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Jason West vs. Desert Sage Two Homeowners Association

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Case Summary

Case ID 17F-H1716031-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-28
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jason West Counsel —
Respondent Desert Sage Two Homeowners Association Counsel Stewart F. Salwin, Esq.

Alleged Violations

Bylaw § 3.6

Outcome Summary

The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.

Why this result: Respondent established that the Board performed all reasonable actions to fill vacancies, but no eligible members were willing to serve, in part due to Petitioner's obstructionist tactics, rendering enforcement of the Bylaw impossible as it would lead to an absurdity.

Key Issues & Findings

Refusing to fill vacancies on Respondent’s Board of Directors

Petitioner alleged Respondent violated Bylaw § 3.6 by refusing to fill vacancies on the Board of Directors. The Administrative Law Judge determined that the Board had done all it could to fill vacancies, but no eligible members were willing to serve, and Bylaw § 3.6 does not empower the Board to conscript unwilling members.

Orders: Petitioner's petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
  • A.A.C. R2-19-119(B)(2)
  • MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
  • BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
  • Mail Boxes v. Industrial Comm’n of Arizona, 181 Ariz. 119, 122, 888 P.2d 777, 780 (1995)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04

Analytics Highlights

Topics: HOA Board Vacancies, Bylaw 3.6, Obstructionist Tactics, Refusal to Serve
Additional Citations:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • Vazanno v. Superior Court
  • A.A.C. R2-19-119(B)(2)
  • MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
  • BLACK’S LAW DICTIONARY
  • Mail Boxes v. Industrial Comm’n of Arizona
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04

Video Overview

Audio Overview

Decision Documents

17F-H1716031-REL Decision – 572314.pdf

Uploaded 2026-04-24T11:04:00 (137.9 KB)

17F-H1716031-REL Decision – 576049.pdf

Uploaded 2026-04-24T11:04:04 (1160.4 KB)

Briefing Document: West v. Desert Sage Two Homeowners Association (Case No. 17F-H1716031-REL)

Executive Summary

This briefing document analyzes the administrative hearing and final order concerning a petition filed by homeowner Jason West (“Petitioner”) against the Desert Sage Two Homeowners Association (“Respondent”). The Petitioner alleged that the HOA’s Board of Directors violated its own Bylaw § 3.6 by failing to fill vacant board positions.

The Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted as a Final Order by the Commissioner of the Arizona Department of Real Estate. The central finding was that the Respondent had made repeated and reasonable efforts to fill the vacancies but was unsuccessful due to a lack of willing and eligible candidates. The ALJ concluded that the governing bylaw mandates the appointment of willing members but does not grant the power to conscript individuals to serve against their will. Furthermore, the decision determined that the shortage of volunteers was attributable, in part, to the Petitioner’s own “obstructionist tactics,” which created a hostile and dysfunctional environment, leading to a series of board member resignations and deterring potential candidates.

Case Overview

• Case Number: 17F-H1716031-REL

• Petitioner: Jason West, a homeowner and member of the Desert Sage Two Homeowners Association.

• Respondent: Desert Sage Two Homeowners Association, representing a small community of approximately 40 homes.

• Core Allegation: On April 10, 2017, the Petitioner filed a single-issue petition alleging the Respondent violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

• Hearing Date: June 21, 2017, before Administrative Law Judge Diane Mihalsky.

• Final Disposition: The Petitioner’s petition was denied in a decision dated June 28, 2017. This decision was adopted as a Final Order by the Arizona Department of Real Estate on July 12, 2017, making it binding on the parties.

Governing Bylaw in Dispute

The central issue revolved around the interpretation of Section 3.6 of the HOA’s Bylaws, which states:

Vacancies. Vacancies on the Board caused by any reason other than the removal of a director in accordance with the provisions of Section 3.3 of these Bylaws shall be filled by a majority vote of the remaining directors at the first regular or special meeting of the Board held after the occurrence of such vacancy, even though the directors present at such meeting may constitute less than a quorum. Each person so elected shall serve the unexpired portion of the prior director’s term.

Key Parties and Witnesses

Role / Affiliation

Key Testimony / Actions

Jason West

Petitioner, Homeowner, Former Board President

Filed the petition alleging bylaw violation. Previously filed recall petitions against other board members, resigned from the board himself, and proposed a bylaw amendment that disqualified newly elected members.

Eugenia (“Gina”) Murray

Respondent’s Board President

Testified that the board made repeated efforts to find volunteers, but no one was willing to serve, citing the Petitioner’s behavior as a major cause for resignations and lack of interest.

Edward (“Eddie”) Padilla

Community Manager, National Property Service (NPS)

Testified about sending multiple email requests for board candidates on behalf of the board, which yielded no interested parties other than those who would later be disqualified.

Christina Van Soest

Former Board Member

Resigned on Feb. 8, 2017, stating, “I have found the direction of some of the board does not appear to be in the best interest of the community as a whole.” Testified she was uncomfortable with the Petitioner.

Elizabeth Mayhew

Former Board Member

Resigned on Apr. 4, 2017, citing stress directly related to the Petitioner: “I have enough stress daily with my job and cannot handle this or him. It is making me physically ill and he is not worth that.”

Myron (“Ray”) Elmer

Former Board Member

Resigned on Apr. 5, 2017, with the stated reason: “[d]ue to continued problems Jason etc.”

Korey Hjelmeir & Debra Epstein

Former Board Members

Testified for the Petitioner’s rebuttal. Both had previously resigned in June 2016 in response to the Petitioner’s recall petitions and were later disqualified from serving by a bylaw amendment he proposed.

Chronology of Board Destabilization and Resignations

The hearing evidence established a pattern of significant board turnover and dysfunction between June 2016 and June 2017.

• June 23, 2016: Board members Adrian Justiniano, Debra Epstein, and Korey Hjelmeir resigned after the Petitioner filed recall petitions against them.

• August 3, 2016: The Petitioner, June Thompson, and Christina Van Soest were elected to the Board. The Petitioner served as president.

• August 18, 2016: The Board expanded from 3 to 5 members, appointing Gina Murray and Ray Elmer.

• August 29, 2016: June Thompson resigned.

• February 8, 2017: Christina Van Soest resigned, citing the board’s direction and her discomfort with the Petitioner’s “research into members’ backgrounds and history, and the way he was making Board decisions.”

• February 18, 2017: The Petitioner resigned from the Board because he had “more important things to worry about than the management of this dysfunctional community.”

• April 4, 2017: Elizabeth Mayhew resigned, stating she could not handle the stress caused by the Petitioner and his “verbal assaults, constant lashing out, and personal attacks.”

• April 5, 2017: Ray Elmer resigned, attributing his departure to “continued problems Jason etc.” This left Gina Murray as the sole remaining board member.

Respondent’s Efforts to Fill Vacancies

The Respondent provided evidence of multiple, documented attempts to recruit new board members.

• February 23, 2017: Following the resignations of Ms. Van Soest and the Petitioner, Community Manager Eddie Padilla sent an email requesting “motivated and dedicated individuals” to serve on the Board. No one responded.

• March 31, 2017: At an open Board Meeting with “Board appointments” on the agenda, Gina Murray asked for volunteers and nominations from the floor. No one responded.

• April 4 & 18, 2017: Mr. Padilla sent two further emails requesting members interested in serving on the board to submit biographies for an upcoming annual meeting. The only individuals to respond and submit biographies were Mr. Justiniano and Ms. Hjelmeir.

• May 15, 2017: At the annual meeting, Ms. Murray again accepted nominations from the floor. Debra Epstein was nominated.

• June 5, 2017: After the newly elected board was disqualified, Mr. Padilla sent another email asking for volunteers.

Petitioner’s Actions and Their Consequences

The Administrative Law Judge’s decision identified the Petitioner’s own actions as a primary cause for the board’s inability to fill vacancies.

• Instigation of Resignations: The Petitioner’s recall petitions in June 2016 and behavior cited in the 2017 resignation letters from Van Soest, Mayhew, and Elmer directly contributed to the board vacancies.

• Contradictory Claims: The Petitioner testified that four individuals (Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti) were interested in serving. However, the sign-in sheet for the March 31, 2017 meeting, where appointments were to be made, showed none of these individuals were present.

• Disqualifying Bylaw Amendment: The Petitioner proposed a new bylaw, § 3.12, which was passed at the May 15, 2017 meeting. It stated:

• Attempted Removal of Remaining Director: On June 12, 2017, the Petitioner submitted a petition to remove Gina Murray, the last remaining original board member, which would have left the board entirely vacant.

Administrative Law Judge’s Findings and Decision

The ALJ’s conclusions of law were decisive in denying the petition.

1. Burden of Proof: The Petitioner bore the burden of proving by a preponderance of the evidence that the Respondent had violated its bylaws.

2. Interpretation of Bylaw § 3.6: The Judge ruled that while the bylaw requires the Board to appoint members to fill vacancies, “it does not empower the Board to conscript members who are not willing to serve on the Board.”

3. Principle of Absurdity: Citing legal precedent, the decision stated that bylaws must be construed to avoid an absurd result. Forcing an HOA to operate without a board because no eligible members are willing to serve, especially when the situation is exacerbated by the Petitioner, would be such an absurdity.

4. Respondent’s Due Diligence: The Judge found that “Respondent established that the Board has done all it could to fill vacancies.”

5. Petitioner’s Culpability: The final conclusion explicitly states that “at this time, no eligible members are willing to serve, in part due to Petitioner’s obstructionist tactics, including Petitioner and his claimed supporters.”

Based on these findings, the ALJ ordered that the Petitioner’s petition be denied. The order became final and binding upon adoption by the Arizona Department of Real Estate on July 12, 2017.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

——————————————————————————–

Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

An independent state agency that conducts evidentiary hearings for cases referred by other state agencies, such as the Department of Real Estate.

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

——————————————————————————–

Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

An independent state agency that conducts evidentiary hearings for cases referred by other state agencies, such as the Department of Real Estate.

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Case Participants

Petitioner Side

  • Jason West (petitioner)
    Appeared on his own behalf; testified on his own behalf
  • Linda Siedler (witness, member)
    Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
  • Teresa Price (witness, member)
    Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
  • Bret Morse (witness, member)
    Allegedly interested in serving on the Board; submitted absentee ballot; signed petition to remove Ms. Murray
  • Bryan Brunatti (witness, member)
    Allegedly interested in serving on the Board; attended meeting and counted ballots; signed petition to remove Ms. Murray

Respondent Side

  • Stewart F. Salwin (HOA attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Represented the Respondent
  • Eugenia Murray (board president, witness)
    Only current Board member at the time of hearing; testified for Respondent
  • Edward Padilla (property manager, witness)
    National Property Service (NPC)
    Community Manager; testified for Respondent

Neutral Parties

  • Diane Mihalsky (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
    ADRE Commissioner who adopted the ALJ Decision

Other Participants

  • Korey Hjelmeir (witness, former board member)
    Testified for Petitioner as former Board member; resigned and later sought re-election
  • Debra Epstein (witness, former board member)
    Testified for Petitioner as former Board member; resigned and later sought re-election; appeared via Skype at a meeting
  • Adrian Justiniano (former board member)
    Resigned and later sought re-election
  • June Thompson (former board member)
    Elected and resigned in 2016
  • Christina Van Soest (former board member)
    Elected and resigned in 2017
  • Myron Elmer (former board member)
    Appointed and resigned in 2017
  • Elizabeth Mayhew (former board member)
    Appointed and resigned in 2017
  • David Epstein (member)
    Appeared via Skype at a meeting; expressed interest in serving on Board
  • Abby Hansen (HOA coordinator)
    Individual to whom requests for rehearing should be addressed

Mark Virden vs. Lakeside Ski Village HOA

Posted on by

Case Summary

Case ID 17F-H1717027-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-27
Administrative Law Judge Tammy L. Eigenheer
Outcome The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Mark Virden Counsel —
Respondent Lakeside Ski Village HOA Counsel Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs
Additional Citations:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Video Overview

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

Uploaded 2026-04-24T11:04:26 (82.2 KB)

17F-H1717027-REL Decision – 575046.pdf

Uploaded 2026-04-24T11:04:32 (736.4 KB)

Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.

Study Guide: Virden v. Lakeside Ski Village HOA

This guide provides a comprehensive review of the administrative case between Petitioner Mark Virden and Respondent Lakeside Ski Village HOA, concerning the construction of an internet service tower. It includes a quiz with an answer key to test factual recall, essay questions for deeper analysis, and a glossary of key terms found in the legal documents.

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Short-Answer Quiz

Instructions: Answer the following ten questions in 2-3 sentences each, based on the provided source documents.

1. Who were the primary parties involved in this case, and what was the central dispute?

2. What specific Arizona Revised Statute did the Petitioner allege was violated, and what does this statute govern?

3. Describe the unique governance structure of the Lakeside Ski Village HOA as noted in the hearing’s findings of fact.

4. What was the arrangement between AireBeam, Lou Talarico, and Carl Rygg that led to the construction of the internet tower?

5. According to the HOA’s governing documents (CC&Rs), what specific authority was granted to its Architectural Committee?

6. On what key legal basis did the Administrative Law Judge reject the Petitioner’s claim of a conflict of interest violation?

7. What was the Petitioner’s alternative argument regarding the tower not being for the “benefit of all or portions” of the HOA, and how did the Judge rule on it?

8. Define the “preponderance of the evidence” standard and identify which party had the burden of meeting this standard.

9. What was the final outcome of Mark Virden’s petition, as determined by the Administrative Law Judge and subsequently adopted?

10. After the Final Order was issued on July 10, 2017, what were the potential next steps for a party wishing to challenge the decision?

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Answer Key

1. The primary parties were Mark Virden (Petitioner) and the Lakeside Ski Village HOA (Respondent). The central dispute was Virden’s allegation that the HOA improperly allowed the construction of an internet service tower on common property due to an undisclosed conflict of interest involving board members.

2. The Petitioner alleged a violation of A.R.S. § 33-1811. This statute governs contracts and conflicts of interest for an HOA’s board of directors, requiring a board member to declare a conflict in an open meeting if a decision would benefit them or a close family member.

3. The Lakeside Ski Village HOA does not have a traditional board of directors. Instead, its Bylaws state that the affairs of the Association are managed directly by the members, who are authorized to exercise all powers normally held by a board.

4. After the HOA failed to secure enough subscribers for AireBeam to build the tower, Lou Talarico offered to pay the upfront cost. In exchange for his payment, AireBeam agreed to provide free internet service to Mr. Talarico and HOA Vice President Carl Rygg for as long as the tower was operational.

5. The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants the Architectural Committee the authority to “permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

6. The Judge rejected the claim because the HOA’s CC&Rs empowered the Architectural Committee to approve the tower directly, without needing ratification from the members acting as a board. Therefore, the disclosure requirements of A.R.S. § 33-1811, which apply to actions taken “by or on behalf of the board of directors,” were not applicable to the Committee’s decision.

7. The Petitioner argued that because people outside the HOA could subscribe to the service, the tower was not for the “benefit of all or portions” of the HOA, meaning the Architectural Committee exceeded its authority. The Judge ruled that the language of the CC&Rs does not require that the system exclusively benefit the HOA.

8. “Preponderance of the evidence” is defined as evidence that is more convincing and shows that the fact sought to be proved is more probable than not. In this proceeding, the Petitioner, Mark Virden, bore the burden of proving his allegations by this standard.

9. The Administrative Law Judge ordered that the Petitioner’s petition be denied, concluding that the Architectural Committee’s approval of the tower was proper. This decision was adopted by the Commissioner of the Department of Real Estate, making it the Final Order.

10. A dissatisfied party could request a rehearing within thirty (30) days for specific causes, such as procedural irregularity, misconduct, or newly discovered evidence. Alternatively, a party could appeal the final administrative decision by filing a complaint for judicial review in court.

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Essay Questions

Instructions: The following questions are designed for longer, more analytical responses. Do not provide answers.

1. Analyze the central conflict between the requirements of A.R.S. § 33-1811, which governs board actions, and the specific powers granted to the Architectural Committee in the Lakeside Ski Village HOA’s CC&Rs. Explain in detail how this conflict, and its interpretation by the Judge, determined the outcome of the case.

2. Discuss the concept of “conflict of interest” as presented in the Petitioner’s complaint. Evaluate whether the actions of the Talaricos and Carl Rygg constituted a conflict of interest, and explain why the Administrative Law Judge’s decision did not ultimately hinge on this point, referencing the use of the term arguendo in the Conclusions of Law.

3. Explain the procedural journey of this case, from the initial petition filing on or about March 23, 2017, to the Final Order issued on July 10, 2017. Identify the key bodies and officials involved at each stage (e.g., Department of Real Estate, Office of Administrative Hearings, Administrative Law Judge, Commissioner).

4. The Petitioner’s complaint details his frustration with a perceived lack of transparency from board members regarding their compensation agreement with AireBeam. Despite these ethical concerns, the petition failed. Based on the “Conclusions of Law,” explain the legal reasoning that rendered the Petitioner’s arguments about transparency and fairness insufficient to prove a violation under the cited statute.

5. The Final Order outlines eight specific causes for which a rehearing or review could be granted. Choose two of these causes (e.g., “The findings of fact or decision is arbitrary, capricious, or an abuse of discretion,” or “Newly discovered material evidence that could not with reasonable diligence have been discovered and produced at the original hearing”) and construct a hypothetical argument that Mark Virden could have made for a rehearing based on them, using the facts presented in the case documents.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official who presides over the administrative hearing, reviews evidence, makes findings of fact, draws conclusions of law, and issues a decision. In this case, Tammy L. Eigenheer.

A.R.S. (Arizona Revised Statutes)

The collection of all the laws passed by the Arizona legislature. The statute at the center of this case was A.R.S. § 33-1811.

Arguendo

A Latin term meaning “for the sake of argument.” The Judge used this to temporarily accept a point as true (that the free service was compensation) in order to show that even if it were true, the Petitioner’s argument would still fail on other legal grounds.

An acronym for Declaration of Covenants, Conditions, Restrictions and Easements. These are the governing legal documents that establish the rules and operational framework for a homeowners association.

Common Area

Property within the HOA, such as land for a community tower, that is owned and shared by all members of the association.

Department of Real Estate

The Arizona state agency that has jurisdiction to hear certain disputes between property owners and their homeowners associations.

HOA (Homeowners Association)

An organization in a planned community or subdivision that creates and enforces rules for the properties within its jurisdiction. In this case, the Lakeside Ski Village HOA.

Petitioner

The party who initiates a legal action by filing a petition. In this case, Mark Virden.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It means the evidence presented must be of greater weight or more convincing than the opposing evidence, showing a fact is more probable than not.

Respondent

The party against whom a petition is filed and who must respond to the allegations. In this case, the Lakeside Ski Village HOA.

How Two HOA Insiders Got Free Internet For Life—And Why the Law Couldn’t Stop Them

Introduction: The Rules Aren’t Always What They Seem

For many homeowners, the relationship with their Homeowner Association (HOA) is built on a simple assumption: while the rules can be strict, they exist to protect the community from abuses of power. We trust that state laws and an HOA’s own documents prevent board members from using their position for personal enrichment. The concept of a “conflict of interest” seems straightforward—board members can’t vote on deals that benefit themselves or their families.

But what if a deal that looks like a textbook conflict of interest was found to be perfectly legal? This is the cautionary tale of Mark Virden v. Lakeside Ski Village HOA, a shocking case from Arizona that turns our assumptions on their head. It’s a story where insiders secured a deal for free lifetime internet service, and despite a homeowner’s legitimate outrage, the law was powerless to stop them. The case wasn’t decided on fairness or ethics, but on the fine print buried in the HOA’s governing documents.

This case is a crucial lesson for every homeowner. It reveals how seemingly innocuous clauses can be weaponized to bypass transparency laws, effectively legalizing what would otherwise be considered a blatant conflict of interest. It demonstrates that in the world of community associations, power doesn’t always reside where you think it does, and the only thing protecting you is a deep understanding of your own community’s rules.

