restrictions (CC&Rs) requiring homeowners to pay an annual HOA assessment in installments over the year. Before buying, Wolf read the CC&Rs “from cover to cover” and knew she would owe those assessments. In 2017 she stopped paying, and the Neely Farms HOA hired the law firm Carpenter Hazlewood Delgado & Bolen LLP to collect the unpaid assessments. In September 2019, before filing a justice-court collection action, the firm obtained Wolf’s credit report—without her consent—to confirm her current address. Wolf then sued the firm under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681b, individually and on behalf of a putative class, arguing the firm lacked a permissible purpose to pull her report. On cross-motions for summary judgment, the U.S. District Court for the District of Arizona (Judge Douglas L. Rayes) framed the case around two questions: whether the HOA assessment was a voluntary “credit transaction” under the FCRA, and whether there was a “direct link” between that transaction and the credit-report request. The court answered both yes. It held that the assessment involved deferred payment through installments and was voluntary—because Wolf freely chose to buy a home she knew was bound by the CC&Rs—and that the firm pulled the report to locate her for a collection suit. The court granted the firm summary judgment, denied Wolf’s class-certification and summary-judgment motions as moot, and directed entry of judgment terminating the case.

Key Issues & Findings

The court framed the case around the Fair Credit Reporting Act’s permissible-purpose provision. Under 15 U.S.C. § 1681b, a third party may obtain a consumer’s credit report without consent when it intends to use the information in connection with a credit transaction involving the consumer and involving the extension of credit to, or the review or collection of an account of, the consumer. Courts have added a requirement that there be a “direct link” between the credit transaction and the collector’s request for the report (Baron v. Kirkorsky). The court therefore reduced the many pending motions to two questions: (1) whether the Neely Farms HOA assessment was a voluntary “credit transaction,” and (2) whether a direct link existed between that transaction and the firm’s request for Wolf’s report.

On the first question, the court noted that the definition of “credit transaction” under the FCRA was one of first impression. Because the FCRA and the Equal Credit Opportunity Act share the same definition of “credit” (15 U.S.C. §§ 1681a(r)(5); 1691a(d)), and because the Ninth Circuit in Brothers v. First Leasing held that the hallmark of a credit transaction is deferred payment, the court applied Brothers. It found the assessment satisfied both required elements. First, deferred payment: the HOA sets the assessment on a yearly basis and homeowners pay it in installments over the year, which the court analogized to the installment lease in Brothers. The court rejected Wolf’s argument that “nothing is deferred,” reasoning that the annual imposition triggers the obligation and the installments defer payment, and that the HOA “regularly extends credit.” It distinguished Ollie v. Waypoint Homes (a residential lease with no grace period), noting the HOA arrangement was a consumer transaction that allowed a fifteen-day grace period. Second, voluntariness: debt collection is a permissible reason to pull a report only where the debt arose from a transaction in which the debtor voluntarily and directly sought credit (Pintos; Baron). Applying Arizona law that a buyer who accepts a deed with restrictions assents to them (Heritage Heights Home Owners Ass’n v. Esser), the court found Wolf acted of her own accord: she liked the home, read the CC&Rs “from cover to cover,” knew she would owe assessments, and conceded no one forced her to buy. It distinguished involuntary debts such as police-initiated towing (Pintos) and court costs (Baron).

On the second question, the court found the direct-link requirement satisfied because it was undisputed that the firm obtained Wolf’s credit report to confirm her whereabouts before filing the justice-court collection action. Having answered both questions affirmatively, the court granted the firm’s motion for summary judgment, which mooted Wolf’s motions for class certification and summary judgment as well as the pending motions for leave to file supplemental briefing, and directed the clerk to enter judgment and terminate the case.

Why It Matters

For Arizona homeowners and HOAs, the decision addresses a recurring question: whether an HOA’s collection law firm may pull a delinquent owner’s credit report without consent. By treating the installment-based annual assessment as a voluntary “credit transaction,” the court gave collection firms a permissible-purpose basis under the FCRA to obtain credit reports in order to locate debtors. That conclusion rests on a first-impression reading of “credit transaction” that leans on the Ninth Circuit’s broad definition of credit in Brothers v. First Leasing and on the Arizona rule that a buyer who accepts a deed with recorded CC&Rs is bound by them (Heritage Heights).

Because this is a federal district-court order, it is persuasive rather than binding authority. According to the case’s subsequent history reflected in the record metadata, the Ninth Circuit later affirmed (No. 22-15233, 2023) and Wolf filed a petition for certiorari (No. 23-109). The case illustrates the intersection of HOA assessment collection and federal consumer-credit law—relevant to owners weighing whether an HOA’s law firm may access their credit information during collection, and to boards and firms weighing the limits of the FCRA’s permissible-purpose provisions. Note that the specific statute at issue here is the Fair Credit Reporting Act, not the Fair Debt Collection Practices Act, even though the dispute arises out of HOA debt collection.

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Wilson v. Playa de Serrano: HOA Court Case Guide

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Arizona Court of Appeals, Division Two

A published 2005 opinion on when an HOA may restrict who occupies an individually owned unit—and why federal fair-housing compliance is not enough.

Last updated July 1, 2026. Case: Wilson v. Playa de Serrano; 211 Ariz. 511, 123 P.3d 1148 (App. 2005); No. 2 CA-CV 2005-0072; Pima County Superior Court No. C20042880 (Hon. Jane L. Eikleberry).

Download the ruling PDF

Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

Absent specific authorization in the recorded Declaration (CC&Rs), a common-interest homeowners’ association cannot impose a 55-and-older occupancy restriction on individually owned townhouses merely by amending its bylaws; compliance with the federal FHAA/HOPA shows only that enforcing such a restriction would not be illegal, not that the association has the contractual authority to impose it. The summary judgment for the association was reversed and the case remanded for entry of judgment for the homeowner, with reasonable attorney fees.

Case Participants

Neutral Parties

  • William M. Wilson (Appellant)
    Individual townhouse owner and plaintiff below; challenged the age-restriction bylaws amendment.
  • Playa de Serrano (Appellee)
    Arizona non-profit corporation / homeowners’ association governing the 1969 townhouse development; defendant below.
  • Stephen M. Weeks (Counsel)
    Weeks & Laird, PLLC (Tucson)
    Attorney for Plaintiff/Appellant William M. Wilson.
  • Tanis A. Duncan (Counsel)
    Law Offices of Tanis A. Duncan (Tucson)
    Attorney for Defendant/Appellee Playa de Serrano.
  • Joseph W. Howard (Judge)
    Presiding Judge; author of the opinion.
  • J. William Brammer, Jr. (Judge)
    Judge; concurred.
  • Peter J. Eckerstrom (Judge)
    Judge; concurred.
  • Hon. Jane L. Eikleberry (Judge)
    Pima County Superior Court judge who granted summary judgment to the association (reversed on appeal).

What happened and why it matters

William M. Wilson owned a townhouse in Playa de Serrano, a 1969 Pima County subdivision whose recorded Declaration called it “an adult townhouse development” and gave an association control over common areas. In 2002 the owners voted 25 to 6 to amend the bylaws to declare the community age-restricted, imposing a requirement that each unit be occupied by at least one person fifty-five or older and creating a process for the Board to verify compliance. After a complaint, the U.S. Department of Housing and Urban Development (HUD) found the community’s policies complied with the federal Housing for Older Persons Act (HOPA). Wilson sued in 2004 for a declaratory judgment that the restriction was invalid and for injunctive relief. On cross-motions, the Pima County Superior Court granted summary judgment to the association, reasoning that HOPA compliance validated the restriction. The Arizona Court of Appeals, Division Two, reversed. Reviewing the summary judgment and the deed restrictions de novo, the court treated the Declaration as a contract among the owners and held that, absent specific authorization in the recorded Declaration, neither the Board nor a majority of owners could restrict occupancy of individually owned units. The court explained that HOPA compliance shows only that enforcing an age restriction would not be illegal, not that the association had the contractual right to impose one. The judgment was reversed and remanded for entry of judgment for Wilson, including reasonable attorney fees at trial and on appeal.

The court reviewed both the grant of summary judgment and the interpretation of the deed restrictions de novo, viewing the evidence in the light most favorable to Wilson as the nonmoving party. It began from the settled Arizona rule that deed restrictions constitute a contract between the subdivision’s property owners as a whole and the individual lot owners, and that to bind a lot owner a restriction generally must appear in the recorded declaration. Citing Shamrock v. Wagon Wheel Park Homeowners Ass’n, the court reiterated that if the recorded declaration does not contain, or provide for the later adoption of, a particular restriction, that restriction is invalid.

Turning to the association’s reliance on the Restatement (Third) of Property: Servitudes, the court found the association’s cited sections concerned only common areas, while Section 6.7(3) squarely supported Wilson: absent specific authorization in the declaration, a common-interest community lacks the power to adopt rules restricting the use or occupancy of individually owned lots. The court held Section 6.7(3) consistent with Shamrock and Arizona law. The Declaration here did not expressly restrict occupancy to persons fifty-five or older, nor grant the Board power to do so; its allocated powers concerned constructing, managing, and maintaining common areas and enforcing existing restrictions.

The association argued that authority to adopt “rules and regulations governing the properties” supplied the power. Construing the Declaration as a matter of law and giving words their ordinary meaning, the court looked to former A.R.S. § 33-561 and current A.R.S. § 33-1242 for the ordinary meaning of “regulation,” finding those powers pertained to common elements and housekeeping, not to a fundamental change in unit occupancy; bylaws, in turn, typically address internal corporate governance. The 2002 amendment itself extended rulemaking only to “the use of, and conduct in, the common areas.” The court therefore held “regulation” was not a specific authorization to impose an occupancy restriction, and ambiguities must be construed against the restriction and in favor of the free use of property. The “adult townhouse” label did not help, because at formation “adult” meant twenty-one or older and adult-only covenants had become illegal under the 1988 FHAA. Finally, the association’s HOPA compliance was “fatally flawed” as a source of authority: it established only that enforcement would not be illegal, not that the association had the contractual right to impose the restriction in the first instance.

This published Division Two opinion draws a bright line that is central to Arizona common-interest community law: the authority to restrict what an owner may do inside an individually owned unit—including who may occupy it—must come from the recorded Declaration, not from a later bylaws amendment or a general power to adopt “rules and regulations.” By adopting Restatement (Third) of Property: Servitudes § 6.7(3) alongside Shamrock, the court confirmed that boards and even majorities of owners cannot unilaterally impose fundamental new use or occupancy restrictions unless the CC&Rs specifically authorize them, so that purchasers are on notice of such limits when they buy.

The decision also clarifies the relationship between fair-housing law and association authority. Complying with the FHAA and HOPA—and even obtaining a favorable HUD determination—addresses only whether an age restriction would be lawful to enforce; it does not create the contractual power to adopt one. For homeowners, boards, and practitioners, the case is a reminder that converting a community to age-restricted “55-and-older” status generally requires a properly authorized amendment to the Declaration itself, and that owners who prevail in challenging an unauthorized restriction may recover their reasonable attorney fees.

Step-by-step litigation record

Step 1969 Playa de Serrano subdivision established; recorded Declaration calls it “an adult townhouse development” and gives the association control of common areas.
Step 1988 Congress enacts the Federal Fair Housing Amendments Act (FHAA), barring familial-status discrimination absent an exemption such as “housing for older persons.”
Step 1993 About five years after the FHAA, Wilson and his mother purchase a townhouse in Playa de Serrano; she later transfers her interest to him.
Step 1995 Congress enacts the Housing for Older Persons Act (HOPA), easing the requirements for the older-persons exemption.
Step 2002 Owners vote 25-6 to amend the bylaws to declare the community age-restricted and impose a 55-and-older occupancy requirement; HUD later finds the policies HOPA-compliant.
Step 2004 Wilson sues Playa de Serrano for a declaratory judgment that the restriction is invalid and for injunctive relief; cross-motions for summary judgment follow.
Step 2004-2005 Pima County Superior Court (Hon. Jane L. Eikleberry) grants summary judgment to the association, finding HOPA compliance validated the restriction.
Step 2005-11-30 Arizona Court of Appeals, Division Two, reverses and remands for entry of judgment for Wilson, with attorney fees.

Complete uploaded source-document index

This index is generated from every public-facing source file currently present in assets/court_case_downloads/wilson-v-playa-de-serrano/raw/: 1 PDF. Files are ordered by the date/sequence embedded in the normalized filename; AI-generated review materials are labeled separately and should not be treated as court filings.

Source 1 2005-11-30

Opinion

Type: Decision or judgment

Opinion holding that absent specific authorization in the recorded Declaration (CC&Rs), a common-interest homeowners’ association cannot impose a 55-and-older occupancy restriction on individually owned townhouses merely by amending its bylaws; compliance with the federal FHAA/HOPA shows only that enforcing such a restriction would not be illegal, not that the association has the contractual authority to impose it.

Download source file
2005-11-30_001_opinion.pdf

FAQ

What was Wilson v. Playa de Serrano about?

It was a declaratory-judgment dispute between a townhouse owner, William M. Wilson, and his homeowners’ association, Playa de Serrano. In 2002 the owners amended the association’s bylaws to make the community age-restricted, requiring each unit to be occupied by at least one person fifty-five or older. Wilson argued the recorded Declaration did not authorize such a restriction, so the bylaws amendment could not validly impose it.

What did the Arizona Court of Appeals decide?

Division Two reversed summary judgment for the association. It held that, absent specific authorization in the recorded Declaration (CC&Rs), neither the Board nor a majority of owners could impose a 55-and-older occupancy restriction on individually owned townhouses by amending the bylaws. The case was remanded for entry of judgment in favor of Wilson.

Why did compliance with HOPA and the FHAA not save the age restriction?

