Teresa J Johnstonbaugh vs. Clemente Ranch Homeowners

Posted on August 7, 2019 by [email protected]

Case Summary

Case ID	19F-H1919058-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2019-08-07
Administrative Law Judge	Jenna Clark
Outcome	The ALJ granted the petition, finding that the Petitioner's boundary walls adjoining the common area were the responsibility of the Association to maintain under the Bylaws and past practice. The Association violated the Bylaws by failing to maintain the wall and attempting to shift costs to the homeowner.
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Teresa J Johnstonbaugh	Counsel	—
Respondent	Clemente Ranch Homeowners Association	Counsel	Lynn Krupnick

Alleged Violations

Bylaws Article 3.11(A)(5)

Outcome Summary

The ALJ granted the petition, finding that the Petitioner's boundary walls adjoining the common area were the responsibility of the Association to maintain under the Bylaws and past practice. The Association violated the Bylaws by failing to maintain the wall and attempting to shift costs to the homeowner.

Key Issues & Findings

Whether Respondent violated Community Document Bylaws Article 3.11(A)(5)

Petitioner alleged the HOA failed to maintain a boundary wall defined as common area (replacing it with chain-link) and attempted to charge her for repairs, violating the duty to maintain common areas outlined in the Bylaws.

Orders: Respondent shall comply with Article 3.11(A)(5) of its Bylaws.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

Bylaws Article 3.11(A)(5)

Video Overview

Audio Overview

Decision Documents

19F-H1919058-REL Decision – 728648.pdf

Uploaded 2026-04-24T11:20:14 (164.4 KB)

19F-H1919058-REL Decision – 728648.pdf

Uploaded 2026-01-27T21:16:42 (164.4 KB)

Administrative Law Judge Decision: Johnstonbaugh vs. Clemente Ranch Homeowners Association

Executive Summary

This briefing document summarizes the administrative hearing and subsequent decision regarding Case No. 19F-H1919058-REL, involving Petitioner Teresa J. Johnstonbaugh and Respondent Clemente Ranch Homeowners Association. The central issue was whether the Association violated its own Bylaws (Article 3.11(A)(5)) by failing to maintain and repair boundary walls adjoining and adjacent to a common area.

The Petitioner challenged an assessment of $9,342.60 (representing a 50% repair fee) for the renovation of a wall between her property and a common area along Queen Creek Road. On August 7, 2019, Administrative Law Judge Jenna Clark ruled in favor of the Petitioner, finding that the Association had historically accepted responsibility for the wall as a common area and failed to maintain it in accordance with the governing documents. The Association was ordered to comply with its Bylaws and fulfill its maintenance obligations.

Analysis of Key Themes

1. Definition and Scope of Common Areas

The primary conflict centered on whether the walls in question were the responsibility of the individual homeowner or the Association. Under CC&R Section 1.11, "Common Area" is defined to include specific tracts, project boundary walls located adjacent to common areas, and any property deeded to the Association for maintenance.

The Petitioner argued, and the court agreed, that her walls met these criteria:

One portion was classified as a "boundary wall adjoining the common area."
The other portion was a "boundary wall adjacent to the common area."
The Petitioner explicitly denied these were "party walls," which would typically imply shared maintenance costs between neighbors.

2. Impact of Historical Precedent

The Association’s past conduct significantly influenced the ruling. For several years, the Association provided landscaping, repair, and maintenance services for the area in question.

2012 Resolutions: In November 2012, the Board resolved to add reinforcement columns to the rear yard walls at the Association's expense.
Efficiency Logic: Meeting minutes from that time indicate the Board believed it was "more efficient" for the Association to pay for the wall repairs and landscape work along Queen Creek Road.
Inconsistent Counsel: In June 2019, the Association notified the Petitioner that previous legal counsel had "advised them incorrectly" regarding the responsibilities for wall repair, leading to the Association's attempt to shift costs to the homeowners.

3. Financial Escalation and Assessment Shifts

The Association's willingness to cover costs appeared to change as the scope of the project grew.

Initial Estimates: In 2013, the renovation cost was projected at approximately $16,678.12.
Discovery of Latent Defects: Following a 2018 engineering report, the Association discovered inherent construction defects that could not be easily cured.
Current Project Costs: New bids for the wall project ranged from $2,500,000.00 to $3,100,000.00.
The Funding Gap: The Association only secured a $1,500,000.00 loan. This underfunding led the Board to issue special assessments and attempt to charge the Petitioner a 50% fee, a move the judge found violated the established maintenance obligations.

4. Current State of the Property

Evidence revealed that the Association's maintenance efforts had not only ceased but had left the property in a state of disrepair. In March 2019, the Association tore down the Petitioner’s boundary wall and replaced it with a chain-link fence, later adding plywood in May 2019. This temporary structure remained in place through the date of the hearing.

Important Quotes and Context

Regarding Association Duties

"The Board shall have all of the powers and duties necessary for the administration of the affairs of the Association… Provide for the operation, care, upkeep and maintenance of all of the Common Area." — Article 3.11(A)(5) of the Association Bylaws

Context: This is the specific provision the Association was found to have violated. The judge determined that since the walls were common areas, the Association had a non-discretionary duty to maintain them.

