Case Summary
| Case ID | 22F-H2221006-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2021-11-22 |
| Administrative Law Judge | Jenna Clark |
| Outcome | Petitioner's petition was granted in part and denied in part. The ALJ found the Respondent Association violated its Bylaws regarding the election and terms of Board members. Respondent was ordered to comply with the relevant Bylaw sections and reimburse $375.00 of the filing fee. Petitioner's prayer to remove the current Board from office was denied. |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Raymond M Uyleman | Counsel | — |
|---|---|---|---|
| Respondent | Casita Royale Townhomes Association | Counsel | — |
Alleged Violations
Bylaws Article 4 Section 2, and Article 8 Sections 2 and 3
Outcome Summary
Petitioner's petition was granted in part and denied in part. The ALJ found the Respondent Association violated its Bylaws regarding the election and terms of Board members. Respondent was ordered to comply with the relevant Bylaw sections and reimburse $375.00 of the filing fee. Petitioner's prayer to remove the current Board from office was denied.
Why this result: Petitioner’s prayer to remove the Association’s current Board from office was denied.
Key Issues & Findings
Unlawful transfer of Board positions and Association bank account
Petitioner alleged the Association violated Bylaws when the former President/Treasurer unlawfully transferred his Board positions and the bank account to new individuals without proper election procedures. The ALJ found the Association was in violation of Bylaws requiring a minimum of five directors and regular annual elections for those positions.
Orders: Respondent must henceforth comply with Bylaws Article 4 Section 2, and Article 8 Sections 2 and 3, and reimburse $375.00 of the filing fee.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
- Bylaws Article 4 Section 2
- Bylaws Article 8 Section 2
- Bylaws Article 8 Section 3
Analytics Highlights
- ARIZ. REV. STAT. §§ 32-2102
- ARIZ. REV. STAT. §§ 32-2199 et seq.
- ARIZ. REV. STAT. § 32-2199.05
- ARIZ. REV. STAT. §§ 32-2199(2)
- ARIZ. REV. STAT. §§ 32-2199.01(A)
- ARIZ. REV. STAT. §§ 32-2199.01(D)
- ARIZ. REV. STAT. §§ 32-2199.02
- ARIZ. REV. STAT. §§ 41-1092 et seq.
- Tierra Ranchos Homeowners Ass'n v. Kitchukov
- ARIZ. REV. STAT. §32-2199.02(B)
- ARIZ. REV. STAT. § 41-1092.09
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Decision Documents
22F-H2221006-REL Decision – 927006.pdf
This is a concise summary of the Administrative Law Judge (ALJ) Decision regarding the hearing between Raymond M Uyleman (Petitioner) and the Casita Royale Townhomes Association (Respondent).
Case Identification and Procedure
The hearing was held before Administrative Law Judge Jenna Clark on November 04, 2021, at the Office of Administrative Hearings (OAH). The matter involved a dispute between a homeowner (Petitioner) and a planned community association, falling under the jurisdiction of the Arizona Department of Real Estate.
Key Facts and Background
The Association's Bylaws require the Board of Directors to consist of not less than five (5) directors. Directors are elected for terms up to three years, and officers are elected annually by the Board.
By January 2014, Gary Knutson, who held the titles of President and Treasurer, was the only remaining Board member, having unilaterally assumed all Board roles after the other members resigned or passed away. No meetings were held thereafter to elect new directors.
The central dispute arose on or about March 16, 2021, when Mr. Knutson sold his townhome. Upon selling, he unilaterally selected Natalie Terry as his Presidential successor and Carmel Ogle as his Secretarial successor, and transferred the Association’s bank account and assets to them. Petitioner Uyleman, who became an Association member in May 2021, filed a petition alleging this transfer was unlawful.
Main Issues and Arguments
The core legal issue determined by the OAH was whether Mr. Knutson’s transfer of Board positions and assets violated Bylaws Article 4, Sections 2 and 3, and Article 8, Sections 2 and 3.
- Petitioner’s Argument: Petitioner argued that the appointments were illegal and fraudulent because Terry and Ogle seated themselves without a proper election. Petitioner also raised objections regarding the successors' prior criminal convictions and requested a financial audit, demanding the removal of the current Board.
- Respondent’s Argument: The Association denied the claims, arguing that Terry and Ogle were merely serving as "fillers" until an annual meeting could be held to properly vote in new Board members.
Legal Findings and Conclusion
The Administrative Law Judge concluded that Petitioner sustained the burden of proof by a preponderance of the evidence.
The ALJ determined that the Association had a clear obligation under its Bylaws to maintain a minimum of five (5) Board members and to hold multiple annual meetings between 2011 and 2021 to elect the necessary directors. Because Mr. Knutson was not properly elected to all three positions he held at the time of his resignation—and because elections had not been held as required—the transfer of positions to Ms. Terry and Ms. Ogle was not conducted in accordance with the community’s governing documents.