The court explained that complying with the federal Housing for Older Persons Act (HOPA) and Fair Housing Amendments Act (FHAA)—and even a favorable HUD determination—only establishes that enforcing an age restriction would not be illegal. It does not give the association the contractual authority or right to impose the restriction in the first place, which must come from the Declaration.

Did the phrase “adult townhouse development” authorize a 55-and-older rule?

No. The court reasoned that when Playa de Serrano was formed in 1969, an “adult” was someone at least twenty-one years old, so the label would not restrict occupancy to persons fifty-five or older. The court also noted that adult-only occupancy covenants became illegal under the 1988 FHAA, so the “adult townhouse” language did not establish an over-fifty-five community.

What legal rule does the case stand for regarding HOA rulemaking?

Following Shamrock v. Wagon Wheel Park HOA and Restatement (Third) of Property: Servitudes § 6.7(3), the court held that a common-interest community lacks inherent power to restrict the use or occupancy of individually owned lots unless the recorded declaration specifically authorizes it. A general power to adopt “rules and regulations” is not a specific authorization to change unit occupancy.

Is this decision binding, and who paid the attorney fees?

Yes—it is a published, precedential opinion of the Arizona Court of Appeals, Division Two, filed November 30, 2005. Because Wilson prevailed, the court remanded for entry of judgment in his favor and awarded him his reasonable attorney fees at trial and, upon compliance with Rule 21, on appeal.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation211 Ariz. 511, 123 P.3d 1148 (App. 2005); No. 2 CA-CV 2005-0072
Court / tribunalCourt of Appeals
Decision / key dateNovember 30, 2005
Judge / panelJoseph W. Howard (Presiding Judge, author), J. William Brammer, Jr. (Judge, concurring), Peter J. Eckerstrom (Judge, concurring)
PartiesIndividual townhouse owner William M. Wilson sued his homeowners’ association, Playa de Serrano, seeking a declaration that a 2002 bylaws amendment imposing a 55-and-older occupancy restriction was invalid.
Governing law
  • A.R.S. § 33-1242 (condominium unit owners’ association powers)
  • A.R.S. § 33-1212 (condominium common elements)
  • Former A.R.S. § 33-561 (horizontal property regimes; repealed 1985)
  • A.R.S. § 33-416 (execution/acknowledgment of recorded instruments)
  • A.R.S. § 10-206 (corporate bylaws)
  • Arizona Fair Housing Act, A.R.S. §§ 41-1491 through 41-1491.35
  • Federal Fair Housing Amendments Act of 1988 (FHAA), 42 U.S.C. §§ 3601–3631
  • Housing for Older Persons Act of 1995 (HOPA), 42 U.S.C. § 3607(b)(2)(C)
  • Restatement (Third) of Property: Servitudes §§ 6.4, 6.7(3), 6.10(3) (interpretive authority)
Topics
CC&RsCovenantsFair HousingAttorney FeesProcedure
Outcome / holding

Absent specific authorization in the recorded Declaration (CC&Rs), a common-interest homeowners’ association cannot impose a 55-and-older occupancy restriction on individually owned townhouses merely by amending its bylaws; compliance with the federal FHAA/HOPA shows only that enforcing such a restriction would not be illegal, not that the association has the contractual authority to impose it. The summary judgment for the association was reversed and the case remanded for entry of judgment for the homeowner, with reasonable attorney fees.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source package1 PDF
Step-by-step docket roadmap8 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases1 download link

Key Issues & Findings

Case Summary

William M. Wilson owned a townhouse in Playa de Serrano, a 1969 Pima County subdivision whose recorded Declaration called it “an adult townhouse development” and gave an association control over common areas. In 2002 the owners voted 25 to 6 to amend the bylaws to declare the community age-restricted, imposing a requirement that each unit be occupied by at least one person fifty-five or older and creating a process for the Board to verify compliance. After a complaint, the U.S. Department of Housing and Urban Development (HUD) found the community’s policies complied with the federal Housing for Older Persons Act (HOPA). Wilson sued in 2004 for a declaratory judgment that the restriction was invalid and for injunctive relief. On cross-motions, the Pima County Superior Court granted summary judgment to the association, reasoning that HOPA compliance validated the restriction. The Arizona Court of Appeals, Division Two, reversed. Reviewing the summary judgment and the deed restrictions de novo, the court treated the Declaration as a contract among the owners and held that, absent specific authorization in the recorded Declaration, neither the Board nor a majority of owners could restrict occupancy of individually owned units. The court explained that HOPA compliance shows only that enforcing an age restriction would not be illegal, not that the association had the contractual right to impose one. The judgment was reversed and remanded for entry of judgment for Wilson, including reasonable attorney fees at trial and on appeal.

Key Issues & Findings

The court reviewed both the grant of summary judgment and the interpretation of the deed restrictions de novo, viewing the evidence in the light most favorable to Wilson as the nonmoving party. It began from the settled Arizona rule that deed restrictions constitute a contract between the subdivision’s property owners as a whole and the individual lot owners, and that to bind a lot owner a restriction generally must appear in the recorded declaration. Citing Shamrock v. Wagon Wheel Park Homeowners Ass’n, the court reiterated that if the recorded declaration does not contain, or provide for the later adoption of, a particular restriction, that restriction is invalid.

Turning to the association’s reliance on the Restatement (Third) of Property: Servitudes, the court found the association’s cited sections concerned only common areas, while Section 6.7(3) squarely supported Wilson: absent specific authorization in the declaration, a common-interest community lacks the power to adopt rules restricting the use or occupancy of individually owned lots. The court held Section 6.7(3) consistent with Shamrock and Arizona law. The Declaration here did not expressly restrict occupancy to persons fifty-five or older, nor grant the Board power to do so; its allocated powers concerned constructing, managing, and maintaining common areas and enforcing existing restrictions.

The association argued that authority to adopt “rules and regulations governing the properties” supplied the power. Construing the Declaration as a matter of law and giving words their ordinary meaning, the court looked to former A.R.S. § 33-561 and current A.R.S. § 33-1242 for the ordinary meaning of “regulation,” finding those powers pertained to common elements and housekeeping, not to a fundamental change in unit occupancy; bylaws, in turn, typically address internal corporate governance. The 2002 amendment itself extended rulemaking only to “the use of, and conduct in, the common areas.” The court therefore held “regulation” was not a specific authorization to impose an occupancy restriction, and ambiguities must be construed against the restriction and in favor of the free use of property. The “adult townhouse” label did not help, because at formation “adult” meant twenty-one or older and adult-only covenants had become illegal under the 1988 FHAA. Finally, the association’s HOPA compliance was “fatally flawed” as a source of authority: it established only that enforcement would not be illegal, not that the association had the contractual right to impose the restriction in the first instance.

Why It Matters

This published Division Two opinion draws a bright line that is central to Arizona common-interest community law: the authority to restrict what an owner may do inside an individually owned unit—including who may occupy it—must come from the recorded Declaration, not from a later bylaws amendment or a general power to adopt “rules and regulations.” By adopting Restatement (Third) of Property: Servitudes § 6.7(3) alongside Shamrock, the court confirmed that boards and even majorities of owners cannot unilaterally impose fundamental new use or occupancy restrictions unless the CC&Rs specifically authorize them, so that purchasers are on notice of such limits when they buy.

The decision also clarifies the relationship between fair-housing law and association authority. Complying with the FHAA and HOPA—and even obtaining a favorable HUD determination—addresses only whether an age restriction would be lawful to enforce; it does not create the contractual power to adopt one. For homeowners, boards, and practitioners, the case is a reminder that converting a community to age-restricted “55-and-older” status generally requires a properly authorized amendment to the Declaration itself, and that owners who prevail in challenging an unauthorized restriction may recover their reasonable attorney fees.

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The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co.: HOA Court Case Guide

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Arizona Court of Appeals — Assessments & Late Fees

A condominium association’s suit to collect assessments and retroactive late fees from its developer fails on appeal, illustrating the reasonableness limit on association powers and the evidence needed to win summary judgment.

Last updated July 1, 2026. Case: The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co.; No. 1 CA-CV 90-263; 174 Ariz. 72, 847 P.2d 117 (App. 1992).

Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

Reversing summary judgment and remanding, the court held that the Developer had authority under the declaration to amend it and lawfully withdraw twenty-three units into a separate phase, so those units were not subject to monthly assessments or late charges while withdrawn; that although the Association had contractual and statutory authority under A.R.S. section 33-1242(11) to impose late fees, applying them retroactively to assessments already delinquent before the late-fee schedule was adopted was unreasonable, arbitrary, and an abuse of discretion; and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case for summary judgment.

Case Participants

Neutral Parties

  • The Villas at Hidden Lakes Condominiums Association (Party)
    Arizona nonprofit condominium association; plaintiff, counter-defendant, and appellee. Lost summary judgment and its fee award on appeal.
  • Geupel Construction Company, Inc. (Party)
    Co-venturer in Paradise Isle Associates, the developer; defendant, counter-claimant, and appellant. Prevailed on appeal.
  • R.G.W. Investment Co., Inc. (Party)
    Co-venturer in Paradise Isle Associates, the developer; defendant, counter-claimant, and appellant.
  • Wallace Neal (Party)
    The Villas at Hidden Lakes Condominiums Association
    Association president and affiant on the summary-judgment motion; named defendant in the Developer’s A.R.S. § 33-420 groundless-lien claim.
  • Barry A. Reiss (Counsel)
    Barry Allen Reiss, P.C. (Phoenix)
    Counsel for plaintiff/appellee, the Association.
  • Chad L. Schexnayder (Counsel)
    Jennings, Kepner & Haug (Phoenix)
    Counsel for defendants/appellants, the Developer.
  • Judge Toci (Judge)
    Authored the opinion of the court.
  • Presiding Judge Taylor (Judge)
    Concurred.
  • Judge Grant (Judge)
    Concurred.

What happened and why it matters

The Villas at Hidden Lakes Condominiums Association, a group of condominium owners organized under a recorded declaration of horizontal property regime, sued its developer, Geupel Construction Company, Inc. and R.G.W. Investment Co., Inc. (together the joint venture Paradise Isle Associates, referred to as the “Developer”), to collect delinquent monthly assessments, retroactive late-payment penalties, and interest, and to foreclose an assessment lien on a lot the Developer still owned. The Developer answered that it owed no assessments on twenty-three of the original fifty-three units because it had recorded an amendment temporarily withdrawing those units into a separate phase, and that the late fees, which had grown to more than $47,000, were unenforceable because they were imposed retroactively and exceeded the twelve percent interest set by the bylaws. The trial court granted the Association summary judgment on both counts and awarded attorney’s fees. Division One of the Arizona Court of Appeals reversed. It held that the Developer had the votes and authority under the declaration to amend it and withdraw the Phase Two units, that the Association had contractual and statutory authority under the Uniform Condominium Act to impose late fees but exercised that power unreasonably by making them retroactive, and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case. The court also found disputed fact issues on the Lot Six lien and the Developer’s tender of payment, reversed the fee award, and remanded.

The court analyzed each issue against the text of the recorded declaration (“Declaration Two”) and the Uniform Condominium Act. On the withdrawal question, it explained that the dispute was not whether the Developer had a “unilateral” right to amend, but whether it satisfied the declaration’s amendment procedure. Article Fourteen allowed amendment at any time by owners holding at least sixty-seven percent of the votes, and Article Six gave the Developer three votes per owned unit, yielding 144 votes against the five votes of the other owners, far more than enough. Mortgage-holder consent was unnecessary because those owners held under four percent of the votes, and the declaration’s own language (‘until or unless changed’) permitted altering the fractional common-element interests. The court rejected the argument that the recording mistake (a reference to the revoked Declaration One) invalidated the amendment, because the document clearly identified the property and its phasing purpose, gave constructive notice under A.R.S. section 33-416, and was re-recorded to fix the error. Distinguishing Camelback Del Este, Riley, and La Esperanza, the court held that the uniform-treatment rule applies only where the declaration so limits amendments; here the amendment merely provided for phased development and did not alter any covenant. Withdrawal of property (67 percent) was also distinct from termination of the regime (100 percent). On estoppel, the Association showed neither justifiable reliance nor injury, so no prima facie case existed. Turning to late fees, the court held the Association had power to impose them under Article Five and A.R.S. section 33-1242(11), and that the fees were a personal obligation, but that condominium associations must exercise such powers reasonably. Because no penalty schedule existed when the assessments became delinquent, owners never had the chance to choose timely payment over a known penalty; imposing the charge retroactively was therefore unreasonable, arbitrary, and an abuse of discretion. Finally, applying Rule 56(e) and the rules of evidence, the court found the Neal affidavit conclusory and built on computer-generated exhibits that were unauthenticated inadmissible hearsay, defeating the prima facie showing, and it found disputed facts on the Lot Six lien and the Developer’s $600 tender.

For Arizona homeowners and condominium associations, the decision is a leading illustration of two limits on association power. First, the powers a board holds under its declaration and under the Uniform Condominium Act, including the express statutory authority in A.R.S. section 33-1242(11) to impose late-payment charges, must still be exercised reasonably. An association cannot adopt a penalty and then reach backward to punish assessments that were already delinquent before any penalty schedule existed, because owners never had a chance to avoid a charge they could not have known about. Retroactive late fees, the court held, are unreasonable, arbitrary, and an abuse of discretion as a matter of law.

Second, the case underscores that assessment-collection and lien-foreclosure claims are ordinary civil actions in which the association carries the burden of proof. To win summary judgment an association must offer admissible evidence, not a conclusory affidavit attaching computer printouts with no foundation. A ledger or account summary must qualify under the business-records exception and be authenticated by someone with personal knowledge. The opinion also confirms that a developer or owner may validly amend a declaration to phase a project if the voting and recording requirements are met, and it flags the penalties in A.R.S. section 33-420 for recording a groundless lien, reminding associations to verify the amount actually owed before recording.