Regarding the Shift in Responsibility

"The Board believes its more efficient to have the Association pay for the cost of the wall repair and landscape work needed in the common area along Queen Creek; however the homeowners will need to pay for any damage or landscape work on their side of the wall." — Board of Director Meeting Minutes (November 26, 2012)

Context: This quote establishes that the Board had previously acknowledged its responsibility for the wall's structural integrity and the Association-side maintenance, distinguishing it from the homeowner's interior yard work.

Regarding the Standard of Proof

"A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not." — Administrative Law Judge Decision (referencing Morris K. Udall, Arizona Law of Evidence)

Context: The judge used this standard to determine that the Petitioner’s evidence regarding the classification of the walls and the Association's historical maintenance was "more substantially persuasive and credible" than the Association's defense.

Key Data and Fact Summary

Category	Detail
Case Number	19F-H1919058-REL
Hearing Date	July 19, 2019
Petitioner's Assessment	$9,342.60 (50% of repair cost)
Initial 2013 Contract	$16,678.12 plus $1,000 for plans/permits
2019 BPC Contract	$129,203.00 (before latent defects discovery)
New Project Bids	$2.5 Million – $3.1 Million
Association Loan	$1.5 Million
Governing Statute	ARIZ. REV. STAT. Title 33, Chapter 16, Article 1

Actionable Insights

Restoration of Property: The Association is now legally required to move beyond temporary measures (chain-link and plywood) and provide permanent upkeep and maintenance for the common area walls adjacent to the Petitioner's property.
Assessment Validity: The decision implies that the Association cannot unilaterally shift 50% of the cost of common area wall repairs to individual homeowners under the current Bylaws, especially when historical conduct has established the Association's responsibility.
Member Voting Requirements: Article 3.11(A)(5) requires the consent of members holding at least two-thirds of the total votes to borrow money in excess of $5,000. As the Association is currently underfunded for the multi-million dollar wall project, a member vote on special assessments is a critical next step.
Committee Oversight: The Association is encouraged to proceed with the creation of a member-led committee to oversee the new wall project, as noted in the findings of fact, to ensure transparency and adherence to the judge's order.

Study Guide: Johnstonbaugh v. Clemente Ranch Homeowners Association

This study guide provides a comprehensive overview of the administrative hearing between Teresa J. Johnstonbaugh and the Clemente Ranch Homeowners Association. It examines the legal issues, factual background, and the final decision rendered by the Office of Administrative Hearings (OAH).

Case Overview and Key Concepts

The case (No. 19F-H1919058-REL) centered on a dispute regarding the maintenance and repair responsibilities of a homeowners association (HOA) versus an individual homeowner. The primary legal question was whether the Clemente Ranch Homeowners Association violated its own Bylaws by failing to maintain a wall that separated a member's property from a common area.

Core Legal Issue

The central issue was whether the Respondent violated Community Document Bylaws Article 3.11(A)(5). This specific article mandates that the Board of Directors provide for the operation, care, upkeep, and maintenance of all Common Areas.

Jurisdiction and Governance

Arizona Department of Real Estate: Authorized by statute to receive and decide petitions regarding disputes between homeowners and associations.
Office of Administrative Hearings (OAH): An independent state agency that conducts evidentiary hearings on these matters.
Governing Documents: The Association is governed by its Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and its Bylaws, while also being regulated by Arizona Revised Statutes (A.R.S.) Title 33, Chapter 16, Article 1.

The Burden of Proof

In this administrative proceeding, the Petitioner (Johnstonbaugh) bore the burden of proving the violation by a preponderance of the evidence. This legal standard means the evidence must show that the contention is "more probably true than not."

Short-Answer Practice Questions

1. Who were the primary parties involved in this case? The Petitioner was Teresa J. Johnstonbaugh, a property owner and member of the Association. The Respondent was the Clemente Ranch Homeowners Association.

2. What financial assessment did the Petitioner challenge in her petition? The Petitioner was being assessed a fifty percent fee of $9,342.60 for the repair of a wall located between her property and a common area.

3. What specific action did the Association take regarding the Petitioner’s wall in March 2019? The Association tore down the Petitioner’s adjacent boundary wall and replaced it with a chain-link fence, later adding plywood to the fencing in May 2019.

4. Why did the Association change its legal stance on wall maintenance in June 2019? The Association informed the Petitioner that it had retained new legal counsel because previous counsel had allegedly advised them incorrectly regarding the rights and responsibilities of wall repair and maintenance within the community.

5. What did the 2012 Board Meeting Minutes reveal about the Association’s historical stance on wall repairs? The 2012 minutes stated that the Board believed it was more efficient for the Association to pay for wall repairs and landscape work along Queen Creek Road because the costs were under $20,000.

6. What "latent defects" were discovered during the construction project that began in early 2019? The Association was informed that there were inherent flaws in the original construction of the subdivision’s walls that the current repair project could not cure or repair.

7. How much was the loan the Association secured, and how did it compare to the actual bids for the new wall project? The Association secured a $1,500,000 loan, but bids for the necessary repairs ranged from $2,500,000 to $3,100,000, leaving the project underfunded.

8. What was the final ruling of the Administrative Law Judge (ALJ)? The ALJ granted the petition, concluding that the Association had violated Article 3.11(A)(5) of its Bylaws by failing to maintain the common area wall over the course of seven years.

