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Kurt Gronlund vs. Cottonfields Community Association

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Case Summary

Case ID 17F-H1716024-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-05-11
Administrative Law Judge Diane Mihalsky
Outcome loss
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

Video Overview

Audio Overview

Decision Documents

17F-H1716024-REL Decision – 563660.pdf

Uploaded 2026-01-23T17:19:21 (99.8 KB)

17F-H1716024-REL Decision – 568840.pdf

Uploaded 2026-01-23T17:19:24 (854.5 KB)





Briefing Doc – 17F-H1716024-REL


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 – 17F-H1716024-REL


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.

——————————————————————————–

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.

——————————————————————————–

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. |






Blog Post – 17F-H1716024-REL



⚖️

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])

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 loss
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

Audio Overview

Decision Documents

17F-H1716024-REL Decision – 563660.pdf

Uploaded 2025-10-08T07:01:37 (99.8 KB)

17F-H1716024-REL Decision – 568840.pdf

Uploaded 2025-10-08T07:01:38 (854.5 KB)





Briefing Doc – 17F-H1716024-REL


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.


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 none
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

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

Uploaded 2025-10-08T06:57:15 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2025-10-08T06:57:16 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2025-10-08T06:57:17 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


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.


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 none
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 2025-10-09T03:31:16 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2025-10-09T03:31:16 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2025-10-09T03:31:16 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


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 – 17F-H1716021-REL


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.

——————————————————————————–

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?

——————————————————————————–

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.

——————————————————————————–

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.

——————————————————————————–

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.






Blog Post – 17F-H1716021-REL



⚖️

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

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 none
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 2026-01-23T17:18:59 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2026-01-23T17:19:02 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2026-01-23T17:19:05 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


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 – 17F-H1716021-REL


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.

——————————————————————————–

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?

——————————————————————————–

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.

——————————————————————————–

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.

——————————————————————————–

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.






Blog Post – 17F-H1716021-REL



⚖️

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

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 none
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

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

Uploaded 2025-10-08T07:01:27 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2025-10-08T07:01:28 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2025-10-08T07:01:28 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


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.


Jerry and Patricia Gravelle vs. Village Parc Homeowners Assoc. of

Posted on by

Case Summary

Case ID 17F-H1716008-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-01-03
Administrative Law Judge Diane Mihalsky
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jerry and Patricia Gravelle Counsel —
Respondent Village Parc Homeowners Assoc. of Havasu Counsel Kenneth E. Moyer, Esq.

Alleged Violations

CC&Rs Article 11, Section 11.7.3; CC&Rs Article 11, Section 11.7.6

Outcome Summary

The Commissioner adopted the ALJ's recommendation to dismiss the petition, finding that the HOA was not required by the governing documents (CC&Rs) or state law (Arizona Condominium Act) to insure against damages to the interior finished surfaces of the petitioners' individual condominium unit.

Why this result: The CC&Rs put Petitioners on notice that Respondent was not required to provide insurance coverage for damages to their individual unit, and Petitioners did not establish that Respondent was responsible for the damages.

Key Issues & Findings

HOA responsibility to insure unit interior damages caused by sewer backup

Petitioners claimed Respondent HOA violated CC&Rs (specifically Sections 11.7.3 and 11.7.6) by not providing insurance coverage for $6,697.70 in damages to the interior of their individual unit caused by a sewer backup. The HOA contended the CC&Rs and Arizona Condominium Act place this responsibility on the unit owner.

Orders: The petition was dismissed, and no action was required of the Respondent.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • A.R.S. § 32-2199.01

Analytics Highlights

Topics: Condominiums, Insurance Coverage, CC&Rs Interpretation, Unit Boundaries, Maintenance Responsibility
Additional Citations:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • A.R.S. § 32-2199.01
  • CC&Rs Article 11, Section 11.7.3
  • CC&Rs Article 11, Section 11.7.6

Audio Overview

Decision Documents

17F-H1716008-REL Decision – 528194.pdf

Uploaded 2025-10-08T06:56:55 (58.8 KB)

17F-H1716008-REL Decision – 528432.pdf

Uploaded 2025-10-08T06:56:56 (63.1 KB)

17F-H1716008-REL Decision – 535933.pdf

Uploaded 2025-10-08T06:56:56 (131.6 KB)

17F-H1716008-REL Decision – 539997.pdf

Uploaded 2025-10-08T06:56:57 (1010.1 KB)





Briefing Doc – 17F-H1716008-REL


Briefing: Gravelle v. Village Parc Homeowners Association

Executive Summary

This briefing synthesizes the key findings and legal determinations from an administrative case between homeowners Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu (HOA). The dispute centered on liability for damages within the Gravelles’ condominium unit caused by a sewer backup.

The petition, filed with the Arizona Department of Real Estate, was ultimately dismissed. The Administrative Law Judge (ALJ) concluded, and the Department Commissioner affirmed, that the HOA’s governing documents—the Covenants, Conditions, and Restrictions (CC&Rs)—unambiguously place the responsibility for insuring the interior of an individual unit on the unit owner, not the HOA.

The ruling established that the HOA’s master insurance policy, provided by Travelers, was only obligated to cover what the CC&Rs required. Arguments based on the HOA’s past payments for minor damages in other units, an erroneous initial statement by an insurance adjuster on a prior claim, and the HOA Board’s own mistaken interpretation of its duties were all found to be insufficient to override the plain written language of the governing documents. The final decision reinforces the principle that unit owners are responsible for understanding their CC&Rs and securing adequate personal insurance for their property.

I. Case Overview and Final Disposition

• Case Identification: No. 17F-H1716008-REL

• Parties:

◦ Petitioners: Jerry and Patricia Gravelle, owners of Unit 14 in the Village Parc development.

◦ Respondent: Village Parc Homeowners Assoc. of Havasu (“the Association”).

• Adjudicating Body: The case was heard in the Arizona Office of Administrative Hearings before Administrative Law Judge (ALJ) Diane Mihalsky. The final order was issued by the Commissioner of the Arizona Department of Real Estate.

• Key Dates:

◦ Hearing Date: November 10, 2016

◦ ALJ Decision: December 22, 2016

◦ Final Order: January 3, 2017

• Final Disposition: The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s recommendation and ordered that the petition be dismissed. This constituted a final administrative action, effective immediately. Parties were advised of their right to file for rehearing or appeal for judicial review.

II. The Core Dispute: Insurance for Sewer Backup Damage

On or about October 23, 2015, the Petitioners’ condominium (Unit 14), along with two other units, suffered damage from a sewer backup. The central conflict arose from determining which party was financially responsible for the repairs inside the Petitioners’ unit.

• Petitioners’ Claim: The Gravelles filed a petition on August 31, 2016, alleging the Association violated Articles 11.7.3 and 11.7.6 of the CC&Rs by failing to provide insurance coverage for the full extent of the damages. Their personal insurance policy did not cover sewer backups. They requested the Association pay $6,697.70 to reimburse them for the loss that the Association’s insurer, Travelers, declined to cover.

• Insurance Claim Outcome:

◦ The Association submitted a claim for the sewer backup damages to its insurer, Travelers.

◦ Travelers determined that its policy covered damages to the common elements associated with the unit and issued a check to the Petitioners for $338.64.