Step-by-step litigation record

Step 1985-08-30 Developer records Declaration One (declaration of horizontal property regime) for The Villas at Hidden Lakes.
Step 1985-10-11 Developer records amended Declaration Two, which governs the project.
Step 1985-10-31 The Villas at Hidden Lakes homeowners’ association is formed under Declaration Two (October 1985).
Step 1986-04-22 Developer conveys the first condominium unit.
Step 1986-05-01 Monthly assessments on Developer-owned units begin under Declaration Two.
Step 1986-07-24 Developer records an amendment withdrawing 23 of the 53 units into a separate Phase Two.
Step 1986-09-05 Developer re-records the amendment to correct a reference to the revoked Declaration One.
Step 1986-12-31 The 23 withdrawn Phase Two units are rededicated to the project about five months after withdrawal (December 1986).
Step 1987-10-12 Association adopts a $10 per-unit monthly late-payment penalty and demands payment (Lot Six letter seeks $26,208.87).
Step 1987-11-03 Developer tenders a $600 check for Lot Six assessments from April 1987 and asks that interest and penalties be waived.
Step 1987-11-05 Association rejects the check and records a $1,439.25 lien against Lot Six.
Step 1988-07-31 Association begins charging a flat $3,180 monthly late charge; claimed late fees ultimately total $47,160 (July 1988).
Step 1992-11-10 Court of Appeals reverses summary judgment on all counts and remands.
Step 1993-01-13 Reconsideration denied.
Step 1993-03-16 Petition for review dismissed.

FAQ

What was The Villas at Hidden Lakes v. Geupel about?

It was a condominium association’s collection suit against its own developer. The Association sought delinquent monthly assessments, retroactive late fees, and interest, and tried to foreclose a lien on a lot the developer still owned. The developer argued it owed nothing on 23 units it had temporarily withdrawn from the project and that the late fees, which exceeded $47,000, were unenforceable.

Can an Arizona HOA or condominium association charge late fees retroactively?

No. The court held that, even though the association had the power to impose late fees under its declaration and under A.R.S. section 33-1242(11), applying a newly adopted penalty to assessments that were already delinquent before the penalty existed was unreasonable, arbitrary, and an abuse of discretion. Owners must have had a chance to choose timely payment over a known penalty.

Does a condominium association have authority to impose late fees at all?

Yes. The court confirmed that both Article Five of the declaration and A.R.S. section 33-1242(11) of the Uniform Condominium Act give an association authority to impose charges for late payment of assessments, and that the Uniform Condominium Act applied even though the declaration predated its effective date. The problem here was only the retroactive, and therefore unreasonable, way the power was used.

Why did the association lose its summary judgment?

Because its only supporting affidavit, from the association president, was conclusory and relied on computer-generated exhibits with no foundation. The affidavit did not show the affiant’s personal knowledge of how the records were prepared and did not establish the business-records exception, so the exhibits were inadmissible hearsay under Rule 56(e) and the rules of evidence, defeating the prima facie case.

Could the developer amend the declaration to withdraw units into a separate phase?

Yes. The declaration allowed amendment by owners holding at least 67 percent of the votes, and the developer’s three-votes-per-owned-unit gave it 144 of 149 votes. A recording error was cured by re-recording and did not invalidate the amendment, and withdrawing property (as opposed to terminating the regime, which needs 100 percent approval) was permissible, so no assessments were due on the withdrawn units while they were out of the project.

What should associations take away about recording liens?

The court found disputed facts about whether the Lot Six lien overstated the amount due and whether the developer’s $600 tender was unconditional, and it noted A.R.S. section 33-420, which penalizes recording a groundless lien. The practical lesson is to verify the actual amount owed, account for any valid tender, and support the claim with admissible evidence before recording or foreclosing a lien.

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Case Summary

Case ID / citationNo. 1 CA-CV 90-263; 174 Ariz. 72, 847 P.2d 117 (App. 1992)
Court / tribunalCourt of Appeals
Decision / key dateNovember 10, 1992
Judge / panelToci, J. (author), Taylor, P.J., Grant, J.
PartiesA condominium association sued its developer to collect delinquent assessments, retroactive late fees, and interest and to foreclose an assessment lien; the developer countered that it had validly amended the declaration to withdraw 23 units into a separate phase and that the retroactive late fees were unenforceable.
Governing law
Topics
AssessmentsCC&RsForeclosureLiensAttorney FeesProcedure
Outcome / holding

Reversing summary judgment and remanding, the court held that the Developer had authority under the declaration to amend it and lawfully withdraw twenty-three units into a separate phase, so those units were not subject to monthly assessments or late charges while withdrawn; that although the Association had contractual and statutory authority under A.R.S. section 33-1242(11) to impose late fees, applying them retroactively to assessments already delinquent before the late-fee schedule was adopted was unreasonable, arbitrary, and an abuse of discretion; and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case for summary judgment.

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Key Issues & Findings

Case Summary

The Villas at Hidden Lakes Condominiums Association, a group of condominium owners organized under a recorded declaration of horizontal property regime, sued its developer, Geupel Construction Company, Inc. and R.G.W. Investment Co., Inc. (together the joint venture Paradise Isle Associates, referred to as the “Developer”), to collect delinquent monthly assessments, retroactive late-payment penalties, and interest, and to foreclose an assessment lien on a lot the Developer still owned. The Developer answered that it owed no assessments on twenty-three of the original fifty-three units because it had recorded an amendment temporarily withdrawing those units into a separate phase, and that the late fees, which had grown to more than $47,000, were unenforceable because they were imposed retroactively and exceeded the twelve percent interest set by the bylaws. The trial court granted the Association summary judgment on both counts and awarded attorney’s fees. Division One of the Arizona Court of Appeals reversed. It held that the Developer had the votes and authority under the declaration to amend it and withdraw the Phase Two units, that the Association had contractual and statutory authority under the Uniform Condominium Act to impose late fees but exercised that power unreasonably by making them retroactive, and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case. The court also found disputed fact issues on the Lot Six lien and the Developer’s tender of payment, reversed the fee award, and remanded.

Key Issues & Findings

The court analyzed each issue against the text of the recorded declaration (“Declaration Two”) and the Uniform Condominium Act. On the withdrawal question, it explained that the dispute was not whether the Developer had a “unilateral” right to amend, but whether it satisfied the declaration’s amendment procedure. Article Fourteen allowed amendment at any time by owners holding at least sixty-seven percent of the votes, and Article Six gave the Developer three votes per owned unit, yielding 144 votes against the five votes of the other owners, far more than enough. Mortgage-holder consent was unnecessary because those owners held under four percent of the votes, and the declaration’s own language (‘until or unless changed’) permitted altering the fractional common-element interests. The court rejected the argument that the recording mistake (a reference to the revoked Declaration One) invalidated the amendment, because the document clearly identified the property and its phasing purpose, gave constructive notice under A.R.S. section 33-416, and was re-recorded to fix the error. Distinguishing Camelback Del Este, Riley, and La Esperanza, the court held that the uniform-treatment rule applies only where the declaration so limits amendments; here the amendment merely provided for phased development and did not alter any covenant. Withdrawal of property (67 percent) was also distinct from termination of the regime (100 percent). On estoppel, the Association showed neither justifiable reliance nor injury, so no prima facie case existed. Turning to late fees, the court held the Association had power to impose them under Article Five and A.R.S. section 33-1242(11), and that the fees were a personal obligation, but that condominium associations must exercise such powers reasonably. Because no penalty schedule existed when the assessments became delinquent, owners never had the chance to choose timely payment over a known penalty; imposing the charge retroactively was therefore unreasonable, arbitrary, and an abuse of discretion. Finally, applying Rule 56(e) and the rules of evidence, the court found the Neal affidavit conclusory and built on computer-generated exhibits that were unauthenticated inadmissible hearsay, defeating the prima facie showing, and it found disputed facts on the Lot Six lien and the Developer’s $600 tender.

Why It Matters

For Arizona homeowners and condominium associations, the decision is a leading illustration of two limits on association power. First, the powers a board holds under its declaration and under the Uniform Condominium Act, including the express statutory authority in A.R.S. section 33-1242(11) to impose late-payment charges, must still be exercised reasonably. An association cannot adopt a penalty and then reach backward to punish assessments that were already delinquent before any penalty schedule existed, because owners never had a chance to avoid a charge they could not have known about. Retroactive late fees, the court held, are unreasonable, arbitrary, and an abuse of discretion as a matter of law.

Second, the case underscores that assessment-collection and lien-foreclosure claims are ordinary civil actions in which the association carries the burden of proof. To win summary judgment an association must offer admissible evidence, not a conclusory affidavit attaching computer printouts with no foundation. A ledger or account summary must qualify under the business-records exception and be authenticated by someone with personal knowledge. The opinion also confirms that a developer or owner may validly amend a declaration to phase a project if the voting and recording requirements are met, and it flags the penalties in A.R.S. section 33-420 for recording a groundless lien, reminding associations to verify the amount actually owed before recording.

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Villa De Jardines Association v. Flagstar Bank, FSB: HOA Court Case Guide

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Assessments / Lien Priority | A.R.S. section 33-1807 | 2 CA-CV 2010-0177

An HOA argued its assessment liens outranked the lenders’ first deeds of trust. Division Two explained why the plain text of A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, and why the association’s position drew Rule 11 sanctions and a frivolous-appeal award.

Last updated July 1, 2026. Case: Villa De Jardines Association v. Flagstar Bank, FSB; 227 Ariz. 91, 253 P.3d 288 (App. 2011); CV200902335.

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Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

A recorded first deed of trust has priority over a planned community association’s assessment lien under A.R.S. section 33-1807(B)(2) regardless of recording order, because the association’s contrary first-in-time reading would render the statutory exception superfluous. The trial court’s summary judgment for the Banks, its Rule 11 sanctions against the association, and its fee award to the Banks as prevailing parties under section 33-1807(H) were all affirmed, and, because the association presented no colorable legal argument, the appeal was deemed frivolous and the Banks were awarded their appellate fees and costs under section 33-1807(H) and, as sanctions, under Rule 25.

Case Participants

Neutral Parties

  • Villa De Jardines Association (Plaintiff/Appellant)
    Arizona nonprofit planned community association; plaintiff below that sued to judicially foreclose its assessment liens against nineteen parcels, contending its liens had priority over the lenders’ deeds of trust.
  • Flagstar Bank, FSB (Defendant/Appellee)
    Lender/deed-of-trust holder; one of the Banks that moved for and obtained summary judgment on the ground that its recorded first deed of trust had priority over VJA’s assessment lien.
  • Federal National Mortgage Association (also known as Freddie Mac) (Defendant/Appellee)
    The other of the Banks; the opinion notes the entity was named inconsistently in VJA’s pleadings (originally ‘Federal Home Loan Corporation’) and used the entity’s self-designation. Prevailed on summary judgment on lien priority.
  • Charles Mannino and his wife (Defendant)
    Unit owners named as defendants below; filed a separate answer. Not parties to the Banks’ summary judgment or to this appeal’s core lien-priority ruling.
  • Desert Hills Bank (Defendant)
    Named defendant that failed to plead or otherwise defend; default was entered against it under Rule 55(a), but VJA obtained no default judgment.
  • Countrywide Home Loans, Inc. (Defendant)
    Named defendant that failed to plead or otherwise defend; default was entered against it under Rule 55(a), but VJA obtained no default judgment.
  • Charles E. Maxwell (Counsel)
    Maxwell & Morgan, P.C.
    Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa.
  • Paul R. Neil (Counsel)
    Maxwell & Morgan, P.C.
    Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa.
  • Chad M. Gallacher (Counsel)
    Maxwell & Morgan, P.C.
    Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa.
  • Brian Morgan (Counsel)
    Maxwell & Morgan, P.C.
    Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa.
  • David N. Ramras (Counsel)
    Ramras Law Offices, P.C.
    Counsel for Defendants/Appellees Flagstar Bank, FSB and Federal National Mortgage Association, of Ramras Law Offices, P.C., Phoenix.
  • Virginia C. Kelly (Judge)
    Arizona Court of Appeals, Division Two
    Authored the opinion of the court.
  • Garye L. Vasquez (Judge)
    Arizona Court of Appeals, Division Two
    Presiding Judge; concurred in the opinion.
  • Peter J. Eckerstrom (Judge)
    Arizona Court of Appeals, Division Two
    Judge; concurred in the opinion.
  • Honorable William J. O’Neil (Judge)
    Pinal County Superior Court
    Trial judge who granted summary judgment for the Banks, imposed Rule 11 sanctions, and denied VJA’s new-trial motion and fee request (Cause No. CV200902335).

What happened and why it matters

Villa de Jardines Association (VJA), an Arizona nonprofit planned community association, filed a judicial foreclosure action in Pinal County Superior Court seeking to enforce its assessment liens against nineteen parcels, contending those liens had priority over the lenders’ deeds of trust. Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac), together the Banks, moved for summary judgment. The trial court granted the motion, imposed Rule 11 sanctions on VJA, denied VJA’s own request for attorney fees, and denied VJA’s motion for a new trial. VJA appealed. Division Two of the Arizona Court of Appeals affirmed. The court held that A.R.S. section 33-1807(B)(2) unambiguously grants a recorded first deed of trust priority over an association assessment lien regardless of which was recorded first, because VJA’s contrary first-in-time reading would render the statutory exception superfluous. It upheld the Rule 11 sanctions because VJA had no objectively reasonable basis for its lien-priority position and could not rely on a title company litigation guarantee to avoid Rule 11’s reasonable-inquiry duty. It affirmed the fee award to the Banks as prevailing parties under section 33-1807(H) and rejected VJA’s procedural challenges to the judgment and to the denial of its new-trial motion. Concluding the appeal was frivolous, the court awarded the Banks their attorney fees and costs on appeal under section 33-1807(H) and, as sanctions, under Rule 25, Ariz. R. Civ. App. P., against both VJA and its counsel.