Essay Prompts for Deeper Exploration

1. The Evolution of Responsibility: 2012 vs. 2019 Analyze how the Association's interpretation of its responsibilities changed between 2012 and 2019. In your essay, discuss the significance of the 2012 Board Meeting Minutes as evidence of the Association's established patterns of maintenance. How did the discovery of "latent defects" and increased repair costs influence the Board's decision to shift financial responsibility to the homeowners?

2. Defining "Common Area" and "Boundary Wall" The case hinged significantly on the classification of the walls. Using the definitions provided in Section 1.11 of the CC&Rs and the findings of fact, evaluate the distinction between a "party wall," a "boundary wall adjoining the common area," and a "boundary wall adjacent to the common area." Explain how these definitions dictate maintenance obligations under the Association's governing documents.

3. The Preponderance of Evidence in Administrative Law The Administrative Law Judge noted that both parties presented conflicting evidence regarding what constituted a "common area." Discuss the factors that led the Judge to find the Petitioner’s evidence "more substantially persuasive and credible." How does the "preponderance of evidence" standard function in a case where historical practice (maintenance history) conflicts with new legal interpretations?

Glossary of Important Terms

Term	Definition
Administrative Law Judge (ALJ)	A judge who conducts hearings and issues decisions for state agencies, such as the OAH.
Bylaws	The internal rules that govern the administration of a homeowners association, including the powers and duties of the Board.
CC&Rs	Declaration of Covenants, Conditions, and Restrictions; the legal documents that lay out the rules for a common interest development.
Common Area	Property owned and maintained by the association for the use and benefit of all members (e.g., Tracts A-E in Clemente Ranch).
Latent Defects	Hidden flaws in design or construction that are not discoverable by a reasonable inspection.
Petitioner	The party who initiates the legal action or petition (in this case, the homeowner).
Preponderance of the Evidence	The standard of proof in civil and administrative cases, meaning the evidence shows the claim is more likely true than not.
Respondent	The party against whom a petition is filed (in this case, the HOA).
Special Assessment	A fee charged to association members for a specific, often unexpected, expense that is not covered by regular dues.
Tract B	A specific section of common area adjacent to the Petitioner's boundary wall, identified in the CC&Rs.

The Great Wall Dispute: Lessons from the Clemente Ranch HOA Legal Ruling

1. Introduction: When "Common Area" Becomes an Uncommon Problem

In the complex landscape of community living, the boundary between individual property rights and Association responsibility is often governed by a delicate set of legal definitions. When these definitions are ignored or reinterpreted to suit a budget, conflict is inevitable. The case of Teresa J. Johnstonbaugh vs. Clemente Ranch Homeowners Association serves as a landmark administrative ruling in Arizona, highlighting the limits of an HOA’s authority to shift maintenance costs onto homeowners.

At the center of this dispute was a crumbling masonry wall and a fundamental legal question: Is a boundary wall bordering a public road the responsibility of the homeowner or the Association? What began as a localized repair project evolved into a $3 million crisis, ultimately forcing a legal reckoning over how governing documents must be enforced, regardless of the price tag.

2. Case Background: From Masonry to Plywood

The deterioration of the walls along Queen Creek Road was first identified in 2012. For seven years, the Clemente Ranch Homeowners Association (the Association) operated under the assumption that it was responsible for the upkeep of these project boundary walls. However, as repair costs escalated, the Association's commitment to its own precedents began to waver.

The timeline of the Association's shifting stance reveals a sudden pivot in 2019:

Feature	HOA’s Initial Stance (2012–2018)	HOA’s Actions in 2019
Responsibility	Accepted full responsibility for wall repair and common area landscaping.	Attempted to shift 50% of the costs to homeowners via special assessments.
Proposed Action	2012: Add reinforcement columns; 2018: Full engineering evaluation.	Tore down masonry wall; replaced with chain-link and plywood (Petitioner’s property).
Contractual Commitment	Approved $16,678.12 (2013); signed $129,203 contract (Jan 2019).	Stopped work; sought member approval for bids between $2.5M and $3.1M.

By March 2019, the Association had demolished the Petitioner’s masonry wall, replacing it with a temporary chain-link fence. By May, they added plywood to the fence, leaving the property with a makeshift barrier that failed to meet community standards while the Board attempted to resolve a massive financial shortfall.

3. The Legal Pivot: The HOA’s $3 Million Dilemma

The Association’s financial strategy shifted dramatically following the discovery of "Latent Defects." In June 2018, a structural engineering report revealed that the walls were fundamentally flawed from their original construction. Despite this, the Board moved forward, signing a $129,203 contract in January 2019 to begin repairs.

The crisis peaked when construction began in February 2019. Contractors informed the Board that the existing project could not fix the inherent structural defects. New bids for a complete overhaul skyrocketed to between $2.5 million and $3.1 million. Faced with a reserve fund that was woefully inadequate and a loan capacity capped at $1.5 million, the Association attempted a legal retreat.

Claiming they had been "incorrectly advised" by previous legal counsel, the Board sought to redefine the walls as shared responsibilities. Consequently, the Petitioner was hit with a specific assessment for a fifty percent fee of $9,342.60. This move effectively attempted to monetize the Association’s failure to plan for long-term structural maintenance.