◦ Travelers concluded there was no coverage under the policy for damage to the interior of the Petitioners’ unit. This denial was based on the CC&Rs, which establish that the unit owner is responsible for the finished surfaces and personal property within their unit.

III. Analysis of Governing Documents and Legal Framework

The ALJ’s decision was grounded in a strict interpretation of the Association’s CC&Rs, its insurance contract, and the Arizona Condominium Act.

Document / Statute

Key Provisions and Implications

Village Parc CC&Rs

Unit Definition (Sec. 2.2.1): A unit is defined as the space “bounded by and contained within the interior finished surfaces of the perimeter walls, floors and ceilings.”

Insurance Responsibility (Sec. 11.7.3): The Association’s master policy is explicitly “not be required to insure the personal property within any individual Unit, which insurance shall be the responsibility and risk of the Unit Owners.”

Liability Limitation (Sec. 11.7.5): The Association is not liable to any owner “if any risk or hazard is not covered by insurance or the amount is inadequate.” It places the burden on each owner to ascertain the Association’s coverage and procure their own additional insurance.

Travelers Insurance Policy

Conditional Coverage Endorsement: The policy covers certain property (fixtures, alterations, appliances) contained within a unit, but only “if your Condominium Association Agreement requires you to insure it.” Since the CC&Rs do not require the Association to insure unit interiors, this coverage was not triggered.

Primary Insurance: The policy states it is “intended to be primary, and not to contribute with such other insurance” a unit-owner may have.

Arizona Condominium Act

Unit Definition (A.R.S. § 33-1212(1)): Reinforces the CC&Rs by defining finished surfaces—”lath, furring, wallboard… tiles, wallpaper, paint, finished flooring”—as part of the unit. All other portions of walls, floors, or ceilings are common elements.

Maintenance Responsibility (A.R.S. § 33-1247(A)): The law specifies that “the association is responsible for maintenance, repair and replacement of the common elements and each unit owner is responsible for maintenance, repair and replacement of the unit.”

IV. Petitioners’ Arguments and the ALJ’s Rejection

The Petitioners presented evidence of past practices by both the Association and Travelers, arguing these created an expectation of coverage. The ALJ systematically rejected these arguments.

• Argument 1: The Association’s Past Payments for Unit Repairs

◦ Petitioners’ Evidence: The Association had authorized payments for repairs inside other units on prior occasions:

▪ June 2011: $153.74, $75.00, and $296.11 for damage to Units 3 and 5 from a broken shower drain.

▪ January 2012: $449.45 to repair kitchen cabinets in Unit 6 damaged by a broken roof vent.

◦ ALJ’s Conclusion: The fact that the Association’s Board made “actual payments of small amounts for damages to individually owned units” does not legally amend the plain language of the CC&Rs. Notably, the Association did not submit these prior incidents to its insurer.

• Argument 2: Travelers’ Prior Actions

◦ Petitioners’ Evidence: In a 2014 claim, a Travelers adjuster initially determined that the policy did provide coverage for damage done to a unit, not just limited common elements.

◦ ALJ’s Conclusion: Travelers later stated the adjuster had erred and confirmed no claim for unit damage was ultimately paid. The ALJ found that the “adjuster’s initial error in the 2014 claim does not estop Travelers from denying the claim for damages to Petitioners’ unit” in 2015.

• Argument 3: The Association Board’s Own Interpretation

◦ Petitioners’ Evidence: At a November 2015 board meeting, where Mr. Gravelle served as secretary/treasurer, the Board itself determined that the CC&Rs did require the Association to provide insurance coverage for all damages to Unit 14.

◦ ALJ’s Conclusion: The Board’s “erroneous opinion” does not have the legal power to amend the CC&Rs or the binding terms of the Travelers insurance policy.

V. Core Legal Principles and Final Decision

The dismissal of the petition was based on several foundational legal principles.

• Primacy of Written Documents: The decision gave superior weight to the “plain language” of the CC&Rs and the insurance contract over inconsistent past practices or mistaken interpretations.

• Burden of Proof: As the filing party, the Petitioners had the burden to prove by a “preponderance of the evidence” that the Association violated the CC&Rs. The ALJ determined they failed to meet this standard.

• Clear Delineation of Responsibility: Both the CC&Rs and Arizona state law create a clear separation of financial and maintenance responsibilities: the Association is responsible for common elements, while individual owners are responsible for their units.

• Presumption of Knowledge: The decision cited the legal principle that “Everyone is presumed to know the law.” The CC&Rs put the Petitioners on constructive notice that they were responsible for insuring their individual unit against risks like a sewer backup. Their failure to procure such coverage was their own responsibility.


Jerry and Patricia Gravelle vs. Village Parc Homeowners Assoc. of

Posted on by

Case Summary

Case ID 17F-H1716008-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-01-03
Administrative Law Judge Diane Mihalsky
Outcome no
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jerry and Patricia Gravelle Counsel —
Respondent Village Parc Homeowners Assoc. of Havasu Counsel Kenneth E. Moyer

Alleged Violations

CC&Rs Article 11, Section 11.7.3 and 11.7.6

Outcome Summary

The Department adopted the ALJ's recommendation to dismiss the petition. The ALJ found that the HOA's insurance policy and CC&Rs did not require coverage for damage to the Petitioners' individual unit (finished surfaces and personal property) resulting from a sewer backup. The HOA was only responsible for common elements.

Why this result: The CC&Rs explicitly state that the Association is not required to insure personal property within an individual unit and that owners are responsible for their own unit coverage. The ALJ found that past minor payments by the Board for similar damages did not amend the governing documents.

Key Issues & Findings

Failure to provide insurance coverage for unit damages

Petitioners alleged the HOA violated CC&Rs by failing to provide insurance coverage for damages to their unit (interior/personal property) caused by a sewer backup, requesting $6,697.70 reimbursement.

Orders: The petition is dismissed; no action is required of Respondent.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • CC&Rs Article 11 Section 11.7.3
  • CC&Rs Article 11 Section 11.7.6

Video Overview

Audio Overview

Decision Documents

17F-H1716008-REL Decision – 528194.pdf

Uploaded 2025-10-09T03:31:06 (58.8 KB)

17F-H1716008-REL Decision – 528432.pdf

Uploaded 2025-10-09T03:31:06 (63.1 KB)

17F-H1716008-REL Decision – 535933.pdf

Uploaded 2025-10-09T03:31:06 (131.6 KB)

17F-H1716008-REL Decision – 539997.pdf

Uploaded 2025-10-09T03:31:06 (1010.1 KB)





Briefing Doc – 17F-H1716008-REL


Briefing: Gravelle v. Village Parc Homeowners Association

Executive Summary

This briefing synthesizes the key findings and legal determinations from an administrative case between homeowners Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu (HOA). The dispute centered on liability for damages within the Gravelles’ condominium unit caused by a sewer backup.

The petition, filed with the Arizona Department of Real Estate, was ultimately dismissed. The Administrative Law Judge (ALJ) concluded, and the Department Commissioner affirmed, that the HOA’s governing documents—the Covenants, Conditions, and Restrictions (CC&Rs)—unambiguously place the responsibility for insuring the interior of an individual unit on the unit owner, not the HOA.