Reviewing summary judgment de novo, the court accepted that the material facts were undisputed, so the outcome turned on statutory interpretation. Under A.R.S. section 33-1807(B), an association’s assessment lien is prior to all other liens and encumbrances except three categories, including ‘[a] recorded first mortgage’ and ‘a recorded first deed of trust on the unit.’ Applying settled canons, the court gave the statute its plain meaning and presumed the legislature does not enact redundant, superfluous, or contradictory provisions. VJA argued that a deed of trust qualifies as a ‘first deed of trust’ only if it is recorded first in time, ahead of the assessment lien. The court rejected that reading because subsection (B)(1) already grants priority to any encumbrance recorded before the assessment lien; if first deeds of trust also had to be recorded first to gain priority, subsection (B)(2) would serve no purpose. The statute therefore unambiguously protects a recorded first deed of trust regardless of recording order.

The court also rejected VJA’s contention that the judgment was ‘overly broad’ by referring to all nineteen parcels and all defendants. The summary judgment ran only in favor of the Banks and gave them no interest in parcels held by other defendants, so it was not a windfall; the Banks never sought relief on behalf of others, making VJA’s standing argument (citing Fernandez v. Takata Seat Belts) inapposite. Nor did the court err by referencing parcels for which default had been entered against Desert Hills Bank and Countrywide, because VJA had obtained no default judgment and was not entitled to one as a matter of law.

On the Rule 11 sanctions, reviewed for abuse of discretion (with the propriety of the legal basis reviewed de novo), the court applied the objective standard of what a competent attorney would do. Because section 33-1807 is clear, no reasonable attorney could argue an assessment lien outranks a first deed of trust, and VJA never argued for an extension or modification of the law. A title company litigation guarantee did not change this: it insures only against loss from incorrect assurances and may guide which parties to name, but it does not trump state law or excuse the duty of reasonable inquiry, and counsel must re-evaluate the client’s position as the case develops. The court further held the trial court properly denied a new trial: Rule 59(c)(1) requires the motion to be in writing, so oral amendment was impermissible and would invite gamesmanship, and no harm arose because the trial court reviewed the entire file sua sponte and found no error. Finally, under section 33-1807(H) the Banks were the prevailing parties, making a fee award mandatory, and because VJA presented no colorable argument the appeal was frivolous, warranting appellate fees and Rule 25 sanctions.

This published, precedential decision resolves a recurring Arizona HOA-collections question: where an association’s assessment lien stands relative to a lender’s first deed of trust. It confirms that A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, so an association ordinarily cannot use judicial foreclosure of an assessment lien to eliminate or leapfrog a first mortgage. Boards, community managers, and collection counsel should understand that pursuing foreclosure on the theory that the assessment lien is senior to a first deed of trust is not supported by the statute and can expose both the association and its attorneys to sanctions and fee-shifting.

The opinion also carries broader lessons about litigation conduct and cost exposure. It illustrates that Rule 11 is measured by an objective standard — what a competent attorney would do — and that relying on a title company’s litigation guarantee is no substitute for a reasonable legal inquiry. It underscores that section 33-1807(H) makes a fee award to the prevailing party mandatory in lien-priority actions, and that a party who presses a position contrary to unambiguous statutory text risks not only losing but paying the other side’s attorney fees at trial and on appeal, plus sanctions for a frivolous appeal. For homeowners, lenders, and associations alike, it is a cautionary example of the financial consequences of over-reading assessment-lien priority.

Step-by-step litigation record

Step 2009 VJA filed its judicial foreclosure complaint in Pinal County Superior Court (Cause No. CV200902335), claiming assessment liens against nineteen parcels (year inferred from the cause number).
Step 2009 Default was entered against Desert Hills Bank and Countrywide Home Loans; the Manninos answered separately, and Flagstar and Federal National Mortgage Association filed a joint answer.
Step 2010 The trial court granted the Banks’ motion for summary judgment, entered Rule 54(b) judgment declaring the deeds of trust superior, imposed Rule 11 sanctions on VJA, and denied VJA’s fee request (year inferred from the appellate docket).
Step 2010 The trial court denied VJA’s motion for a new trial and its attempt to orally amend it; VJA filed its notice of appeal (docket 2 CA-CV 2010-0177).
Step 2011-04-22 Division Two of the Arizona Court of Appeals affirmed and awarded the Banks their appellate attorney fees and costs under A.R.S. section 33-1807(H) and, as sanctions, under Rule 25.

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Source 1 2011-04-22

Opinion

Type: Decision or judgment

Opinion holding that a recorded first deed of trust has priority over a planned community association’s assessment lien under A.R.S. section 33-1807(B)(2) regardless of recording order, because the association’s contrary first-in-time reading would render the statutory exception superfluous.

Download source file
2011-04-22_001_opinion.pdf

FAQ

Does an HOA’s assessment lien have priority over a bank’s first mortgage or deed of trust in Arizona?

Generally no. Under A.R.S. section 33-1807(B), a planned community association’s assessment lien is prior to most other liens and encumbrances, but the statute lists exceptions, including a recorded first mortgage and a recorded first deed of trust on the unit. In this case the Court of Appeals held that a recorded first deed of trust takes priority over the association’s assessment lien regardless of which was recorded first.

Why did the court reject the association’s ‘first-in-time’ argument?

VJA argued a deed of trust could be a ‘first deed of trust’ only if it was recorded first in time, ahead of the assessment lien. The court rejected this because section 33-1807(B)(1) already gives priority to any encumbrance recorded before the assessment lien. Reading subsection (B)(2) to also require the deed of trust to be recorded first would make it superfluous, and courts presume the legislature does not enact redundant provisions.

What are Rule 11 sanctions and why were they imposed here?

Rule 11 requires attorneys to certify that filings are well-grounded in fact and warranted by existing law or a good-faith argument to change it. Sanctions are required when there was no reasonable inquiry, no chance of success under existing precedent, and no reasonable argument to extend, modify, or reverse the law, judged by an objective standard. The court upheld sanctions because no competent attorney could reasonably argue the association’s lien outranked a first deed of trust under the plain statutory text.

Could the association rely on a title company’s litigation guarantee to justify its position?

No. The court explained that a litigation guarantee does not trump state law. It insures the association only against loss from incorrect assurances and can help identify the parties to name in a foreclosure, but the association could not rely on it exclusively to avoid Rule 11’s duty of reasonable inquiry or to argue the guarantee superseded the statute.

Why did the court refuse to let the association orally amend its motion for a new trial?

Rule 59(c)(1) requires a motion for a new trial to be in writing. The court held that allowing oral amendments would undermine that requirement and invite gamesmanship by letting a party surprise opposing counsel with new arguments at the hearing. It also found no harm, because the trial judge reviewed the entire file on its own initiative and found no error.

What does it mean that the appeal was ‘frivolous,’ and who had to pay the fees?

Under Rule 25, Ariz. R. Civ. App. P., an appellate court may impose penalties for a frivolous appeal, though only with great reservation and not where a colorable argument exists. Because VJA presented no colorable legal argument, the court awarded the Banks their attorney fees and taxable costs on appeal under A.R.S. section 33-1807(H) and, as sanctions, under Rule 25, against both the association and its counsel.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation227 Ariz. 91, 253 P.3d 288 (App. 2011)
Court / tribunalCourt of Appeals
Decision / key dateApril 22, 2011
Judge / panelVirginia C. Kelly (author), Garye L. Vasquez (Presiding Judge, concurring), Peter J. Eckerstrom (Judge, concurring)
PartiesA planned community homeowners association (Villa de Jardines Association) sued to judicially foreclose its assessment liens against nineteen Pinal County parcels, contending its liens had priority over the lenders’ recorded first deeds of trust; Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac) defended on the ground that A.R.S. section 33-1807 gives a recorded first deed of trust priority over an association’s assessment lien.
Governing law
Topics
AssessmentsForeclosureLiensAttorney FeesProcedure
Outcome / holding

A recorded first deed of trust has priority over a planned community association’s assessment lien under A.R.S. section 33-1807(B)(2) regardless of recording order, because the association’s contrary first-in-time reading would render the statutory exception superfluous. The trial court’s summary judgment for the Banks, its Rule 11 sanctions against the association, and its fee award to the Banks as prevailing parties under section 33-1807(H) were all affirmed, and, because the association presented no colorable legal argument, the appeal was deemed frivolous and the Banks were awarded their appellate fees and costs under section 33-1807(H) and, as sanctions, under Rule 25.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source package1 PDF
Step-by-step docket roadmap5 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases1 download link

Key Issues & Findings

Case Summary

Villa de Jardines Association (VJA), an Arizona nonprofit planned community association, filed a judicial foreclosure action in Pinal County Superior Court seeking to enforce its assessment liens against nineteen parcels, contending those liens had priority over the lenders’ deeds of trust. Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac), together the Banks, moved for summary judgment. The trial court granted the motion, imposed Rule 11 sanctions on VJA, denied VJA’s own request for attorney fees, and denied VJA’s motion for a new trial. VJA appealed. Division Two of the Arizona Court of Appeals affirmed. The court held that A.R.S. section 33-1807(B)(2) unambiguously grants a recorded first deed of trust priority over an association assessment lien regardless of which was recorded first, because VJA’s contrary first-in-time reading would render the statutory exception superfluous. It upheld the Rule 11 sanctions because VJA had no objectively reasonable basis for its lien-priority position and could not rely on a title company litigation guarantee to avoid Rule 11’s reasonable-inquiry duty. It affirmed the fee award to the Banks as prevailing parties under section 33-1807(H) and rejected VJA’s procedural challenges to the judgment and to the denial of its new-trial motion. Concluding the appeal was frivolous, the court awarded the Banks their attorney fees and costs on appeal under section 33-1807(H) and, as sanctions, under Rule 25, Ariz. R. Civ. App. P., against both VJA and its counsel.

Key Issues & Findings

Reviewing summary judgment de novo, the court accepted that the material facts were undisputed, so the outcome turned on statutory interpretation. Under A.R.S. section 33-1807(B), an association’s assessment lien is prior to all other liens and encumbrances except three categories, including ‘[a] recorded first mortgage’ and ‘a recorded first deed of trust on the unit.’ Applying settled canons, the court gave the statute its plain meaning and presumed the legislature does not enact redundant, superfluous, or contradictory provisions. VJA argued that a deed of trust qualifies as a ‘first deed of trust’ only if it is recorded first in time, ahead of the assessment lien. The court rejected that reading because subsection (B)(1) already grants priority to any encumbrance recorded before the assessment lien; if first deeds of trust also had to be recorded first to gain priority, subsection (B)(2) would serve no purpose. The statute therefore unambiguously protects a recorded first deed of trust regardless of recording order.

The court also rejected VJA’s contention that the judgment was ‘overly broad’ by referring to all nineteen parcels and all defendants. The summary judgment ran only in favor of the Banks and gave them no interest in parcels held by other defendants, so it was not a windfall; the Banks never sought relief on behalf of others, making VJA’s standing argument (citing Fernandez v. Takata Seat Belts) inapposite. Nor did the court err by referencing parcels for which default had been entered against Desert Hills Bank and Countrywide, because VJA had obtained no default judgment and was not entitled to one as a matter of law.

On the Rule 11 sanctions, reviewed for abuse of discretion (with the propriety of the legal basis reviewed de novo), the court applied the objective standard of what a competent attorney would do. Because section 33-1807 is clear, no reasonable attorney could argue an assessment lien outranks a first deed of trust, and VJA never argued for an extension or modification of the law. A title company litigation guarantee did not change this: it insures only against loss from incorrect assurances and may guide which parties to name, but it does not trump state law or excuse the duty of reasonable inquiry, and counsel must re-evaluate the client’s position as the case develops. The court further held the trial court properly denied a new trial: Rule 59(c)(1) requires the motion to be in writing, so oral amendment was impermissible and would invite gamesmanship, and no harm arose because the trial court reviewed the entire file sua sponte and found no error. Finally, under section 33-1807(H) the Banks were the prevailing parties, making a fee award mandatory, and because VJA presented no colorable argument the appeal was frivolous, warranting appellate fees and Rule 25 sanctions.

Why It Matters

This published, precedential decision resolves a recurring Arizona HOA-collections question: where an association’s assessment lien stands relative to a lender’s first deed of trust. It confirms that A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, so an association ordinarily cannot use judicial foreclosure of an assessment lien to eliminate or leapfrog a first mortgage. Boards, community managers, and collection counsel should understand that pursuing foreclosure on the theory that the assessment lien is senior to a first deed of trust is not supported by the statute and can expose both the association and its attorneys to sanctions and fee-shifting.

The opinion also carries broader lessons about litigation conduct and cost exposure. It illustrates that Rule 11 is measured by an objective standard — what a competent attorney would do — and that relying on a title company’s litigation guarantee is no substitute for a reasonable legal inquiry. It underscores that section 33-1807(H) makes a fee award to the prevailing party mandatory in lien-priority actions, and that a party who presses a position contrary to unambiguous statutory text risks not only losing but paying the other side’s attorney fees at trial and on appeal, plus sanctions for a frivolous appeal. For homeowners, lenders, and associations alike, it is a cautionary example of the financial consequences of over-reading assessment-lien priority.