Takeaway 1: A Committee’s Power Can Sidestep Conflict-of-Interest Laws

The petitioner’s argument was simple and seemed like a slam dunk. An internet company needed to build a service tower on HOA common property but lacked enough subscribers to fund it. Lou Talarico, whose wife Susan was on the HOA’s Architectural Committee, offered to pay the upfront installation costs. In exchange, Mr. Talarico and the HOA’s Vice President, Carl Rygg, would receive free internet service for life.

This arrangement reeks of a conflict of interest, and on its face, appears to be a direct violation of Arizona’s statute (A.R.S. § 33-1811). The law requires that if an action “taken by or on behalf of the board of directors” would benefit a board member’s spouse, the conflict must be declared in an open meeting. Here, no such declaration was made.

But here is the stunning legal twist: the Administrative Law Judge found that the decision to approve the tower was made not by the “board,” but exclusively by the “Architectural Committee.” The HOA’s governing documents explicitly granted this committee the power to approve communication systems. Because the state’s conflict-of-interest law applies specifically to actions taken by the board, it had no jurisdiction over a decision made independently by the committee. In essence, the state law was watching the front door (the board), but the HOA’s documents gave the Architectural Committee a back door—one with no legal supervision for conflicts of interest. This technicality meant the deal, and the conflict of interest at its core, was entirely proper under the law.

Takeaway 2: An HOA ‘Board’ Might Not Be a Board at All

The second critical fact that enabled this outcome was the highly unusual structure of the Lakeside Ski Village HOA itself. The judge noted that the association “does not have a traditional Board.” Instead, all the members collectively act as the board.

The HOA’s Bylaws lay out this unique governance model:

“[t]he affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

This structure is fundamentally important. State laws governing HOAs are written with a traditional model in mind—a small group of elected directors making decisions for the community. But at Lakeside Ski Village, the power of the “members acting as a board” was limited by specific authority delegated to other entities, most notably the Architectural Committee. This decentralized structure created a loophole the state’s conflict-of-interest law was not designed to close.

The lesson for homeowners is that you can never assume all HOAs are structured alike. The very definition of the “board” and the scope of its power can be radically different from one community to another. Here, that unique structure was the key that unlocked the committee’s unchecked power.

Takeaway 3: The Fine Print Is All That Matters

Ultimately, this entire dispute was decided not by broad principles of transparency or fiduciary duty, but by specific phrases written in the HOA’s founding documents years ago. The petitioner, Mark Virden, expressed understandable outrage that the insiders involved refused to be transparent.

He recounted a particularly telling exchange with the association’s Vice President when he asked about the terms of the internet deal:

When we initially asked the VP what their compensation was, he stated “it’s none of your business”.

While this response would infuriate any homeowner, the court’s final decision effectively proved it right. Because the Architectural Committee was acting within its sole authority, the details of its agreement were not subject to the disclosure rules that govern the board. The response, “it’s none of your business,” turned out to be legally correct.

The petitioner’s frustration was compounded by the professional background of the committee member at the center of the conflict. In his filing, he wrote: “To make things worse, the board member whose spouse paid the upfront fee to the tower company is a licensed realtor, Susan Talarico. If anyone should understand the fiduciary responsibility to owners of a HOA, it’s a realtor serving on a Board of that HOA.” His belief that a real estate professional should have known better underscores the feeling of betrayal.

And in a final, dramatic turn that reinforces the theme of insiders benefiting, the petitioner noted what happened after the deal was done: “She has since resigned but her husband has taken her place on the board.” This illustrates the most vital lesson of all: your sense of what is “fair” is legally irrelevant if the governing documents allow for a specific action. The CC&Rs and Bylaws are the ultimate source of truth and power in any HOA dispute.

Conclusion: Are You Sure You Know Your Rules?

The case of Virden v. Lakeside Ski Village HOA serves as a stark reminder that HOA governance is a world of legal technicalities, where the written word of the founding documents is supreme. It shows how specific, delegated authority can create outcomes that defy the spirit, if not the letter, of the law. What appears to be a clear-cut case of self-dealing can be rendered perfectly permissible by a few key sentences in the bylaws or CC&Rs.

This case was decided on the specific authority granted to a single committee—do you know which committees in your HOA have the power to make decisions without board approval?

Case Participants

Petitioner Side

  • Mark Virden (petitioner)

Respondent Side

  • Stewart F. Salwin (attorney)
    Lakeside Ski Village HOA
  • Susan Talarico (board member)
    Lakeside Ski Village HOA
    Licensed realtor; spouse of Lou Talarico; resigned but husband took her place on the board
  • Lou Talarico (board member)
    Lakeside Ski Village HOA
    Spouse of Susan Talarico; paid upfront tower cost; received free internet service; referred to as Treasurer in petition excerpt
  • Carl Rygg (board member)
    Lakeside Ski Village HOA
    Vice President; received free internet service
  • Emmett Mitchell (board member)
    Lakeside Ski Village HOA
    President

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Addressee for rehearing requests

Brian Sopatyk vs. The Lakeshore Village Condo. Association, Inc.

Posted on by
Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.

Case Summary

Case ID 17F-H1716004-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-08-10
Administrative Law Judge Thomas Shedden
Outcome The ALJ decision, certified as the final administrative decision, dismissed the Petitioner's claim after rehearing, finding that the Petitioner failed to prove the Association violated A.R.S. § 33-1260. The challenged $660 fee was determined to be a permissible working capital contribution under the CC&Rs, not a fee restricted by the statutory cap on resale disclosure services.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Sopatyk Counsel Nathan Andrews
Respondent The Lakeshore Village Condo. Association, Inc. Counsel Bradley R. Jardine

Alleged Violations

ARIZ. REV. STAT. section 33-1260

Outcome Summary

The ALJ decision, certified as the final administrative decision, dismissed the Petitioner's claim after rehearing, finding that the Petitioner failed to prove the Association violated A.R.S. § 33-1260. The challenged $660 fee was determined to be a permissible working capital contribution under the CC&Rs, not a fee restricted by the statutory cap on resale disclosure services.

Why this result: Petitioner failed to meet the burden of proof; the fee in question was determined to be a working capital fee/assessment governed by the CC&Rs and ARS § 33-1242(A)(2), and not subject to the limitation set forth in ARS § 33-1260.

Key Issues & Findings

Alleged excessive fee collection for resale disclosure/transfer services

Petitioner alleged the Association violated A.R.S. § 33-1260 by charging a $660 fee, which he argued exceeded the statutory maximum of $400 for resale disclosure/transfer services. The Association argued the $660 fee was a working capital contribution mandated by CC&R section 8.13 and was mislabeled, and therefore not subject to the statutory limitations of § 33-1260.

Orders: Brian D. Sopatyk’s petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)

Analytics Highlights

Topics: HOA fee dispute, Working capital fee, Transfer fee, Resale disclosure, Statutory interpretation
Additional Citations:

  • ARIZ. REV. STAT. § 33-1260
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)

Video Overview

Audio Overview

Decision Documents

17F-H1716004-REL-RHG Decision – 571793.pdf

Uploaded 2026-04-24T11:00:00 (96.8 KB)

17F-H1716004-REL-RHG Decision – 580965.pdf

Uploaded 2026-04-24T11:00:09 (61.2 KB)

17F-H1716004-REL-RHG Decision – 593042.pdf

Uploaded 2026-04-24T11:00:20 (100.9 KB)

17F-H1716004-REL-RHG Decision – 593045.pdf

Uploaded 2026-04-24T11:00:26 (59.2 KB)

17F-H1716004-REL-RHG Decision – 531040.pdf

Uploaded 2026-01-23T17:17:41 (67.9 KB)

17F-H1716004-REL-RHG Decision – 540004.pdf

Uploaded 2026-01-23T17:17:44 (154.0 KB)

Briefing: Sopatyk v. Lakeshore Village Condominium Association, Inc.

Executive Summary

This document synthesizes the findings and outcomes of an administrative legal case brought by petitioner Brian Sopatyk against The Lakeshore Village Condominium Association, Inc. The core of the dispute was Mr. Sopatyk’s allegation that the Association charged a “transfer fee” of $660 upon the sale of a condominium unit, in violation of Arizona Revised Statute (A.R.S.) § 33-1260, which caps fees for resale disclosure services at an aggregate of $400.

Following an initial hearing and a subsequent rehearing, the Administrative Law Judge (ALJ) consistently ruled in favor of the Association, dismissing Mr. Sopatyk’s petition on both occasions. The central finding was that the petitioner failed to prove a statutory violation by a preponderance of the evidence. The Association successfully argued that the disputed $660 charge was not a resale disclosure fee governed by A.R.S. § 33-1260, but rather a “working capital fee” authorized by its Covenants, Conditions, and Restrictions (CC&Rs). The Association admitted that this fee had been historically mislabeled as a “transfer fee,” an error it had since identified and corrected. The actual fee charged for resale disclosure documents was a separate, compliant $30 “statement fee.” The ALJ’s decision from the rehearing was certified as the final administrative decision in the matter on August 10, 2017.

Case Overview

Case Number

17F-H1716004-REL (Initial Hearing)
17F-H1716004-REL-RHG (Rehearing)

Jurisdiction

State of Arizona, Office of Administrative Hearings

Petitioner

Brian Sopatyk

Respondent

The Lakeshore Village Condominium Association, Inc.

Core Allegation

Violation of A.R.S. § 33-1260, which limits fees for resale disclosure services to a maximum of $400.

Final Outcome

Petition Dismissed. The Respondent was deemed the prevailing party.

Chronology of Legal Proceedings

March 2, 2015

The Association issues a disclosure statement for Mr. Sopatyk’s purchase, showing a $660 “transfer fee” and a $30 “statement fee.”

May 18, 2016

Prompted by Mr. Sopatyk, the Association’s Board discusses the fee structure. It concludes the $660 fee is a mislabeled “working capital fee” and not a statutory violation.

August 9, 2016

Mr. Sopatyk files a petition with the Arizona Department of Real Estate alleging the violation.

November 14, 2016

The initial administrative hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

ALJ Shedden issues a decision dismissing Mr. Sopatyk’s petition.

December 13, 2016

The Commissioner of the Department of Real Estate adopts the ALJ’s recommendation, issuing a Final Order to dismiss the petition.

Post-Dec. 2016

Mr. Sopatyk requests a rehearing of the matter.

June 9, 2017

The rehearing is conducted, again before ALJ Thomas Shedden.

June 26, 2017

ALJ Shedden issues a new decision, once again dismissing Mr. Sopatyk’s petition.

August 10, 2017

With no modifying action from the Department of Real Estate, the ALJ’s June 26 decision is certified as the final administrative decision.

Core Dispute Analysis

The case centered on the interpretation and classification of two fees charged by the Association during the sale of Mr. Sopatyk’s condominium unit.

Petitioner’s Position (Brian Sopatyk)

• Allegation of Violation: Mr. Sopatyk alleged that the Association charged a “transfer fee” of $660, which directly contravened the $400 statutory maximum established by A.R.S. § 33-1260 for services related to resale disclosure.

• Evidence Presented: The petitioner submitted a March 2, 2015 disclosure form from the Association listing both a “660transferfee”anda”30 statement fee.” A HUD-1 disclosure statement for the purchase was also entered, showing the $660 “Transfer Fee” was split, with $330 paid from the buyer’s (Sopatyk’s) funds and $330 from the seller’s funds.

• Contradictory Testimony: The ALJ noted a discrepancy in the petitioner’s statements. The sworn petition stated the $660 fee was split between him and the seller, while his testimony at the rehearing claimed he “had in fact paid the entire $660 as part of the negotiated price.” The ALJ decision stated, “either Mr. Sopatyk’s sworn statement or his testimony must be false.”

• Requested Remedies: Mr. Sopatyk requested that the Association be ordered to comply with the statute, that refunds be paid to those who paid fees in excess of the statutory maximum, and that a civil penalty be imposed against the Association.

Respondent’s Position (The Lakeshore Village Condo. Assoc.)

• Distinction Between Fees: The Association’s central argument was that two separate and legally distinct fees were assessed:

1. A $30 Resale Statement Fee: This was the charge for preparing documents pursuant to A.R.S. § 33-1260 and was well within the $400 limit.

2. A $660 Working Capital Fee: This fee was authorized under a separate provision, Section 8.13 of the Association’s CC&Rs, which mandates an assessment from each new owner equal to two monthly installments to fund the Association’s working capital (reserve) fund.

• “Mislabeled” Fee: The Association acknowledged that the $660 working capital fee was incorrectly labeled as a “transfer fee.” Association Manager Amy Telnes testified that she received erroneous information from the prior manager and had been using the wrong label.

• Board Action and Corrective Measures: The minutes from the May 18, 2016 Board meeting show that the Board, after reviewing a legal opinion, concluded the issue was one of “labeling, not violating the statute.” The Board directed Ms. Telnes to perform an accounting and transfer all such fees collected into the Reserve Account. To prevent future confusion, the Board also voted to assess a single $400 transfer fee on all future transactions, with no other fees.

• Fund Allocation: Ms. Telnes testified that the $660 fee was deposited into the Association’s reserve fund, consistent with its purpose as a working capital contribution, while the $30 fee was the charge pursuant to A.R.S. § 33-1260(C).

Administrative Law Judge’s Findings and Rulings

ALJ Thomas Shedden presided over both the initial hearing and the rehearing, reaching the same conclusion in both instances.

Key Rulings and Legal Reasoning

• Burden of Proof: The ALJ established that Mr. Sopatyk, as the petitioner, bore the burden of proving the alleged violation by a “preponderance of the evidence.”

• Core Finding: The evidence demonstrated that the Association charged two distinct fees. The $30 fee was for document preparation under A.R.S. § 33-1260, while the $660 fee was a working capital assessment authorized by CC&R Section 8.13. The ALJ concluded that A.R.S. § 33-1260 was not applicable to the $660 fee.

• Conclusion on Violation: Based on the evidence, including the testimony of the Association manager and the board meeting minutes, the ALJ found that the $660 fee was mislabeled but was not collected for services related to resale disclosure. Therefore, Mr. Sopatyk did not meet his burden to show that the Association violated the statute.

• Rejection of Harm-Based Argument: The ALJ did not accept the Association’s argument that the claim should fail because Mr. Sopatyk did not personally pay over $400. The judge clarified that A.R.S. § 33-2199.01 “does not require this type of particularized harm, but rather applies to all statutory violations.”

• Dismissal of Petition: In both the November 29, 2016 decision and the June 26, 2017 decision, the order was to dismiss Mr. Sopatyk’s petition and deem the Association the prevailing party.

Final Disposition and Legal Status

The decision issued by ALJ Shedden on June 26, 2017, was transmitted to the Arizona Department of Real Estate. The Department had until August 1, 2017, to accept, reject, or modify the decision. As no action was taken by the deadline, the Office of Administrative Hearings issued a Certification of Decision of Administrative Law Judge on August 10, 2017. This certification established the ALJ’s decision as the final administrative decision of the Department of Real Estate in the matter.

Key Legal Citations and Definitions

• A.R.S. § 33-1260 (Resale of Units; Information Required): This Arizona statute governs the information a condominium association must provide to a prospective purchaser. It explicitly limits the fees an association can charge for these services:

• CC&R Section 8.13 (Transfer Fee and Working Capital Fund): This section of The Lakeshore Village Condominium Association’s governing documents provides the authority to collect a fee from new owners for a different purpose:

• Preponderance of the Evidence: The standard of proof required for the petitioner to prevail, defined in the legal decisions as:

Study Guide: Sopatyk v. The Lakeshore Village Condo. Association, Inc.

Short Answer Quiz

Instructions: Answer the following questions in 2-3 complete sentences, drawing exclusively from the information provided in the case documents.

1. Identify the petitioner and the respondent in this case, and state the core legal violation the petitioner alleged.

2. What specific fees were charged during the petitioner’s condominium purchase that became the central point of the dispute?

3. According to the Association, what was the true nature of the $660 fee, and how did it explain the “transfer fee” label on the disclosure documents?

4. What role did Amy Telnes, the Association manager, play in explaining the history of the disputed fee?

5. What actions did the Association’s Board take during its meeting on May 18, 2016, to address the petitioner’s concerns and correct its internal procedures?

6. Who held the burden of proof in this matter, and what was the legal standard required to meet that burden?

7. What was the official outcome of the initial administrative hearing held on November 14, 2016?

8. Why was a re-hearing conducted, and what was the final outcome of that hearing on June 9, 2017?

9. According to the re-hearing decision, there was a significant contradiction between the petitioner’s sworn petition and his later testimony. What was this contradiction?

10. What was the legal basis, according to the Association’s CC&Rs, for collecting the $660 working capital fee?

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Answer Key

1. The petitioner was Brian Sopatyk, and the respondent was The Lakeshore Village Condominium Association, Inc. Mr. Sopatyk alleged that the Association violated ARIZ. REV. STAT. section 33-1260 by charging a transfer fee in excess of the statutory maximum of $400.

2. The disputed fees were a $660 “transfer fee,” which was split between the buyer (Mr. Sopatyk) and the seller, and a separate $30 “statement fee” or “Resale Statement Fee.” The petitioner’s claim focused on the $660 fee being above the legal limit for resale disclosure services.

3. The Association argued the $660 fee was not a transfer fee for disclosure services but was a “working capital fee” authorized by its CC&Rs. It explained that the fee had been mislabeled as a “transfer fee” due to an error passed down from a previous property manager.

4. Amy Telnes testified that when she became the Association manager, she was incorrectly told the working capital fee was the transfer fee. She further testified that the $660 was deposited into the Association’s reserve fund, and the actual fee charged for disclosure under the statute was the separate $30 statement fee.

5. At the May 18, 2016, meeting, the Board concluded it was not in violation of the law but that its fee labeling was confusing. The Board directed Amy Telnes to perform an accounting and transfer all mislabeled fees into the Reserve Account and voted to assess a single, correctly labeled $400 transfer fee on all future transactions.

6. The petitioner, Brian Sopatyk, bore the burden of proof. The standard of proof required was a “preponderance of the evidence,” defined as evidence with the most convincing force that inclines an impartial mind to one side of an issue over the other.

7. Following the initial hearing, Administrative Law Judge Thomas Shedden found that Mr. Sopatyk had not shown by a preponderance of the evidence that the Association violated the statute. The judge ordered that Mr. Sopatyk’s petition be dismissed.

8. A re-hearing was conducted after Mr. Sopatyk requested one following the initial decision. The final outcome of the June 9, 2017, re-hearing was the same as the first: the Administrative Law Judge found the petitioner did not meet his burden of proof and ordered the petition to be dismissed.

9. In his sworn petition, Mr. Sopatyk stated that the $660 transfer fee was split between him and the seller. However, during his testimony at the re-hearing, he stated that he had in fact paid the entire $660 as part of the negotiated price of the unit.

10. The legal basis was Section 8.13 of the Association’s Declaration of Covenants, Conditions and Restrictions (CC&Rs). This section, titled “Transfer Fee and Working Capital Fund,” called for an assessment from each new owner of two monthly installments of the annual fee to be deposited into the working capital fund.

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Essay Questions

Instructions: The following questions are designed to test a deeper, more synthesized understanding of the case. Formulate a comprehensive response to each prompt, incorporating specific facts, legal arguments, and procedural details from the source documents.

1. Trace the complete timeline of the case, beginning with the filing of the petition. Include key dates of filings, hearings, decisions, and final certifications, and describe the significance of each event in the legal process.

2. Analyze the central legal argument of the Respondent, The Lakeshore Village Condominium Association. Explain how the distinction between a “transfer fee” under ARIZ. REV. STAT. section 33-1260 and a “working capital fee” under the Association’s CC&Rs was crucial to the Administrative Law Judge’s final decision.

3. Discuss the concept of “preponderance of the evidence” as it is defined and applied in this case. Explain why the petitioner, Brian Sopatyk, failed to meet this standard of proof in both the initial hearing and the re-hearing, citing specific evidence presented by the Association.

4. Evaluate the importance of the Association’s Board Meeting Minutes from May 18, 2016, as a piece of evidence. Detail the specific findings and resolutions from that meeting and explain how they were used to build the Association’s defense.

5. Examine the roles of the key individuals and entities in this administrative action. Describe the functions and contributions of Brian Sopatyk (Petitioner), Amy Telnes (Association Manager), Michael Cibellis (Association President), Thomas Shedden (Administrative Law Judge), and the Arizona Department of Real Estate.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official, in this case Thomas Shedden, who presides over hearings at the Office of Administrative Hearings, makes findings of fact and conclusions of law, and issues a decision.