The ruling established that the HOA’s master insurance policy, provided by Travelers, was only obligated to cover what the CC&Rs required. Arguments based on the HOA’s past payments for minor damages in other units, an erroneous initial statement by an insurance adjuster on a prior claim, and the HOA Board’s own mistaken interpretation of its duties were all found to be insufficient to override the plain written language of the governing documents. The final decision reinforces the principle that unit owners are responsible for understanding their CC&Rs and securing adequate personal insurance for their property.

I. Case Overview and Final Disposition

• Case Identification: No. 17F-H1716008-REL

• Parties:

◦ Petitioners: Jerry and Patricia Gravelle, owners of Unit 14 in the Village Parc development.

◦ Respondent: Village Parc Homeowners Assoc. of Havasu (“the Association”).

• Adjudicating Body: The case was heard in the Arizona Office of Administrative Hearings before Administrative Law Judge (ALJ) Diane Mihalsky. The final order was issued by the Commissioner of the Arizona Department of Real Estate.

• Key Dates:

◦ Hearing Date: November 10, 2016

◦ ALJ Decision: December 22, 2016

◦ Final Order: January 3, 2017

• Final Disposition: The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s recommendation and ordered that the petition be dismissed. This constituted a final administrative action, effective immediately. Parties were advised of their right to file for rehearing or appeal for judicial review.

II. The Core Dispute: Insurance for Sewer Backup Damage

On or about October 23, 2015, the Petitioners’ condominium (Unit 14), along with two other units, suffered damage from a sewer backup. The central conflict arose from determining which party was financially responsible for the repairs inside the Petitioners’ unit.

• Petitioners’ Claim: The Gravelles filed a petition on August 31, 2016, alleging the Association violated Articles 11.7.3 and 11.7.6 of the CC&Rs by failing to provide insurance coverage for the full extent of the damages. Their personal insurance policy did not cover sewer backups. They requested the Association pay $6,697.70 to reimburse them for the loss that the Association’s insurer, Travelers, declined to cover.

• Insurance Claim Outcome:

◦ The Association submitted a claim for the sewer backup damages to its insurer, Travelers.

◦ Travelers determined that its policy covered damages to the common elements associated with the unit and issued a check to the Petitioners for $338.64.

◦ Travelers concluded there was no coverage under the policy for damage to the interior of the Petitioners’ unit. This denial was based on the CC&Rs, which establish that the unit owner is responsible for the finished surfaces and personal property within their unit.

III. Analysis of Governing Documents and Legal Framework

The ALJ’s decision was grounded in a strict interpretation of the Association’s CC&Rs, its insurance contract, and the Arizona Condominium Act.

Document / Statute

Key Provisions and Implications

Village Parc CC&Rs

Unit Definition (Sec. 2.2.1): A unit is defined as the space “bounded by and contained within the interior finished surfaces of the perimeter walls, floors and ceilings.”

Insurance Responsibility (Sec. 11.7.3): The Association’s master policy is explicitly “not be required to insure the personal property within any individual Unit, which insurance shall be the responsibility and risk of the Unit Owners.”

Liability Limitation (Sec. 11.7.5): The Association is not liable to any owner “if any risk or hazard is not covered by insurance or the amount is inadequate.” It places the burden on each owner to ascertain the Association’s coverage and procure their own additional insurance.

Travelers Insurance Policy

Conditional Coverage Endorsement: The policy covers certain property (fixtures, alterations, appliances) contained within a unit, but only “if your Condominium Association Agreement requires you to insure it.” Since the CC&Rs do not require the Association to insure unit interiors, this coverage was not triggered.

Primary Insurance: The policy states it is “intended to be primary, and not to contribute with such other insurance” a unit-owner may have.

Arizona Condominium Act

Unit Definition (A.R.S. § 33-1212(1)): Reinforces the CC&Rs by defining finished surfaces—”lath, furring, wallboard… tiles, wallpaper, paint, finished flooring”—as part of the unit. All other portions of walls, floors, or ceilings are common elements.

Maintenance Responsibility (A.R.S. § 33-1247(A)): The law specifies that “the association is responsible for maintenance, repair and replacement of the common elements and each unit owner is responsible for maintenance, repair and replacement of the unit.”

IV. Petitioners’ Arguments and the ALJ’s Rejection

The Petitioners presented evidence of past practices by both the Association and Travelers, arguing these created an expectation of coverage. The ALJ systematically rejected these arguments.

• Argument 1: The Association’s Past Payments for Unit Repairs

◦ Petitioners’ Evidence: The Association had authorized payments for repairs inside other units on prior occasions:

▪ June 2011: $153.74, $75.00, and $296.11 for damage to Units 3 and 5 from a broken shower drain.

▪ January 2012: $449.45 to repair kitchen cabinets in Unit 6 damaged by a broken roof vent.

◦ ALJ’s Conclusion: The fact that the Association’s Board made “actual payments of small amounts for damages to individually owned units” does not legally amend the plain language of the CC&Rs. Notably, the Association did not submit these prior incidents to its insurer.

• Argument 2: Travelers’ Prior Actions

◦ Petitioners’ Evidence: In a 2014 claim, a Travelers adjuster initially determined that the policy did provide coverage for damage done to a unit, not just limited common elements.

◦ ALJ’s Conclusion: Travelers later stated the adjuster had erred and confirmed no claim for unit damage was ultimately paid. The ALJ found that the “adjuster’s initial error in the 2014 claim does not estop Travelers from denying the claim for damages to Petitioners’ unit” in 2015.

• Argument 3: The Association Board’s Own Interpretation

◦ Petitioners’ Evidence: At a November 2015 board meeting, where Mr. Gravelle served as secretary/treasurer, the Board itself determined that the CC&Rs did require the Association to provide insurance coverage for all damages to Unit 14.

◦ ALJ’s Conclusion: The Board’s “erroneous opinion” does not have the legal power to amend the CC&Rs or the binding terms of the Travelers insurance policy.

V. Core Legal Principles and Final Decision

The dismissal of the petition was based on several foundational legal principles.

• Primacy of Written Documents: The decision gave superior weight to the “plain language” of the CC&Rs and the insurance contract over inconsistent past practices or mistaken interpretations.

• Burden of Proof: As the filing party, the Petitioners had the burden to prove by a “preponderance of the evidence” that the Association violated the CC&Rs. The ALJ determined they failed to meet this standard.

• Clear Delineation of Responsibility: Both the CC&Rs and Arizona state law create a clear separation of financial and maintenance responsibilities: the Association is responsible for common elements, while individual owners are responsible for their units.

• Presumption of Knowledge: The decision cited the legal principle that “Everyone is presumed to know the law.” The CC&Rs put the Petitioners on constructive notice that they were responsible for insuring their individual unit against risks like a sewer backup. Their failure to procure such coverage was their own responsibility.






Study Guide – 17F-H1716008-REL


Study Guide: Gravelle v. Village Parc Homeowners Association

This guide provides a detailed review of the administrative case No. 17F-H1716008-REL, involving Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu. It is designed to test and deepen understanding of the facts, legal arguments, and final decision presented in the case documents.

Short Answer Quiz

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

1. Who were the primary parties in case No. 17F-H1716008-REL, and what were their official roles?

2. What specific event on October 23, 2015, initiated the dispute between the parties?

3. What was the total monetary amount the Petitioners requested, and for what purpose?

4. According to the Travelers insurance policy held by the Association, what property inside a unit could be covered, and under what specific condition?