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TRAILS AT AMBER RIDGE HOMEOWNERS ASSOCIATION, an Arizona nonprofit corporation, Plaintiff, v. GERARDO MACIAS, a married man, as his sole and separate property; COMMUNITY HOUSING RESOURCES OF ARIZONA; ARIZONA HOME FORECLOSURE PREVENTION FUNDING CORPORATION, Defendants/Appellees, MARICOPOLY, LLC, a limited liability company, Intervenor/Appellant.: HOA Court Case Guide

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Foreclosure Surplus | Ariz. R. Civ. P. 7.1 | 2 CA-CV 2022-0096

After an HOA foreclosure, the sheriff’s-sale purchaser fought a junior lienholder over $59,819.17 in surplus proceeds; the Court of Appeals affirmed, finding a premature ruling harmless under the law-of-the-case doctrine.

Last updated July 1, 2026. Case: TRAILS AT AMBER RIDGE HOMEOWNERS ASSOCIATION, an Arizona nonprofit corporation, Plaintiff, v. GERARDO MACIAS, a married man, as his sole and separate property; COMMUNITY HOUSING RESOURCES OF ARIZONA; ARIZONA HOME FORECLOSURE PREVENTION FUNDING CORPORATION, Defendants/Appellees, MARICOPOLY, LLC, a limited liability company, Intervenor/Appellant.; 2 CA-CV 2022-0096; CV2017092698 (Maricopa County Superior Court; Hon. Brian D. Kaiser, Judge Pro Tempore).

Download the ruling PDF

Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

Although the trial court erred by granting the junior lienholder’s motion to release excess foreclosure proceeds before the opposing party’s Rule 7.1 response deadline, the error was harmless and did not violate procedural due process. Because the prior appellate mandate and the law-of-the-case doctrine limited the intervenor to re-asserting its already-rejected equitable-assignment claim — and barred new priority theories such as equitable subrogation — the intervenor suffered no prejudice, and the orders were affirmed.

Case Participants

Neutral Parties

  • Trails at Amber Ridge Homeowners Association (Plaintiff)
    Arizona nonprofit corporation; obtained the 2018 default judgment and judicially foreclosed on Macias’s home. Its judgment was already paid from the sale, so it was not an active participant in the excess-proceeds dispute on appeal.
  • Gerardo Macias (Appellee)
    Defendant/Appellee; the foreclosed homeowner, who applied to receive any excess proceeds remaining after AZ Home’s junior lien was satisfied.
  • Arizona Home Foreclosure Prevention Funding Corporation (Appellee)
    Defendant/Appellee (“AZ Home”); junior lienholder that moved for release of the excess proceeds and prevailed on appeal.
  • Community Housing Resources of Arizona (Appellee)
    Named defendant/appellee in the caption; not a focus of the appellate analysis.
  • Maricopoly, LLC (Appellant)
    Intervenor/Appellant; the limited liability company that purchased the property at the sheriff’s sale and claimed the surplus on an equitable-assignment theory.
  • Valerie L. Marciano (Counsel)
    Arizona Attorney General’s Office (Mark Brnovich, Attorney General)
    Assistant Attorney General; counsel for Defendant/Appellee Arizona Home Foreclosure Prevention Funding Corporation.
  • Kyle A. Kinney (Counsel)
    Law Offices of Kyle A. Kinney PLLC
    Counsel for Intervenor/Appellant Maricopoly, LLC.
  • Chief Judge Garye L. Vásquez (Judge)
    Chief Judge of the Court of Appeals, Division Two; authored the memorandum decision.
  • Presiding Judge Peter J. Eckerstrom (Judge)
    Presiding Judge of the Court of Appeals panel; concurred in the decision.
  • Judge Christopher Cattani (Judge)
    Court of Appeals judge; concurred in the decision.
  • Hon. Brian D. Kaiser (Judge)
    Maricopa County Superior Court Judge Pro Tempore who entered the orders under review (Superior Court No. CV2017092698).

What happened and why it matters

This memorandum decision from the Arizona Court of Appeals, Division Two, arose from a homeowners association’s judicial foreclosure. In 2018, Trails at Amber Ridge Homeowners Association obtained a default judgment against homeowner Gerardo Macias and foreclosed on his home. Maricopoly, LLC purchased the property at the sheriff’s sale, and after the Association’s judgment was satisfied, $59,819.17 in excess proceeds was deposited with the clerk of court. Maricopoly intervened and claimed the surplus on the theory that it had acquired an “equitable assignment” of the senior lien, but in an earlier appeal Division Two rejected that theory, vacated the order paying Maricopoly, and remanded with directions to have Maricopoly return the funds. On remand, Arizona Home Foreclosure Prevention Funding Corporation (“AZ Home”), a junior lienholder, moved for release of $21,902.81 of the proceeds. The trial court granted that motion on September 1, 2021 — before Maricopoly’s response deadline under Rule 7.1. Maricopoly appealed, arguing the premature ruling denied it procedural due process and that the court wrongly refused to set the order aside under Rule 60. The Court of Appeals agreed the ruling was premature but held the error was harmless: under the appellate mandate and the law-of-the-case doctrine, Maricopoly could only re-assert its already-rejected equitable-assignment claim and could not raise new priority theories. Finding no prejudice, the court affirmed.

The court first agreed with Maricopoly that the trial court had acted prematurely. Under Rule 7.1(a)(3), Ariz. R. Civ. P., an opposing party must file any responsive memorandum within 10 days after service; because AZ Home served its August 19, 2021 motion by U.S. mail under Rule 5(c)(2)(C), five calendar days were added under Rule 6(c), and the weekend/holiday exclusion of Rule 6(a)(2) applied, making Maricopoly’s response due September 7, 2021. The court had signed and filed AZ Home’s order on September 1 — before that deadline. The panel explained that although Rule 7.1(b) permits a court to summarily grant a motion in three situations (noncompliance with Rule 7.1(a), the opposing party’s failure to file a response, or counsel’s failure to appear for oral argument), none applied here, so summary treatment was inappropriate and the trial court erred.

Nevertheless, the court held Maricopoly was not prejudiced and its due process rights were not violated. Procedural due process requires only the opportunity to be heard at a meaningful time and in a meaningful manner (citing Sycamore Hills Estates Homeowners Ass’n v. Zablotny). Maricopoly had already fully presented its sole basis for the surplus — equitable assignment — and the first appeal had rejected it. Under the mandate rule (Raimey v. Ditsworth) and the law-of-the-case doctrine (State v. Bocharski), that prior decision bound the trial court and the parties throughout the remaining proceedings, so Maricopoly could not re-assert equitable assignment or introduce new evidence to support it (United Dairymen of Ariz. v. Schugg; Crouch v. Truman).

The court further held that Maricopoly could not raise “other grounds for priority,” such as equitable subrogation, for the first time on remand, and that its attempt to advance that theory for the first time in its appellate reply brief was untimely and waived (United Bank v. Mesa N. O. Nelson Co.; BMO Harris Bank N.A. v. Espiau). The proper time to raise such theories had been the initial trial-court proceedings before the first appeal. The record also belied Maricopoly’s claim that it would have argued differently if given a chance to respond, because on remand it had told the trial court the case was remanded only to address equitable assignment. And even assuming an argument that surplus proceeds automatically flow up to an unextinguished senior lien, the court noted it would have been unavailing under Tortosa Homeowners Ass’n v. Garcia. Finding no prejudice and thus no reversible error (Volk v. Brame; Creach v. Angulo), the court affirmed and denied Maricopoly’s request for costs because it was not the successful party under A.R.S. § 12-341.

For homeowners, purchasers, and lienholders navigating Arizona HOA assessment-lien foreclosures, this decision illustrates how “excess” or surplus sale proceeds are contested after the association is paid, and how an appellate mandate constrains what can be argued later. When an HOA forecloses and the property sells for more than the association’s judgment, the surplus does not automatically belong to the sheriff’s-sale purchaser; competing junior lienholders (here a state-affiliated foreclosure-prevention corporation) and the former owner may also claim it, and entitlement turns on lien-priority principles rather than on who bought the home.

The case is also a practical lesson in civil procedure. A trial court’s ruling on a motion before the response deadline is error, but Arizona appellate courts will not reverse unless the error actually prejudiced the complaining party. Because the law-of-the-case doctrine and the mandate from the first appeal had already foreclosed Maricopoly’s only viable theory, the premature ruling changed nothing and the panel affirmed. The decision underscores that a party must raise all of its legal theories — such as equitable subrogation — in the trial court before the first appeal, not for the first time on remand or in a reply brief, or it risks waiver. As an unpublished memorandum decision it creates no binding precedent, but it offers a concrete window into surplus-proceeds and remand practice in Arizona HOA foreclosures.

Step-by-step litigation record

Step 2018 Trails at Amber Ridge Homeowners Association obtained a default judgment against Gerardo Macias and judicially foreclosed on his home.
Maricopoly, LLC purchased the property at the sheriff’s sale; after the Association’s judgment was paid, $59,819.17 in excess proceeds was deposited with the clerk of court.
The trial court granted Maricopoly’s intervention and ordered the surplus released to Maricopoly on an equitable-assignment theory; AZ Home and Macias appealed.
Step 2021-03-23 In the first appeal (1 CA-CV 20-0254), Division Two rejected Maricopoly’s equitable-assignment theory, vacated the payment to Maricopoly, and remanded with directions to return the proceeds.
Step 2021-08-19 AZ Home moved for release of $21,902.81 of the excess proceeds, with the balance to Macias.
Step 2021-09-01 The trial court signed and filed the order releasing proceeds to AZ Home (before Maricopoly’s response deadline); Maricopoly moved to set the order aside the same day.
Step 2021-09-07 Maricopoly’s response to AZ Home’s motion was actually due under Rule 7.1, as computed by the Court of Appeals.
The trial court denied Maricopoly’s set-aside motion; after a stay to obtain a signed order, Maricopoly filed a supplemental notice of appeal.
Step 2022-10-17 The Arizona Court of Appeals, Division Two, issued its memorandum decision affirming the trial court’s orders.

Complete uploaded source-document index

This index is generated from every public-facing source file currently present in assets/court_case_downloads/trails-at-amber-ridge-hoa-v-macias/raw/: 1 PDF. Files are ordered by the date/sequence embedded in the normalized filename; AI-generated review materials are labeled separately and should not be treated as court filings.

Source 1 2022-10-17

Opinion

Type: Decision or judgment

Opinion holding that although the trial court erred by granting the junior lienholder’s motion to release excess foreclosure proceeds before the opposing party’s Rule 7.1 response deadline, the error was harmless and did not violate procedural due process.

Download source file
2022-10-17_001_opinion.pdf

FAQ

What was this case about?

It was a dispute over surplus (“excess”) proceeds from an HOA’s judicial foreclosure. Trails at Amber Ridge Homeowners Association foreclosed on Gerardo Macias’s home; Maricopoly, LLC bought it at the sheriff’s sale, and after the Association was paid, $59,819.17 remained with the clerk of court. Maricopoly and a junior lienholder (AZ Home) each claimed the surplus.

Why did the Court of Appeals say the trial court erred?

The trial court granted AZ Home’s motion to release the proceeds on September 1, 2021, before Maricopoly’s response was due. Under Rule 7.1, Ariz. R. Civ. P. (with mailing and weekend/holiday adjustments), Maricopoly’s response was not due until September 7, 2021, and none of the conditions allowing a summary grant under Rule 7.1(b) applied. Ruling early was therefore error.

If the trial court erred, why did the purchaser still lose?

Because the error was harmless. Procedural due process requires only a meaningful opportunity to be heard, and Maricopoly had already fully presented its only theory — equitable assignment — which Division Two rejected in an earlier appeal. Under the mandate rule and the law-of-the-case doctrine, Maricopoly could not re-litigate that theory or add new ones on remand, so the premature ruling caused no prejudice.

What is the “law-of-the-case” or “mandate” rule referenced here?

It means that an appellate court’s decision, and the mandate implementing it, bind the trial court and the parties in later proceedings in the same case. Because the first appeal had already decided that Maricopoly had no equitable assignment of the senior lien, the trial court on remand could only carry out that ruling — it could not revisit the question or let Maricopoly raise new priority theories.

Why couldn’t Maricopoly argue equitable subrogation?

Maricopoly raised equitable subrogation (and the idea that surplus automatically flows up to an unextinguished senior lien) for the first time in its appellate reply brief. Arizona courts will not consider issues raised for the first time in a reply brief, and the theory should have been presented in the trial court before the first appeal, so the court deemed it waived and noted it would have failed under Tortosa Homeowners Ass’n v. Garcia anyway.

Is this decision binding precedent?