The ALJ specifically found that the Association violated Bylaws Article 4 Section 2 (Terms of Office) and Article 8 Sections 2 and 3 (Election of Officer, Term). Issues regarding the criminal backgrounds of Ms. Terry and Ms. Ogle were dismissed, as no evidence supported the Petitioner's contention that they should have been subjected to background checks.
Outcome and Order
The Petitioner’s petition was granted in part and denied in part.
- Compliance: The Association was ORDERED to henceforth comply with Bylaws Article 4 Section 2 and Article 8 Sections 2 and 3.
- Reimbursement: Respondent was ORDERED to reimburse the Petitioner $375.00 (three-quarters of the filing fee).
- Denial of Removal: Petitioner’s request to remove the Association’s current Board from office was denied.
{ “case”: { “docket_no”: “22F-H2221006-REL”, “case_title”: “Raymond M Uyleman vs. Casita Royale Townhomes Association”, “decision_date”: “2021-11-22”, “alj_name”: “Jenna Clark”, “tribunal”: “Office of Administrative Hearings”, “agency”: “Arizona Department of Real Estate” }, “questions”: [ { “question”: “Can a Board member unilaterally appoint their own successor and transfer HOA assets without an election?”, “short_answer”: “No. Board positions must be filled through elections or selection by remaining Board members as outlined in the Bylaws, not by the departing member alone.”, “detailed_answer”: “A Board member cannot simply ‘bestow’ their position or the HOA’s bank account to a successor upon selling their home. The Bylaws generally require directors to be elected by members at annual meetings. Even in the event of a resignation, the successor usually must be selected by the remaining members of the Board, not the outgoing individual.”, “alj_quote”: “Therefore, it cannot be concluded that the Board positions Mr. Knutson bestowed on Ms. Terry and Ms. Ogle were done in accordance with the community’s governing documents.”, “legal_basis”: “Bylaws Article 4 Sections 2 and 3; Article 8 Sections 2 and 3”, “topic_tags”: [ “Board Elections”, “Transfer of Power”, “Bylaws Compliance” ] }, { “question”: “Is it a violation if the HOA fails to maintain the minimum number of directors required by the Bylaws?”, “short_answer”: “Yes. If the Bylaws stipulate a minimum number of directors (e.g., five), the HOA must maintain that number through regular elections.”, “detailed_answer”: “The ALJ found that allowing a single individual to hold all Board positions violated the Bylaws, which explicitly required a Board of not less than five directors. The Association is obligated to hold annual meetings to elect the requisite number of members.”, “alj_quote”: “The Association’s Bylaws clearly indicate that there must be no less than five (5) Board members, and that elections for those positions must be held at annual meetings every 1-3 years.”, “legal_basis”: “Bylaws Article 4 Section 1”, “topic_tags”: [ “Board Composition”, “Bylaws Compliance”, “Governance” ] }, { “question”: “Can I prevent someone with a criminal record from serving on the HOA Board?”, “short_answer”: “Generally, no, unless the specific governing documents require background checks or prohibit those with criminal records from serving.”, “detailed_answer”: “The ALJ dismissed the homeowner’s complaint regarding the Board members’ criminal backgrounds (felonies) as a ‘red herring.’ Since the petitioner could not provide evidence that the governing documents required background checks for Board candidates, the argument was not grounds for a violation.”, “alj_quote”: “As are Ms. Terry’s and Ms. Ogle’s criminal backgrounds, as no evidence in the record supports Petitioner’s contention that they should have been subjected to background checks.”, “legal_basis”: “Evidentiary Standard / Governing Documents”, “topic_tags”: [ “Board Eligibility”, “Criminal Background”, “Discrimination” ] }, { “question”: “What is the standard of proof for a homeowner suing their HOA in an administrative hearing?”, “short_answer”: “The homeowner (Petitioner) must prove their claims by a ‘preponderance of the evidence.'”, “detailed_answer”: “The burden lies with the person bringing the complaint to show that their claims are more likely true than not. This does not require removing all doubt, but the evidence must have ‘superior evidentiary weight’ to incline an impartial mind to one side.”, “alj_quote”: “Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Article 4 sections 2 and 3, and Article 8 sections 2 and 3 of the Association’s Bylaws.”, “legal_basis”: “Arizona Law of Evidence”, “topic_tags”: [ “Legal Procedure”, “Burden of Proof”, “Hearing Process” ] }, { “question”: “Does the ADRE have jurisdiction to hear disputes about violations of CC&Rs and Bylaws?”, “short_answer”: “Yes. The Department has the authority to hear disputes between owners and associations regarding violations of community