5. How did the Arizona Condominium Act (A.R.S. § 33-1212(1)) and the CC&Rs define the boundaries and components of an individual “Unit”?

6. What was the key reasoning provided by Travelers for denying coverage for the interior damage to the Petitioners’ unit?

7. The Petitioners cited past instances where the Respondent paid for repairs in other units. Why did the Administrative Law Judge rule that these “past practices” did not legally bind the Respondent in this case?

8. What is the definition of “preponderance of the evidence” as cited in the legal decision?

9. What was the final, official outcome of the case as determined by the Administrative Law Judge and adopted by the Commissioner of the Department of Real Estate?

10. According to Section 11.7.5 of the CC&Rs, who is ultimately responsible for procuring additional insurance coverage if the Association’s policy is deemed inadequate?

——————————————————————————–

Quiz Answer Key

1. The primary parties were Jerry and Patricia Gravelle, who were designated as the “Petitioners,” and the Village Parc Homeowners Assoc. of Havasu, which was the “Respondent.” The Petitioners owned a condominium unit and were members of the Respondent homeowners’ association.

2. On or about October 23, 2015, the Petitioners’ Unit 14, as well as Units 15 and 16, suffered damage from a sewer backup. The Petitioners discovered that their personal insurance policy did not provide coverage for this type of damage, leading them to seek coverage under the Respondent’s policy.

3. The Petitioners requested that the Respondent pay $6,697.70. This amount was to reimburse them for the loss that the insurance company, Travelers, refused to cover for the damages inside their unit caused by the sewer backup.

4. The Travelers policy endorsement stated it could cover property contained within a unit, regardless of ownership, under one specific condition: if the “Condominium Association Agreement requires you to insure it.” This included fixtures, improvements, alterations, and certain appliances.

5. The CC&Rs (Section 2.2.1) and the Arizona Condominium Act defined a unit as being bounded by the interior finished surfaces of its perimeter walls, floors, and ceilings. The Act specifies that materials like tiles, paint, finished flooring, and wallpaper are part of the unit, while other portions of the walls, floors, or ceilings are part of the common elements.

6. Travelers concluded there was no coverage for the interior damage because the CC&Rs make the unit owner responsible for damages within a unit. The policy was intended to cover common elements and structural damage, not the finished surfaces and personal property that constitute the interior of the unit.

7. The judge ruled that the Board’s past payments for small damages and its erroneous opinion that the policy should cover the damage did not amend the plain language of the CC&Rs. The legally binding CC&Rs put Petitioners on notice about insurance requirements, and these past actions were not sufficient to override the written documents.

8. “A preponderance of the evidence” is defined as “such proof as convinces the trier of fact that the contention is more probably true than not.” It is also described as “The greater weight of the evidence… sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

9. The Administrative Law Judge issued a Recommended Order that the petition be dismissed and that no action was required of the Respondent. This recommendation was accepted and adopted by the Commissioner of the Department of Real Estate in a Final Order dated January 3, 2017.

10. Section 11.7.5 of the CC&Rs explicitly states that “Each Owner is responsible for ascertaining the Association’s coverage and for procuring such additional coverage as such owner deems necessary.” It also shields the Association from liability if a risk is not covered or the insurance amount is inadequate.

——————————————————————————–

Essay Questions

Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate a comprehensive response for each question based on the provided source materials.

1. Analyze the role of the Covenants, Conditions, and Restrictions (CC&Rs) in this case. How did specific sections of the CC&Rs support the Respondent’s position and ultimately lead to the dismissal of the petition?

2. The Petitioners argued that the Respondent’s “past practices” and an initial, erroneous determination by a Travelers adjuster should have set a precedent. Explain what the legal concept of “estoppel” means in this context and detail the judge’s reasoning for why it did not apply to the Gravelles’ situation.

3. Discuss the division of responsibility for maintenance and insurance as defined by the Arizona Condominium Act and the Village Parc CC&Rs. How does this case illustrate the critical distinction between “Common Elements,” “Limited Common Elements,” and the “Unit” itself?

4. Trace the procedural path of this dispute, from the initial petition filing to the Final Order. Identify the key government bodies involved (e.g., Department of Real Estate, Office of Administrative Hearings) and the roles they played in adjudicating the case.

5. Imagine you are advising a new condominium owner at Village Parc. Based on the outcome and reasoning of this case, what advice would you give them regarding insurance policies and understanding their responsibilities versus those of the Homeowners Association?

——————————————————————————–

Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official (Diane Mihalsky) from the Office of Administrative Hearings who conducted the hearing, analyzed the evidence and legal arguments, and issued a recommended decision in the case.

Arizona Condominium Act

A set of Arizona state statutes that define legal terms and responsibilities related to condominiums. In this case, it was used to define the boundaries of a “unit” versus “common elements” (A.R.S. § 33-1212(1)) and to assign responsibility for their maintenance (A.R.S. § 33-1247(A)).

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents for the Village Parc development. These documents define the rights and obligations of the unit owners and the homeowners’ association, including insurance requirements.

Common Elements

Portions of the condominium project designated for common ownership by all unit owners. Under the Arizona Condominium Act, portions of walls, floors, or ceilings that are not part of the finished surfaces of a unit are considered common elements.

Estoppel

A legal principle defined in the case as meaning “that a party is prevented by his own acts from claiming a right to detriment of other party who was entitled to rely on such conduct and has acted accordingly.” The judge ruled it did not apply because the plain language of the CC&Rs prevented the Petitioners from claiming they reasonably relied on the Board’s or Travelers’ past practices.

Limited Common Elements

A portion of the Common Elements allocated for the exclusive use of one or more, but fewer than all, of the Units. An example given is a “chute, flue, duct, wire, conduit… [that] serve only that Unit.”

Petitioner

The party that filed the petition initiating the legal action. In this case, Jerry and Patricia Gravelle, owners of Unit 14.

Preponderance of the Evidence

The standard of proof required for the Petitioners to win their case. It is defined as “such proof as convinces the trier of fact that the contention is more probably true than not” and as evidence with the “most convincing force.”

Project

As defined in Section 1.27 of the CC&Rs, this refers to “the entire Property… portions of which are designated for separate ownership and the remainder of which are designated for common ownership solely by the owners of the Units therein.”

Respondent

The party against whom the petition was filed. In this case, the Village Parc Homeowners Assoc. of Havasu (“the Association”).

As defined in the CC&Rs, “the elements of an individual unit… which are not owned in common with the Owners of other Condominium Units.” Its physical boundaries are defined as the interior finished surfaces of the perimeter walls, floors, and ceilings.