ARIZ. REV. STAT. section 33-1260

The Arizona statute that requires a condominium association to provide certain disclosure documents to a prospective purchaser. It also limits the fee an association can charge for the preparation of these documents to an aggregate of four hundred dollars.

Burden of Proof

The obligation of a party in a legal case to prove their allegations. In this matter, the petitioner, Brian Sopatyk, bore the burden of proof.

An abbreviation for the Declaration of Covenants, Conditions and Restrictions. In this case, section 8.13 of the Association’s CC&Rs authorized the collection of a fee from new owners for a working capital fund.

Final Administrative Decision

The ultimate, legally binding decision in the administrative matter. In this case, the Administrative Law Judge’s decision became the final administrative decision after the Department of Real Estate did not act to accept, reject, or modify it within the statutory time limit.

HUD-1 Disclosure Statement

A document used in the petitioner’s property purchase that itemized all charges imposed upon a borrower and seller for a real estate transaction. It was used as evidence to show how the $660 “Transfer Fee” and $30 “Resale Statement Fee” were assessed and paid.

Petitioner

The party who files a petition initiating a legal action. In this case, Brian Sopatyk was the petitioner.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It is defined as “The greater weight of the evidence… that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

Reserve Fund

An account maintained by the Condominium Association. The Association referred to its “working capital fund” as the Reserve Fund, into which the disputed $660 fees were deposited.

Respondent

The party against whom a petition is filed. In this case, The Lakeshore Village Condominium Association, Inc. was the respondent.

Statement Fee / Resale Statement Fee

A $30 fee charged by the Association for the preparation of disclosure documents. The Association argued this was the fee governed by ARIZ. REV. STAT. section 33-1260, which was compliant with the $400 statutory cap.

Transfer Fee

In the context of the petitioner’s allegation, a fee charged for resale disclosure services, limited to $400 by statute. In the context of the Association’s defense, this was the erroneous label applied to the working capital fee.

Working Capital Fee

A fee authorized by section 8.13 of the Association’s CC&Rs, assessed to each new owner to be deposited into the working capital fund (or Reserve Fund). The Association successfully argued that the disputed $660 fee was this type of fee, not one for resale disclosure.

How a $660 Fee Sparked a Legal Showdown: 5 Surprising Lessons from a Homeowner vs. HOA Dispute

We sign, we initial, we pay—assuming every line item on our closing documents is gospel. When buying a home in a condominium association, the stack of paperwork and list of fees can feel overwhelming. But what if one of those “standard” fees wasn’t standard at all?

For homeowner Brian Sopatyk, a single $660 charge from The Lakeshore Village Condominium Association wasn’t just a number; it was a thread he pulled that unraveled a surprising story of HOA governance, legal strategy, and the power of asking “why?” This post breaks down the five most impactful takeaways from a seemingly minor dispute that went all the way through a formal hearing and re-hearing.

1. A Simple Label Can Ignite a Legal Firestorm

A clerical error triggers a full-blown legal dispute.

The entire case hinged on a single, crucial mistake: the HOA mislabeled a “working capital fee” as a “transfer fee” on its disclosure forms.

Why was this one word so important? Because Mr. Sopatyk’s formal petition alleged that by charging a “$660 transfer fee,” the HOA violated Arizona statute 33-1260, which caps fees for resale disclosure services at a maximum of $400. On its face, the $660 charge looked like a clear violation of state law.

The Association’s manager, Amy Telnes, testified that when she took over her position, she was given erroneous information that the working capital fee was the transfer fee. As a result, the charge had been incorrectly labeled ever since. This simple administrative error was enough to trigger a formal petition to the Arizona Department of Real Estate, a full administrative hearing, and eventually, a re-hearing, proving how a small clerical mistake can escalate into a significant legal conflict.

2. In the Eyes of the Law, Substance Can Trump Form

Why the fee’s purpose mattered more than its name.

The Association’s core defense was that while the name of the fee was wrong, its purpose and authority were legitimate. The $660 charge, they argued, wasn’t for resale documents (the service capped by state law), but was a “working capital fee” authorized by an entirely different rule: the Association’s own Covenants, Conditions, and Restrictions (CC&Rs).

Specifically, Section 8.13 of the CC&Rs allowed for this assessment, with the funds designated for the Association’s reserve fund. This working capital fee, in contrast, was an assessment on the new owner as mandated by the CC&Rs to ensure the association’s financial health. The actual fee for the statutory disclosure documents was a separate, compliant $30 “Resale Statement Fee,” which was paid by the seller.

The Administrative Law Judge ultimately agreed. The fee’s underlying purpose and the HOA’s authority to collect it (its substance) were deemed more important than its incorrect name on the form (its form). This is a crucial lesson for any homeowner challenging an HOA: it’s not enough to find a mistake on a form. You must be prepared to argue against the underlying authority and purpose of the action itself.

3. You Can Lose the Battle but Win the War

How a dismissed case led to a major policy victory.

Perhaps the most counter-intuitive outcome is that although Mr. Sopatyk’s petition was dismissed, his actions were the direct catalyst for a significant and positive policy change by the HOA.

In a summary of the Association’s May 18, 2016, Board Meeting, which was entered as evidence, the judge noted that the Board reviewed the very issue Mr. Sopatyk had raised. Under the pressure of his legal challenge, they came to a powerful conclusion about their own system, determining it was “confusing and unfair.”

As a direct result of this internal review prompted by the dispute, the Board voted to simplify its process. It resolved to assess a single, clear transfer fee of $400 on all future transactions, eliminating the other confusing fees. This proves that even an unsuccessful legal challenge can be a powerful tool, forcing an organization to confront and correct its own problematic practices for the benefit of all future members.

4. The ‘Burden of Proof’ Is More Than Just a Phrase

What it really means to have to prove your case.

In both the original decision and the re-hearing, the judge repeatedly stated that Mr. Sopatyk, as the petitioner, bore the “burden of proof.” This legal standard was critical to the outcome. It meant he had to prove his claim by a “preponderance of the evidence,” which the court documents defined as:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

In this case, it meant Mr. Sopatyk’s job was to prove that the $660 fee was, more likely than not, an illegal charge for resale documents. The HOA’s defense—that it was a legally separate “working capital fee” that was simply mislabeled—created enough doubt that he couldn’t clear this hurdle.

5. A Small Contradiction Can Damage Credibility

When every word you say (and write) is on the record.

A fascinating detail appeared in the re-hearing decision, highlighting how every word matters in a legal proceeding.

There was a discrepancy in Mr. Sopatyk’s statements. His sworn petition, filed on August 9, 2016, stated the $660 fee was “split between the seller and the buyer.” However, during the hearing, he testified that he had “in fact paid the entire $660.”

The judge noted this contradiction directly in footnote 3 of the re-hearing decision, stating: “either Mr. Sopatyk’s sworn statement or his testimony must be false.” While not the deciding factor, this kind of inconsistency can subtly erode a petitioner’s standing. Remember the “burden of proof” from Takeaway 4? It requires convincing a judge to “incline a fair and impartial mind” to your side. Contradictions, even small ones, make that inclination much harder to achieve.

Conclusion: The Devil Is in the Details

This case is the perfect microcosm of community association disputes. It began with a clerical error (form), was adjudicated on intent (substance), was lost on a technicality (the burden of proof), yet resulted in a victory for transparency. Mr. Sopatyk may not have won his case, but he won a better system for his neighbors.

The ultimate lesson? In an HOA, the most powerful tool isn’t always a lawsuit—sometimes, it’s a magnifying glass. It leaves us with a thought-provoking question: When is it worth challenging the system for clarity and fairness, even if the outcome isn’t a clear ‘win’ on paper?

Case Participants

Petitioner Side

  • Brian Sopatyk (petitioner)
    Represented himself at the initial hearing; sought rehearing
  • Nathan Andrews (petitioner attorney)
    ASU Alumni Law Group
  • Jill M. Kennedy (petitioner attorney)
    ASU Alumni Law Group
  • Judy Sopatyk (petitioner's wife)
    Co-purchaser of the condominium unit,
  • Chance Peterson (petitioner attorney)
    ASU Alumni Law Group

Respondent Side

  • Bradley R. Jardine (HOA attorney)
    Jardine Baker Hickman & Houston
  • Amy Telnes (property manager/witness)
    The Lakeshore Village Condo. Association, Inc.
    Association manager who testified,
  • Michael Cibellis (Association president/witness)
    The Lakeshore Village Condo. Association, Inc.
    Testified at the rehearing

Neutral Parties

  • Thomas Shedden (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Contact for requests for rehearing
  • Greg Hanchett (Interim Director)
    OAH
    Signed the Certification of Decision,

Other Participants

  • Rosella J. Rodriguez (administrative staff)
    Administrative staff for transmission/mailing,

Tom Pyron vs Cliffs at North Mountain Condominium Association, Inc.

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Case Summary

Case ID 17F-H1717026-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-19
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the petition, concluding that the HOA correctly identified only one Board position (the one-year term) was up for election in 2017 based on the Bylaws' staggered term provisions.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Tom Pyron Counsel —
Respondent Cliffs at North Mountain Condominium Association, Inc. Counsel B. Austin Baillio

Alleged Violations

Bylaws, Article III, §§ 3.02 and 3.06, and Article IV, § 4.06

Outcome Summary

The Administrative Law Judge denied the petition, concluding that the HOA correctly identified only one Board position (the one-year term) was up for election in 2017 based on the Bylaws' staggered term provisions.

Why this result: The Petitioner failed to establish by a preponderance of the evidence that the Respondent violated its Bylaws.

Key Issues & Findings

Dispute over the number of Board of Director positions available for the 2017 election.

Petitioner alleged Respondent HOA violated Bylaws by stating only one Board position was up for election for a one-year term in 2017, when Petitioner contended two positions (one-year and two-year terms) were open.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04
  • A.R.S. § 41-1092.08
  • R4-28-1310

Analytics Highlights

Topics: HOA Election, Bylaw Violation, Board Term, Staggered Terms, Condominium Association
Additional Citations:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04
  • A.R.S. § 41-1092.08
  • R4-28-1310

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Video Overview

Audio Overview

Decision Documents

17F-H1717026-REL Decision – 570560.pdf

Uploaded 2026-04-24T11:04:17 (120.2 KB)

17F-H1717026-REL Decision – 576045.pdf

Uploaded 2026-01-23T17:19:41 (959.2 KB)

  • 2016

Study Guide: Pyron v. Cliffs at North Mountain Condominium Association, Inc.

This study guide provides a review of the administrative hearing case No. 17F-H1717026-REL between Tom Pyron (Petitioner) and the Cliffs at North Mountain Condominium Association, Inc. (Respondent). It covers the central arguments, key evidence, relevant bylaws, and the final legal decision.

Short Answer Quiz

Instructions: Answer the following questions in 2-3 complete sentences based on the provided source documents.

1. What was the single issue at the heart of Tom Pyron’s petition filed on March 16, 2017?

2. According to the Association’s bylaws, how are Board of Director terms structured when the board consists of three members?

3. What was the Petitioner’s argument regarding Jeff Oursland’s term on the Board of Directors?

4. What was the Respondent’s counter-argument regarding Barbara Ahlstrand’s 2015 election and, subsequently, Jeff Oursland’s term?

5. What actions did the Respondent take in an attempt to resolve the dispute with the Petitioner before the hearing?

6. Who was the key witness for the Respondent, and what was their role?

7. Explain the legal standard “preponderance of the evidence” as it is defined in the case documents.

8. What was the Administrative Law Judge’s core legal reasoning for concluding that only one board position was open in 2017?

9. What was the final outcome of the case as stated in the Recommended Order and adopted by the Commissioner of the Department of Real Estate?

10. Following the Final Order issued on July 12, 2017, what legal recourse was available to a party dissatisfied with the decision?

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Answer Key

1. Tom Pyron’s petition alleged that the Respondent violated its bylaws by announcing only one Board position was open for a one-year term in the 2017 election. Pyron contended that two positions—one for a one-year term and another for a two-year term—should have been up for election.

2. Bylaw Article III, § 3.02 specifies that for a three-person board, the directors hold staggered terms of one year, two years, and three years. The bylaw further dictates which terms end at which annual meetings (e.g., the two-year term ends at the second, fourth, sixth, etc., annual meetings).

3. The Petitioner argued that Barbara Ahlstrand was elected to a two-year term in 2015. Therefore, when Jeff Oursland was appointed to fill her vacancy, his term should have expired in 2017, meaning his two-year position should have been on the 2017 ballot.

4. The Respondent argued that under the plain language of Bylaw § 3.02, only the one-year and three-year terms were up for election in 2015. Since Sandra Singer received the most votes and secured the three-year term, Ms. Ahlstrand must have been elected to the one-year term, meaning Mr. Oursland’s appointed term expired in 2016.

5. In response to the petition, the Respondent twice rescheduled the 2017 annual meeting and re-issued ballots to include all candidates who had submitted an application. The Association also offered to pay the Petitioner’s $500 single-issue filing fee if he was satisfied with this resolution.

6. The key witness for the Respondent was Cynthia Quillen. She served as the Community Manager for the Association’s management company, Associated Property Management, and testified about the Board’s composition and her interpretation of the bylaws.

7. “A preponderance of the evidence” is defined as proof that convinces the trier of fact that a contention is more probably true than not. It is described as the greater weight of evidence, which is sufficient to incline a fair and impartial mind to one side of an issue over the other.

8. The Judge’s decision was based on the “plain language” of Bylaw § 3.02. This bylaw dictated that only the one-year and three-year terms were up for election in 2015. Since the parties agreed Ms. Singer won the three-year term, the Judge concluded Ms. Ahlstrand must have been elected to the one-year term, making the Respondent’s subsequent actions and election notices correct.

9. The Administrative Law Judge’s Recommended Order was that the Petitioner’s petition be denied. This order was adopted by the Commissioner of the Department of Real Estate in a Final Order, making it binding on the parties.

10. According to the Final Order, a dissatisfied party could request a rehearing within thirty days by filing a petition setting forth the reasons. The document lists eight specific causes for a rehearing. A party could also appeal the final administrative decision by filing a complaint for judicial review.

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Essay Questions

Instructions: The following questions are designed to test a deeper understanding of the case. Formulate a comprehensive essay-style response for each.

1. Analyze the conflicting interpretations of the 2015 election presented by the Petitioner and the Respondent. How did the Administrative Law Judge use the “plain language” of Bylaw § 3.02 to resolve this conflict, and what does this reveal about the interpretation of governing documents in legal disputes?

2. Trace the chain of events from the 2012 election to the 2017 dispute. Explain how the board composition, terms of office, and specific actions (like Ms. Ahlstrand’s resignation) compounded to create the disagreement at the heart of this case.

3. Discuss the burden of proof in this administrative hearing. Define “preponderance of the evidence” and explain why the Petitioner, Tom Pyron, failed to meet this standard in the view of the Administrative Law Judge.

4. Examine the roles and authorities of the different entities involved: the homeowners’ association Board, the Arizona Department of Real Estate, the Office of Administrative Hearings, and the Administrative Law Judge. How do these bodies interact to resolve disputes within a planned community?

5. Based on the Final Order, outline the legal recourse available to Tom Pyron following the denial of his petition. What specific grounds for a rehearing are mentioned, and what is the process for further appeal?

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Glossary of Key Terms

Definition

Acclamation

A form of election where a candidate is declared elected without opposition, as when Sandra Singer’s election was “unanimously passed by acclamation” in 2014.

Administrative Law Judge (ALJ)

An independent judge who presides over administrative hearings, makes findings of fact, draws conclusions of law, and issues a recommended decision. In this case, the ALJ was Diane Mihalsky.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations. The Commissioner of the Department, Judy Lowe, issued the Final Order in this case.

Bylaws

The governing documents of the homeowners’ association that outline its rules and procedures, including the number of directors, terms of office, and process for filling vacancies.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which accepts and adopts the Administrative Law Judge’s decision. This order becomes effective and can only be changed by a successful rehearing or judicial appeal.

Office of Administrative Hearings (OAH)

An independent state agency to which the Department of Real Estate refers petitions for an evidentiary hearing.

Petitioner

The party who files a petition initiating a legal action. In this case, the Petitioner was Tom Pyron, a homeowner in the association.

Preponderance of the Evidence

The standard of proof required in this hearing, defined as “proof as convinces the trier of fact that the contention is more probably true than not.” The Petitioner bore this burden to prove the Respondent violated its bylaws.

Recommended Order

The decision and order issued by the Administrative Law Judge following a hearing. In this case, it recommended that the Petitioner’s petition be denied.

Rehearing

A formal request to have a case heard again. The Final Order specifies that a petition for rehearing must be filed within thirty days and may be granted for specific causes, such as newly discovered evidence or an arbitrary decision.

Respondent

The party against whom a petition is filed. In this case, the Respondent was the Cliffs at North Mountain Condominium Association, Inc.

Staggered Terms

A system where not all board members are elected at the same time. As defined in Bylaw § 3.02, the three-person board had terms of one, two, and three years to ensure continuity.

Unexpired Portion of the Prior Director’s Term

The remainder of a board member’s term that an appointee serves after the original member resigns or is removed, as specified in Bylaw § 3.6.

We Read an HOA Lawsuit So You Don’t Have To: 3 Shocking Lessons Hidden in the Bylaws

1. Introduction: The Hidden Drama in Your Community’s Fine Print

If you live in a condominium association or a planned community, you’re familiar with the thick packet of governing documents you received at closing—the Covenants, Conditions & Restrictions (CC&Rs) and the Bylaws. For many, these documents are filed away and forgotten, seen as a collection of mundane rules about trash cans and paint colors. But hidden within that legalese is the complete operating manual for your community, and a simple misunderstanding of its contents can have significant consequences.

What happens when a homeowner’s interpretation of the rules clashes with the association’s? In a case from Arizona involving homeowner Tom Pyron and the Cliffs at North Mountain Condominium Association, the dispute escalated into a formal administrative hearing. The central question was simple: how many board seats were open for election in 2017? But this wasn’t just a procedural disagreement. Court documents reveal that before the hearing, the association offered to re-issue ballots to include all candidates and even “offered to pay Petitioner’s $500 single-issue filing fee if he was satisfied with the proposed resolution.” The homeowner refused.

This decision transforms the case from a simple rules dispute into a cautionary tale about how a deeply held belief can override a pragmatic, no-cost compromise. The official court documents offer a fascinating look at how community governance can go awry, revealing powerful, practical lessons for any homeowner or board member who believes they know what the rules should say.

2. Takeaway 1: Your Beliefs Don’t Overrule the Bylaws

What You Think the Rules Say Doesn’t Matter—Only What They Actually Say

The core of the dispute rested on a belief held by a former board member, Ms. Ahlstrand, who was elected in 2015. She testified that she believed she had been elected to a two-year term. Based on this belief, the petitioner argued that the director appointed to replace her after her resignation should have served until 2017, meaning a two-year position was open for election that year.

The Administrative Law Judge, however, looked not at what anyone believed, but at the “plain language” of the community’s governing documents. The judge’s conclusion was a matter of inescapable logic derived directly from the bylaws:

1. First, Bylaw § 3.02 clearly states that in an election with multiple open seats, “the person receiving the most votes will become the Director with the longest term.”

2. Next, the court record shows that “the parties agreed that… because she got the most votes, Ms. Singer was elected to a three-year term” in the 2015 election.

3. Finally, the judge determined that according to the same bylaw, only the one-year and three-year terms were available in 2015. Since Ms. Singer secured the three-year term, Ms. Ahlstrand, by definition, must have been elected to the only other available position: the one-year term.

The lesson is stark and unambiguous: an individual’s interpretation or assumption, however sincere, cannot change the written rules. The bylaws are the ultimate authority. As the judge stated in the final decision, the documents speak for themselves.

The Bylaws do not allow their plain language to be modified or amended by a member’s understanding.

3. Takeaway 2: The Domino Effect of a Single Resignation

A Single Resignation Can Create Years of Confusion

This entire legal conflict was set in motion by a single, routine event: a board member’s resignation. The timeline of events shows how one small action, when combined with a misunderstanding of the rules, can create a ripple effect with long-lasting consequences.