No. It is an unpublished memorandum decision under Ariz. R. Sup. Ct. 111(c)(1) and Ariz. R. Civ. App. P. 28(a)(1), (f), so it does not create legal precedent and may be cited only as those rules allow. It is presented here for educational context about HOA foreclosure surplus disputes and Arizona remand procedure, not as controlling law.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation2 CA-CV 2022-0096
Court / tribunalCourt of Appeals
Decision / key dateOctober 17, 2022
Judge / panelChief Judge Garye L. Vásquez (authored), Presiding Judge Peter J. Eckerstrom (concurred), Judge Christopher Cattani (concurred)
PartiesTrails at Amber Ridge Homeowners Association (Plaintiff) / Arizona Home Foreclosure Prevention Funding Corporation (Defendant/Appellee) v. Maricopoly, LLC (Intervenor/Appellant)
Governing law
  • Ariz. R. Civ. P. 7.1(a)(3)
  • Ariz. R. Civ. P. 7.1(b)
  • Ariz. R. Civ. P. 5(c)(2)(C)
  • Ariz. R. Civ. P. 6(a)(2)
  • Ariz. R. Civ. P. 6(c)
  • Ariz. R. Civ. P. 60
  • A.R.S. § 12-341
  • A.R.S. § 12-2101(A)(1)
  • Ariz. R. Civ. App. P. 21
Topics
ForeclosureLiensProcedureAssessments
Outcome / holding

Although the trial court erred by granting the junior lienholder’s motion to release excess foreclosure proceeds before the opposing party’s Rule 7.1 response deadline, the error was harmless and did not violate procedural due process. Because the prior appellate mandate and the law-of-the-case doctrine limited the intervenor to re-asserting its already-rejected equitable-assignment claim — and barred new priority theories such as equitable subrogation — the intervenor suffered no prejudice, and the orders were affirmed.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source package1 PDF
Step-by-step docket roadmap9 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases1 download link

Key Issues & Findings

Case Summary

This memorandum decision from the Arizona Court of Appeals, Division Two, arose from a homeowners association’s judicial foreclosure. In 2018, Trails at Amber Ridge Homeowners Association obtained a default judgment against homeowner Gerardo Macias and foreclosed on his home. Maricopoly, LLC purchased the property at the sheriff’s sale, and after the Association’s judgment was satisfied, $59,819.17 in excess proceeds was deposited with the clerk of court. Maricopoly intervened and claimed the surplus on the theory that it had acquired an “equitable assignment” of the senior lien, but in an earlier appeal Division Two rejected that theory, vacated the order paying Maricopoly, and remanded with directions to have Maricopoly return the funds. On remand, Arizona Home Foreclosure Prevention Funding Corporation (“AZ Home”), a junior lienholder, moved for release of $21,902.81 of the proceeds. The trial court granted that motion on September 1, 2021 — before Maricopoly’s response deadline under Rule 7.1. Maricopoly appealed, arguing the premature ruling denied it procedural due process and that the court wrongly refused to set the order aside under Rule 60. The Court of Appeals agreed the ruling was premature but held the error was harmless: under the appellate mandate and the law-of-the-case doctrine, Maricopoly could only re-assert its already-rejected equitable-assignment claim and could not raise new priority theories. Finding no prejudice, the court affirmed.

Key Issues & Findings

The court first agreed with Maricopoly that the trial court had acted prematurely. Under Rule 7.1(a)(3), Ariz. R. Civ. P., an opposing party must file any responsive memorandum within 10 days after service; because AZ Home served its August 19, 2021 motion by U.S. mail under Rule 5(c)(2)(C), five calendar days were added under Rule 6(c), and the weekend/holiday exclusion of Rule 6(a)(2) applied, making Maricopoly’s response due September 7, 2021. The court had signed and filed AZ Home’s order on September 1 — before that deadline. The panel explained that although Rule 7.1(b) permits a court to summarily grant a motion in three situations (noncompliance with Rule 7.1(a), the opposing party’s failure to file a response, or counsel’s failure to appear for oral argument), none applied here, so summary treatment was inappropriate and the trial court erred.

Nevertheless, the court held Maricopoly was not prejudiced and its due process rights were not violated. Procedural due process requires only the opportunity to be heard at a meaningful time and in a meaningful manner (citing Sycamore Hills Estates Homeowners Ass’n v. Zablotny). Maricopoly had already fully presented its sole basis for the surplus — equitable assignment — and the first appeal had rejected it. Under the mandate rule (Raimey v. Ditsworth) and the law-of-the-case doctrine (State v. Bocharski), that prior decision bound the trial court and the parties throughout the remaining proceedings, so Maricopoly could not re-assert equitable assignment or introduce new evidence to support it (United Dairymen of Ariz. v. Schugg; Crouch v. Truman).

The court further held that Maricopoly could not raise “other grounds for priority,” such as equitable subrogation, for the first time on remand, and that its attempt to advance that theory for the first time in its appellate reply brief was untimely and waived (United Bank v. Mesa N. O. Nelson Co.; BMO Harris Bank N.A. v. Espiau). The proper time to raise such theories had been the initial trial-court proceedings before the first appeal. The record also belied Maricopoly’s claim that it would have argued differently if given a chance to respond, because on remand it had told the trial court the case was remanded only to address equitable assignment. And even assuming an argument that surplus proceeds automatically flow up to an unextinguished senior lien, the court noted it would have been unavailing under Tortosa Homeowners Ass’n v. Garcia. Finding no prejudice and thus no reversible error (Volk v. Brame; Creach v. Angulo), the court affirmed and denied Maricopoly’s request for costs because it was not the successful party under A.R.S. § 12-341.

Why It Matters

For homeowners, purchasers, and lienholders navigating Arizona HOA assessment-lien foreclosures, this decision illustrates how “excess” or surplus sale proceeds are contested after the association is paid, and how an appellate mandate constrains what can be argued later. When an HOA forecloses and the property sells for more than the association’s judgment, the surplus does not automatically belong to the sheriff’s-sale purchaser; competing junior lienholders (here a state-affiliated foreclosure-prevention corporation) and the former owner may also claim it, and entitlement turns on lien-priority principles rather than on who bought the home.

The case is also a practical lesson in civil procedure. A trial court’s ruling on a motion before the response deadline is error, but Arizona appellate courts will not reverse unless the error actually prejudiced the complaining party. Because the law-of-the-case doctrine and the mandate from the first appeal had already foreclosed Maricopoly’s only viable theory, the premature ruling changed nothing and the panel affirmed. The decision underscores that a party must raise all of its legal theories — such as equitable subrogation — in the trial court before the first appeal, not for the first time on remand or in a reply brief, or it risks waiver. As an unpublished memorandum decision it creates no binding precedent, but it offers a concrete window into surplus-proceeds and remand practice in Arizona HOA foreclosures.

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Joan Tober, Plaintiff/Appellant, v. Civano 1: Neighborhood Association, Inc., an Arizona nonprofit corporation; and Rick Hanson, Mark Levine, George Luis, Lee Rayburn, Bob Small, Chris Shipley, and Les Shipley, Defendants/Appellees: HOA Court Case Guide

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Elections & Open Meetings | A.R.S. §§ 33-1812, 10-3304 | 2 CA-CV 2012-0129

How an Arizona planned community lawfully elected its board entirely by mail-in ballot, and why a homeowner’s after-the-fact challenge to the procedure failed on standing and justiciability grounds.

Last updated July 1, 2026. Case: Joan Tober, Plaintiff/Appellant, v. Civano 1: Neighborhood Association, Inc., an Arizona nonprofit corporation; and Rick Hanson, Mark Levine, George Luis, Lee Rayburn, Bob Small, Chris Shipley, and Les Shipley, Defendants/Appellees; 2 CA-CV 2012-0129.

Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

Under A.R.S. section 33-1812, a planned community association may conduct its board election exclusively by mail-in ballots counted before the annual meeting; the statute does not require in-person voting at every election or that elections be held at the annual meeting, and the open-meeting law, A.R.S. section 33-1804, does not require elections to occur at an open meeting. A member’s suit against the board challenging such procedures is derivative, and, absent a justiciable controversy, it cannot support injunctive relief, so summary judgment and the attorney-fee award for the association were affirmed.

Case Participants

Neutral Parties

  • Joan Tober (Plaintiff/Appellant)
    Mandatory member of Civano 1 who challenged the 2011 board election conducted exclusively by mail-in ballot.
  • Civano 1: Neighborhood Association, Inc. (Defendant/Appellee)
    Arizona nonprofit corporation managing a Tucson planned community; conducted the challenged mail-in board election.
  • Rick Hanson (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • Mark Levine (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • George Luis (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • Lee Rayburn (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • Bob Small (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • Chris Shipley (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • Les Shipley (Defendant/Appellee)
    Individual Civano board member named as a defendant/appellee.
  • Elizabeth D. Bushell (Counsel)
    Elizabeth D. Bushell, P.L.C.
    Tucson attorney for Plaintiff/Appellant Joan Tober.
  • Carolyn B. Goldschmidt (Counsel)
    Monroe, McDonough, Goldschmidt & Molla, P.L.L.C.
    Tucson attorney for Defendants/Appellees Civano and its board.
  • Philip G. Espinosa (Judge)
    Court of Appeals judge who authored the memorandum decision.
  • Garye L. Vasquez (Judge)
    Presiding Judge on the Court of Appeals panel; concurred.
  • Virginia C. Kelly (Judge)
    Judge on the Court of Appeals panel; concurred.

What happened and why it matters

Joan Tober, a mandatory member of the Civano 1: Neighborhood Association, a Tucson planned community, sued the association and the members of its board of directors after the 2011 board election was conducted exclusively by mail-in ballots that were counted before the association’s annual meeting. She alleged the board breached its statutory obligations under A.R.S. section 33-1812 by not allowing votes to be cast in person and by absentee ballot, and she sought injunctive relief under A.R.S. section 10-3304 after withdrawing her breach-of-contract and breach-of-fiduciary-duty claims. The trial court granted summary judgment for the association and board and awarded them attorney fees and costs, and Tober appealed only the ruling on her breach-of-statutory-duty claim. Division Two of the Arizona Court of Appeals affirmed. It held that Tober’s claim against the individual board members was derivative and could not proceed as a direct action because she alleged no injury unique to herself, that neither the CC&Rs nor section 10-3304 authorized her particular statutory claim as pleaded, and that her challenge to the completed 2011 election and to speculative future elections presented no justiciable controversy for injunctive relief. The court added that, in any event, section 33-1812 does not require in-person voting at every election or that elections be held at the annual meeting. It also upheld the attorney-fee award and awarded the association its fees and costs on appeal.

The court reviewed the summary judgment de novo because the material facts were undisputed, and it treated capacity to sue as a question of law. It first held that Tober’s claim against the individual board members was derivative rather than direct. An action by an association member is derivative when the gravamen is injury to the corporation or to the whole body of members without any severance among individual holders. A member may sue directly only if she has a relationship with the wrongdoer apart from her membership, the wrongdoer owes her a duty for a reason other than membership, or her injury is unique to her rather than shared by the association. Tober alleged none of these; she asserted only a “personal stake in how her community is run,” and her theory was that Civano members as a whole were disadvantaged by the mail-in procedure. Because she did not follow the demand and standing requirements for a derivative suit under A.R.S. sections 10-3631 and 10-3632, that claim was properly dismissed.

The court next rejected the two authorities Tober said permitted her direct statutory claim. The CC&Rs’ section 16.1 gives owners a right to enforce the community documents, but Tober conceded her statutory claim was independent of the contract, and A.R.S. section 33-1812 could not be read into the CC&Rs because it was enacted after the CC&Rs were executed. A.R.S. section 10-3304 does let a planned community member sue the association to enjoin an ultra vires act, and the court agreed Tober could in theory bring such a claim. But injunctive relief was unavailable: she did not try to enjoin the 2011 election before it was finalized, and a completed election cannot be undone on that ground; her request to control future elections was speculative, unsupported by any showing of likely future harm, and therefore not a justiciable controversy.

Finally, and in any event, the court held the mail-in procedure did not violate section 33-1812. The statute’s phrase “if absentee ballots are used” shows absentee voting is optional, and the statute expressly allows voting by “some other form of delivery” such as mail; it does not require in-person voting at every election or that elections occur at the annual meeting, and section 33-1804 requires only that meetings be open, not that elections happen at them. The court affirmed the attorney-fee award under A.R.S. section 12-341.01 and section 16.2 of the CC&Rs, noting that voluntarily dismissing the contract claims did not defeat a contract-based fee award and that the missing hearing transcripts were presumed to support the trial court’s discretion.

For Arizona homeowners and boards, the decision illustrates how planned community election procedures are measured against A.R.S. section 33-1812 and the open-meeting law, A.R.S. section 33-1804. The court read section 33-1812 to permit an association to elect directors entirely by mail-in ballot, with ballots counted before the annual meeting, and concluded the statute does not compel in-person voting at every election or require that the election itself take place at the annual meeting. It also underscores a practical timing lesson: a member who believes an election procedure is unlawful generally must seek to enjoin it before the vote is finalized, because courts are reluctant to unwind a completed election or to issue advisory relief about future, speculative elections.

The opinion is an unpublished memorandum decision, so under Rule 28 of the Arizona Rules of Civil Appellate Procedure it is not precedent and generally may not be cited as legal authority; it is offered here only as a neutral, educational illustration of how these HOA-governance statutes have been applied. The decision also highlights procedural mechanics that recur in HOA disputes, including the derivative-versus-direct distinction for suits against a board and the risk that a member who loses such a suit may owe the association’s attorney fees under A.R.S. section 12-341.01 and a fee-shifting provision in the CC&Rs. The homeowner was represented by Elizabeth D. Bushell of Elizabeth D. Bushell, P.L.C., and the association and its board by Carolyn B. Goldschmidt of Monroe, McDonough, Goldschmidt & Molla, P.L.L.C.

Step-by-step litigation record

Step 2011-03-01 The board mailed election ballots to all members with notice of the annual membership meeting, ballot instructions, and the election timeline; ballots were to be returned by mail or hand delivery by 5:00 p.m. on March 21.
Step 2011-03-15 The board adopted an administrative resolution for the 2011 election authorizing the (apparently exclusive) use of written mail-in ballots to elect board members.
Step 2011-03-21 The association’s election committee counted all ballots by the 5:00 p.m. deadline and certified the results to the board.
Step 2011-03-22 The election results were announced at the annual membership meeting; Tober had mailed her ballot and attended the meeting.
More than a month after the election was finalized, Tober sued Civano and the individual board members for breach of contract, breach of fiduciary duty, breach of statutory obligation, and election tampering.
Tober amended her complaint to add requests for injunctive relief under A.R.S. section 10-3304 (the section 10-3304 reference was added more than five months after the election).
Tober withdrew her breach-of-contract and breach-of-fiduciary-duty claims, conceding no individual damages and no disenfranchisement.
After a hearing on cross-motions for summary judgment, the trial court ruled that A.R.S. sections 10-3708 and 33-1812 did not prohibit an exclusively mail-in election counted before the annual meeting and entered final judgment for Civano and the board with attorney fees and costs.
Step 2013-03-12 Division Two of the Arizona Court of Appeals issued its memorandum decision affirming the trial court’s judgment.