Blog Post – 17F-H1716008-REL


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Case Participants

Petitioner Side

  • Jerry Gravelle (petitioner)
    Village Parc Homeowners Assoc. of Havasu
    Homeowner; also served as Secretary/Treasurer on the Board in Nov 2015
  • Patricia Gravelle (petitioner)
    Village Parc Homeowners Assoc. of Havasu
    Homeowner

Respondent Side

  • Kenneth E. Moyer (attorney)
    Law Offices of Kenneth E. Moyer, PLLC
    Attorney for Respondent
  • Gary Himango (affiant)
    Village Parc Homeowners Assoc. of Havasu
    Submitted affidavit for Respondent

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
  • M. Aguirre (clerk)
    Office of Administrative Hearings
    Transmitted documents
  • L. Dettorre (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • D. Jones (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • J. Marshall (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • N. Cano (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])

Jerry and Patricia Gravelle vs. Village Parc Homeowners Assoc. of

Posted on by

Case Summary

Case ID 17F-H1716008-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-01-03
Administrative Law Judge Diane Mihalsky
Outcome no
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jerry and Patricia Gravelle Counsel —
Respondent Village Parc Homeowners Assoc. of Havasu Counsel Kenneth E. Moyer

Alleged Violations

CC&Rs Article 11, Section 11.7.3 and 11.7.6

Outcome Summary

The Department adopted the ALJ's recommendation to dismiss the petition. The ALJ found that the HOA's insurance policy and CC&Rs did not require coverage for damage to the Petitioners' individual unit (finished surfaces and personal property) resulting from a sewer backup. The HOA was only responsible for common elements.

Why this result: The CC&Rs explicitly state that the Association is not required to insure personal property within an individual unit and that owners are responsible for their own unit coverage. The ALJ found that past minor payments by the Board for similar damages did not amend the governing documents.

Key Issues & Findings

Failure to provide insurance coverage for unit damages

Petitioners alleged the HOA violated CC&Rs by failing to provide insurance coverage for damages to their unit (interior/personal property) caused by a sewer backup, requesting $6,697.70 reimbursement.

Orders: The petition is dismissed; no action is required of Respondent.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • CC&Rs Article 11 Section 11.7.3
  • CC&Rs Article 11 Section 11.7.6

Video Overview

Audio Overview

Decision Documents

17F-H1716008-REL Decision – 528194.pdf

Uploaded 2026-01-23T17:18:03 (58.8 KB)

17F-H1716008-REL Decision – 528432.pdf

Uploaded 2026-01-23T17:18:10 (63.1 KB)

17F-H1716008-REL Decision – 535933.pdf

Uploaded 2026-01-23T17:18:15 (131.6 KB)

17F-H1716008-REL Decision – 539997.pdf

Uploaded 2026-01-23T17:18:22 (1010.1 KB)





Briefing Doc – 17F-H1716008-REL


Briefing: Gravelle v. Village Parc Homeowners Association

Executive Summary

This briefing synthesizes the key findings and legal determinations from an administrative case between homeowners Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu (HOA). The dispute centered on liability for damages within the Gravelles’ condominium unit caused by a sewer backup.

The petition, filed with the Arizona Department of Real Estate, was ultimately dismissed. The Administrative Law Judge (ALJ) concluded, and the Department Commissioner affirmed, that the HOA’s governing documents—the Covenants, Conditions, and Restrictions (CC&Rs)—unambiguously place the responsibility for insuring the interior of an individual unit on the unit owner, not the HOA.

The ruling established that the HOA’s master insurance policy, provided by Travelers, was only obligated to cover what the CC&Rs required. Arguments based on the HOA’s past payments for minor damages in other units, an erroneous initial statement by an insurance adjuster on a prior claim, and the HOA Board’s own mistaken interpretation of its duties were all found to be insufficient to override the plain written language of the governing documents. The final decision reinforces the principle that unit owners are responsible for understanding their CC&Rs and securing adequate personal insurance for their property.

I. Case Overview and Final Disposition

• Case Identification: No. 17F-H1716008-REL

• Parties:

◦ Petitioners: Jerry and Patricia Gravelle, owners of Unit 14 in the Village Parc development.

◦ Respondent: Village Parc Homeowners Assoc. of Havasu (“the Association”).

• Adjudicating Body: The case was heard in the Arizona Office of Administrative Hearings before Administrative Law Judge (ALJ) Diane Mihalsky. The final order was issued by the Commissioner of the Arizona Department of Real Estate.

• Key Dates:

◦ Hearing Date: November 10, 2016

◦ ALJ Decision: December 22, 2016

◦ Final Order: January 3, 2017

• Final Disposition: The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s recommendation and ordered that the petition be dismissed. This constituted a final administrative action, effective immediately. Parties were advised of their right to file for rehearing or appeal for judicial review.

II. The Core Dispute: Insurance for Sewer Backup Damage

On or about October 23, 2015, the Petitioners’ condominium (Unit 14), along with two other units, suffered damage from a sewer backup. The central conflict arose from determining which party was financially responsible for the repairs inside the Petitioners’ unit.

• Petitioners’ Claim: The Gravelles filed a petition on August 31, 2016, alleging the Association violated Articles 11.7.3 and 11.7.6 of the CC&Rs by failing to provide insurance coverage for the full extent of the damages. Their personal insurance policy did not cover sewer backups. They requested the Association pay $6,697.70 to reimburse them for the loss that the Association’s insurer, Travelers, declined to cover.

• Insurance Claim Outcome:

◦ The Association submitted a claim for the sewer backup damages to its insurer, Travelers.

◦ Travelers determined that its policy covered damages to the common elements associated with the unit and issued a check to the Petitioners for $338.64.

◦ Travelers concluded there was no coverage under the policy for damage to the interior of the Petitioners’ unit. This denial was based on the CC&Rs, which establish that the unit owner is responsible for the finished surfaces and personal property within their unit.

III. Analysis of Governing Documents and Legal Framework

The ALJ’s decision was grounded in a strict interpretation of the Association’s CC&Rs, its insurance contract, and the Arizona Condominium Act.

Document / Statute

Key Provisions and Implications

Village Parc CC&Rs

Unit Definition (Sec. 2.2.1): A unit is defined as the space “bounded by and contained within the interior finished surfaces of the perimeter walls, floors and ceilings.”

Insurance Responsibility (Sec. 11.7.3): The Association’s master policy is explicitly “not be required to insure the personal property within any individual Unit, which insurance shall be the responsibility and risk of the Unit Owners.”

Liability Limitation (Sec. 11.7.5): The Association is not liable to any owner “if any risk or hazard is not covered by insurance or the amount is inadequate.” It places the burden on each owner to ascertain the Association’s coverage and procure their own additional insurance.

Travelers Insurance Policy

Conditional Coverage Endorsement: The policy covers certain property (fixtures, alterations, appliances) contained within a unit, but only “if your Condominium Association Agreement requires you to insure it.” Since the CC&Rs do not require the Association to insure unit interiors, this coverage was not triggered.

Primary Insurance: The policy states it is “intended to be primary, and not to contribute with such other insurance” a unit-owner may have.

Arizona Condominium Act

Unit Definition (A.R.S. § 33-1212(1)): Reinforces the CC&Rs by defining finished surfaces—”lath, furring, wallboard… tiles, wallpaper, paint, finished flooring”—as part of the unit. All other portions of walls, floors, or ceilings are common elements.

Maintenance Responsibility (A.R.S. § 33-1247(A)): The law specifies that “the association is responsible for maintenance, repair and replacement of the common elements and each unit owner is responsible for maintenance, repair and replacement of the unit.”

IV. Petitioners’ Arguments and the ALJ’s Rejection

The Petitioners presented evidence of past practices by both the Association and Travelers, arguing these created an expectation of coverage. The ALJ systematically rejected these arguments.