4. Decoding the Governing Documents: CC&Rs and Bylaws

The resolution of this case hinged on the precise language of the community’s governing documents. As a legal analyst, one must look at the specific definitions that the Board attempted to circumvent.

CC&R Section 1.11(d): This is the "smoking gun" of the ruling. It explicitly defines "Common Area" to include "the Project boundary walls located adjacent to Common Areas on the boundary lines of Lots."
Bylaw Article 3.11(A)(5): This mandates that the Board "provide for the operation, care, upkeep and maintenance of all of the Common Area."

The Petitioner argued successfully that her wall was a boundary wall adjacent to Tract B (a common area) and facing a public roadway. She specifically challenged the Association’s attempt to reclassify the structure as a "party wall." In legal terms, a party wall is shared between two private neighbors, with shared costs. Because this wall bordered a common area owned by the Association, it was a boundary wall, making the Association 100% responsible for its maintenance under the CC&Rs.

5. The Administrative Law Judge's Decision

Administrative Law Judge Jenna Clark applied the "Preponderance of the Evidence" standard. This requires the Petitioner to prove her case is "more probably true than not." In this instance, the Association’s "shifting defense" worked against them. The Judge found the Petitioner’s evidence—years of consistent maintenance by the Association—to be more persuasive than the Association's sudden discovery of a "new" legal interpretation once the price of repairs became inconvenient.

The Judge’s "Conclusions of Law" emphasized two critical points:

The Avoidance of Absurdity: The Judge noted that Bylaws must be construed to avoid an "absurdity." It would be absurd to allow an Association to abandon its clear maintenance duties simply because the costs of those duties increased due to poor financial planning or the discovery of structural defects.
Failure of Duty: The ruling found that by tearing down the masonry wall and leaving the property with chain-link and plywood for seven years (dating back to the initial 2012 signs of deterioration and culminating in the 2019 demolition), the Association had failed in its duty to maintain the common area.

The Judge ultimately ordered the Association to comply with Bylaw Article 3.11(A)(5) and assume its rightful responsibility for the wall.

6. Final Takeaways for Homeowners and Boards

The Johnstonbaugh vs. Clemente Ranch case provides a vital roadmap for community governance and homeowner advocacy:

Consistency Establishes Precedent: When an HOA consistently performs landscaping and repairs on a structure for years, it reinforces the legal interpretation that the structure is a common area. A Board cannot unilaterally reverse this precedent to avoid a high-cost project.
Governance Trumps Budgeting: An HOA’s legal obligation to maintain the community is not a "sliding scale" based on the current bank balance. A lack of funds, underfunded reserves, or loan shortfalls does not absolve a Board of its duties under the Bylaws. Financial mismanagement is not a legal defense for non-performance.
Definitions are Decisive: The distinction between a "party wall" (shared between neighbors) and a "boundary wall adjacent to common areas" (Association responsibility) is worth thousands of dollars. Homeowners must hold Boards strictly to the definitions found in CC&R Section 1.11.

Community associations are governed by contracts, not by the convenience of the Board. This ruling serves as a powerful reminder that when an Association attempts to shift its $3 million problems onto individual homeowners, the governing documents remain the final authority.

Case Participants

Petitioner Side

Teresa J. Johnstonbaugh (petitioner)
Appeared on her own behalf

Respondent Side

Lynn Krupnick (HOA attorney)
Krupnik & Speas, PLLC
Timothy Krupnick (HOA attorney)
Krupnik & Speas, PLLC
Jaime Therrien (community manager)
Clemente Ranch Homeowners Association
Witness for Respondent
Joseph Therrien (observer)
Appeared with Respondent
Nick Ferre (observer)
Appeared with Respondent
Barbara Dewitt (observer)
Appeared with Respondent

Neutral Parties

Jenna Clark (ALJ)
Office of Administrative Hearings
Judy Lowe (Commissioner)
Arizona Department of Real Estate
Recipient of the transmitted order

Brent J Mathews v. American Ranch Community Association

Posted on October 9, 2018 by [email protected]

Case Summary

Case ID	18F-H1818050-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2018-10-11
Administrative Law Judge	Tammy L. Eigenheer
Outcome	The Administrative Law Judge dismissed the Petition because the Petitioner failed to prove the Respondent Board violated the Bylaws. The Board was found to have the necessary authority under Bylaws Section 3.11 to enter into the Well Agreement 2 as a variance, and this action did not constitute an improper amendment of the CC&Rs.
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Brent J. Mathews	Counsel	—
Respondent	American Ranch Community Association	Counsel	Lynn Krupnik and Timothy Krupnik

Alleged Violations

American Ranch Bylaws, Article 3.11

Outcome Summary

The Administrative Law Judge dismissed the Petition because the Petitioner failed to prove the Respondent Board violated the Bylaws. The Board was found to have the necessary authority under Bylaws Section 3.11 to enter into the Well Agreement 2 as a variance, and this action did not constitute an improper amendment of the CC&Rs.

Why this result: The Board was authorized to grant a variance to the CC&Rs regarding the well on Lot 2, a power delegated to the Association, meaning the Board did not exceed its authority under the Bylaws.