FAQ

What was the dispute in Tober v. Civano 1: Neighborhood Association?

Joan Tober, a mandatory member of the Civano 1 planned community in Tucson, challenged the association’s 2011 board election, which was conducted exclusively by mail-in ballots that were counted before the annual meeting. She argued the board violated A.R.S. section 33-1812 by not allowing votes to be cast in person and by absentee ballot, and she sought injunctive relief. The trial court granted summary judgment for the association and board, and Tober appealed only her breach-of-statutory-duty claim.

Did A.R.S. section 33-1812 require the HOA to hold in-person voting?

No. The Court of Appeals held that section 33-1812 does not require in-person voting at every election. The statute’s phrase ‘if absentee ballots are used’ shows absentee voting is optional, and the statute expressly allows voting by ‘some other form of delivery,’ such as mail-in ballot. The court also held the statute does not require the election to be held at the annual meeting, and that the open-meeting law (A.R.S. section 33-1804) requires only that meetings be open to members, not that elections occur at them.

Why was Tober’s claim against the board members treated as derivative?

The court explained that a member’s suit is derivative when the gravamen is injury to the corporation or to the whole body of members rather than an injury unique to the individual. A member can sue directly only if she has a relationship with the wrongdoer apart from membership, is owed a duty for a reason other than membership, or suffered a unique injury. Tober alleged none of these, asserting only a ‘personal stake in how her community is run,’ so her claim was derivative and, because she did not follow the derivative-suit procedures in A.R.S. sections 10-3631 and 10-3632, it was properly dismissed.

Why did the request for an injunction fail?

Although the court agreed a planned community member may in theory sue the association under A.R.S. section 10-3304 to enjoin an unauthorized act, Tober was not entitled to an injunction. She did not seek to enjoin the 2011 election before it was finalized, and a completed election cannot be undone on that ground. Her attempt to control future elections was speculative, unsupported by any showing of likely future harm, and therefore presented no justiciable controversy; courts do not issue advisory relief about hypothetical future conduct.

Why did the homeowner have to pay the association’s attorney fees?

The trial court awarded the association and board their attorney fees under A.R.S. section 12-341.01 (fees in a contract action) and section 16.2 of the CC&Rs, which provides that the successful party in litigation to enforce the Declaration is entitled to fees. The Court of Appeals found no abuse of discretion, noting that voluntarily dismissing the contract claims did not defeat a contract-based fee award and that the missing hearing transcripts were presumed to support the trial court. It also awarded the association its fees and costs on appeal.

Is this decision binding precedent in Arizona?

No. This is an unpublished memorandum decision from Division Two of the Arizona Court of Appeals. Under Rule 28 of the Arizona Rules of Civil Appellate Procedure, it does not create legal precedent and generally may not be cited as authority except as the rules allow. It is presented here only as a neutral, educational illustration of how these HOA-governance statutes have been applied.

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Case Summary

Case ID / citation2 CA-CV 2012-0129
Court / tribunalCourt of Appeals
Decision / key dateMarch 12, 2013
Judge / panelPhilip G. Espinosa, Garye L. Vasquez, Virginia C. Kelly
PartiesJoan Tober (Plaintiff/Appellant) v. Civano 1: Neighborhood Association, Inc., and its individual board members (Defendants/Appellees)
Governing law
Topics
ElectionsOpen MeetingsCC&RsProcedureAttorney Fees
Outcome / holding

Under A.R.S. section 33-1812, a planned community association may conduct its board election exclusively by mail-in ballots counted before the annual meeting; the statute does not require in-person voting at every election or that elections be held at the annual meeting, and the open-meeting law, A.R.S. section 33-1804, does not require elections to occur at an open meeting. A member’s suit against the board challenging such procedures is derivative, and, absent a justiciable controversy, it cannot support injunctive relief, so summary judgment and the attorney-fee award for the association were affirmed.

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FAQ / homeowner questions6 questions
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Key Issues & Findings

Case Summary

Joan Tober, a mandatory member of the Civano 1: Neighborhood Association, a Tucson planned community, sued the association and the members of its board of directors after the 2011 board election was conducted exclusively by mail-in ballots that were counted before the association’s annual meeting. She alleged the board breached its statutory obligations under A.R.S. section 33-1812 by not allowing votes to be cast in person and by absentee ballot, and she sought injunctive relief under A.R.S. section 10-3304 after withdrawing her breach-of-contract and breach-of-fiduciary-duty claims. The trial court granted summary judgment for the association and board and awarded them attorney fees and costs, and Tober appealed only the ruling on her breach-of-statutory-duty claim. Division Two of the Arizona Court of Appeals affirmed. It held that Tober’s claim against the individual board members was derivative and could not proceed as a direct action because she alleged no injury unique to herself, that neither the CC&Rs nor section 10-3304 authorized her particular statutory claim as pleaded, and that her challenge to the completed 2011 election and to speculative future elections presented no justiciable controversy for injunctive relief. The court added that, in any event, section 33-1812 does not require in-person voting at every election or that elections be held at the annual meeting. It also upheld the attorney-fee award and awarded the association its fees and costs on appeal.

Key Issues & Findings

The court reviewed the summary judgment de novo because the material facts were undisputed, and it treated capacity to sue as a question of law. It first held that Tober’s claim against the individual board members was derivative rather than direct. An action by an association member is derivative when the gravamen is injury to the corporation or to the whole body of members without any severance among individual holders. A member may sue directly only if she has a relationship with the wrongdoer apart from her membership, the wrongdoer owes her a duty for a reason other than membership, or her injury is unique to her rather than shared by the association. Tober alleged none of these; she asserted only a “personal stake in how her community is run,” and her theory was that Civano members as a whole were disadvantaged by the mail-in procedure. Because she did not follow the demand and standing requirements for a derivative suit under A.R.S. sections 10-3631 and 10-3632, that claim was properly dismissed.

The court next rejected the two authorities Tober said permitted her direct statutory claim. The CC&Rs’ section 16.1 gives owners a right to enforce the community documents, but Tober conceded her statutory claim was independent of the contract, and A.R.S. section 33-1812 could not be read into the CC&Rs because it was enacted after the CC&Rs were executed. A.R.S. section 10-3304 does let a planned community member sue the association to enjoin an ultra vires act, and the court agreed Tober could in theory bring such a claim. But injunctive relief was unavailable: she did not try to enjoin the 2011 election before it was finalized, and a completed election cannot be undone on that ground; her request to control future elections was speculative, unsupported by any showing of likely future harm, and therefore not a justiciable controversy.

Finally, and in any event, the court held the mail-in procedure did not violate section 33-1812. The statute’s phrase “if absentee ballots are used” shows absentee voting is optional, and the statute expressly allows voting by “some other form of delivery” such as mail; it does not require in-person voting at every election or that elections occur at the annual meeting, and section 33-1804 requires only that meetings be open, not that elections happen at them. The court affirmed the attorney-fee award under A.R.S. section 12-341.01 and section 16.2 of the CC&Rs, noting that voluntarily dismissing the contract claims did not defeat a contract-based fee award and that the missing hearing transcripts were presumed to support the trial court’s discretion.

Why It Matters

For Arizona homeowners and boards, the decision illustrates how planned community election procedures are measured against A.R.S. section 33-1812 and the open-meeting law, A.R.S. section 33-1804. The court read section 33-1812 to permit an association to elect directors entirely by mail-in ballot, with ballots counted before the annual meeting, and concluded the statute does not compel in-person voting at every election or require that the election itself take place at the annual meeting. It also underscores a practical timing lesson: a member who believes an election procedure is unlawful generally must seek to enjoin it before the vote is finalized, because courts are reluctant to unwind a completed election or to issue advisory relief about future, speculative elections.

The opinion is an unpublished memorandum decision, so under Rule 28 of the Arizona Rules of Civil Appellate Procedure it is not precedent and generally may not be cited as legal authority; it is offered here only as a neutral, educational illustration of how these HOA-governance statutes have been applied. The decision also highlights procedural mechanics that recur in HOA disputes, including the derivative-versus-direct distinction for suits against a board and the risk that a member who loses such a suit may owe the association’s attorney fees under A.R.S. section 12-341.01 and a fee-shifting provision in the CC&Rs. The homeowner was represented by Elizabeth D. Bushell of Elizabeth D. Bushell, P.L.C., and the association and its board by Carolyn B. Goldschmidt of Monroe, McDonough, Goldschmidt & Molla, P.L.L.C.

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Sycamore Hills Estates Homeowners Association, Inc. v. Zablotny: HOA Court Case Guide

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CC&Rs / Ultra Vires | A.R.S. sections 10-3304, 33-1802 | 2 CA-CV 2019-0200

After stipulating to a judgment approving its settlement with homeowners, an HOA tried to void the judgment and the settlement; Division Two affirmed the denial under A.R.S. section 10-3304 but vacated a supplemental attorney-fee award granted before the response deadline.

Last updated July 1, 2026. Case: Sycamore Hills Estates Homeowners Association, Inc. v. Zablotny; 250 Ariz. 479; 481 P.3d 705 (App. 2021) (No. 2 CA-CV 2019-0200); C20154533.

Download the ruling PDF

Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.

The rule in one sentence

A trial court that has general subject-matter jurisdiction over the underlying contract action may enter a stipulated (consent) judgment granting relief outside the pleadings, so the judgment approving the parties’ settlement agreement was not void under Rule 60(b)(4). Under A.R.S. section 10-3304, a nonprofit planned-community association cannot challenge the validity of its own corporate action on the ground that it lacked power to act, so the Association could not void its settlement agreement as ultra vires. However, the trial court denied the Association procedural due process by granting the opposing party’s supplemental attorney-fee application before the Association’s time to respond had expired, and that fee award must be redetermined.

Case Participants

Neutral Parties

  • Sycamore Hills Estates Homeowners Association, Inc. (Plaintiff/Appellant)
    Arizona non-profit corporation and planned-community association created by the Sycamore Hills Estates CC&Rs; moved under Rule 60(b)(4) to set aside the stipulated judgment approving its own settlement and appealed the denial.
  • Kenneth W. Zablotny and Barbara K. Zablotny (Defendants/Appellees)
    Husband and wife, individually and as trustees of the Kenneth W. Zablotny and Barbara K. Zablotny Joint Living Trust dated August 29, 1995; homeowners bound by the CC&Rs who sued the Association in 2015 and defended the settlement and judgment.
  • Mark E. Chadwick (Counsel)
    Munger Chadwick & Denker P.L.C.
    Counsel for Plaintiff/Appellant Sycamore Hills Estates Homeowners Association, Inc. (Munger Chadwick & Denker P.L.C., Tucson).
  • Gregory L. Miles (Counsel)
    Davis Miles McGuire Gardner PLLC
    Counsel for Defendants/Appellees Kenneth and Barbara Zablotny (Davis Miles McGuire Gardner PLLC, Tempe).
  • Marshall R. Hunt (Counsel)
    Davis Miles McGuire Gardner PLLC
    Counsel for Defendants/Appellees Kenneth and Barbara Zablotny (Davis Miles McGuire Gardner PLLC, Tempe).
  • Judge Brearcliffe (Judge)
    Arizona Court of Appeals, Division Two
    Authored the opinion of the Court.
  • Presiding Judge Eppich (Judge)
    Arizona Court of Appeals, Division Two
    Concurred in the opinion.
  • Chief Judge Vasquez (Judge)
    Arizona Court of Appeals, Division Two
    Concurred in the opinion.
  • The Honorable Charles V. Harrington (Judge)
    Superior Court in Pima County
    Trial judge who entered the stipulated judgment and denied the Rule 60(b)(4) motion (No. C20154533).

What happened and why it matters

Sycamore Hills Estates is a residential community governed by an Amended and Restated Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs), which created the Sycamore Hills Estates Homeowners Association. Kenneth and Barbara Zablotny, homeowners bound by the CC&Rs, sued the Association in 2015 for allegedly breaching the CC&Rs. The parties settled, signed a written settlement agreement, and stipulated to a form of final judgment that incorporated the settlement by reference. In March 2017 the trial court approved the settlement and entered the stipulated judgment. In May 2019 the Association moved under Ariz. R. Civ. P. 60(b)(4) to set the judgment aside, arguing the court had no jurisdiction ‘to render’ a declaratory approval of relief the pleadings never requested, and that its own agreement to a settlement provision conflicting with the CC&Rs was an ultra vires act. The Court of Appeals, Division Two, affirmed the denial of that motion. It held that a court with general jurisdiction over the underlying contract dispute may enter a consent judgment granting relief beyond the pleadings, and that A.R.S. section 10-3304 bars a nonprofit planned-community association from challenging the validity of its own corporate action for lack of power. Separately, the court held the trial court violated procedural due process by granting the Zablotnys’ supplemental attorney-fee request before the Association’s time to respond had run, and it vacated and remanded that fee award. Neither side wholly prevailed, so the court awarded no fees or costs on appeal.

Reviewing the denial of the Rule 60(b)(4) motion de novo, the court explained that a judgment is void only when the court entering it lacked jurisdiction over the subject matter, over the person, or to render the particular judgment or order entered. The Association relied on Andrews v. Andrews for the proposition that a court’s power is limited by the nature of the suit and the issues raised in the pleadings; in Andrews a dissolution court’s affirmative money judgment on a claim outside the statutory dissolution scheme, and never pleaded as a civil claim, was void. The court assumed without deciding that the judgment’s language approving and incorporating the settlement agreement amounted to a declaratory judgment, and acknowledged that neither party had pleaded for declaratory relief (the settlement did not yet exist when the complaint was filed). It nevertheless held the parties’ stipulation asking the court to enter a judgment approving the settlement supplied the power to grant that relief. Drawing on Industrial Park Corp. v. U.S.I.F. Palo Verde Corp., the court reiterated that provisions of a consent judgment may be sustained and enforced even where the relief was outside the pleadings, so long as the court has general jurisdiction over the matters adjudicated. Because the Association did not contest the trial court’s constitutional and statutory authority to hear the underlying contract action, and because the parties agreed to the relief, the stipulated judgment was valid and not void.