• Argument 1: The Association’s Past Payments for Unit Repairs

◦ Petitioners’ Evidence: The Association had authorized payments for repairs inside other units on prior occasions:

▪ June 2011: $153.74, $75.00, and $296.11 for damage to Units 3 and 5 from a broken shower drain.

▪ January 2012: $449.45 to repair kitchen cabinets in Unit 6 damaged by a broken roof vent.

◦ ALJ’s Conclusion: The fact that the Association’s Board made “actual payments of small amounts for damages to individually owned units” does not legally amend the plain language of the CC&Rs. Notably, the Association did not submit these prior incidents to its insurer.

• Argument 2: Travelers’ Prior Actions

◦ Petitioners’ Evidence: In a 2014 claim, a Travelers adjuster initially determined that the policy did provide coverage for damage done to a unit, not just limited common elements.

◦ ALJ’s Conclusion: Travelers later stated the adjuster had erred and confirmed no claim for unit damage was ultimately paid. The ALJ found that the “adjuster’s initial error in the 2014 claim does not estop Travelers from denying the claim for damages to Petitioners’ unit” in 2015.

• Argument 3: The Association Board’s Own Interpretation

◦ Petitioners’ Evidence: At a November 2015 board meeting, where Mr. Gravelle served as secretary/treasurer, the Board itself determined that the CC&Rs did require the Association to provide insurance coverage for all damages to Unit 14.

◦ ALJ’s Conclusion: The Board’s “erroneous opinion” does not have the legal power to amend the CC&Rs or the binding terms of the Travelers insurance policy.

V. Core Legal Principles and Final Decision

The dismissal of the petition was based on several foundational legal principles.

• Primacy of Written Documents: The decision gave superior weight to the “plain language” of the CC&Rs and the insurance contract over inconsistent past practices or mistaken interpretations.

• Burden of Proof: As the filing party, the Petitioners had the burden to prove by a “preponderance of the evidence” that the Association violated the CC&Rs. The ALJ determined they failed to meet this standard.

• Clear Delineation of Responsibility: Both the CC&Rs and Arizona state law create a clear separation of financial and maintenance responsibilities: the Association is responsible for common elements, while individual owners are responsible for their units.

• Presumption of Knowledge: The decision cited the legal principle that “Everyone is presumed to know the law.” The CC&Rs put the Petitioners on constructive notice that they were responsible for insuring their individual unit against risks like a sewer backup. Their failure to procure such coverage was their own responsibility.






Study Guide – 17F-H1716008-REL


Study Guide: Gravelle v. Village Parc Homeowners Association

This guide provides a detailed review of the administrative case No. 17F-H1716008-REL, involving Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu. It is designed to test and deepen understanding of the facts, legal arguments, and final decision presented in the case documents.

Short Answer Quiz

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

1. Who were the primary parties in case No. 17F-H1716008-REL, and what were their official roles?

2. What specific event on October 23, 2015, initiated the dispute between the parties?

3. What was the total monetary amount the Petitioners requested, and for what purpose?

4. According to the Travelers insurance policy held by the Association, what property inside a unit could be covered, and under what specific condition?

5. How did the Arizona Condominium Act (A.R.S. § 33-1212(1)) and the CC&Rs define the boundaries and components of an individual “Unit”?

6. What was the key reasoning provided by Travelers for denying coverage for the interior damage to the Petitioners’ unit?

7. The Petitioners cited past instances where the Respondent paid for repairs in other units. Why did the Administrative Law Judge rule that these “past practices” did not legally bind the Respondent in this case?

8. What is the definition of “preponderance of the evidence” as cited in the legal decision?

9. What was the final, official outcome of the case as determined by the Administrative Law Judge and adopted by the Commissioner of the Department of Real Estate?

10. According to Section 11.7.5 of the CC&Rs, who is ultimately responsible for procuring additional insurance coverage if the Association’s policy is deemed inadequate?

——————————————————————————–

Quiz Answer Key

1. The primary parties were Jerry and Patricia Gravelle, who were designated as the “Petitioners,” and the Village Parc Homeowners Assoc. of Havasu, which was the “Respondent.” The Petitioners owned a condominium unit and were members of the Respondent homeowners’ association.

2. On or about October 23, 2015, the Petitioners’ Unit 14, as well as Units 15 and 16, suffered damage from a sewer backup. The Petitioners discovered that their personal insurance policy did not provide coverage for this type of damage, leading them to seek coverage under the Respondent’s policy.

3. The Petitioners requested that the Respondent pay $6,697.70. This amount was to reimburse them for the loss that the insurance company, Travelers, refused to cover for the damages inside their unit caused by the sewer backup.

4. The Travelers policy endorsement stated it could cover property contained within a unit, regardless of ownership, under one specific condition: if the “Condominium Association Agreement requires you to insure it.” This included fixtures, improvements, alterations, and certain appliances.

5. The CC&Rs (Section 2.2.1) and the Arizona Condominium Act defined a unit as being bounded by the interior finished surfaces of its perimeter walls, floors, and ceilings. The Act specifies that materials like tiles, paint, finished flooring, and wallpaper are part of the unit, while other portions of the walls, floors, or ceilings are part of the common elements.

6. Travelers concluded there was no coverage for the interior damage because the CC&Rs make the unit owner responsible for damages within a unit. The policy was intended to cover common elements and structural damage, not the finished surfaces and personal property that constitute the interior of the unit.

7. The judge ruled that the Board’s past payments for small damages and its erroneous opinion that the policy should cover the damage did not amend the plain language of the CC&Rs. The legally binding CC&Rs put Petitioners on notice about insurance requirements, and these past actions were not sufficient to override the written documents.

8. “A preponderance of the evidence” is defined as “such proof as convinces the trier of fact that the contention is more probably true than not.” It is also described as “The greater weight of the evidence… sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

9. The Administrative Law Judge issued a Recommended Order that the petition be dismissed and that no action was required of the Respondent. This recommendation was accepted and adopted by the Commissioner of the Department of Real Estate in a Final Order dated January 3, 2017.

10. Section 11.7.5 of the CC&Rs explicitly states that “Each Owner is responsible for ascertaining the Association’s coverage and for procuring such additional coverage as such owner deems necessary.” It also shields the Association from liability if a risk is not covered or the insurance amount is inadequate.

——————————————————————————–

Essay Questions

Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate a comprehensive response for each question based on the provided source materials.

1. Analyze the role of the Covenants, Conditions, and Restrictions (CC&Rs) in this case. How did specific sections of the CC&Rs support the Respondent’s position and ultimately lead to the dismissal of the petition?

2. The Petitioners argued that the Respondent’s “past practices” and an initial, erroneous determination by a Travelers adjuster should have set a precedent. Explain what the legal concept of “estoppel” means in this context and detail the judge’s reasoning for why it did not apply to the Gravelles’ situation.

3. Discuss the division of responsibility for maintenance and insurance as defined by the Arizona Condominium Act and the Village Parc CC&Rs. How does this case illustrate the critical distinction between “Common Elements,” “Limited Common Elements,” and the “Unit” itself?

4. Trace the procedural path of this dispute, from the initial petition filing to the Final Order. Identify the key government bodies involved (e.g., Department of Real Estate, Office of Administrative Hearings) and the roles they played in adjudicating the case.