Key Issues & Findings

Alleged violation of the American Ranch Bylaws, Article 3.11, when the Board entered into the 'Well Agreement' (Well Agreement 2).

Petitioner asserted that the Board violated the Bylaws by entering into Well Agreement 2, claiming the Board lacked the authority to grant exceptions or variances to the CC&Rs regarding the use of a private water well on Lot 2. The Board agreed the well existed in violation of CC&Rs Section 3.26, but argued Well Agreement 2 constituted a variance, not an amendment.

Orders: The Petition was dismissed.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

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. § 41-1092.09

Analytics Highlights

Topics: HOA authority, Bylaws 3.11, CC&Rs, Variance, Amendment, Well Agreement, Burden of Proof, Dismissal

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. § 41-1092.09

Video Overview

Audio Overview

Decision Documents

18F-H1818050-REL Decision – 664186.pdf

Uploaded 2026-04-24T11:13:46 (112.4 KB)

18F-H1818050-REL Decision – 664186.pdf

Uploaded 2026-01-23T17:24:56 (112.4 KB)

Briefing Document: Mathews v. American Ranch Community Association

Executive Summary

This briefing document outlines the findings and decision in case number 18F-H1818050-REL, a dispute between Petitioner Brent J. Mathews and the American Ranch Community Association (HOA). The Administrative Law Judge dismissed the petition, concluding that Mr. Mathews failed to prove his allegations by a preponderance of the evidence.

The central issue was whether the HOA’s Board of Directors violated Article 3.11 of its Bylaws by entering into a “Well Agreement” with the owners of Lot 2 on August 9, 2016. The Petitioner argued that this agreement constituted an unauthorized amendment to the community’s Covenants, Conditions, and Restrictions (CC&Rs) because the Board does not have the power to grant exceptions.

The judge found this argument “faulty,” determining that the agreement was not an amendment but a variance. The CC&Rs explicitly grant the authority to issue variances to the Architectural Review Committee. Per the Bylaws, the Board is empowered to exercise any authority delegated to the Association that is not specifically reserved for the general membership. Therefore, the judge concluded that the Board acted within its authority when it executed the agreement. The decision was based on the Board’s need to resolve a problematic prior agreement under time-sensitive circumstances related to a property sale.

1. Case Overview

Case Number

18F-H1818050-REL

Petitioner

Brent J. Mathews

Respondent

American Ranch Community Association

Hearing Date

September 21, 2018

Decision Date

October 11, 2018

Presiding Judge

Administrative Law Judge Tammy L. Eigenheer

The dispute originated from a petition filed by Brent J. Mathews on May 16, 2018, with the Arizona Department of Real Estate. The core of the complaint was an alleged Open Meeting Violation concerning an “Action Outside of Meeting” that resulted in a “Well Agreement” between the Association and homeowners Mark and Diane Kaplan.

2. Petitioner’s Core Allegation

After being directed to clarify his petition to a single issue, Mr. Mathews submitted the following statement on August 23, 2018:

“When the Board entered into the ‘Well Agreement’ they may have assumed they had the power to grant exceptions to the CC&R’s. The American Ranch Community Association Bylaws do not empower the Board to grant exceptions to the CC&R’s. Therefore the single complaint is an alleged violation of the American Ranch Bylaws, Article 3.11.”

The Petitioner’s legal argument was that the Board’s action in creating the “Well Agreement 2” was effectively an amendment of the CC&Rs. According to Section 9.3.1 of the CC&Rs, amendments require the written approval or affirmative vote of 75 percent of the total owners. Since this did not occur, the Petitioner concluded the Board lacked the authority to enter into the agreement.

3. Factual Background and Chronology of Events

The case revolves around a water well on Lot 2 of the American Ranch community, which was installed in violation of the governing documents.

A water well is installed on Lot 2. This installation violates Section 3.26 of the CC&Rs, which prohibits wells on all lots except Equestrian Lots and, even then, only with prior approval from the Architectural Review Committee (ARC) for specific purposes.

June 2011

The owners of Lot 2 and the HOA Board enter into the first “Well and Easement Agreement” (Well Agreement 1). This agreement permitted the continued use of the well for irrigation but required the owners to install a water meter and pay the HOA for water usage at the same rate as the local water district.

November 23, 2013

Lot 2 is sold to Steven and Frances Galliano.

July 30, 2016

Mark and Diane Kaplan, who are in escrow to purchase Lot 2, email the Community Manager, Tiffany Taylor. They express concern over Well Agreement 1 and state they cannot proceed with the purchase without clarity on the HOA’s position. They also note that the Gallianos told them they had never been charged for water from the well.

August 2016

Facing a time-sensitive situation due to the pending property sale, the HOA Board decides to enter into a new agreement to invalidate Well Agreement 1. The Board’s decision was based in part on the belief that it lacked the authority to enter into the original agreement, specifically because it had no power to bill residents for water usage—a function of the water district.

August 9, 2016

The HOA Board and the Kaplans execute a new “Well Agreement” (Well Agreement 2). This agreement permits the continued use of the well for irrigation purposes but explicitly states the owners will not be billed for the water used.

