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This consolidated appeal grew out of a decades-long dispute over ground rent for 29 casitas built on land subleased from a Scottsdale resort. In 1970 the resort’s predecessor leased twenty acres, later dividing it into a twelve-acre resort and an eight-acre condominium complex of 29 casitas. A 1972 sublease set the casita owners’ ground rent, and a 1999 amendment fixed the rent at $323 per month while authorizing the homeowners association (the HOA) to represent the owners in future rent negotiations and to use an appraiser if the HOA and the resort owner, Procaccianti AZ II, L.P. (the Hotel), could not agree. After a 2005 arbitration between the Hotel and the landowner, the Hotel and the HOA agreed the owners would pay 40% of the total ground rent, or $708.50 per unit per month, and 24 of 29 owners approved that allocation at a January 2006 special meeting and again through a mailed written amendment. A 2011 stipulated judgment (the Willett Judgment) had voided the 2006 special meeting for lack of a quorum. Various owner groups then sued the Hotel and the HOA, contesting the HOA’s authority, the validity of the 2006 amendment, the identity of the incorporated HOA, the denial of a receiver, a stricken damages claim, and joint-and-several liability for a roughly $459,000 fee award. In an unpublished memorandum decision, Division One of the Arizona Court of Appeals affirmed the superior court across all three consolidated appeals and awarded the Hotel and the HOA their fees and costs on appeal.

The court addressed each argument in turn. On issue preclusion, it reviewed de novo and applied the five-element test, holding that Appellants failed the first element because the status of the incorporated HOA and the validity of the 2006 Amendment were never “actually litigated and determined by a valid and final judgment.” The 2011 Willett Judgment was a stipulated judgment that addressed only the narrow question whether the January 12, 2006 special meeting and vote were valid; stipulated judgments generally lack preclusive effect, and its narrow findings did not bar the later courts from deciding the HOA’s status and authority or the validity of the 2006 Amendment. Interpreting the Willett Judgment de novo as a contract, the court found its plain terms voided only the actions taken at the January 2006 meeting for lack of a quorum; it made no findings about the validity of future amendments and did not extinguish the owners’ ground-rent obligations. On the HOA’s status, the court noted the question—whether the post-1994 incorporated entity succeeded the pre-1994 unincorporated association—had already been decided against Appellants, including in London v. Karatz, and declined to revisit it. On the “vote by pen,” the court held A.R.S. § 10-3704(A) permits nonprofit-corporation members to approve action by signed written consent absent contrary governing documents, that nothing showed the HOA’s documents forbade it, and that a jury on sufficient evidence implicitly found the owners validly approved the 2006 Amendment. It found no abuse of discretion in striking the Elis’ undisclosed damages under Arizona Rule of Civil Procedure 26.1, and affirmed summary judgment for the Hotel because the owners’ 2011 settlement—barring the HOA from negotiating their ground rent—breached the 1999 Amendment’s grant of exclusive negotiating authority to the HOA. The court upheld the denial of a receiver because the HOA had a properly elected board and valid bylaws and was not incapacitated, and, alternatively, the declaration’s remedy was for the Hotel to assume control. It held DRL waived its challenge to joint-and-several fee liability by not raising it below, and awarded the Hotel and the HOA their fees and costs on appeal as prevailing parties under A.R.S. § 12-341.01.

For Arizona associations and owners, this decision illustrates how governing-document amendment and voting rules interact with the Arizona Nonprofit Corporation Act. The court confirmed that a nonprofit HOA may obtain member approval through a written “vote by pen” under A.R.S. § 10-3704(A) when the governing documents do not prohibit it, and that whether owners actually approved an amendment can be a fact question for a jury. It also shows that an association’s authority, once conferred in the governing documents, can bind owners: because the 1999 Amendment gave the HOA exclusive authority to negotiate ground rent, individual owners who sidestepped that authority through a private settlement were found to have breached the sublease.

The opinion is also a caution about the limits of a favorable earlier ruling and about preserving arguments. A 2011 stipulated judgment that voided a defective 2006 meeting did not, by its narrow terms, permanently free the owners from ground rent or bar the association from later re-approving the amendment. And DRL’s challenge to being held jointly and severally liable for a roughly $459,000 fee award was waived because it was not raised in the trial court. Because the decision is an unpublished memorandum decision under Arizona Rule of the Supreme Court 111(c), it is not precedential and may be cited only as authorized by rule.

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