1. On August 3, 2015, the newly elected board member, Ms. Ahlstrand, resigned.

2. The Board then appointed another member, Jeff Oursland, to serve the remainder of her term, as permitted by the bylaws.

3. The critical point of contention became the length of that “remainder.” Was it the rest of a one-year term ending in 2016, or a two-year term ending in 2017?

4. The judge’s determination that Ahlstrand’s original term was only one year (as explained above) meant that Mr. Oursland’s appointed term correctly expired in 2016. He was then properly elected to a new two-year term at the 2016 meeting.

5. This sequence confirmed that the association was correct all along: only one board position (a one-year term) was actually open for election in 2017.

A single resignation created two years of confusion that ultimately required an administrative hearing to resolve. It’s a powerful reminder of how crucial it is for boards to precisely follow their own procedures, especially when handling vacancies and appointments, as one small error can cascade into years of conflict.

4. Takeaway 3: The Hidden Complexity of “Staggered Terms”

“Staggered Terms” Are Designed for Stability, But Can Cause Chaos

Many associations use staggered terms for their board of directors. The concept, outlined in Bylaw § 3.02 for the Cliffs at North Mountain, is simple: instead of all directors being elected at once, they serve terms of varying lengths (in this case, one, two, and three years). This is a common and effective practice designed to ensure leadership continuity and prevent the entire board from turning over in a single election.

However, this case reveals the hidden downside of that system: complexity. The staggered terms created an election cycle where the available term lengths changed every single year. The court documents show that in 2014, the one-year and two-year positions were on the ballot. In 2015, the one-year and three-year terms were available. This rotating schedule was difficult for members—and apparently even some board members—to track accurately.

This built-in complexity was the root cause of the entire disagreement. The system’s lack of intuitive clarity created the exact conditions necessary for a personal belief, like Ms. Ahlstrand’s, to seem plausible even when it was contrary to the bylaws. The very governance structure intended to create stability inadvertently created the fertile ground for confusion, allowing a misunderstanding to grow into a lawsuit.

5. Conclusion: The Power Is in the Paperwork

The overarching theme from this case is that in the world of community associations, the governing documents are the ultimate source of truth. They are not merely suggestions; they are the binding legal framework that dictates how the community must operate. A board’s actions and a homeowner’s rights are all defined within that paperwork.

In the end, the homeowner’s petition was denied, and the judge’s order affirmed the association’s position. The written rules, as found in the bylaws, prevailed over individual beliefs and interpretations. The case stands as a powerful testament to the importance of reading, understanding, and strictly adhering to your community’s foundational documents.

This entire conflict stemmed from a few lines in a legal document—when was the last time you read yours?

Case Participants

Petitioner Side

  • Tom Pyron (petitioner)

Respondent Side

  • B. Austin Baillio (HOA attorney)
    Maxwell & Morgan, P.C.
  • Cynthia Quillen (property manager)
    Associated Property Management
    Community Manager

Neutral Parties

  • Diane Mihalsky (ALJ)
  • Judy Lowe (ADRE commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (coordinator)
    HOA Coordinator/Admin Official listed for rehearing requests and transmission

Other Participants

  • Anne Fugate (witness)
    Elected to the Board in 2012
  • Barbara Ahlstrand (witness)
    Elected to the Board in 2015
  • Kevin Downey (witness)
    Candidate for 2017 election
  • John Haunschild (board member)
    Elected to the Board in 2012
  • Ron Cadaret (board member)
    Elected to the Board in 2012, re-elected 2013
  • Sandra Singer (board member)
    Elected to the Board in 2014 and 2015
  • Jeff Oursland (board member)
    Appointed to the Board in 2015, elected 2016
  • Steve Molever (board member)
    Elected to the Board in 2016

Linda Haderli vs. Carriage Manor RV Resort Association, Inc.

Posted on by

Case Summary

Case ID 17F-H1717029-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-18
Administrative Law Judge Tammy L. Eigenheer
Outcome Petitioner was deemed the prevailing party. The HOA (Respondent) was found to have acted beyond the scope of its authority under its governing documents by removing the Petitioner as the Pickleball Club President and banning her from holding office for 24 months. The imposed discipline was quashed, and the HOA was ordered to refund the Petitioner's $500.00 filing fee.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Linda Haderli Counsel Jonathan A. Dessaules
Respondent Carriage Manor RV Resort Association, Inc. Counsel Samuel E. Arrowsmith

Alleged Violations

A.R.S. § 32-2199 et seq.

Outcome Summary

Petitioner was deemed the prevailing party. The HOA (Respondent) was found to have acted beyond the scope of its authority under its governing documents by removing the Petitioner as the Pickleball Club President and banning her from holding office for 24 months. The imposed discipline was quashed, and the HOA was ordered to refund the Petitioner's $500.00 filing fee.

Key Issues & Findings

HOA lacked authority to impose discipline (removal as club president and 24-month ban on holding office) under governing documents.

Petitioner alleged Respondent lacked authority pursuant to governing documents to remove her as President of the Pickleball Club and preclude her from serving as any officer for 24 months as purported discipline. The Tribunal concluded the Board’s decision was in excess of its authority because Respondent did not establish that removal and the prohibition on holding office were remedies available under the governing documents.

Orders: Petitioner was deemed the prevailing party; Respondent's imposed discipline was quashed; Respondent was ordered to pay Petitioner her filing fee of $500.00.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • CC&R’s Section 14.2
  • CC&R’s Section 15.2B
  • CC&R’s Section 12.2

Analytics Highlights

Topics: discipline, governing documents, authority, club officer removal, homeowner vs HOA
Additional Citations:

  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • CC&R’s Section 14.2
  • CC&R’s Section 15.2B
  • CC&R’s Section 12.2

Video Overview

Audio Overview

Decision Documents

17F-H1717029-REL Decision – 570378.pdf

Uploaded 2026-04-24T11:04:51 (84.2 KB)

17F-H1717029-REL Decision – 575026.pdf

Uploaded 2026-04-24T11:04:55 (700.9 KB)

Briefing Document: Haderli vs. Carriage Manor RV Resort Association

Executive Summary

This document synthesizes the key findings and legal conclusions from an administrative hearing concerning a dispute between resident Linda Haderli (Petitioner) and the Carriage Manor RV Resort Association, Inc. (Respondent). The core of the dispute was the Association’s decision to remove Ms. Haderli from her position as President of the Pickleball Club and to bar her from holding any club office for 24 months as a disciplinary measure.

The Administrative Law Judge (ALJ) ultimately ruled in favor of Ms. Haderli. The central finding was that the disciplinary action imposed by the Association was in excess of the authority granted by its own governing documents (CC&Rs). While the Association’s rules allowed for remedies such as financial assessments up to $500 or the suspension of common area use rights for violations, they did not provide for the removal of a resident from an elected club office. Consequently, the ALJ ordered that Ms. Haderli be deemed the prevailing party, the Association’s disciplinary action be quashed, and the Association reimburse Ms. Haderli’s $500 filing fee. This decision was formally adopted by the Commissioner of the Arizona Department of Real Estate, making it a final administrative order.

Case Overview

• Parties:

◦ Petitioner: Linda Haderli

◦ Respondent: Carriage Manor RV Resort Association, Inc., a homeowners association in Mesa, Arizona.

• Legal Venue: The Office of Administrative Hearings, State of Arizona.

• Case Number: 17F-H1717029-REL

• Hearing Date: May 30, 2017

• Core Issue: On March 28, 2017, Ms. Haderli filed a petition with the Arizona Department of Real Estate. She alleged that the Association lacked the authority under its governing documents to remove her as President of the Pickleball Club and to prohibit her from serving in any club officer position for two years as a form of discipline.

The Association’s Disciplinary Action and Justification

The Association took disciplinary action against Ms. Haderli and provided three specific reasons for its decision in a formal letter:

1. Challenging Board Policies: The letter accused Ms. Haderli of harassing Association employees and circumventing established systems designed to implement Association policies.

2. Improper Officer Representation: The Association stated that Ms. Haderli had permitted Ms. Joyce Wooton to represent herself as an “Advisor” to the Pickleball Club, a position not recognized as an official Officer position in the Pickleball By-Laws.

3. Unauthorized Representation to External Entities: The Association claimed Ms. Haderli had represented herself to the City of Mesa and SRP (Salt River Project) as having the authority to make decisions on behalf of the Association, which had not been granted by the Board of Directors.

Analysis of Allegations and Testimony

During the May 30, 2017 hearing, testimony was presented by both parties regarding the three justifications for the disciplinary action.

Allegation 1: Harassment of an Association Employee

• Respondent’s Testimony (Mary Candelaria, General Manager): Ms. Candelaria testified that on January 4, 2017, Ms. Haderli had a “contentious interaction” with an employee, Barb Putnam. According to some observers, Ms. Haderli was yelling. The following day, Ms. Putnam was hospitalized with a hemorrhage in her eye. Ms. Candelaria “theorized” that the stress from the encounter caused the medical issue. She collected written statements from observers but did not speak with Ms. Haderli about the incident, citing confidentiality concerns.

• Petitioner’s Testimony (Linda Haderli): Ms. Haderli denied yelling at Ms. Putnam, explaining that her hearing loss sometimes causes her to speak louder than intended, which can be misinterpreted as yelling. She stated she was attempting to reserve dates for Pickleball Club fundraising events and that Ms. Putnam was uncooperative. Ms. Haderli testified she was unaware of the harassment accusation until reviewing exhibits for the hearing with her attorney.

Allegation 2: Improper Officer Representation (Joyce Wooton)

• Petitioner’s Testimony (Linda Haderli): Ms. Haderli testified that Ms. Wooton was already serving as an advisor to the Pickleball Club when Ms. Haderli was elected Vice President, a full year before she became President on March 1, 2016.

Allegation 3: Unauthorized Representation to External Entities

• Respondent’s Testimony (Mary Candelaria, General Manager): Ms. Candelaria stated that while the Pickleball Club was exploring a project to build a small structure, Ms. Haderli contacted the City of Mesa and SRP directly, representing herself as acting on behalf of the Association. This continued even after Ms. Haderli was advised to work through the project’s architect for technical questions.

• Petitioner’s Testimony (Linda Haderli): Ms. Haderli denied representing herself as having authority to act for the Association. She testified that her intent was merely to gather background information to be better informed about the project. She initially did not want to provide her name or address to the entities for fear of appearing to act in an official capacity, only providing the address when required because regulations differ by city area.

Governing Documents and Permitted Remedies

The Administrative Law Judge’s decision hinged on the specific remedies available to the Association as outlined in its governing documents, the CC&Rs. The Association clarified that the discipline was imposed on Ms. Haderli in her capacity as a resident who violated community rules, not as a disciplinary action against the Pickleball Club itself.

The following sections of the CC&Rs were cited as relevant:

CC&R Section

Description

Authorized Remedy

Section 14.2

Employee Abuse: Prohibits physical or verbal harassment of employees by residents.

Enforcement as an “Other Violation” under Section 15.2B.

Section 15.2B

Other Violations: Stipulates that such violations are subject to a financial penalty.

An assessment set by the Board of Directors, not to exceed $500.00.

Section 12.2

Suspension of Rights: Grants the Association the right to suspend an Owner’s rights for infractions.

Suspension of an Owner’s voting rights and Common Areas use rights.

Legal Conclusions and Final Ruling

The Administrative Law Judge reached several key conclusions of law that led to the final order.

• Burden of Proof: The petitioner, Linda Haderli, bore the burden of proving by a preponderance of the evidence that the Association acted without the authority granted by its governing documents.

• Excess of Authority: The Respondent (the Association) “did not establish that removal as the Pickleball Club President and/or a prohibition of holding any other officer position for a period of 24 months is a remedy available under the governing documents.”

• Final Conclusion: The Tribunal concluded that the Board of Directors’ decision to impose this specific discipline was in excess of its authority.

Recommended and Final Order

Based on these conclusions, Administrative Law Judge Tammy L. Eigenheer issued a recommended order on June 18, 2017:

1. Petitioner Deemed Prevailing Party: Linda Haderli was declared the prevailing party in the matter.

2. Discipline Quashed: The disciplinary action imposed by the Association against Ms. Haderli was ordered to be quashed.

3. Filing Fee Reimbursement: The Association was ordered to pay Ms. Haderli her $500.00 filing fee within thirty days.

On June 21, 2017, Judy Lowe, the Commissioner of the Arizona Department of Real Estate, issued a Final Order adopting the Administrative Law Judge’s decision in its entirety. This order became a final administrative action, effective immediately.

Study Guide: Haderli v. Carriage Manor RV Resort Association, Inc.

Quiz: Short-Answer Questions

Instructions: Answer the following questions in 2-3 complete sentences based on the provided case documents.

1. Who are the primary parties in this legal dispute, and what are their respective roles?

2. What was the central violation alleged by the Petitioner, Linda Haderli, in her petition?

3. What specific disciplinary action did the Carriage Manor RV Resort Association, Inc. impose on Linda Haderli?

4. List the three reasons the Association provided to justify its disciplinary action against the Petitioner.

5. How did Linda Haderli explain her interaction with the Association employee, Barb Putnam, which the Association characterized as harassment?

6. What was the Petitioner’s explanation for contacting the City of Mesa and SRP regarding the Pickleball Club’s building project?

7. According to the Association’s governing documents (CC&R’s), what specific remedies are available for non-monetary infractions and “Other Violations”?

8. What is the legal standard of proof that the Petitioner was required to meet in this case, and how is it defined in the document?

9. What was the final conclusion of the Administrative Law Judge regarding the Association’s authority to impose its chosen discipline?

10. What were the three components of the Recommended Order issued by the Administrative Law Judge, which was later adopted as the Final Order?

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Answer Key

1. The primary parties are Linda Haderli, the Petitioner, and Carriage Manor RV Resort Association, Inc., the Respondent. The Petitioner is the individual homeowner who filed the dispute, while the Respondent is the homeowners association (HOA) that took disciplinary action against her.

2. The Petitioner alleged that the Respondent did not have the authority under its own governing documents to take the disciplinary action it imposed. Specifically, she challenged her removal as President of the Pickleball Club and the subsequent ban from holding any officer position.

3. The Association removed Linda Haderli from her position as President of the Pickleball Club. Additionally, it precluded her from serving as any officer of the Pickleball Club for a period of 24 months.

4. The Association cited three reasons: (1) harassing Association employees and circumventing policies; (2) improperly permitting Ms. Joyce Wooton to represent herself as an “Advisor,” a non-existent officer position; and (3) representing herself to the City of Mesa and SRP as having authority to make decisions on behalf of the Association.

5. Ms. Haderli denied yelling at Ms. Putnam, attributing her loud voice to hearing loss which can be misinterpreted. She stated she was simply trying to reserve dates for Pickleball Club fundraising events and that the employee was not being cooperative in providing information.

6. The Petitioner testified that she approached the City of Mesa and SRP merely to gather background information to be more informed about the building project. She denied ever representing herself as having authority to act for the Association and was initially hesitant to even provide her name for fear of creating that impression.

7. For “Other Violations,” Section 15.2B of the CC&R’s allows for a monetary assessment up to $500.00. For non-monetary infractions, Section 12.2 allows the Association to suspend an Owner’s voting rights and Common Areas use rights until the infraction is cured.

8. The Petitioner was required to prove her case by a preponderance of the evidence. The document defines this as “Evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.”

9. The Administrative Law Judge concluded that the Board’s decision to remove the Petitioner as Pickleball Club President and ban her from holding office for 24 months was in excess of its authority. The judge found that this specific penalty was not a remedy available to the Association under its governing documents.

10. The Order dictated that (1) the Petitioner be deemed the prevailing party in the matter, (2) the Respondent’s imposed discipline against the Petitioner be quashed (nullified), and (3) the Respondent pay the Petitioner her filing fee of $500.00 within thirty days.

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Essay Questions

Instructions: Consider the following prompts for longer, essay-style responses. Use evidence and specific details from the case documents to construct your arguments.

1. Analyze the discrepancy between the disciplinary penalties available to the Association under its CC&R’s (Sections 12.2 and 15.2B) and the penalty it actually imposed on Linda Haderli. Explain why this discrepancy was the pivotal factor in the Administrative Law Judge’s final decision.

2. Discuss the three allegations made by the Association against Linda Haderli. For each allegation, present the evidence and testimony offered by the Association (via Mary Candelaria) and the counter-evidence or explanation provided by the Petitioner.

3. Trace the procedural timeline of this case, starting from the filing of the Homeowners Association (HOA) Dispute Process Petition. Describe each key step, including the date of filing, the Notice of Hearing, the hearing itself, the Administrative Law Judge Decision, and the final adoption of that decision by the Commissioner of the Department of Real Estate.

4. The Respondent stated that the discipline was against Linda Haderli in her capacity as a resident, not as a representative of the Pickleball Club. Evaluate this argument in the context of the specific penalties imposed. Did the nature of the discipline align with the Association’s claim?

5. Explain the legal concept of “burden of proof” as it applies to this case. How did the Petitioner, Linda Haderli, successfully meet the burden of proving by a “preponderance of the evidence” that the Association acted outside its authority?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The judicial officer, Tammy L. Eigenheer, who presided over the administrative hearing, evaluated evidence, and issued a decision and recommended order.

Answer

The formal response filed by the Respondent (Carriage Manor RV Resort Association, Inc.) denying the violation alleged in the Petitioner’s petition.

CC&R’s

An abbreviation for Covenants, Conditions, and Restrictions. These are part of the Association’s governing documents that outline the rules for residents and the remedies available to the Association for violations.

Commissioner

The Commissioner of the Arizona Department of Real Estate, Judy Lowe, who has the authority to adopt the ALJ’s decision, making it a Final Order.

Department

The Arizona Department of Real Estate, the state agency with jurisdiction to hear disputes between homeowners and homeowners associations.

Final Order

The official, binding order issued by the Commissioner of the Department of Real Estate that adopts the ALJ’s decision. This order becomes effective immediately and is appealable through judicial review.

Governing Documents

The collection of rules, bylaws, and CC&R’s that legally govern the operation of the Homeowners Association and the conduct of its members.

Homeowners Association (HOA) Dispute Process Petition

The formal document filed by the Petitioner (Linda Haderli) with the Arizona Department of Real Estate on or about March 28, 2017, to initiate the legal dispute against the Association.

Petitioner

The party who filed the petition initiating the legal action. In this case, homeowner Linda Haderli.

Preponderance of the Evidence

The standard of proof required for the Petitioner to win the case. It is defined as “Evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.”

Prevailing Party

The party that wins the legal dispute. The Administrative Law Judge’s order deemed the Petitioner, Linda Haderli, to be the prevailing party.

Quashed

A legal term meaning to nullify, void, or set aside. The Judge’s order quashed the disciplinary action that the Respondent had imposed on the Petitioner.

Respondent

The party against whom the petition is filed and who is responding to the allegations. In this case, Carriage Manor RV Resort Association, Inc.

She Fought Her HOA Over Pickleball—And Won on a Technicality. Here Are 4 Surprising Lessons.

Introduction: The David vs. Goliath of Neighborhood Disputes

For many homeowners, a dispute with their Homeowners Association (HOA) can feel like an unwinnable battle. The board holds what seems like absolute power, leaving residents feeling powerless. However, a recent administrative hearing in Arizona offers a powerful counter-narrative and a series of crucial lessons for anyone living in a planned community. The case involved Linda Haderli, the President of a community Pickleball Club, and her HOA, the Carriage Manor RV Resort Association, Inc. What started as a disagreement over her conduct escalated into a formal disciplinary action that was ultimately overturned. The story of her victory reveals surprising truths about the limits of an HOA’s authority.

Takeaway 1: Your HOA’s Power Isn’t Unlimited—It’s Written in Black and White

An HOA Board Can’t Invent Punishments.

The core of the dispute was the punishment the HOA Board imposed on Linda Haderli. In response to alleged rule violations, the Board removed her from her elected position as President of the Pickleball Club and banned her from holding any club office for 24 months.