Turning to the ultra vires theory, the court noted the Association had certified in the settlement that its signatories held full corporate authority, yet now argued that section III of the agreement could only be granted by a member vote and could not lawfully benefit the Zablotnys alone. The court held A.R.S. section 10-3304(A) forecloses that argument: the validity of corporate action may not be challenged for lack of power except in the three situations listed in subsection (B). For a planned-community association as defined in A.R.S. section 33-1802, a power-to-act challenge is limited to a proceeding by a member against the corporation to enjoin the act, or a proceeding by the corporation against a current or former director, officer, employee, or agent. The Association was neither a member nor suing an officer or agent; it was attacking its own authority, which the statute does not permit. The court acknowledged the statute could allow an impermissible corporate act to stand, but reasoned that the act is not thereby unchallengeable, only that this Association may not bring the challenge, and affirmed on that alternative ground under Forszt v. Rodriguez. Finally, applying de novo review to the due-process claim, the court calculated that the Association had until September 17, 2019 to respond to the supplemental fee application under Rules 54(g), 7.1, 6, and 5(c), yet the trial court ruled on September 13. Because a party opposing fees is entitled to be heard on their reasonableness (Reed v. Reed), and a later motion for new trial does not cure the deprivation (Morrison v. Shanwick), the premature award violated procedural due process and had to be vacated. The court lacked jurisdiction to review the Rule 59 ruling because it was entered after, and not designated in, the notice of appeal.

For Arizona homeowners associations, this published decision is a strong caution against trying to undo a settlement the association itself negotiated and stipulated to. Once a court with general jurisdiction over a contract dispute enters a consent judgment, that judgment is not void merely because it grants relief the original pleadings never requested; the parties’ stipulation supplies the court’s power to act. Just as importantly, A.R.S. section 10-3304 bars a nonprofit planned-community association from later escaping its own corporate action by calling it ultra vires. The Legislature channeled power-to-act challenges into narrow paths, chiefly a suit by a member to enjoin the act or a suit by the association against its own director, officer, employee, or agent, so a board that agrees to terms it may lack authority to grant cannot simply repudiate the deal by attacking its own authority. Boards should confirm their authority before signing, because the corporate-authority defense will generally not be available to them afterward.

The opinion is equally significant on procedure. Even a party that loses on the merits is entitled to procedural due process on attorney fees, meaning a real opportunity to be heard on the reasonableness and appropriateness of a fee request before the court rules. A trial court that grants a supplemental fee application before the opponent’s response deadline runs commits reversible error, and a later motion for new trial or reconsideration does not cure it. The decision also reminds litigants that a notice of appeal must designate each order challenged, or the appellate court will lack jurisdiction to review it, and that appellate fees under A.R.S. section 12-341.01 may be denied outright where neither side completely prevails.

Step-by-step litigation record

Step 2015 The Zablotnys filed a complaint in Pima County Superior Court (No. C20154533) alleging the Association breached the CC&Rs.
Step 2017-03 The trial court approved the parties’ settlement agreement and entered the stipulated final judgment incorporating it by reference.
Step 2019-05 The Association filed a Rule 60(b)(4) motion to set aside the March 2017 judgment as void and to void the settlement agreement as ultra vires.
Step 2019-08-09 The trial court denied the Rule 60(b)(4) motion in an unsigned order.
Step 2019-08-28 The Zablotnys applied for a supplemental award of attorney fees incurred defending the Rule 60(b)(4) motion.
Step 2019-09-05 The Association filed a notice of appeal from the August 9 order.
Step 2019-09-13 The trial court granted the Zablotnys’ supplemental fee application before the Association filed any opposition.
Step 2019-09-17 The Association filed its response to the supplemental fee application and later a Rule 59 motion for relief from the fee award.
Step 2021-01-20 Division Two affirmed the Rule 60(b)(4) denial, vacated the supplemental fee award on due-process grounds, and remanded.

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Source 1 2021-01-20

Opinion

Type: Decision or judgment

Opinion holding that a trial court that has general subject-matter jurisdiction over the underlying contract action may enter a stipulated (consent) judgment granting relief outside the pleadings, so the judgment approving the parties’ settlement agreement was not void under Rule 60(b)(4).

Download source file
2021-01-20_001_opinion.pdf

FAQ

Can a homeowners association undo a stipulated judgment it agreed to?

Generally no. The Court of Appeals held that a court with general jurisdiction over the underlying contract dispute may enter a stipulated (consent) judgment, even one granting relief the pleadings never requested, so long as the parties agreed to it. Because the Association did not contest the trial court’s authority to hear the underlying contract action and had stipulated to the form of judgment, the March 2017 judgment approving the settlement was not void under Rule 60(b)(4).

What is an ultra vires act, and why did that argument fail here?

An ultra vires act is one taken outside the authority of the corporate officers. The Association argued its agreement to section III of the settlement was ultra vires because it conflicted with the CC&Rs and was not approved by a member vote. That argument failed because A.R.S. section 10-3304(A) bars challenging the validity of corporate action on the ground that the corporation lacked power to act, except in narrow situations that did not apply.

How does A.R.S. section 10-3304 limit challenges to an association’s authority?

For a nonprofit planned-community association as defined in A.R.S. section 33-1802, a power-to-act challenge is limited to two settings: a proceeding by a member of the association against the corporation to enjoin the act, or a proceeding by the corporation against a current or former director, officer, employee, or agent. Because the Association was attacking its own authority (not suing an officer or being sued by a member), it could not raise the ultra vires claim.

Why did the court vacate the supplemental attorney-fee award?

The trial court granted the Zablotnys’ supplemental fee application on September 13, 2019, before the Association’s deadline to respond (September 17, 2019, under Rules 54(g), 7.1, 6, and 5(c)). Procedural due process guarantees a party opposing fees a meaningful opportunity to be heard on their reasonableness, so the premature award was reversible error. The court vacated the award and remanded for the trial court to decide the fee question again.

Why couldn’t the appeals court review the denial of the Rule 59 motion?

The order denying the Rule 59 motion was entered after the Association had already filed its notice of appeal, and the notice did not designate that later order. Under Rule 8(c)(3), a notice of appeal must specify the judgment or order being appealed, so the Court of Appeals had no jurisdiction to review the Rule 59 ruling.

Is this decision binding precedent in Arizona?

Yes. This is a published opinion of the Arizona Court of Appeals, Division Two, reported at 250 Ariz. 479 and 481 P.3d 705 (App. 2021). Unlike an unpublished memorandum decision, a published opinion is precedential and may be cited as binding authority in Arizona courts.

Case Dossier

This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.

Case Summary

Case ID / citation250 Ariz. 479; 481 P.3d 705 (App. 2021) (No. 2 CA-CV 2019-0200)
Court / tribunalCourt of Appeals
Decision / key dateJanuary 20, 2021
Judge / panelJudge Brearcliffe (author), Presiding Judge Eppich (concurring), Chief Judge Vasquez (concurring)
PartiesA homeowners association (Sycamore Hills Estates HOA) sought to set aside a stipulated judgment approving its own settlement with homeowners (the Zablotnys), arguing the court could not render the judgment and that its settlement was an ultra vires act; the Court of Appeals affirmed the denial but vacated a premature attorney-fee award.
Governing law
Topics
CC&RsCovenantsAttorney FeesProcedure
Outcome / holding

A trial court that has general subject-matter jurisdiction over the underlying contract action may enter a stipulated (consent) judgment granting relief outside the pleadings, so the judgment approving the parties’ settlement agreement was not void under Rule 60(b)(4). Under A.R.S. section 10-3304, a nonprofit planned-community association cannot challenge the validity of its own corporate action on the ground that it lacked power to act, so the Association could not void its settlement agreement as ultra vires. However, the trial court denied the Association procedural due process by granting the opposing party’s supplemental attorney-fee application before the Association’s time to respond had expired, and that fee award must be redetermined.

Primary public sourceView source opinion/order

Parties, Court, and Research Coverage

Uploaded source package1 PDF
Step-by-step docket roadmap9 roadmap entries
Video overviewNo video embed currently configured
Study / briefing material1 section
FAQ / homeowner questions6 questions
Curated download aliases1 download link

Key Issues & Findings

Case Summary

Sycamore Hills Estates is a residential community governed by an Amended and Restated Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs), which created the Sycamore Hills Estates Homeowners Association. Kenneth and Barbara Zablotny, homeowners bound by the CC&Rs, sued the Association in 2015 for allegedly breaching the CC&Rs. The parties settled, signed a written settlement agreement, and stipulated to a form of final judgment that incorporated the settlement by reference. In March 2017 the trial court approved the settlement and entered the stipulated judgment. In May 2019 the Association moved under Ariz. R. Civ. P. 60(b)(4) to set the judgment aside, arguing the court had no jurisdiction ‘to render’ a declaratory approval of relief the pleadings never requested, and that its own agreement to a settlement provision conflicting with the CC&Rs was an ultra vires act. The Court of Appeals, Division Two, affirmed the denial of that motion. It held that a court with general jurisdiction over the underlying contract dispute may enter a consent judgment granting relief beyond the pleadings, and that A.R.S. section 10-3304 bars a nonprofit planned-community association from challenging the validity of its own corporate action for lack of power. Separately, the court held the trial court violated procedural due process by granting the Zablotnys’ supplemental attorney-fee request before the Association’s time to respond had run, and it vacated and remanded that fee award. Neither side wholly prevailed, so the court awarded no fees or costs on appeal.

Key Issues & Findings

Reviewing the denial of the Rule 60(b)(4) motion de novo, the court explained that a judgment is void only when the court entering it lacked jurisdiction over the subject matter, over the person, or to render the particular judgment or order entered. The Association relied on Andrews v. Andrews for the proposition that a court’s power is limited by the nature of the suit and the issues raised in the pleadings; in Andrews a dissolution court’s affirmative money judgment on a claim outside the statutory dissolution scheme, and never pleaded as a civil claim, was void. The court assumed without deciding that the judgment’s language approving and incorporating the settlement agreement amounted to a declaratory judgment, and acknowledged that neither party had pleaded for declaratory relief (the settlement did not yet exist when the complaint was filed). It nevertheless held the parties’ stipulation asking the court to enter a judgment approving the settlement supplied the power to grant that relief. Drawing on Industrial Park Corp. v. U.S.I.F. Palo Verde Corp., the court reiterated that provisions of a consent judgment may be sustained and enforced even where the relief was outside the pleadings, so long as the court has general jurisdiction over the matters adjudicated. Because the Association did not contest the trial court’s constitutional and statutory authority to hear the underlying contract action, and because the parties agreed to the relief, the stipulated judgment was valid and not void.

Turning to the ultra vires theory, the court noted the Association had certified in the settlement that its signatories held full corporate authority, yet now argued that section III of the agreement could only be granted by a member vote and could not lawfully benefit the Zablotnys alone. The court held A.R.S. section 10-3304(A) forecloses that argument: the validity of corporate action may not be challenged for lack of power except in the three situations listed in subsection (B). For a planned-community association as defined in A.R.S. section 33-1802, a power-to-act challenge is limited to a proceeding by a member against the corporation to enjoin the act, or a proceeding by the corporation against a current or former director, officer, employee, or agent. The Association was neither a member nor suing an officer or agent; it was attacking its own authority, which the statute does not permit. The court acknowledged the statute could allow an impermissible corporate act to stand, but reasoned that the act is not thereby unchallengeable, only that this Association may not bring the challenge, and affirmed on that alternative ground under Forszt v. Rodriguez. Finally, applying de novo review to the due-process claim, the court calculated that the Association had until September 17, 2019 to respond to the supplemental fee application under Rules 54(g), 7.1, 6, and 5(c), yet the trial court ruled on September 13. Because a party opposing fees is entitled to be heard on their reasonableness (Reed v. Reed), and a later motion for new trial does not cure the deprivation (Morrison v. Shanwick), the premature award violated procedural due process and had to be vacated. The court lacked jurisdiction to review the Rule 59 ruling because it was entered after, and not designated in, the notice of appeal.

Why It Matters

For Arizona homeowners associations, this published decision is a strong caution against trying to undo a settlement the association itself negotiated and stipulated to. Once a court with general jurisdiction over a contract dispute enters a consent judgment, that judgment is not void merely because it grants relief the original pleadings never requested; the parties’ stipulation supplies the court’s power to act. Just as importantly, A.R.S. section 10-3304 bars a nonprofit planned-community association from later escaping its own corporate action by calling it ultra vires. The Legislature channeled power-to-act challenges into narrow paths, chiefly a suit by a member to enjoin the act or a suit by the association against its own director, officer, employee, or agent, so a board that agrees to terms it may lack authority to grant cannot simply repudiate the deal by attacking its own authority. Boards should confirm their authority before signing, because the corporate-authority defense will generally not be available to them afterward.

The opinion is equally significant on procedure. Even a party that loses on the merits is entitled to procedural due process on attorney fees, meaning a real opportunity to be heard on the reasonableness and appropriateness of a fee request before the court rules. A trial court that grants a supplemental fee application before the opponent’s response deadline runs commits reversible error, and a later motion for new trial or reconsideration does not cure it. The decision also reminds litigants that a notice of appeal must designate each order challenged, or the appellate court will lack jurisdiction to review it, and that appellate fees under A.R.S. section 12-341.01 may be denied outright where neither side completely prevails.

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