4. Administrative Law Judge’s Findings and Legal Reasoning

The Judge’s decision rested on a critical distinction between a CC&R amendment and a variance, and a detailed analysis of the powers granted to the Board by the governing documents.

A. Burden of Proof

The Petitioner, Brent J. Mathews, bore the burden of proof to establish that the HOA committed the alleged violation by a “preponderance of the evidence.” This standard requires proof that a contention is more probably true than not.

B. Variance vs. Amendment

The central point of the Judge’s legal conclusion was the rejection of the Petitioner’s argument.

• Petitioner’s Argument: Well Agreement 2 was an amendment to the CC&Rs.

• Judge’s Finding: The argument is “faulty.” The decision states, “A variance granted to an individual owner from a restriction under the CC&Rs does not constitute an amendment of the CC&Rs.”

The Judge found that the CC&Rs themselves, in Section 3.31, provide a specific mechanism for granting variances. The ARC is authorized to grant variances in “extenuating circumstances” if a restriction creates an “unreasonable hardship or burden” and the variance does not have a “substantial adverse effect” on the community.

C. The Board’s Delegated Authority

The Judge established a clear chain of authority that empowered the Board to act as it did:

1. CC&R Section 3.31: Delegates the power to grant variances to the Architectural Review Committee.

2. Bylaw Section 3.11.8: States the Board shall have the power to “Exercise for the Association all powers, duties and authority vested in or delegated to the Association and not reserved to the membership by other provisions of the Project Documents.”

3. Conclusion: Because the power to grant variances was delegated to the ARC (and thus to the Association) and not reserved for the membership, the Board had the authority to grant the variance embodied in Well Agreement 2.

5. Final Order

Based on the foregoing analysis, the Administrative Law Judge issued the following order:

• Decision: The Petition filed by Brent J. Mathews is dismissed.

• Reasoning: “Petitioner failed to establish by a preponderance of the evidence that the Board of Directors lacked the authority to enter into Well Agreement 2. Thus, Petitioner failed to sustain his burden to establish a violation of Section 3.11 of the Bylaws.”

The order was finalized and transmitted to the parties on October 11, 2018.

Study Guide: Mathews v. American Ranch Community Association (Case No. 18F-H1818050-REL)

This guide provides a comprehensive review of the Administrative Law Judge Decision in the case between Petitioner Brent J. Mathews and Respondent American Ranch Community Association. It is designed to test and deepen understanding of the facts, legal arguments, and final ruling presented in the source document.

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Short-Answer Quiz

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

1. Who were the primary parties involved in this case, and what were their respective roles?

2. What was the initial, overarching subject of Brent J. Mathews’s complaint filed on May 16, 2018?

3. After being asked to clarify, what single issue did the Petitioner choose to proceed with for the hearing?

4. According to the CC&Rs, what are the specific rules regarding the use of water wells on lots within American Ranch?

5. What were the key terms of “Well Agreement 1,” established in June 2011 with the original owners of Lot 2?

6. Why did the American Ranch Board of Directors believe they lacked the authority to enforce “Well Agreement 1”?

7. What were the terms of “Well Agreement 2,” which was executed on August 9, 2016, with the new owners of Lot 2, the Kaplans?

8. What was Petitioner Mathews’s primary legal argument against the Board’s authority to enter into “Well Agreement 2”?

9. How did the Administrative Law Judge distinguish between a “variance” and an “amendment” to the CC&Rs in the final decision?

10. What was the final order issued by the Administrative Law Judge on October 11, 2018?

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Answer Key

1. The primary parties were Petitioner Brent J. Mathews, who filed the complaint, and Respondent American Ranch Community Association (HOA), which was the subject of the complaint. Mathews represented himself, while the Association was represented by Lynn Krupnik and Timothy Krupnik.

2. The initial complaint’s subject was an “Open Meeting Violation regarding an ‘Action Outside of Meeting’” that took place on August 6, 2016. This action concerned the Association entering into a “Well Agreement” with Mark and Diane Kaplan.

3. The Petitioner clarified his single issue was an alleged violation of the American Ranch Bylaws, Article 3.11. He argued that the Board entered into the “Well Agreement” assuming they had the power to grant exceptions to the CC&Rs, a power he claimed the Bylaws did not grant them.

4. Section 3.26 of the CC&Rs prohibits water wells on all lots except Equestrian Lots. On Equestrian Lots, wells are permitted only with prior written approval from the Architectural Review Committee and must be used solely to irrigate pasture land and provide drinking water for horses.

5. “Well Agreement 1” acknowledged that the owners of Lot 2 were using their well for irrigation in violation of the CC&Rs. The agreement allowed them to continue this use, provided they installed a water meter and paid the Association the same per-gallon charge as other owners paid to the water district.

6. The Board of Directors believed they did not have the authority to enter into “Well Agreement 1” because they had no ability or authority to bill the lot owners for water used from a private well. They reasoned that billing for water was the responsibility of the water district, not the HOA.

7. “Well Agreement 2” stated that the private water well on Lot 2 would continue to be used for irrigation purposes. Crucially, it specified that the owners (the Kaplans) would not be billed for the water used from this well.

8. Petitioner Mathews argued that “Well Agreement 2” constituted an amendment of the CC&Rs. He contended that under Section 9.3.1 of the CC&Rs, an amendment requires the written approval or affirmative vote of 75 percent of the total owners, and therefore the Board acted outside its authority.