However, a close look at the Association’s own governing documents—the CC&Rs—revealed a critical flaw in the Board’s action. The documents specified exactly which remedies were available for violations. These included a monetary assessment not to exceed $500, or the suspension of an owner’s voting rights and their right to use common areas.

The punishment the Board chose—removal from an elected position and a ban from future office—was simply not on that list. The Administrative Law Judge’s decision was unequivocal on this point:

Therefore, this Tribunal concludes that the Board’s decision to remove Petitioner as the Pickleball Club President and to preclude her from holding any other officer position for a period of 24 months was in excess of its authority under the Association’s governing documents.

Ultimately, the HOA was bound by the rules it had created. Its failure to adhere to its own documents was the key to its defeat.

Takeaway 2: It Might Not Matter Who Was “Right”

The Case Can Hinge on Procedure, Not on the Facts of the Dispute.

The HOA levied three main accusations against Haderli: harassing an Association employee during a contentious interaction, improperly allowing an “Advisor” to participate in the club, and misrepresenting herself to the City of Mesa while researching a project. For her part, Haderli explained that her hearing loss can cause her to speak loudly, that the advisor had served in that capacity previously, and that she was only gathering information from the city and never claimed to have authority.

Here is the counter-intuitive twist: the judge never ruled on whether Haderli was actually guilty of any of these actions. The final decision did not weigh the evidence to determine who was “right” or “wrong” about the incidents. The entire case was decided on the grounds that the punishment itself was invalid because it was not authorized by the HOA’s governing documents, regardless of the alleged offenses that prompted it.

This procedural victory underscores the first lesson: it didn’t matter if the Board’s accusations were 100% true, because they attempted to enforce their judgment with a punishment they had no authority to invent. This is a crucial lesson. In an HOA dispute, winning isn’t always about proving your innocence regarding an incident. It can be about proving the board failed to follow its own established rules and procedures for discipline.

Takeaway 3: You May Have to Prove the HOA is Wrong

The Burden of Proof Can Fall on the Homeowner.

Many might assume that an HOA, as the governing body imposing discipline, would be required to prove it had the authority to do so. In this case, however, the legal burden was reversed. The administrative ruling states that the homeowner, referred to as the “Petitioner,” had the “burden of proving by a preponderance of the evidence” that the HOA acted without authority. This is not unusual; in an administrative hearing, the person who files the petition is the one bringing the complaint, and it is standard procedure for them to carry the burden of proving their claim.

The court defined “preponderance of the evidence” as:

[E]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.

This is a significant hurdle. It meant that Haderli couldn’t just question the Board’s power; she had to affirmatively prove, with more convincing evidence, that they didn’t have the authority they claimed. Despite this challenge, she successfully met that burden.

Takeaway 4: Victory Can Be Found in the Fine Print

Knowing Your Governing Documents is Your Greatest Weapon.

This case was not won through complex legal maneuvering or emotional arguments about who was to blame. Victory was found in a straightforward reading of the HOA’s own Covenants, Conditions, and Restrictions (CC&Rs).

The judge’s decision specifically cited Sections 14.2, 15.2B, and 12.2 of the CC&Rs as the foundation for what constituted authorized punishments—namely, fines and the suspension of privileges. By pointing out that the Board’s chosen discipline was absent from these sections, Haderli demonstrated that the Board had overstepped.

This reinforces the central lesson for every homeowner. The most powerful tool you have in a dispute with your association is a copy of your own governing documents. The answer to whether a board is overstepping its authority is often written right there in the text. Homeowners should treat their CC&Rs not as a dusty rulebook, but as a binding contract that holds their Board accountable.

Conclusion: Knowledge is Power

In the end, Linda Haderli was officially deemed the “prevailing party.” The judge ordered that the HOA’s imposed discipline be “quashed” and that her $500 filing fee be returned. This victory was possible for one primary reason: the HOA board exceeded the specific authority granted to it by its own rules. The case serves as a powerful reminder that an HOA’s power is not absolute; it is defined and limited by its documents.

The Board’s power ended where their documents said it did. Do you know where that line is drawn in your community?

Case Participants

Petitioner Side

  • Linda Haderli (petitioner)
  • Jonathan A. Dessaules (attorney)
  • Ashley C. Hill (attorney)

Respondent Side

  • Samuel E. Arrowsmith (attorney)
  • Ryan J. McCarthy (attorney)
  • Mary Candelaria (general manager)
    Respondent's General Manager; testified
  • Barb Putnam (employee)
    Association employee allegedly harassed by Petitioner

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
  • Judy Lowe (Commissioner)
    Commissioner of the Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)

Other Participants

  • Joyce Wooton (involved individual)
    Individual associated with the Pickleball Club, subject of allegation

Barry Saxion vs. Silverton II Homeowners Association, Inc.

Posted on by

Case Summary

Case ID 17F-H1716023-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-05-16
Administrative Law Judge Tammy L. Eigenheer
Outcome The Commissioner of the Department of Real Estate accepted the ALJ Decision, ordering the petition be dismissed because the governing documents require the claim be handled through internal dispute resolution prior to administrative action.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Barry Saxion Counsel —
Respondent Silverton II Homeowners Association, Inc. Counsel Troy B. Stratman, Esq.

Alleged Violations

Declaration Section 12.1

Outcome Summary

The Commissioner of the Department of Real Estate accepted the ALJ Decision, ordering the petition be dismissed because the governing documents require the claim be handled through internal dispute resolution prior to administrative action.

Why this result: Petitioner failed to use the mandatory dispute resolution procedures set forth in the Declaration before filing the administrative action.

Key Issues & Findings

Requirement for mandatory dispute resolution procedures

The Petition was dismissed because the Declaration of Homeowners Benefits and Covenants, Conditions, and Restrictions for Silverton II requires that all covered claims must be resolved using internal dispute resolution procedures in lieu of initiating administrative proceedings.

Orders: The ALJ recommended that the Petition be dismissed, and the Commissioner accepted the ALJ decision.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • Declaration Section 12.1
  • A.R.S. § 41-1092.08

Analytics Highlights

Topics: Mandatory Dispute Resolution, Dismissal, Standing Issue Denied
Additional Citations:

  • Declaration Section 12.1
  • A.R.S. § 41-1092.08

Video Overview

Audio Overview

Decision Documents

17F-H1716023-REL Decision – 564668.pdf

Uploaded 2026-04-24T11:03:27 (51.2 KB)

17F-H1716023-REL Decision – 564672.pdf

Uploaded 2026-04-24T11:03:32 (54.6 KB)

17F-H1716023-REL Decision – 568837.pdf

Uploaded 2026-04-24T11:03:37 (425.5 KB)

Briefing on Case No. 17F-H1716023-REL: Saxion vs. Silverton II HOA

Executive Summary

This briefing details the administrative proceedings and final disposition of the case involving petitioners Barry and Sandra Saxion and respondent Silverton II Homeowners Association, Inc. The petition was ultimately dismissed by the Arizona Department of Real Estate, which adopted the recommendation of an Administrative Law Judge (ALJ). The dismissal was based on a procedural failure by the petitioners to adhere to the mandatory dispute resolution process outlined in the HOA’s governing documents before initiating administrative action.

The respondent’s motion for dismissal presented two primary arguments. The first, challenging petitioner Barry Saxion’s standing due to non-ownership of property, was denied by the ALJ, who found that co-petitioner Sandra Saxion did own property and had standing. The second, and decisive, argument was that the HOA’s Declaration explicitly requires all “covered claims” to be resolved through its internal dispute resolution procedures in lieu of administrative proceedings. The ALJ agreed with this argument, leading to a recommendation for dismissal, the vacating of a scheduled hearing, and the issuance of a final order confirming the dismissal.

Case Overview

This section outlines the primary participants, key identifiers, and procedural timeline of the administrative action.

Affiliation

Petitioner

Barry Saxion

Petitioner

Sandra Saxion

Property owner within the Association

Respondent

Silverton II Homeowners Association, Inc.

Adjudicator

Tammy L. Eigenheer

Administrative Law Judge, Office of Administrative Hearings

Final Authority

Judy Lowe

Commissioner, Arizona Department of Real Estate

Respondent’s Counsel

Troy B. Stratman, Esq.

Stratman Law Firm, PLC

Identifier

Case Number

HO 17-16/023

Docket Number

17F-H1716023-REL

Jurisdiction

Office of Administrative Hearings (OAH), Phoenix, Arizona

Referring Body

Arizona Department of Real Estate (Department)

• Petition Filed: Both Barry and Sandra Saxion signed a Homeowners Association (HOA) Dispute Process Petition.

• Referral to OAH: The Department of Real Estate referred the matter to the Office of Administrative Hearings, creating the caption Barry Saxion v. Silverton II Homeowners Association, Inc.

• Motion for Summary Judgment: The Respondent HOA filed a motion to dismiss the petition.

• May 16, 2017: Administrative Law Judge Tammy L. Eigenheer issued a decision recommending the petition be dismissed.

• May 16, 2017: A Minute Entry was issued, vacating the hearing scheduled for May 22, 2017, based on the dismissal recommendation.

• May 30, 2017: The Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the ALJ’s decision and officially dismissing the petition.

Analysis of the Motion for Summary Judgment

The Silverton II HOA’s Motion for Summary Judgment was the pivotal filing in this case. It presented two distinct arguments for dismissal, which were addressed separately by the Administrative Law Judge.

Respondent’s Arguments

1. Lack of Standing: The initial argument was that the petitioner, identified in the case caption as Barry Saxion, did not own property within the Association and therefore lacked the legal standing necessary to pursue the action.

2. Failure to Adhere to Governing Documents: The second argument was that the petition must be dismissed because it violated the procedural requirements set forth in the HOA’s governing documents. Specifically, Section 12.1 of the Declaration of Homeowners Benefits and Covenants, Conditions, and Restrictions for Silverton II (the “Declaration”) mandates a specific internal dispute resolution process for all “covered claims.”

Administrative Law Judge’s Decision

The ALJ’s decision, issued on May 16, 2017, analyzed both of the respondent’s arguments and made distinct recommendations for each.

• The ALJ recommended that the motion to dismiss be denied on the grounds of standing.

• The judge acknowledged the fact, undisputed by the petitioner, that Barry Saxion does not own property within the association.

• However, the judge’s review of the original HOA Dispute Process Petition revealed that Sandra Saxion, who does own property, had also signed the petition as a petitioner. The judge concluded that the case caption, which named only Barry Saxion, was an administrative creation by the Department of Real Estate upon referral.

• The finding was that Sandra Saxion clearly “has standing to pursue this action,” thereby nullifying the argument for dismissal based on a lack of standing.

• The ALJ recommended that the petition be dismissed for failing to follow the mandatory dispute resolution procedures outlined in the HOA’s Declaration.

• The judge cited Section 12.1 of the Declaration, which defines “covered claims” as “all claims, grievances, controversies, disagreements, or disputes that arise in whole or part out of . . . the interpretation, application, or enforcement of the Declaration or the other Project Documents.”

• The judge found that the current dispute fell squarely within this definition.

• The decision states that the “plain language of the Declaration prevents this dispute… to be brought in the Office of Administrative Hearings and mandates that the dispute must be handled through the dispute resolution process set forth in the Declaration and Bylaws.”

• The conclusion was that the petition was improperly filed, as the internal remedies had not been pursued first.

Final Disposition and Subsequent Actions

The ALJ’s recommendation to dismiss directly led to the final resolution of the case.

Vacating of Hearing

A Minute Entry dated May 16, 2017, formally vacated the hearing that was scheduled for May 22, 2017. The order was a direct result of the ALJ’s decision recommending the complaint be dismissed.

Final Order from the Department of Real Estate

On May 30, 2017, Judy Lowe, the Commissioner of the Department of Real Estate, issued a Final Order that officially concluded the matter.

• Adoption of ALJ Decision: The Order explicitly states, “The Commissioner accepts the ALJ decision that the petition in this matter be dismissed as the applicable governing documents require that the claim must be handled through the dispute resolution process prior to administrative proceedings being brought.”

• Effective Date: The Order was designated a “final administrative action” and was effective immediately from the date of service.

• Appellate Rights: The parties were informed of their right to file for a rehearing or review within 30 days of the order. They were also advised of their right to appeal for a judicial review by filing a complaint pursuant to Arizona Revised Statutes Title 12, Chapter 7, Article 6. A court-obtained stay would be required to delay the order during a judicial review.

Official Communications

The Final Order and related documents were formally transmitted to all parties of record via certified mail or electronic means on May 30, 2017. Recipients included:

• Barry Saxion

• Troy B. Stratman, Esq. (counsel for the HOA)

• The Office of Administrative Hearings

• Judy Lowe and other staff at the Arizona Department of Real Estate

Study Guide: Saxion v. Silverton II Homeowners Association, Inc.

Short-Answer Quiz

Instructions: Answer the following questions in two to three complete sentences, based on the information provided in the case documents.

1. Identify the primary parties involved in case number 17F-H1716023-REL and their respective roles.

2. What was the initial argument made by the Respondent, Silverton II HOA, in its Motion for Summary Judgement?

3. How did the Administrative Law Judge (ALJ) resolve the issue of Barry Saxion’s standing to pursue the action?

4. What was the second, and ultimately successful, argument presented by the Respondent for the case’s dismissal?

5. According to the HOA’s governing documents, what is the definition of a “covered claim”?

6. What was the final recommendation made by Administrative Law Judge Tammy L. Eigenheer in her decision dated May 16, 2017?

7. What immediate procedural action was taken as a result of the ALJ’s recommended decision on May 16, 2017?

8. Who formally accepted the ALJ’s decision, and what was the title of the document that finalized this acceptance?

9. What process must the petitioners now follow to resolve their dispute with the HOA, according to the final ruling?

10. Following the issuance of the Final Order on May 30, 2017, what right did the parties have if they disagreed with the decision?

——————————————————————————–

Answer Key

1. The primary parties were the Petitioners, Barry and Sandra Saxion, and the Respondent, Silverton II Homeowners Association, Inc. The Saxions initiated the dispute process, and the Homeowners Association was the entity against which the claim was filed.

2. The Respondent initially argued that the case should be dismissed because Petitioner Barry Saxion did not own property within the Association. This lack of ownership, they claimed, meant he did not possess the legal standing required to pursue the action.

3. The ALJ found that although Barry Saxion did not own property, Sandra Saxion did own property and had also signed the petition. Therefore, Sandra Saxion had standing to pursue the action, and the ALJ recommended denying the motion to dismiss on these grounds.

4. The Respondent’s successful argument was that Section 12.1 of the HOA’s Declaration required all covered claims to be resolved using the internal dispute resolution procedures set forth in the Declaration and Bylaws. They argued this must be done in lieu of initiating administrative proceedings.

5. A “covered claim” is defined as “all claims, grievances, controversies, disagreements, or disputes that arise in whole or part out of . . . the interpretation, application, or enforcement of the Declaration or the other Project Documents.”

6. On May 16, 2017, the ALJ recommended that the Petition be dismissed. She concluded that the plain language of the HOA’s governing documents required the claim to be handled through the internal dispute resolution process before any administrative proceedings could be brought.

7. As a result of the ALJ’s recommendation, an order was issued vacating the hearing that was scheduled for May 22, 2017. The parties were advised of this through a Minute Entry.

8. Judy Lowe, the Commissioner of the Department of Real Estate, formally accepted the ALJ’s decision. This was finalized in a document titled “Final Order,” dated May 30, 2017.

9. The petitioners must handle their claim through the dispute resolution process set forth in the Silverton II Declaration and Bylaws. The Final Order mandates that this internal process must be used prior to bringing administrative proceedings.

10. After the Final Order, pursuant to A.R.S. § 41-1092.09, a party had the right to file a motion for rehearing or review within thirty (30) days. They also had the right to appeal the final administrative decision by filing a complaint for judicial review.

——————————————————————————–

Essay Questions

Instructions: The following questions require a more detailed analysis of the case. Formulate a comprehensive response for each, drawing connections between the different documents and legal concepts presented.

1. Analyze the concept of “standing” as it was presented and resolved in this case. Discuss why Barry Saxion’s lack of property ownership did not result in the case’s dismissal on those grounds, and explain the role of the original Petition in the ALJ’s finding.

2. Explain the legal hierarchy and procedural flow of this dispute. Trace the case from the initial petition to the Final Order, identifying the specific roles and actions of the Department of Real Estate, the Office of Administrative Hearings, the Administrative Law Judge, and the Commissioner.

3. Discuss the significance of Section 12.1 of the “Declaration of Homeowners Benefits and Covenants, Conditions, and Restrictions for Silverton II.” How did the “plain language” of this specific clause determine the ultimate outcome of the administrative proceeding?

4. Evaluate the two distinct arguments made by the Respondent in their Motion for Summary Judgement. Compare the legal reasoning used by the Administrative Law Judge in her recommendations for each argument and explain why one argument failed while the other succeeded.

5. Describe the post-decision options available to the parties following the issuance of the Final Order on May 30, 2017. What specific steps could a party take if they disagreed with the outcome, what were the associated deadlines, and to whom would a request for rehearing be addressed?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, reviews evidence, and issues a recommended decision. In this case, the ALJ was Tammy L. Eigenheer.

Administrative Law Judge Decision

The formal written recommendation of the ALJ. In this matter, the decision recommended that the petition be dismissed based on the HOA’s governing documents.

Commissioner

The head of the Arizona Department of Real Estate. In this case, Commissioner Judy Lowe adopted the ALJ’s decision and issued the Final Order.

Covered Claims

A specific category of disputes defined in the HOA’s Declaration. It includes all claims, grievances, or disputes related to the interpretation, application, or enforcement of the HOA’s governing documents.

Declaration

The short name for the “Declaration of Homeowners Benefits and Covenants, Conditions, and Restrictions for Silverton II.” This is a core governing document for the HOA that dictates required procedures, such as dispute resolution.

Department of Real Estate (Department)

The Arizona state agency that referred the HOA dispute to the Office of Administrative Hearings and whose Commissioner issued the Final Order.

Final Order

A binding order issued by the Commissioner of the Department of Real Estate that accepts the ALJ’s decision. This order made the dismissal of the petition official and effective immediately.

Homeowners Association (HOA)

The governing body for the Silverton II community, which was the Respondent in this case.

Minute Entry

A brief entry on the case record noting a court or judge’s order or action. In this case, a Minute Entry was issued to vacate the scheduled May 22, 2017 hearing.

Motion for Summary Judgement

A formal request made by a party (in this case, the Respondent) asking the judge to rule in their favor without a full hearing, based on the argument that there are no disputed facts and the law is on their side.

Office of Administrative Hearings

The state office where the case was heard. It provides a neutral forum for resolving disputes involving state agencies.

Petitioner

The party who initiates a legal action or files a petition. In this case, the petitioners were Barry and Sandra Saxion.

Respondent

The party against whom a petition is filed. In this case, the respondent was the Silverton II Homeowners Association, Inc.

Standing

The legal right to bring a lawsuit or administrative action. In this context, standing was initially questioned based on property ownership within the HOA.

Why This Homeowner’s Complaint Against Their HOA Was Dismissed Before It Began

Dealing with a Homeowners Association (HOA) can be one of the most frustrating aspects of homeownership. When you feel the association is overstepping its bounds or failing to enforce the rules fairly, the natural impulse is to seek a formal resolution. Homeowners have rights, and there are official channels, like administrative hearings, designed to address these disputes.

But what if the path to justice has a mandatory detour you didn’t know about? The case of Saxion vs. Silverton II HOA is a powerful cautionary tale for any homeowner who believes they have a legitimate grievance. A close look at the official documents reveals surprising lessons, and it’s a stark reminder that in an HOA dispute, being right is not enough; you must also be procedurally perfect.

1. The Fine Print Is Your First Hurdle

The primary reason the homeowners’ petition was dismissed had nothing to do with the merits of their actual complaint. The Administrative Law Judge (ALJ) never weighed in on whether the homeowners were right or the HOA was wrong. Instead, the case was dismissed because the homeowners failed to follow the mandatory dispute resolution process required by their own HOA’s governing documents before they filed for an administrative hearing.

The association’s own rules legally required an internal process to be completed first. By going straight to an administrative filing, the homeowners had unintentionally bypassed a mandatory first step outlined in their governing documents. The ALJ pointed to the specific language in the HOA’s Declaration, which was the ultimate authority on the matter.

all covered claims “must be resolved using the dispute resolution procedures set forth . . . in [the] Declaration and the Bylaws in lieu of filing a lawsuit or initiating administrative proceedings.”