5. Imagine you are advising a new condominium owner at Village Parc. Based on the outcome and reasoning of this case, what advice would you give them regarding insurance policies and understanding their responsibilities versus those of the Homeowners Association?

——————————————————————————–

Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official (Diane Mihalsky) from the Office of Administrative Hearings who conducted the hearing, analyzed the evidence and legal arguments, and issued a recommended decision in the case.

Arizona Condominium Act

A set of Arizona state statutes that define legal terms and responsibilities related to condominiums. In this case, it was used to define the boundaries of a “unit” versus “common elements” (A.R.S. § 33-1212(1)) and to assign responsibility for their maintenance (A.R.S. § 33-1247(A)).

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents for the Village Parc development. These documents define the rights and obligations of the unit owners and the homeowners’ association, including insurance requirements.

Common Elements

Portions of the condominium project designated for common ownership by all unit owners. Under the Arizona Condominium Act, portions of walls, floors, or ceilings that are not part of the finished surfaces of a unit are considered common elements.

Estoppel

A legal principle defined in the case as meaning “that a party is prevented by his own acts from claiming a right to detriment of other party who was entitled to rely on such conduct and has acted accordingly.” The judge ruled it did not apply because the plain language of the CC&Rs prevented the Petitioners from claiming they reasonably relied on the Board’s or Travelers’ past practices.

Limited Common Elements

A portion of the Common Elements allocated for the exclusive use of one or more, but fewer than all, of the Units. An example given is a “chute, flue, duct, wire, conduit… [that] serve only that Unit.”

Petitioner

The party that filed the petition initiating the legal action. In this case, Jerry and Patricia Gravelle, owners of Unit 14.

Preponderance of the Evidence

The standard of proof required for the Petitioners to win their case. It is defined as “such proof as convinces the trier of fact that the contention is more probably true than not” and as evidence with the “most convincing force.”

Project

As defined in Section 1.27 of the CC&Rs, this refers to “the entire Property… portions of which are designated for separate ownership and the remainder of which are designated for common ownership solely by the owners of the Units therein.”

Respondent

The party against whom the petition was filed. In this case, the Village Parc Homeowners Assoc. of Havasu (“the Association”).

As defined in the CC&Rs, “the elements of an individual unit… which are not owned in common with the Owners of other Condominium Units.” Its physical boundaries are defined as the interior finished surfaces of the perimeter walls, floors, and ceilings.


Case

Docket No
17F-H1716008-REL
Case Title
Jerry and Patricia Gravelle v. Village Parc Homeowners Assoc. of Havasu
Decision Date
2017-01-03
Tribunal
OAH
Agency
ADRE

Individuals

Name
Jerry Gravelle
Role
petitioner
Side
petitioner
Affiliation
Village Parc Homeowners Assoc. of Havasu
Notes
Homeowner; also served as Secretary/Treasurer on the Board in Nov 2015
Name
Patricia Gravelle
Role
petitioner
Side
petitioner
Affiliation
Village Parc Homeowners Assoc. of Havasu
Notes
Homeowner
Name
Kenneth E. Moyer
Role
attorney
Side
respondent
Affiliation
Law Offices of Kenneth E. Moyer, PLLC
Notes
Attorney for Respondent
Name
Gary Himango
Role
affiant
Side
respondent
Affiliation
Village Parc Homeowners Assoc. of Havasu
Notes
Submitted affidavit for Respondent
Name
Diane Mihalsky
Role
ALJ
Side
neutral
Affiliation
Office of Administrative Hearings
Notes
Administrative Law Judge
Name
Judy Lowe
Role
Commissioner
Side
neutral
Affiliation
Arizona Department of Real Estate
Name
Abby Hansen
Role
HOA Coordinator
Side
neutral
Affiliation
Arizona Department of Real Estate
Name
M. Aguirre
Role
clerk
Side
neutral
Affiliation
Office of Administrative Hearings
Notes
Transmitted documents
Name
L. Dettorre
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])
Name
D. Jones
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])
Name
J. Marshall
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])
Name
N. Cano
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])

Case Participants

Petitioner Side

  • Jerry Gravelle (petitioner)
    Village Parc Homeowners Assoc. of Havasu
    Homeowner; also served as Secretary/Treasurer on the Board in Nov 2015
  • Patricia Gravelle (petitioner)
    Village Parc Homeowners Assoc. of Havasu
    Homeowner

Respondent Side

  • Kenneth E. Moyer (attorney)
    Law Offices of Kenneth E. Moyer, PLLC
    Attorney for Respondent
  • Gary Himango (affiant)
    Village Parc Homeowners Assoc. of Havasu
    Submitted affidavit for Respondent

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
  • M. Aguirre (clerk)
    Office of Administrative Hearings
    Transmitted documents
  • L. Dettorre (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • D. Jones (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • J. Marshall (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • N. Cano (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])

Jerry and Patricia Gravelle vs. Village Parc Homeowners Assoc. of

Posted on by

Case Summary

Case ID 17F-H1716008-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-01-03
Administrative Law Judge Diane Mihalsky
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jerry and Patricia Gravelle Counsel —
Respondent Village Parc Homeowners Assoc. of Havasu Counsel Kenneth E. Moyer, Esq.

Alleged Violations

CC&Rs Article 11, Section 11.7.3; CC&Rs Article 11, Section 11.7.6

Outcome Summary

The Commissioner adopted the ALJ's recommendation to dismiss the petition, finding that the HOA was not required by the governing documents (CC&Rs) or state law (Arizona Condominium Act) to insure against damages to the interior finished surfaces of the petitioners' individual condominium unit.

Why this result: The CC&Rs put Petitioners on notice that Respondent was not required to provide insurance coverage for damages to their individual unit, and Petitioners did not establish that Respondent was responsible for the damages.

Key Issues & Findings

HOA responsibility to insure unit interior damages caused by sewer backup

Petitioners claimed Respondent HOA violated CC&Rs (specifically Sections 11.7.3 and 11.7.6) by not providing insurance coverage for $6,697.70 in damages to the interior of their individual unit caused by a sewer backup. The HOA contended the CC&Rs and Arizona Condominium Act place this responsibility on the unit owner.

Orders: The petition was dismissed, and no action was required of the Respondent.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • A.R.S. § 32-2199.01

Analytics Highlights

Topics: Condominiums, Insurance Coverage, CC&Rs Interpretation, Unit Boundaries, Maintenance Responsibility
Additional Citations:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • A.R.S. § 32-2199.01
  • CC&Rs Article 11, Section 11.7.3
  • CC&Rs Article 11, Section 11.7.6

Audio Overview

Decision Documents

17F-H1716008-REL Decision – 528194.pdf

Uploaded 2025-10-08T07:01:04 (58.8 KB)

17F-H1716008-REL Decision – 528432.pdf

Uploaded 2025-10-08T07:01:04 (63.1 KB)

17F-H1716008-REL Decision – 535933.pdf

Uploaded 2025-10-08T07:01:05 (131.6 KB)

17F-H1716008-REL Decision – 539997.pdf

Uploaded 2025-10-08T07:01:07 (1010.1 KB)





Briefing Doc – 17F-H1716008-REL


Briefing: Gravelle v. Village Parc Homeowners Association

Executive Summary

This briefing synthesizes the key findings and legal determinations from an administrative case between homeowners Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu (HOA). The dispute centered on liability for damages within the Gravelles’ condominium unit caused by a sewer backup.