9. The Judge ruled that “Well Agreement 2” was a variance granted to an individual owner, not an amendment to the CC&Rs. The CC&Rs specifically provide a method for granting variances via the Architectural Review Committee, and this power is delegated to the Association and thus exercisable by the Board.

10. The final order, issued on October 11, 2018, was that the Petition be dismissed. The Judge concluded that the Petitioner failed to establish by a preponderance of the evidence that the Board of Directors lacked the authority to enter into “Well Agreement 2.”

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Essay Questions

Instructions: The following questions are designed for a more in-depth, essay-style response. Use the case document to construct a thorough and well-supported argument for each prompt. Answers are not provided.

1. Analyze the evolution of the dispute, from the initial installation of the well on Lot 2 to the final Administrative Law Judge Decision. Discuss the key events and agreements (Well Agreement 1 and Well Agreement 2) and explain how each contributed to the legal conflict.

2. Explain the legal reasoning used by the Administrative Law Judge to dismiss the Petitioner’s claim. Detail the specific sections of the Bylaws and CC&Rs cited (3.11, 3.26, 3.31, 9.3.1) and explain the distinction the Judge made between a “variance” and an “amendment.”

3. Discuss the concept of “burden of proof” as it applies to this case. Who held the burden of proof, what was the required standard (“preponderance of the evidence”), and why did the Petitioner ultimately fail to meet this standard?

4. Evaluate the actions of the American Ranch Community Association Board of Directors regarding Lot 2’s well. Discuss their reasoning for invalidating Well Agreement 1 and creating Well Agreement 2, and analyze whether their actions were consistent with the powers granted to them by the community’s governing documents.

5. Based on the procedural history outlined in the “Findings of Fact,” describe the process of an HOA dispute in this jurisdiction, from the initial filing of a petition to the final order from the Office of Administrative Hearings.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official (Tammy L. Eigenheer) who presides over administrative hearings and issues a decision on the matter.

A.R.S. (Arizona Revised Statutes)

The statutory laws of the state of Arizona, sections of which regulate planned communities and the administrative hearing process.

Architectural Review Committee

A body within the Association delegated the authority by the CC&Rs (Section 3.31) to grant variances from certain restrictions in extenuating circumstances.

Board of Directors

The governing body of the American Ranch Community Association, which has the powers and duties necessary for administering the Association’s affairs.

Burden of Proof

The obligation of a party in a legal case to prove their claims. In this case, the Petitioner had the burden to establish the alleged violations.

Bylaws

The rules governing the internal administration of the Association. Petitioner alleged a violation of Bylaw 3.11, which outlines the powers and duties of the Board.

Covenants, Conditions, and Restrictions. These are the governing documents that set rules for properties within the community, such as the prohibition of certain water wells (Section 3.26).

Department

Refers to the Arizona Department of Real Estate, the agency with which the initial Homeowners Association Dispute Process Petition was filed.

Office of Administrative Hearings

An independent state agency to which the Department refers HOA dispute cases for a formal hearing.

Petition

The formal document filed by Brent J. Mathews to initiate the HOA dispute process with the Arizona Department of Real Estate.

Petitioner

The party who brings the legal action or complaint. In this case, Brent J. Mathews.

Preponderance of the Evidence

The standard of proof required in this hearing. It is defined as proof that convinces the trier of fact that a contention is “more probably true than not.”

Respondent

The party against whom the petition is filed. In this case, the American Ranch Community Association.

Variance

An officially granted exception from a restriction in the CC&Rs for an individual owner. The Judge determined Well Agreement 2 was a variance, not an amendment.

Well Agreement 1

A June 2011 agreement that allowed the owners of Lot 2 to use a non-compliant well for irrigation, provided they paid the Association for the water.

Well Agreement 2

An August 2016 agreement that invalidated Well Agreement 1 and allowed the new owners of Lot 2 (the Kaplans) to continue using the well for irrigation without being billed for the water.

Your HOA Board Might Be More Powerful Than You Think: 3 Lessons from a Legal Showdown

1.0 Introduction: The Predictable Fight with an Unpredictable Outcome

It’s a scenario familiar to many homeowners: you suspect your Homeowners Association (HOA) board is playing favorites, bending the rules for one resident while holding everyone else to the letter of the law. This feeling of frustration often leads to heated disputes, but what happens when a homeowner decides to take that fight to court? You might expect a simple verdict based on the community’s clear, written rules.

That’s exactly what homeowner Brent J. Mathews thought. He discovered his HOA board had made a special agreement with a neighbor, allowing a water well that clearly violated the community’s governing documents. He filed a formal complaint, arguing the board had illegally overstepped its authority.

The case that followed, however, didn’t turn on one obvious rule. Instead, the judge’s decision hinged on how different governing documents—the CC&Rs and the Bylaws—interact. The outcome reveals some surprising and counter-intuitive truths about where power really lies within an HOA, offering critical lessons for every homeowner.

2.0 Takeaway 1: A Special Exception Isn’t the Same as Changing the Rules for Everyone

Mr. Mathews’ central argument was straightforward and, on its face, perfectly logical. He contended that the board’s “Well Agreement 2” with his neighbor was effectively an amendment to the community’s Covenants, Conditions, and Restrictions (CC&Rs).