2. A Simple Clerical Error Can Jeopardize Your Entire Case

Before even getting to the core procedural issue, the HOA made another challenge that could have ended the case immediately. They argued that the petitioner officially named in the case caption, Barry Saxion, didn’t actually own property in the association and therefore had no legal standing.

This error, however, wasn’t made by the homeowners. The case documents reveal a critical lesson: when the Arizona Department of Real Estate referred the matter for a hearing, it was the agency that created the incorrect caption. This bureaucratic mistake could have been fatal, but the petition was saved because the ALJ noted that the original paperwork was signed by both Barry Saxion and Sandra Saxion, who did own property. Because both their names and signatures were on the petition, the ALJ could overlook the agency’s error. This highlights the need for homeowners to be vigilant, double-checking all official documents—even those prepared by a state agency.

3. A “Win” Doesn’t Always Mean Justice Was Served

The final outcome was not a judgment on the underlying disagreement. The petition was simply “dismissed.” This means the core issues the homeowners wanted to resolve were never actually heard or ruled on by the Administrative Law Judge.

The process itself is revealing. On May 16, 2017, the ALJ, Tammy L. Eigenheer, issued a recommendation that the complaint be dismissed. This recommendation was then reviewed by the Commissioner of the Department of Real Estate, Judy Lowe, who accepted it and issued a FINAL ORDER making the dismissal official on May 30, 2017. For the HOA, this was a victory won on a technicality. For the homeowners, it was a procedural dead end, preventing their core complaints from being heard in the administrative hearing. This shows how a legal victory can be won entirely on procedure, preventing the central conflict from ever being addressed.

Conclusion

The core lesson from the Saxion vs. Silverton II HOA case is clear: in a dispute with your HOA, understanding the procedural rules in your governing documents is just as important as the substance of your complaint. Failing to read and follow these rules can render your entire effort, no matter how justified, completely invalid. It can cost you time, money, and the opportunity to have your case heard at all. Before you take on your HOA, have you read the rulebook they require you to play by?

Case Participants

Petitioner Side

  • Barry Saxion (petitioner)
  • Sandra Saxion (petitioner)

Respondent Side

  • Troy B. Stratman (Respondent attorney)
    Stratman Law Firm, PLC

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
  • L. Dettorre (ADRE Staff)
    Arizona Department of Real Estate
  • D. Jones (ADRE Staff)
    Arizona Department of Real Estate
  • J. Marshall (ADRE Staff)
    Arizona Department of Real Estate
  • N. Cano (ADRE Staff)
    Arizona Department of Real Estate
  • M. Aguirre (Staff)

Kurt Gronlund vs. Cottonfields Community Association

Posted on by

Case Summary

Case ID 17F-H1716024-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-05-11
Administrative Law Judge Diane Mihalsky
Outcome The Commissioner accepted the ALJ decision granting the Respondent's Motion for Summary Judgment, recommending dismissal of the petition due to the Department's lack of statutory jurisdiction over the dispute, which involved a Reciprocal Easement and Maintenance Agreement (REMA) and the rights of a third-party Golf Course Owner.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Kurt Gronlund Counsel —
Respondent Cottonfields Community Association Counsel Troy B. Stratman, Esq.

Alleged Violations

A.R.S. § 32-2199.01(A)

Outcome Summary

The Commissioner accepted the ALJ decision granting the Respondent's Motion for Summary Judgment, recommending dismissal of the petition due to the Department's lack of statutory jurisdiction over the dispute, which involved a Reciprocal Easement and Maintenance Agreement (REMA) and the rights of a third-party Golf Course Owner.

Why this result: The Department lacked jurisdiction to resolve the dispute because the REMA was not considered a 'community document' under A.R.S. § 33-1802(2) and the requested relief implicated the rights of a non-party (the Golf Course Owner) over whom the Department has no jurisdiction.

Key Issues & Findings

Jurisdiction over REMA Amendment Dispute

Petitioner sought a finding that REMA Amendments 2 and 3 were void because the HOA board unilaterally amended the REMA without the required member vote (two-thirds majority) as specified in the CC&Rs and REMA, and sought an order for the removal of the amendments from the record.

Orders: The Administrative Law Judge recommended granting Respondent's Motion for Summary Judgment and dismissing the Complaint.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 32-2199.01(A)
  • A.R.S. § 33-1802(2)
  • CC&Rs 14.2
  • REMA Article 12

Analytics Highlights

Topics: jurisdiction, summary judgment, golf course, REMA, third party
Additional Citations:

  • A.R.S. § 32-2199.01(A)
  • A.R.S. § 33-1802(2)
  • A.R.S. § 32-2199.02(A)
  • CC&Rs 14.2
  • REMA 5.1
  • REMA Article 12

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Video Overview

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Decision Documents

17F-H1716024-REL Decision – 563660.pdf

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17F-H1716024-REL Decision – 568840.pdf

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Briefing Document: Gronlund vs. Cottonfields Community Association (Case No. 17F-H1716024-REL)

Executive Summary

This document synthesizes the legal proceedings and decision in the case of Kurt Gronlund versus the Cottonfields Community Association, adjudicated by the Arizona Office of Administrative Hearings. The core of the dispute centers on the petitioner’s allegation that the Homeowners Association (HOA) board improperly amended a critical land-use agreement in 2011 without a required vote of the membership, ultimately enabling the commercial rezoning of an adjacent golf course.

The Administrative Law Judge (ALJ) granted the HOA’s motion for summary judgment, and the Commissioner of the Arizona Department of Real Estate adopted this decision, dismissing the petition. The dismissal was not based on the merits of the petitioner’s claim but on a crucial lack of jurisdiction. The ALJ determined that the Department of Real Estate could not rule on the matter for two primary reasons:

1. The governing agreement in question (the REMA) is not a “community document” as defined by the relevant Arizona statute, placing it outside the Department’s purview.

2. The relief sought by the petitioner would directly implicate the property rights of a third party (the Golf Course Owner) and a prior legal settlement, which exceeds the Department’s statutory authority.

While acknowledging the petitioner’s concerns about the golf course development may be “well-founded,” the decision concluded that the petitioner’s available remedies lie in electing a new HOA board, filing a lawsuit in a judicial forum, or seeking legislative change.

Case Overview

This case involves a dispute between a homeowner and his HOA regarding the amendment of a land-use agreement governing a golf course property.

Parties Involved

Name / Entity

Description

Petitioner

Kurt Gronlund

A homeowner within the Cottonfields community and a member of the Respondent association.

Respondent

Cottonfields Community Association

The Homeowners Association (HOA) for the Cottonfields development.

Third Party

The Golf Course Owner

A separate legal entity that owns the golf course property adjacent to the community.

Case Chronology

• December 11, 2001: The developer records both the Reciprocal Easement and Maintenance Agreement (REMA) and the community’s CC&Rs.

• March 2011: The Cottonfields HOA board votes 3-2 to amend the REMA.

• March 3 & May 16, 2011: Amendments 2 and 3 to the REMA, which alter the legal description of the golf course property, are officially recorded.

• 2014: Litigation (Case No. CV2014-000639) begins in Maricopa County Superior Court between the HOA and the Golf Course Owner regarding the REMA and its amendments.

• July 2015: The HOA and the Golf Course Owner execute a settlement agreement.

• August 7, 2015: The superior court lawsuit is dismissed with prejudice.

• October 5, 2016: The HOA president represents to the City Council that homeowners favor rezoning the golf course. The Council approves a rezone from “GC” (Golf Course) to Commercial, relying on the 2011 REMA amendments.

• February 3, 2017: Kurt Gronlund files a Homeowners Association Dispute Process Petition with the Arizona Department of Real Estate.

• April 27, 2017: The HOA files a Motion for Summary Judgment, arguing a lack of jurisdiction.

• May 10, 2017: Oral arguments on the motion are held.

• May 11, 2017: The Administrative Law Judge issues a decision recommending dismissal.

• May 11, 2017: The Commissioner of the Department of Real Estate issues a Final Order adopting the ALJ’s decision and dismissing the case.

Core Dispute: Unilateral Amendment of the REMA

The petitioner’s case is founded on the claim that the HOA board acted in violation of its own governing documents when it facilitated changes to the REMA without consulting the community’s homeowners.

Petitioner’s Allegations

On February 3, 2017, Kurt Gronlund filed a petition asserting that the HOA board’s actions in 2011 were illegal and directly led to the loss of protection for homeowner property values.

• The Unilateral Action: The petition states, “[In] March 2011 the HOA board voted 3-2 to unilaterally amend REMA 5.1’s use restriction on the golf course property without the required vote of the approximately 450 eligible class members…”

• The Consequence: These amendments were used as justification for the HOA president to support a commercial rezoning of the golf course property before the City Council on October 5, 2016. The petitioner argues this “stripped away that last layer of protection” for homeowners who believed the golf course could not be developed without their approval.

• Homeowner Reliance: During oral arguments, the petitioner testified that members relied on the protections within the CC&Rs and REMA when purchasing their homes, believing development required a two-thirds majority vote.

Petitioner’s Requested Relief

The petitioner respectfully requested that the Administrative Court issue the following orders:

1. Find that REMA Section 5.1 may not be amended without the member vote required by REMA Article 12 and CC&Rs Section 14.2.

2. Find that Amendments 2 and 3 to the REMA are void and unenforceable.

3. Order the HOA Board to remove Amendments 2 and 3 from the public record.

Analysis of Governing Document Provisions

The dispute hinges on the interpretation of and interaction between two key legal documents: the REMA and the HOA’s CC&Rs.

Document

Section

Description

Key Language

Section 5.1

Use Restriction: Restricts the golf course property’s use to either a golf course or open space.

“The Golf Course Property shall be used solely and exclusively for Golf Course Use or as open space, and for no other purposes.”

Article 12

Amendment Procedure: Stipulates that changes to Section 5.1 require the same member vote as an amendment to the HOA’s Declaration (CC&Rs).

“…no termination, cancellation, change, modification or amendment of paragraph 5.1… shall be made without the written approval thereof by the number of Members… required to amend the Declaration pursuant to Section 13.2 thereof.”

Section 14.2

Member Vote Requirement: Defines the threshold for amending the CC&Rs.

“…may be amended only by the affirmative vote (in person or by proxy) or written consent of: (a) Members holding not less than two-thirds (2/3) of all Class A votes then entitled to be cast; and (b) Members holding not less than two thirds (2/3) of all Class B votes…”

Section 14.17

Third-Party Rights: Protects the rights of the Golf Course Owner, stating that provisions benefiting them cannot be amended without their written consent.

“…no provision of this Declaration… which grants to or confers upon the Golf Course Owner or the Golf Course Property any rights… shall be modified, amended or revoked in any way without the express written consent of the Golf Course Owner.”

Jurisdictional Challenge and Legal Rationale for Dismissal

The HOA’s defense focused not on the factual allegations but on the argument that the Department of Real Estate was the improper forum for this dispute. The ALJ ultimately agreed with this position.

Respondent’s Motion for Summary Judgment

The Cottonfields Community Association argued that the Department could not grant the petitioner’s requested relief because:

1. The REMA is not a “community document” as defined under Arizona law (A.R.S. § 32-2199.01(A)).

2. The Golf Course Owner is a third party over whom the Department lacks jurisdiction.

3. Any ruling would affect the rights of this third party and could impact the 2015 settlement agreement from the superior court case.

Administrative Law Judge’s Conclusions of Law

The ALJ’s decision was based on a strict interpretation of the Department’s statutory authority.

• REMA is Not a “Community Document”: The judge found that although the REMA references the CC&Rs, it does not meet the legal definition of a community document under A.R.S. § 33-1802(2), which defines them as “the declaration, bylaws, articles of incorporation, if any, and rules, if any.” The Department’s authority under A.R.S. § 32-2199.01(A) is limited to violations of these specific documents.

• Implication of Third-Party Rights: The decision states that the petitioner’s request to void the amendments “implicates the Golf Course Owner’s interests in its property and may affect the settlement that the Golf Course Owner entered into with Respondent.” The law does not grant the Department “jurisdiction over disputes that implicate the rights of third parties.”

• Petitioner’s Available Remedies: While validating the petitioner’s underlying worries, the judge outlined specific alternative courses of action. The decision states: “Petitioner’s concerns about development of the golf course may be well-founded. However, under applicable statutes, at this time, his available remedies are to elect a board that will better protect members’ interest in maintaining the golf course, to file suit in a judicial forum against Respondent and the Golf Course Owner, or to ask the legislature to amend A.R.S. §§ 33-1802(2) and 32-2199.01(A).”

Final Order and Disposition

Based on the legal conclusions regarding jurisdiction, the case was dismissed.

• ALJ Recommendation: On May 11, 2017, Administrative Law Judge Diane Mihalsky recommended that the complaint be dismissed.

• Commissioner’s Final Order: On May 11, 2017, Judy Lowe, Commissioner for the Arizona Department of Real Estate, issued a Final Order stating: “The Commissioner accepts the ALJ decision that the petition in this matter be dismissed.”

• Further Action: The Final Order noted that a party may file for a rehearing or review within thirty days, or may appeal the final administrative decision by filing a complaint for judicial review.

Study Guide: Gronlund v. Cottonfields Community Association

This guide provides a detailed review of the administrative case Kurt Gronlund v. Cottonfields Community Association (No. 17F-H1716024-REL), focusing on the key legal arguments, governing documents, and the court’s final decision regarding jurisdiction.

Short-Answer Quiz

Answer the following questions in 2-3 sentences based on the provided legal documents.

1. Who are the Petitioner and Respondent in this case, and what is their relationship?

2. What central allegation did the Petitioner make regarding the HOA board’s actions in March 2011?

3. What specific relief did the Petitioner request from the Administrative Court in his petition?

4. Identify the two key legal documents at the heart of the dispute and briefly explain their respective roles.

5. According to REMA Article 12 and CC&Rs Section 14.2, what was the required procedure to amend the use restriction on the golf course property?

6. On what primary grounds did the Respondent, Cottonfields Community Association, file a motion for summary judgment?

7. What was the Administrative Law Judge’s key legal conclusion regarding the status of the Reciprocal Easement and Maintenance Agreement (REMA)?

8. Why did the Administrative Law Judge ultimately find that the Arizona Department of Real Estate lacked the jurisdiction to grant the Petitioner’s requested relief?

9. What alternative remedies did the Administrative Law Judge suggest were available to the Petitioner?

10. What was the final outcome of the case as determined by the Commissioner of the Department of Real Estate?

——————————————————————————–

Answer Key

1. The Petitioner is Kurt Gronlund, a homeowner and member of the Cottonfields Community Association. The Respondent is the Cottonfields Community Association, which is the Homeowners Association (HOA) for the residential development where the Petitioner owns a home.

2. The Petitioner alleged that the HOA board voted 3-2 to unilaterally amend REMA Section 5.1’s use restriction on the golf course property. This action was allegedly taken without the required vote of the approximately 450 eligible class members, which constituted a violation of the governing documents.

3. The Petitioner requested that the court find Amendments 2 and 3 to the REMA to be void and unenforceable, order the HOA Board to remove these amendments from the public record, and issue a finding that REMA 5.1 may not be amended without the member vote required by the CC&Rs.

4. The key documents are the Declaration of Covenants, Conditions and Restrictions (CC&Rs) and the Reciprocal Easement and Maintenance Agreement (REMA). The CC&Rs are the primary governing documents for the HOA, while the REMA is a separate agreement between the developer/HOA and the Golf Course Owner specifically governing the use of the golf course property.

5. REMA Article 12 required that any amendment to Section 5.1 (the use restriction) receive written approval from the number of Members specified in the CC&Rs. CC&Rs Section 14.2 stipulates this requires an affirmative vote or written consent of members holding at least two-thirds (2/3) of all Class A and Class B votes.

6. The Respondent argued that the Department of Real Estate lacked jurisdiction to rule on the matter. This argument was based on two points: the REMA was not a “community document” as defined by Arizona statute, and the dispute involved the rights of the Golf Course Owner, a third party over whom the Department had no authority.

7. The Judge concluded that although the REMA references the CC&Rs, it is not a “community document” as defined in A.R.S. § 33-1802(2). This determination was central to the case, as the Department’s jurisdiction is limited to disputes concerning community documents.

8. The Department’s jurisdiction under A.R.S. § 32-2199.01(A) does not extend to disputes that implicate the rights of third parties. Because the Petitioner’s request would affect the property interests of the Golf Course Owner and a 2015 legal settlement, the Department was not statutorily authorized to resolve the issue.

9. The Judge suggested three potential remedies: elect a new HOA board that will better protect members’ interests, file a lawsuit in a judicial forum against both the HOA and the Golf Course Owner, or ask the state legislature to amend the relevant statutes governing HOAs and community documents.

10. The Commissioner of the Department of Real Estate adopted the Administrative Law Judge’s recommendation in a Final Order dated May 11, 2017. The Commissioner accepted the decision that the Department lacked jurisdiction and ordered that the Petitioner’s complaint be dismissed.

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Essay Questions

The following questions are designed to encourage a deeper analysis of the case. No answers are provided.

1. Analyze the distinction between a “community document” and the REMA as presented in this case. Why was this distinction the pivotal point in the Administrative Law Judge’s decision to recommend dismissal for lack of jurisdiction?

2. Discuss the procedural history of the dispute over the golf course property, beginning with the REMA amendments in 2011 and including the 2014 litigation, the 2015 settlement, and the 2016 rezoning. How did these prior events impact the arguments and outcome of Gronlund’s 2017 petition?

3. Explain the conflict between the powers granted to the HOA Board and Golf Course Owner in REMA Article 12 and the protections afforded to homeowners in the same article’s reference to CC&Rs Section 14.2. How did the Petitioner and Respondent interpret these clauses differently?

4. Evaluate the legal reasoning behind the Administrative Law Judge’s conclusion that the Department of Real Estate lacked jurisdiction over third parties like the Golf Course Owner. Why would resolving Gronlund’s petition necessarily implicate the rights of this third party?

5. The Judge outlines three potential remedies for the Petitioner: electoral, judicial, and legislative. Describe each of these remedies and discuss the potential challenges and benefits of each path in seeking to protect the golf course from development.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

A judge who presides over administrative hearings at a government agency, in this case, the Office of Administrative Hearings (OAH). The ALJ in this matter was Diane Mihalsky.

A.R.S. (Arizona Revised Statutes)

The collection of all the laws passed by the Arizona state legislature. Specific statutes, such as A.R.S. § 32-2199.01(A) and § 33-1802(2), were central to this case.

CC&Rs (Declaration of Covenants, Conditions and Restrictions)

The primary governing legal documents for a planned community or homeowners’ association that outline the rules and member obligations.

Commissioner

The head of a government department. In this case, Judy Lowe, the Commissioner of the Arizona Department of Real Estate, issued the Final Order.

Community Documents

As defined by A.R.S. § 33-1802(2), these include a planned community’s declaration (CC&Rs), bylaws, articles of incorporation, and rules. The REMA was determined not to fall under this definition.

Dismissed with Prejudice

A legal term for a final judgment that prevents the plaintiff from filing another case on the same claim. The 2014 lawsuit between the HOA and the Golf Course Owner was dismissed with prejudice.

Golf Course Owner

A separate legal entity that owned the golf course property and was a primary party to the REMA, but was not a party to this administrative case.