The petition, filed with the Arizona Department of Real Estate, was ultimately dismissed. The Administrative Law Judge (ALJ) concluded, and the Department Commissioner affirmed, that the HOA’s governing documents—the Covenants, Conditions, and Restrictions (CC&Rs)—unambiguously place the responsibility for insuring the interior of an individual unit on the unit owner, not the HOA.

The ruling established that the HOA’s master insurance policy, provided by Travelers, was only obligated to cover what the CC&Rs required. Arguments based on the HOA’s past payments for minor damages in other units, an erroneous initial statement by an insurance adjuster on a prior claim, and the HOA Board’s own mistaken interpretation of its duties were all found to be insufficient to override the plain written language of the governing documents. The final decision reinforces the principle that unit owners are responsible for understanding their CC&Rs and securing adequate personal insurance for their property.

I. Case Overview and Final Disposition

• Case Identification: No. 17F-H1716008-REL

• Parties:

◦ Petitioners: Jerry and Patricia Gravelle, owners of Unit 14 in the Village Parc development.

◦ Respondent: Village Parc Homeowners Assoc. of Havasu (“the Association”).

• Adjudicating Body: The case was heard in the Arizona Office of Administrative Hearings before Administrative Law Judge (ALJ) Diane Mihalsky. The final order was issued by the Commissioner of the Arizona Department of Real Estate.

• Key Dates:

◦ Hearing Date: November 10, 2016

◦ ALJ Decision: December 22, 2016

◦ Final Order: January 3, 2017

• Final Disposition: The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s recommendation and ordered that the petition be dismissed. This constituted a final administrative action, effective immediately. Parties were advised of their right to file for rehearing or appeal for judicial review.

II. The Core Dispute: Insurance for Sewer Backup Damage

On or about October 23, 2015, the Petitioners’ condominium (Unit 14), along with two other units, suffered damage from a sewer backup. The central conflict arose from determining which party was financially responsible for the repairs inside the Petitioners’ unit.

• Petitioners’ Claim: The Gravelles filed a petition on August 31, 2016, alleging the Association violated Articles 11.7.3 and 11.7.6 of the CC&Rs by failing to provide insurance coverage for the full extent of the damages. Their personal insurance policy did not cover sewer backups. They requested the Association pay $6,697.70 to reimburse them for the loss that the Association’s insurer, Travelers, declined to cover.

• Insurance Claim Outcome:

◦ The Association submitted a claim for the sewer backup damages to its insurer, Travelers.

◦ Travelers determined that its policy covered damages to the common elements associated with the unit and issued a check to the Petitioners for $338.64.

◦ Travelers concluded there was no coverage under the policy for damage to the interior of the Petitioners’ unit. This denial was based on the CC&Rs, which establish that the unit owner is responsible for the finished surfaces and personal property within their unit.

III. Analysis of Governing Documents and Legal Framework

The ALJ’s decision was grounded in a strict interpretation of the Association’s CC&Rs, its insurance contract, and the Arizona Condominium Act.

Document / Statute

Key Provisions and Implications

Village Parc CC&Rs

Unit Definition (Sec. 2.2.1): A unit is defined as the space “bounded by and contained within the interior finished surfaces of the perimeter walls, floors and ceilings.”

Insurance Responsibility (Sec. 11.7.3): The Association’s master policy is explicitly “not be required to insure the personal property within any individual Unit, which insurance shall be the responsibility and risk of the Unit Owners.”

Liability Limitation (Sec. 11.7.5): The Association is not liable to any owner “if any risk or hazard is not covered by insurance or the amount is inadequate.” It places the burden on each owner to ascertain the Association’s coverage and procure their own additional insurance.

Travelers Insurance Policy

Conditional Coverage Endorsement: The policy covers certain property (fixtures, alterations, appliances) contained within a unit, but only “if your Condominium Association Agreement requires you to insure it.” Since the CC&Rs do not require the Association to insure unit interiors, this coverage was not triggered.

Primary Insurance: The policy states it is “intended to be primary, and not to contribute with such other insurance” a unit-owner may have.

Arizona Condominium Act

Unit Definition (A.R.S. § 33-1212(1)): Reinforces the CC&Rs by defining finished surfaces—”lath, furring, wallboard… tiles, wallpaper, paint, finished flooring”—as part of the unit. All other portions of walls, floors, or ceilings are common elements.

Maintenance Responsibility (A.R.S. § 33-1247(A)): The law specifies that “the association is responsible for maintenance, repair and replacement of the common elements and each unit owner is responsible for maintenance, repair and replacement of the unit.”

IV. Petitioners’ Arguments and the ALJ’s Rejection

The Petitioners presented evidence of past practices by both the Association and Travelers, arguing these created an expectation of coverage. The ALJ systematically rejected these arguments.

• Argument 1: The Association’s Past Payments for Unit Repairs

◦ Petitioners’ Evidence: The Association had authorized payments for repairs inside other units on prior occasions:

▪ June 2011: $153.74, $75.00, and $296.11 for damage to Units 3 and 5 from a broken shower drain.

▪ January 2012: $449.45 to repair kitchen cabinets in Unit 6 damaged by a broken roof vent.

◦ ALJ’s Conclusion: The fact that the Association’s Board made “actual payments of small amounts for damages to individually owned units” does not legally amend the plain language of the CC&Rs. Notably, the Association did not submit these prior incidents to its insurer.

• Argument 2: Travelers’ Prior Actions

◦ Petitioners’ Evidence: In a 2014 claim, a Travelers adjuster initially determined that the policy did provide coverage for damage done to a unit, not just limited common elements.

◦ ALJ’s Conclusion: Travelers later stated the adjuster had erred and confirmed no claim for unit damage was ultimately paid. The ALJ found that the “adjuster’s initial error in the 2014 claim does not estop Travelers from denying the claim for damages to Petitioners’ unit” in 2015.

• Argument 3: The Association Board’s Own Interpretation

◦ Petitioners’ Evidence: At a November 2015 board meeting, where Mr. Gravelle served as secretary/treasurer, the Board itself determined that the CC&Rs did require the Association to provide insurance coverage for all damages to Unit 14.

◦ ALJ’s Conclusion: The Board’s “erroneous opinion” does not have the legal power to amend the CC&Rs or the binding terms of the Travelers insurance policy.

V. Core Legal Principles and Final Decision

The dismissal of the petition was based on several foundational legal principles.

• Primacy of Written Documents: The decision gave superior weight to the “plain language” of the CC&Rs and the insurance contract over inconsistent past practices or mistaken interpretations.

• Burden of Proof: As the filing party, the Petitioners had the burden to prove by a “preponderance of the evidence” that the Association violated the CC&Rs. The ALJ determined they failed to meet this standard.

• Clear Delineation of Responsibility: Both the CC&Rs and Arizona state law create a clear separation of financial and maintenance responsibilities: the Association is responsible for common elements, while individual owners are responsible for their units.

• Presumption of Knowledge: The decision cited the legal principle that “Everyone is presumed to know the law.” The CC&Rs put the Petitioners on constructive notice that they were responsible for insuring their individual unit against risks like a sewer backup. Their failure to procure such coverage was their own responsibility.