According to the community’s CC&Rs (Section 9.3.1), amending the rules is a serious undertaking that requires the written approval of 75 percent of all homeowners. The board clearly did not have this approval, so it seemed to be a clear-cut case of an illegal action. Many homeowners would have made the same reasonable assumption: the board can’t just change the rules on its own.

However, the judge found a critical distinction. The board’s action was not an “amendment”—a permanent change to the rules for the entire community. Instead, it was legally considered a “variance”—a one-time exception granted to a single homeowner. Because the CC&Rs contained a separate, specific process for granting variances (Section 3.31), the board was not illegally rewriting the rulebook; it was simply using a different, pre-existing tool in the governing documents.

3.0 Takeaway 2: The Board Can Wield Powers Given to Its Own Committees

This distinction raised another logical objection. The CC&Rs (Section 3.31) explicitly state that the power to grant variances belongs to the “Architectural Review Committee” (ARC), not the Board of Directors. It appeared Mr. Mathews had found his checkmate: even if the action was a variance, the wrong body had granted it.

This is where the case took its most surprising turn. The judge looked beyond the CC&Rs and consulted a different governing document: the Bylaws. This document contained a foundational clause about the board’s authority that proved decisive.

According to Bylaw 3.11.8, the Board of Directors is empowered to exercise any authority of the Association that is not specifically and exclusively reserved for the members themselves. Since the power to grant variances was delegated to a committee (the ARC) and not reserved for a vote by the general membership, the Board had the authority to step in and exercise that power itself. The judge’s decision made this clear.

“As the power to grant variances was delegated to the Architectural Review Committee and was not reserved to the membership, the Board had the authority to grant such a variance.”

This finding reveals a crucial principle of HOA governance: powers delegated to a committee are not the same as powers reserved for the entire membership. Unless a power is explicitly reserved for a member vote, the Bylaws can grant the Board ultimate authority over it.

4.0 Takeaway 3: A Messy History Can Justify an Unusual Solution

While the legal arguments are complex, the context behind the board’s decision is equally important. The board wasn’t making a special deal out of the blue; it was trying to solve a messy problem it had inherited.

The well on Lot 2 was originally installed around 2007 in violation of Section 3.26 of the CC&Rs. The board’s first attempt to fix this, “Well Agreement 1” in or about June 2011, allowed the well’s use but required the owner to pay the association for the water consumed. This arrangement, however, was deeply flawed.

When new buyers (the Kaplans) were in escrow to purchase the property in 2016, the situation came to a head. The Kaplans discovered the unusual agreement and informed the board they would be “unable to proceed with the purchase” unless its status was clarified. With the real estate deal on the line, the board recognized that “time was of the essence.”

The board’s decision to execute “Well Agreement 2” was driven by two realities. First, they believed the original agreement was legally invalid, as the board had no authority to bill a resident for water. Second, the agreement was a failure in practice; the Kaplans had been told by the prior owners that “they had never been charged for the water used from the well.” Facing an unenforceable and un-enforced agreement that was now threatening a home sale, the board acted pragmatically to resolve the decade-old violation once and for all.

5.0 Conclusion: Know the Rules—And Who Has the Power to Bend Them

The core lesson from this case is that HOA governance is a complex web of interlocking documents. The rules you read in the CC&Rs might not tell the whole story. Power and authority can be defined, and even transferred, by provisions buried in the Bylaws or other governing texts. What may seem like an obvious violation can be justified by a clause a homeowner might easily overlook.

This case is a powerful reminder for every homeowner. It’s not enough to know the rules of your community. You also need to understand the system of governance that enforces, interprets, and sometimes, grants exceptions to them. It prompts a critical question: Do you know not just the rules in your community, but who really has the authority to grant exceptions?

Case Participants

Petitioner Side

Brent J. Mathews (petitioner)
Appeared on his own behalf

Respondent Side

Lynn Krupnik (attorney)
Krupnik & Speas, PLLC
Represented Respondent
Timothy Krupnik (attorney)
Krupnik & Speas, PLLC
Represented Respondent
Tiffany Taylor (community manager)
American Ranch Community Association
Testified for Respondent
Brad Baker (board member)
American Ranch Community Association
Respondent Vice President; testified at hearing

Neutral Parties

Tammy L. Eigenheer (ALJ)
OAH
Judy Lowe (commissioner)
Arizona Department of Real Estate
Felicia Del Sol (administrative staff)
Signed transmission page
LDettorre (ADRE staff)
Arizona Department of Real Estate
Decision recipient
AHansen (ADRE staff)
Arizona Department of Real Estate
Decision recipient
djones (ADRE staff)
Arizona Department of Real Estate
Decision recipient
DGardner (ADRE staff)
Arizona Department of Real Estate
Decision recipient
ncano (ADRE staff)
Arizona Department of Real Estate
Decision recipient

Other Participants

Mark Kaplan (owner)
Lot 2
Executed Well Agreement 2
Diane Kaplan (owner)
Lot 2
Executed Well Agreement 2
Steven Galliano (former owner)
Lot 2
Frances Galliano (former owner)
Lot 2