• HOA (Homeowners Association) | An organization in a subdivision or planned community that creates and enforces rules for the properties within its jurisdiction. In this case, the Cottonfields Community Association. | | Jurisdiction | The official power to make legal decisions and judgments. The central legal issue of the case was whether the Arizona Department of Real Estate had jurisdiction over the dispute. | | Motion for Summary Judgment | A request made by a party asking the court to decide a case in their favor without a full trial, arguing that there are no material facts in dispute and that they are entitled to win as a matter of law. | | Office of Administrative Hearings (OAH) | An independent Arizona state agency that conducts evidentiary hearings for other state agencies to ensure fair and impartial decisions. | | Petitioner | The party who files a petition or brings an action before a court or administrative body. In this case, Kurt Gronlund. | | REMA (Reciprocal Easement and Maintenance Agreement) | A recorded legal agreement between the original developer/HOA and the Golf Course Owner that established mutual rights, easements, and obligations, including the critical use restriction on the golf course property. | | Respondent | The party against whom a petition is filed or an appeal is brought. In this case, the Cottonfields Community Association. |

⚖️

17F-H1716024-REL

2 sources

The provided sources consist of an Administrative Law Judge Decision and a subsequent Final Order from the Arizona Department of Real Estate concerning a dispute between homeowner Kurt Gronlund, the Petitioner, and the Cottonfields Community Association, the Respondent. The administrative law judge recommended granting the Association’s motion for summary judgment because the Department of Real Estate lacked jurisdiction over the matter, a recommendation which the Commissioner ultimately accepted. The core of the conflict was Gronlund’s petition challenging the Association’s 2011 amendments to a Reciprocal Easement and Maintenance Agreement (REMA), which governed the use of a golf course adjacent to the community. The decision clarified that the REMA was not classified as a “community document” under the relevant statutes, and furthermore, the requested relief would improperly implicate the rights of the Golf Course Owner, a third party over whom the Department had no authority. The final ruling therefore dismissed the petition, suggesting judicial action or legislative change as alternative remedies for the petitioner.

Case Participants

Petitioner Side

  • Kurt Gronlund (petitioner)

Respondent Side

  • Troy B. Stratman (attorney)
    Stratman Law Firm, PLC

Neutral Parties

  • Diane Mihalsky (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
    Responsible for processing rehearing requests and listed on ADRE service email list.
  • LDettorre (administrative staff)
    Arizona Department of Real Estate
    Email contact listed ([email protected])
  • djones (administrative staff)
    Arizona Department of Real Estate
    Email contact listed ([email protected])
  • jmarshall (administrative staff)
    Arizona Department of Real Estate
    Email contact listed ([email protected])
  • ncano (administrative staff)
    Arizona Department of Real Estate
    Email contact listed ([email protected])

John Sellers vs. Rancho Madera Condominium Association

Posted on by

Case Summary

Case ID 17F-H1716021-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-03-30
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John Sellers Counsel —
Respondent Rancho Madera Condominium Association Counsel Lydia Peirce Linsmeier, Esq.

Alleged Violations

A.R.S. § 33-1258

Outcome Summary

The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.

Why this result: Petitioner failed to meet the burden of proof that Respondent violated A.R.S. § 33-1258 because the statute does not require the association to provide records (like signature cards or usernames/passwords) which are not financial records showing actual expenditures and are often held by the financial institution.

Key Issues & Findings

Association financial and other records; applicability

Petitioner, a member of the HOA, alleged the HOA violated A.R.S. § 33-1258 by refusing access to bank account signature cards and read-only user names/passwords. The ALJ found that these items were not 'financial and other records' that the association was statutorily required to provide, as they related to mechanisms for disbursement rather than actual expenditure, and would be maintained by the bank, not the association.

Orders: Petitioner's petition was denied and dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01

Analytics Highlights

Topics: Records Request, Condominium Act, Access to Records, Financial Records, Bank Records
Additional Citations:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.08

Video Overview

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

Uploaded 2026-04-24T11:03:00 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2026-04-24T11:03:04 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2026-04-24T11:03:09 (757.3 KB)

Administrative Hearing Briefing: Sellers v. Rancho Madera Condominium Association

Executive Summary

This document synthesizes the proceedings and outcome of the administrative case John Sellers v. Rancho Madera Condominium Association. The core of the dispute was Petitioner John Sellers’s allegation that the Respondent, Rancho Madera Condominium Association, violated Arizona Revised Statute (A.R.S.) § 33-1258 by refusing to produce specific records: bank account signature cards and read-only online banking credentials for the association’s account with Mutual of Omaha.

The Administrative Law Judge (ALJ) ultimately recommended the petition be denied, a decision that was formally adopted by the Commissioner of the Arizona Department of Real Estate. The ruling hinged on a narrow interpretation of the statute. The ALJ concluded that the requested items were not “financial and other records of the association” as required by law. Key findings supporting this conclusion were:

• Custody: The signature cards, if they exist, are records held by the bank (Mutual of Omaha), not the association.

• Nature of Request: Online user names and passwords constitute “information,” not a “document” or “record” in the statutory sense.

• Sufficient Disclosure: The association had already provided a comprehensive set of financial documents (bank statements, contracts, resolutions, etc.) sufficient for a member to ascertain whether the association was prudently managing its funds, thereby satisfying the plain-meaning purpose of A.R.S. § 33-1258.

The petitioner’s arguments that such records must exist under federal banking regulations and that electronic access is superior to paper records were deemed policy arguments to be addressed to the legislature, not grounds for finding a statutory violation.

Case Overview

Case Name

John Sellers, Petitioner, vs. Rancho Madera Condominium Association, Respondent

Case Number

No. 17F-H1716021-REL (also listed as DOCKET NO. 17F-H1716021-REL and CASE NO. HO 17-16/021)

Petitioner

John Sellers (Appeared on his own behalf)

Respondent

Rancho Madera Condominium Association

Respondent’s Counsel

Lydia Peirce Linsmeier, Esq., Carpenter, Hazlewood, Delgado & Bolen, PLC

Adjudicating Body

Arizona Office of Administrative Hearings

Reviewing Body

Arizona Department of Real Estate

Administrative Law Judge

Diane Mihalsky

Commissioner

Judy Lowe, Arizona Department of Real Estate

Core Allegation and Legal Framework

Petitioner’s Claim

On or about December 20, 2016, John Sellers, a condominium owner and member of the Rancho Madera Condominium Association, filed a petition with the Arizona Department of Real Estate. The petition alleged that the association had violated A.R.S. § 33-1258 by refusing to provide two specific items related to its bank account at Mutual of Omaha:

1. Bank account signature cards.

2. Read-only user names and passwords for online access to the account.

Sellers argued that these documents must exist, citing federal banking statutes and regulations intended to combat terrorism.

Governing Statute: A.R.S. § 33-1258

The case revolved around the interpretation of A.R.S. § 33-1258, “Association financial and other records.” The key provisions of this statute state:

• A. Right to Examine: “Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member…”

• Timeline: An association has ten business days to fulfill a request for examination and ten business days to provide copies upon request.

• Fees: An association may charge a fee of not more than fifteen cents per page for copies.

• B. Withholdable Records: The statute allows an association to withhold records related to:

1. Privileged attorney-client communication.

2. Pending litigation.

3. Records of board meetings not required to be open to all members.

4. Personal, health, or financial records of individual members or employees.

5. Records related to job performance or complaints against employees.

• C. Legal Prohibitions: An association is not required to disclose records if doing so would violate state or federal law.

The Uniform Condominium Act, of which this statute is a part, does not provide a more specific definition of “financial and other records.”

Factual Findings and Evidence Presented

Records Provided by the Association

Prior to the hearing, the Respondent had already provided the Petitioner with a substantial volume of financial records. Emails attached to the initial petition indicated that the following documents were furnished:

• All bank statements

• Account opening documentation

• Forms for members’ direct debit authorizations

• The Board’s resolution authorizing the opening of the bank account

• Agreements between the property management company, Trestle Management Group, and Mutual of Omaha regarding fees, indemnities, and netting

• The association’s insurance certificate

• The association’s management contract with Trestle Management Group

Witness Testimony

A hearing was held on March 7, 2017, where testimony was presented by both parties.

• Petitioner’s Testimony: John Sellers testified on his own behalf and submitted ten exhibits.

• Respondent’s Witnesses:

◦ Marc Vasquez (Vice President of Trestle Management Group): Testified that all signature cards for the association’s bank accounts were held by the bank at which the accounts were opened. He stated that Mutual of Omaha was the custodian of those cards.

◦ Alan Simpson (Vice President of Respondent’s Board) & Marc Kaplan (President of Respondent’s Board): Both testified that they did not have user names and passwords for the association’s Mutual of Omaha account. They believed, however, that the association’s treasurer may have had such credentials to access the account online.

Administrative Law Judge’s Decision and Rationale

The ALJ’s decision, issued on March 29, 2017, denied the Petitioner’s petition. The reasoning was based on a direct interpretation of A.R.S. § 33-1258 and the evidence presented.

• Burden of Proof: The decision established that the Petitioner bore the burden of proving by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is defined as proof that “convinces the trier of fact that the contention is more probably true than not.”

• Statutory Interpretation: The ALJ determined that the “plain meaning” of A.R.S. § 33-1258 is to provide members with access to documents that allow them to “ascertain whether the association is prudently managing its members’ assessments.” The decision explicitly states that the numerous documents already provided by the Respondent fulfilled this purpose.

• Custody and Control: A central finding was that the requested items were not “records of the association.” The signature cards were records held and maintained by a third party, Mutual of Omaha. The statute does not compel an association to produce records that are not in its possession or under its control.

• Information vs. Documents: The decision drew a distinction between records and information, stating, “The user names and passwords are information, not a document.” Furthermore, it noted that these items “do not relate to Respondent’s actual expenditure of members’ assessments” but rather to the mechanisms for disbursing funds.

• Scope of the Statute: The ALJ concluded that A.R.S. § 33-1258 does not require an association to “create, maintain, or provide this information or documentation to Petitioner, either to serve his convenience or to allow him to ascertain Respondent’s or Mutual of Omaha’s compliance with federal banking statutes that are not incorporated in the Uniform Condominium Act.”

• Policy Arguments: The Petitioner’s contention that “paper access to the account information is inferior to electronic access” was dismissed as “a policy argument that should be addressed to the Legislature.” The statute only requires that records be made “reasonably available,” which the Respondent had done.

Procedural History and Final Outcome

c. Dec. 20, 2016

John Sellers files a petition with the Arizona Department of Real Estate.

Mar. 7, 2017

An evidentiary hearing is held before ALJ Diane Mihalsky. An order is issued holding the record open for the parties to submit legal memoranda regarding the scope of A.R.S. § 33-1258.

Mar. 21, 2017

The deadline for submitting legal memoranda passes, and the record on the matter is closed.

Mar. 29, 2017

ALJ Diane Mihalsky issues the “Administrative Law Judge Decision,” which includes Findings of Fact, Conclusions of Law, and a Recommended Order to deny the Petitioner’s petition.

Mar. 30, 2017

Judy Lowe, Commissioner of the Department of Real Estate, issues a “Final Order.” This order formally accepts and adopts the ALJ’s decision, and the petition is denied.

The Final Order, effective immediately upon service, represented the final administrative action in the matter. The order noted that parties could file a motion for rehearing within 30 days or appeal the final administrative decision through judicial review.

Study Guide:Sellers v. Rancho Madera Condominium Association

This study guide provides a comprehensive review of the administrative case John Sellers v. Rancho Madera Condominium Association, Case No. 17F-H1716021-REL. It covers the key parties, legal arguments, statutory interpretations, and the ultimate decision rendered by the Office of Administrative Hearings and the Arizona Department of Real Estate.

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Short-Answer Quiz

Instructions: Answer the following questions in 2-3 sentences each, based on the information provided in the case documents.

1. What was the central allegation made by the Petitioner, John Sellers, against the Rancho Madera Condominium Association?

2. Identify the specific Arizona Revised Statute (A.R.S.) that formed the basis of the legal dispute and summarize its primary requirement for homeowners’ associations.

3. What specific documents or information did John Sellers request that the association refused to provide?

4. In its defense, what was the association’s stated reason for not producing the requested items?

5. List the documents that the association did provide to the Petitioner prior to the hearing.

6. Who testified on behalf of the Respondent association at the March 7, 2017 hearing?

7. How did the Administrative Law Judge (ALJ) distinguish between “information” and “documents” in her legal conclusions?

8. What is the “burden of proof” in this case, and which party was responsible for meeting it?

9. What was the final outcome of the petition as determined by the Administrative Law Judge and subsequently adopted by the Commissioner of the Department of Real Estate?

10. According to the ALJ’s decision, what is the plain meaning and purpose of A.R.S. § 33-1258?

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Answer Key

1. The Petitioner, John Sellers, alleged that the Respondent, Rancho Madera Condominium Association, had violated A.R.S. § 33-1258. The specific violation was the association’s refusal to provide him with certain records related to its bank account at Mutual of Omaha.

2. The statute at the center of the dispute was A.R.S. § 33-1258, titled “Association financial and other records.” This statute generally requires that all financial and other records of a homeowners’ association be made reasonably available for examination by any member within ten business days of a request.

3. John Sellers requested bank account signature cards for the association’s Mutual of Omaha account. He also requested read-only user names and passwords for online access to that same account.

4. The association denied the request because it asserted that the requested documents and information either did not exist or were not included in the association’s records. It was testified that the signature cards were held by the bank, Mutual of Omaha, as their custodian.

5. The association provided copies of all bank statements, account opening documentation, direct debit authorization forms, the Board’s resolution to open the account, agreements between its management company (Trestle) and the bank, its insurance certificate, and its management contract with Trestle.

6. Three witnesses testified for the Respondent: Alan Simpson (Vice President of the Board), Marc Kaplan (President of the Board), and Marc Vasquez (Vice President of Trestle Management Group).

7. The ALJ concluded that the requested user names and passwords constituted “information,” not a “document” as covered by the statute. She further reasoned that neither the signature cards nor the online credentials related to the actual expenditure of funds, but rather to the mechanisms for disbursement, and were maintained by the bank, not the association.

8. The burden of proof rested on the Petitioner, John Sellers, to establish by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is proof that convinces the trier of fact that a contention is more probably true than not.

9. The Administrative Law Judge issued a recommended order denying the Petitioner’s petition. This decision was then adopted by the Commissioner of the Department of Real Estate in a Final Order, formally denying the petition and making the decision binding on the parties.

10. The ALJ determined the plain meaning of A.R.S. § 33-1258 is that associations must provide members with access to documents that allow them to ascertain whether the association is prudently managing its members’ assessments. The judge noted that arguments for different types of access (e.g., electronic vs. paper) are policy arguments that should be addressed to the Legislature.

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Essay Questions

Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate comprehensive responses based on the facts, legal reasoning, and conclusions presented in the source documents.

1. Analyze the Administrative Law Judge’s interpretation of “financial and other records” under A.R.S. § 33-1258. How did this interpretation, particularly the distinction between disbursement mechanisms and actual expenditures, lead to the denial of John Sellers’ petition?

2. Discuss the concept of “burden of proof” as it applied in this case. Explain what “preponderance of the evidence” means and detail why the Petitioner, according to the ALJ’s findings, failed to meet this standard.

3. Trace the procedural timeline of the case from the initial petition filed around December 20, 2016, to the Final Order dated March 30, 2017. Identify the key legal bodies involved (Office of Administrative Hearings, Department of Real Estate) and their respective roles in the process.

4. Evaluate the Petitioner’s argument that federal banking statutes and regulations intended to fight terrorism necessitated the existence and disclosure of the requested records. Why was this argument ultimately unpersuasive to the court?

5. Examine the exceptions to disclosure outlined in A.R.S. § 33-1258(B). Although not the central issue in the final decision, explain how these exceptions frame the limits of a homeowner’s right to association records.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, makes findings of fact and conclusions of law, and issues decisions or recommended orders. In this case, Diane Mihalsky served as the ALJ.

A.R.S. § 33-1258

The specific Arizona Revised Statute at the heart of the case, part of the Uniform Condominium Act. It governs a homeowner association’s duty to make its “financial and other records” available for examination by members.

Burden of Proof

The obligation on a party in a legal case to prove their allegations. In this matter, the Petitioner bore the burden of proof.

Commissioner

The head of a government department. In this case, Judy Lowe, the Commissioner of the Arizona Department of Real Estate, adopted the ALJ’s decision and issued the Final Order.

Evidentiary Hearing

A formal proceeding where parties present evidence (such as documents and testimony) before a judge or hearing officer. The hearing in this case was held on March 7, 2017.

Final Order

A binding decision issued by an administrative agency that concludes a case. In this matter, the Final Order was issued by the Commissioner of the Department of Real Estate on March 30, 2017, denying the petition.

Homeowners’ Association

An organization in a subdivision, planned community, or condominium development that makes and enforces rules for the properties and its residents. In this case, the Rancho Madera Condominium Association.

Petitioner

The party who files a petition initiating a legal or administrative action. In this case, John Sellers.

Preponderance of the Evidence

The standard of proof in most civil and administrative cases. It means that the evidence presented is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, establishing that a claim is “more probably true than not.”

Respondent

The party against whom a petition is filed. In this case, the Rancho Madera Condominium Association.

Trestle Management Group (“Trestle”)

The property management company for the Rancho Madera Condominium Association. The Vice President of Trestle, Marc Vasquez, testified at the hearing.

Uniform Condominium Act

The section of Arizona law (Chapter 9 of Title 33, Arizona Revised Statutes) that governs condominiums. A.R.S. § 33-1258 is part of this act.

⚖️

17F-H1716021-REL

3 sources

These sources document the administrative legal proceedings of a dispute between John Sellers (Petitioner) and the Rancho Madera Condominium Association (Respondent) before the Arizona Office of Administrative Hearings. The core issue of the case, No. 17F-H1716021-REL, was the Association’s alleged violation of A.R.S. § 33-1258 by refusing to provide bank account signature cards and read-only user credentials for online access to their bank account. The initial order, dated March 7, 2017, held the record open to allow both parties to submit legal memoranda concerning the scope of corporate records required under the statute. The subsequent Administrative Law Judge Decision, dated March 29, 2017, denied the Petitioner’s petition, concluding that the requested items were not considered financial records the association was legally required to create, maintain, or disclose. Finally, the Commissioner of the Department of Real Estate adopted the ALJ Decision as a Final Order on March 30, 2017.

Case Participants

Petitioner Side

  • John Sellers (petitioner)

Respondent Side

  • Lydia Peirce Linsmeier (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
  • Alan Simpson (board member/witness)
    Rancho Madera Condominium Association
    Vice President of Respondent's board
  • Marc Kaplan (board member/witness)
    Rancho Madera Condominium Association
    President of Respondent's Board
  • Marc Vasquez (property manager/witness)
    Trestle Management Group
    Vice President of Trestle
  • Annette Graham (attorney staff)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Derived from email address (Annette.graham)

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
    Also listed as AHansen

Other Participants

  • M. Johnson (clerical staff)
    Signatory on document transmission
  • LDettorre (ADRE Staff)
    ADRE
    Email recipient
  • djones (ADRE Staff)
    ADRE
    Email recipient
  • jmarshall (ADRE Staff)
    ADRE
    Email recipient
  • ncano (ADRE Staff)
    ADRE
    Email recipient

Jay Janicek vs. Sycamore Vista No. 8 HOA

Posted on by

Case Summary

Case ID 17F-H1716019-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-03-14
Administrative Law Judge Suzanne Marwil
Outcome The Petitioner's petition was granted. The HOA violated A.R.S. § 33-1817 by invalidly adopting the 'Declaration of Scrivener's Error' (Exhibit C) as an amendment without the required lot owner vote. However, the $10.00 annual increased assessment that Petitioner objected to was permitted to stand because the authority for differential assessments was established by the valid First Amendment to the Declaration, independent of the invalid Exhibit C. The HOA was ordered to refund the Petitioner's $500 filing fee.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jay Janicek Counsel —
Respondent Sycamore Vista No. 8 HOA Counsel Evan Thomson, Esq.

Alleged Violations

A.R.S. § 33-1817

Outcome Summary

The Petitioner's petition was granted. The HOA violated A.R.S. § 33-1817 by invalidly adopting the 'Declaration of Scrivener's Error' (Exhibit C) as an amendment without the required lot owner vote. However, the $10.00 annual increased assessment that Petitioner objected to was permitted to stand because the authority for differential assessments was established by the valid First Amendment to the Declaration, independent of the invalid Exhibit C. The HOA was ordered to refund the Petitioner's $500 filing fee.

Why this result: Petitioner objected to the increased assessment resulting from Exhibit C, but the Tribunal determined that Respondent had the right to impose the increased assessment pursuant to the language of Section 6.8 in the valid First Amendment to the Declaration, regardless of the invalidity of Exhibit C.

Key Issues & Findings

Improper Amendment of Declaration (Declaration of Scrivener's Error)

Petitioner claimed Respondent HOA improperly adopted a Declaration of Scrivener's Error (Exhibit C) to revise the definition of developed/undeveloped lots, arguing it was a substantive amendment requiring a 75% lot owner vote, which Respondent failed to obtain.

Orders: The Tribunal found that Exhibit C constituted an amendment and Respondent violated A.R.S. § 33-1817 by adopting it without a vote. Exhibit C was deemed invalid, but this invalidity did not nullify the subsequent assessment increase, which was authorized by a prior, valid declaration amendment. Respondent was ordered to refund the filing fee.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1817
  • A.R.S. § 32-2199 et seq.

Analytics Highlights

Topics: HOA Declaration Amendment, Scrivener's Error, Assessments, Statutory Violation
Additional Citations:

  • A.R.S. § 33-1817
  • A.R.S. § 32-2199.02
  • A.R.S. § 33-1811

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Video Overview

Audio Overview

Decision Documents

17F-H1716019-REL Decision – 551057.pdf

Uploaded 2026-04-24T11:02:31 (83.7 KB)

17F-H1716019-REL Decision – 559875.pdf

Uploaded 2026-04-24T11:02:41 (794.0 KB)

Briefing Document: Janicek v. Sycamore Vista No. 8 HOA

Executive Summary

This briefing document analyzes the administrative legal dispute between petitioner Jay Janicek and respondent Sycamore Vista No. 8 Homeowners Association (HOA), culminating in the case No. 17F-H1716019-REL. The core of the conflict was the HOA Board’s attempt to amend its governing Declaration via a “Declaration of Scrivener’s Error” without the required 75% vote from lot owners. This action was intended to reinsert a definition of “Completed Lots” that had been omitted from a 2009 amendment and was followed by a $10 annual assessment increase on developed lots.

The Administrative Law Judge (ALJ) ultimately ruled in favor of the petitioner, granting his petition and invalidating the “Declaration of Scrivener’s Error.” The judge found that the change was a substantive amendment, not a correction of a clerical error, and the Board’s unilateral action violated Arizona state law (A.R.S. § 33-1817). However, in a critical distinction, the ALJ ruled that the $10 assessment increase on developed lots was permissible and should stand, as the authority to set different rates for completed and uncompleted lots was already established in the valid 2009 First Amendment to the Declaration.

The judge also rejected the petitioner’s conflict of interest claim against three Board members with financial ties to the developer, deeming the petitioner’s interpretation of the relevant statute (A.R.S. § 33-1811) to be overbroad. The final order, adopted by the Arizona Department of Real Estate Commissioner, required the HOA to pay the petitioner’s $500 filing fee and to comply with state statutes regarding amendments and conflicts of interest in the future.

Case Details

Details

Case Name

Jay Janicek, Petitioner, vs. Sycamore Vista No. 8 HOA, Respondent

Case Number

HO 17-16/019

Docket Number

17F-H1716019-REL

Jurisdiction

Office of Administrative Hearings / Arizona Department of Real Estate

Petitioner

Jay Janicek (appeared personally)

Respondent

Sycamore Vista No. 8 HOA (represented by Evan Thomson, Esq.)

Administrative Law Judge

Suzanne Marwil

Hearing Date

March 2, 2017

ALJ Decision Date

March 14, 2017

Final Order Date

March 16, 2017

Commissioner

Judy Lowe, Commissioner, Arizona Department of Real Estate

Background and Core Dispute

The conflict originated from changes to the Sycamore Vista No. 8 HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (Declaration).

• 2005 Declaration: The original “2005 Amended and Restated Declaration” contained Section 6.8, which established a uniform assessment rate for all lots. Crucially, it exempted the Declarant and Developer from payments on any property except for “Completed Lots.” This section provided a specific definition for “Completed Lots,” describing them as any lot with a dwelling unit ready for occupancy.

• 2009 First Amendment: On December 4, 2008, after securing a vote from 75% of lot owners, the HOA adopted the “First Amendment to the 2005 Declaration.” This amendment deleted the original Section 6.8 in its entirety and replaced it with new language stating: “annual dues may be assessed at one uniform rate for Completed Lots and a different uniform rate for Uncompleted Lots.” This amendment, however, omitted the definition of a “Completed Lot” that was present in the 2005 version.

• Seven-Year Period: For seven years following the 2009 amendment, the revised Section 6.8 remained unchanged, without the specific definition.

The “Declaration of Scrivener’s Error”

In June or July 2016, the HOA Board proposed a “Declaration of Scrivener’s Error” to address the omitted definition.

• Board’s Position: The Respondent, represented by its president Steven Russo, argued that the purpose of the declaration was simply to correct a clerical error by reinserting the definition of a developed versus undeveloped lot, which was “inadvertently omitted” from the 2009 First Amendment. The Board stated it was acting on the advice of its legal counsel.

• Petitioner’s Position: Mr. Janicek contended that this declaration was not a correction of a minor error but was a substantive change to the Declaration. As such, he argued it required the approval of 75% of the lot owners, a process that was not followed.

• Adoption: On August 3, 2016, the Board adopted the Declaration of Scrivener’s Error by a 3-2 vote. Petitioner Janicek and another Board member representing developed lot owners voted against the measure.

• Immediate Consequence: Following the adoption, the Board voted to increase the annual assessment for developed lot owners by $10.00, while the assessment for undeveloped lots remained unchanged. This action prompted Mr. Janicek to file his petition.

Allegations of Fiduciary Duty and Conflict of Interest

Petitioner Janicek accused the Respondent of a violation of its fiduciary duty and a conflict of interest. He noted that three members of the Board had a financial interest in NT Properties, the company that owned the community’s undeveloped lots. These lots directly benefited from the assessment structure that placed a higher burden on developed lots.

Administrative Law Judge’s Decision and Rationale

The ALJ’s decision, issued on March 14, 2017, contained three central conclusions of law that addressed the distinct issues raised in the petition.

1. The “Scrivener’s Error” was an Invalid Amendment

The judge found decisively in favor of the petitioner on the core issue of the amendment process.

• Substantive Change, Not Clerical Error: The Tribunal found that the change constituted an amendment to the Declaration, not a correction of a simple clerical error.

• Violation of A.R.S. § 33-1817: The judge ruled that the procedure for amending the Declaration requires a vote by the lot owners, as specified in the Declaration and state law. The HOA violated this statute by attempting to amend the document via a simple Board vote.

• Key Judicial Reasoning: The judge noted that the same section had been properly amended by a homeowner vote in 2009. The ruling states, “after a period of seven years, it defies logic to suggest that a further change to section was simply a clerical error.”

• Conclusion: The Declaration of Scrivener’s Error (Exhibit C) was declared invalid and could not operate to amend the Declaration.

2. The Assessment Increase Was Valid

Despite invalidating the method used by the Board, the judge upheld the Board’s right to implement the assessment increase.

• Existing Authority: The ruling stated that the invalidity of Exhibit C “does not implicate Respondent’s right to impose an increased assessment on the developed lots.”

• Basis in 2009 Amendment: The judge found that the language of the valid 2009 First Amendment—which expressly states that “annual dues may be assessed at one uniform rate for Completed Lots and a different uniform rate for Uncompleted Lots”—provided the Board with sufficient authority to set differential rates.

• Conclusion: The raised assessment was allowed to stand.

3. Conflict of Interest Claim Rejected

The Tribunal rejected the petitioner’s argument that Board members with ties to NT Properties had a conflict of interest under A.R.S. § 33-1811.

• “Overbroad” Interpretation: The judge found the petitioner’s interpretation of the conflict-of-interest statute to be “overbroad.”

• Rationale: The ruling stated that this interpretation “ignores that make-up of the Board as outlined in the Declaration and disregards the express language permitting the Board to assess annual dues.”

• Conclusion: The Board members were not required to declare a conflict of interest and were permitted to vote on the issue.

Final Order

The petition filed by Jay Janicek was granted. The Administrative Law Judge’s decision was officially adopted by the Commissioner of the Arizona Department of Real Estate in a Final Order dated March 16, 2017. The final order mandated the following:

• The Sycamore Vista No. 8 HOA must pay the petitioner, Jay Janicek, the $500.00 filing fee.

• The HOA must comply with the applicable provisions of Arizona Revised Statutes § 33-1817 (regarding the proper procedure for amending a declaration) and § 33-1811 (regarding conflicts of interest) in the future.

Study Guide: Janicek v. Sycamore Vista No. 8 HOA

This study guide provides a review of the administrative law case Janicek v. Sycamore Vista No. 8 HOA (No. 17F-H1716019-REL). It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms to aid in understanding the facts, arguments, and legal conclusions of the case.

Short-Answer Quiz

Instructions: Answer the following questions in 2-3 complete sentences, based on the information provided in the source documents.

1. Who were the primary parties in this case, and what were their roles?

2. What was the central action taken by the Respondent’s Board that led to this legal dispute?

3. What was the Petitioner’s primary legal argument against the “Declaration of Scrivener’s Error”?

4. How did the Respondent justify its use of a “Declaration of Scrivener’s Error” instead of a full vote by lot owners?

5. Describe the conflict of interest alleged by the Petitioner against the Respondent’s Board.

6. How did the 2009 First Amendment alter Section 6.8 of the HOA’s 2005 Declaration?

7. What was the direct financial consequence for developed lot owners following the Board’s actions in 2016?

8. What was the Administrative Law Judge’s final ruling regarding the validity of the “Declaration of Scrivener’s Error”?

9. Despite invalidating the Board’s action, what did the Judge decide regarding the increased assessment on developed lots?

10. What was the final order issued in the case, and what was the Respondent required to do?

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Answer Key

1. The primary parties were Petitioner Jay Janicek and Respondent Sycamore Vista No. 8 HOA. Janicek, a lot owner, brought the petition against the Homeowner’s Association to challenge a decision made by its Board of Directors.

2. The Respondent’s Board, by a 3-2 vote, adopted a “Declaration of Scrivener’s Error” on August 3, 2016. This action was intended to reinsert a definition of “Completed Lots” that had been omitted from a 2009 amendment to the HOA’s governing documents.

3. The Petitioner argued that the “Declaration of Scrivener’s Error” was not a simple correction but a substantive change to the Declaration. As such, he contended it was an amendment that required approval by a vote of seventy-five percent of the lot owners, not just a Board vote.

4. The Respondent argued that the “Declaration of Scrivener’s Error” was merely intended to correct a clerical error by reinserting the definition of developed versus undeveloped lots, which was inadvertently deleted from the 2009 revision. The Board’s President, Steven Russo, testified that they acted on the recommendation of their legal counsel.

5. The Petitioner alleged a conflict of interest because three members of the Respondent’s Board had a financial interest in NT Properties, the company that owns the undeveloped lots. The Petitioner argued that these members stood to benefit from assessment changes that favored undeveloped lots.

6. The 2009 First Amendment deleted the original Section 6.8 and replaced it with new language. This new language explicitly allowed annual dues to be assessed at different uniform rates for “Completed Lots” and “Uncompleted Lots,” a distinction not present in the original uniform rate structure.

7. Following the adoption of the “Declaration of Scrivener’s Error,” the Board voted to increase the annual assessment for developed lot owners by $10.00. The assessment for undeveloped lots was left unchanged.

8. The Administrative Law Judge ruled that the “Declaration of Scrivener’s Error” was an invalid amendment to the Declaration. The Judge found that it was a substantive change that required a vote of the lot owners as specified in A.R.S. §33-1817, and that calling it a correction of a clerical error after seven years “defies logic.”

9. The Judge ruled that the increased assessment on developed lots could stand. The ruling was based on the language of the valid 2009 First Amendment, which expressly permitted the HOA to assess different rates for completed and uncompleted lots, independent of the invalidated “Declaration of Scrivener’s Error.”

10. The final order granted the Petitioner’s petition. The Respondent, Sycamore Vista No. 8 HOA, was ordered to pay the Petitioner the filing fee required by section 32-2199.01.

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Essay Questions

Instructions: Consider the following questions. Formulate a comprehensive response drawing upon the specific facts, legal arguments, and conclusions presented in the case documents.

1. Analyze the legal reasoning behind the Administrative Law Judge’s decision to invalidate the “Declaration of Scrivener’s Error” while simultaneously upholding the increased assessment on developed lots. Explain how both parts of this ruling were supported by different governing documents.

2. Discuss the conflict of interest allegation raised by Jay Janicek under A.R.S. § 33-1811. Why did the Tribunal ultimately reject this argument, and what does this rejection imply about the Board’s authority to set assessments under the Declaration?

3. Trace the evolution of Section 6.8 of the Declaration from the original 2005 version, through the 2009 First Amendment, to the attempted 2016 change. Explain the significance of the “Completed Lots” definition and how its omission and attempted reinsertion became the central point of the dispute.

4. Evaluate the Respondent’s argument that it was simply correcting an inadvertent clerical error. What evidence and reasoning did the Administrative Law Judge use to conclude that this was, in fact, an improper amendment?

5. Describe the legal requirements for amending an HOA declaration as outlined in A.R.S. § 33-1817. Explain precisely how the actions of the Sycamore Vista No. 8 HOA Board violated this statute.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The presiding judge in the administrative hearing, in this case, Suzanne Marwil. The ALJ hears evidence and issues a decision based on the facts and applicable laws.

A.R.S. § 33-1811

An Arizona Revised Statute cited in the case that addresses conflicts of interest for members of an HOA board of directors. The Tribunal found the Petitioner’s interpretation of this statute to be overbroad.

A.R.S. § 33-1817

An Arizona Revised Statute cited in the case that outlines the legal requirements and procedures for amending an HOA’s declaration. The ALJ found the Respondent violated this statute.

Completed Lots

As defined in the original 2005 Declaration, this refers to any lot with a dwelling unit ready for occupancy, including installed carpets, cabinets, plumbing, etc. This definition was central to the dispute.

Declaration of Covenants, Conditions, Restrictions and Easements (Declaration)

The primary governing legal document of the Sycamore Vista No. 8 HOA, which outlines the rules, assessments, and rights of the property owners.

Declaration of Scrivener’s Error

The legal instrument adopted by the Respondent’s Board in a 3-2 vote on August 3, 2016. It was purported to correct a clerical error but was ruled to be an invalid substantive amendment to the Declaration.

First Amendment

The amendment to the 2005 Declaration adopted on December 4, 2008, after a vote of 75% of the lot owners. It changed Section 6.8 to allow for different assessment rates for completed and uncompleted lots but inadvertently omitted the definition of a “Completed Lot.”

NT Properties

A company with a financial interest in the undeveloped lots within the HOA. Three members of the Respondent’s Board also had a financial interest in this company, forming the basis of a conflict of interest allegation.

Petitioner

The party who filed the petition initiating the legal action. In this case, Jay Janicek.

Respondent

The party against whom the petition was filed. In this case, Sycamore Vista No. 8 HOA.

Tribunal

A term used within the decision to refer to the adjudicating body, specifically the Office of Administrative Hearings and the presiding Administrative Law Judge.

Uniform Rate of Assessment

A principle laid out in the 2005 Declaration requiring that annual and special assessments be fixed at a uniform rate for all lots. This was modified by the 2009 First Amendment.

He Sued His HOA and Won. Here’s Why He Still Had to Pay.

Introduction: The David vs. Goliath of Neighborhood Disputes

For many homeowners, the relationship with their Homeowners’ Association (HOA) can feel like a constant source of tension. It’s a world of rules, fees, and board decisions that can seem arbitrary or unfair. So when a single homeowner decides to take on their entire HOA in a legal battle, it feels like a classic David vs. Goliath story. This is one of those stories—about a homeowner who challenged an improper rule change and an unexpected fee increase. He took his HOA to court and, on paper, he won. But as he discovered, the outcome was far more surprising and nuanced than a simple victory.

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1. You Can’t Fix a Seven-Year-Old “Mistake” with a Simple Board Vote.

The core of the dispute began when the Sycamore Vista No. 8 HOA tried to amend its governing documents with a “Declaration of Scrivener’s Error.” Their goal was to reinsert definitions of “Completed Lots” versus “Undeveloped Lots” that they claimed had been “inadvertently deleted” from a revision seven years prior.

Instead of seeking approval from the homeowners, the Board of Directors passed this “correction” on August 3, 2016, with a simple 3-2 vote. This procedural shortcut triggered the legal challenge.

The Administrative Law Judge unequivocally rejected the HOA’s move. The judge’s reasoning was sharp and logical: the seven-year gap since the original amendment was a critical factor. The sheer passage of time had transformed what the HOA called a clerical correction into what the law considered a substantive change. As such, it required a vote by 75% of the lot owners, not a simple board action.

The judge’s decision underscored this point with a powerful rebuke:

…after a period of seven years, it defies logic to suggest that a further change to section was simply a clerical error.

This finding was a crucial victory for the homeowner. It affirmed that HOAs must follow the proper procedures outlined in their own governing documents and cannot use shortcuts to rewrite history, no matter how they frame their intentions.

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2. A Legal “Win” Doesn’t Always Mean You Get the Financial Outcome You Want.

Even though the judge invalidated the HOA’s “Declaration of Scrivener’s Error,” she made another, more surprising ruling: the $10.00 annual assessment increase on developed lots—the very fee that sparked the lawsuit—was valid and would stand.

The legal reasoning was buried in the fine print of the HOA’s own documents. A different amendment, one legally passed with a 75% homeowner vote on December 4, 2008, already gave the Board the explicit authority to set different assessment rates. The key language in that valid amendment stated, “annual dues may be assessed at one uniform rate for Completed Lots and a different uniform rate for Uncompleted Lots.”

This created the central irony of the case: the HOA took a legally improper path to arrive at a destination they already had a legal right to reach. Interestingly, the HOA board president testified they were acting on the advice of their counsel, suggesting this was less a malicious act and more of a costly legal misstep.

The petitioner, Jay Janicek, won his case on principle. The judge’s order granted his petition and even awarded him his $500.00 filing fee. But he lost on the practical financial issue that started the dispute. The $10 increase remained. It’s a stark illustration of how complex legal documents can be, where one legally sound clause can override a victory on another front.

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3. Proving a Conflict of Interest Is Harder Than It Looks.

The homeowner also accused the board of a conflict of interest. He pointed out that three members of the five-person board had a financial stake in NT Properties, the company that owned the community’s undeveloped lots. These were the very lots that benefited from the new assessment structure, as their fees remained unchanged while only the developed lots saw the $10 increase. On the surface, it appeared to be a clear-cut case of self-dealing.

However, the judge rejected this claim, ruling that the petitioner’s interpretation of the conflict of interest statute was “overbroad.” The judge’s analysis provided a crucial distinction: the board members were not inventing a new power for their own benefit; they were exercising a power explicitly granted to the Board by the homeowners themselves in the 2009 Declaration. The ruling noted that the petitioner’s argument “disregards the express language permitting the Board to assess annual dues.”

This takeaway is a sobering one for homeowners. It demonstrates that what might look like a glaring conflict of interest to a layperson may not meet the specific legal standard required to invalidate a board’s actions, especially when those actions fall within the powers already granted by the community’s governing documents.

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Conclusion: A Victory of Principle

In the end, the homeowner walked away with a strange and dual outcome. He successfully proved his HOA acted improperly by trying to amend its rules without a proper vote, yet he could not reverse the financial consequence that drove him to file the suit. The case stands as a powerful reminder for all homeowners: understanding both the procedural rules your HOA must follow and the precise wording hidden deep within its governing documents is absolutely critical. This ruling created a clear divide between procedural justice and financial reality.

This case was a victory of principle over practice—how much is a principle worth when the bottom line doesn’t change?

Case Participants

Petitioner Side

  • Jay Janicek (petitioner)

Respondent Side

  • Evan Thomson (attorney)
    Represented Respondent
  • Steven Russo (board member)
    Sycamore Vista No. 8 HOA
    President of Respondent; testified
  • Dane Dehler (attorney)
    Thompson Kron, P.L.C.
    Received copy of final order
  • Whitney Cunningham (HOA contact)
    Sycamore Vista No. 8 HOA
    Received copy of final order c/o

Neutral Parties

  • Suzanne Marwil (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Recipient for rehearing request