documents.”, “detailed_answer”: “The ALJ confirmed that the dispute was within the Department’s jurisdiction, citing statutes that allow owners to petition for hearings concerning violations of community documents (like CC&Rs and Bylaws) or statutes regulating planned communities.”, “alj_quote”: “The owner or association may petition the department for a hearing concerning violations of community documents or violations of the statutes that regulate planned communities as long as the petitioner has filed a petition with the department and paid a filing fee…”, “legal_basis”: “A.R.S. § 32-2199 et seq.”, “topic_tags”: [ “Jurisdiction”, “ADRE Authority”, “Dispute Resolution” ] }, { “question”: “If I win my case against the HOA, can I get my filing fee back?”, “short_answer”: “Yes, the ALJ has the discretion to order the HOA to reimburse the filing fee, often proportional to the success of the petition.”, “detailed_answer”: “In this case, because the petitioner’s petition was ‘granted in part,’ the ALJ ordered the HOA to reimburse 3/4 of the 500filingfee(375).”, “alj_quote”: “IT IS FURTHER ORDERED that Respondent reimburse ¾ of Petitioner’s filing fee (e.g. $375.00) in certified funds.”, “legal_basis”: “Administrative Order”, “topic_tags”: [ “Remedies”, “Fees”, “Financial Reimbursement” ] }, { “question”: “Will the ALJ automatically remove Board members from office if they find a violation in how they were appointed?”, “short_answer”: “Not necessarily. The ALJ may find a violation and order future compliance without granting a request to immediately remove the current Board.”, “detailed_answer”: “Although the ALJ found the Board members were not appointed in accordance with the Bylaws, the specific request to remove them from office was denied. The order focused on ensuring the HOA complies with Bylaws moving forward (presumably by holding the required elections).”, “alj_quote”: “IT IS FURTHER ORDERED that Petitioner’s prayer to remove the Association’s current Board from office is denied.”, “legal_basis”: “Administrative Remedy”, “topic_tags”: [ “Remedies”, “Board Removal”, “Enforcement” ] } ] }
{ “case”: { “docket_no”: “22F-H2221006-REL”, “case_title”: “Raymond M Uyleman vs. Casita Royale Townhomes Association”, “decision_date”: “2021-11-22”, “alj_name”: “Jenna Clark”, “tribunal”: “Office of Administrative Hearings”, “agency”: “Arizona Department of Real Estate” }, “questions”: [ { “question”: “Can a Board member unilaterally appoint their own successor and transfer HOA assets without an election?”, “short_answer”: “No. Board positions must be filled through elections or selection by remaining Board members as outlined in the Bylaws, not by the departing member alone.”, “detailed_answer”: “A Board member cannot simply ‘bestow’ their position or the HOA’s bank account to a successor upon selling their home. The Bylaws generally require directors to be elected by members at annual meetings. Even in the event of a resignation, the successor usually must be selected by the remaining members of the Board, not the outgoing individual.”, “alj_quote”: “Therefore, it cannot be concluded that the Board positions Mr. Knutson bestowed on Ms. Terry and Ms. Ogle were done in accordance with the community’s governing documents.”, “legal_basis”: “Bylaws Article 4 Sections 2 and 3; Article 8 Sections 2 and 3”, “topic_tags”: [ “Board Elections”, “Transfer of Power”, “Bylaws Compliance” ] }, { “question”: “Is it a violation if the HOA fails to maintain the minimum number of directors required by the Bylaws?”, “short_answer”: “Yes. If the Bylaws stipulate a minimum number of directors (e.g., five), the HOA must maintain that number through regular elections.”, “detailed_answer”: “The ALJ found that allowing a single individual to hold all Board positions violated the Bylaws, which explicitly required a Board of not less than five directors. The Association is obligated to hold annual meetings to elect the requisite number of members.”, “alj_quote”: “The Association’s Bylaws clearly indicate that there must be no less than five (5) Board members, and that elections for those positions must be held at annual meetings every 1-3 years.”, “legal_basis”: “Bylaws Article 4 Section 1”, “topic_tags”: [ “Board Composition”, “Bylaws Compliance”, “Governance” ] }, { “question”: “Can I prevent someone with a criminal record from serving on the HOA Board?”, “short_answer”: “Generally, no, unless the specific governing documents require background checks or prohibit those with criminal records from serving.”, “detailed_answer”: “The ALJ dismissed the homeowner’s complaint regarding the Board members’ criminal backgrounds (felonies) as a ‘red herring.’ Since the petitioner could not provide evidence that the governing documents required background checks for Board candidates, the argument was not grounds for a violation.”, “alj_quote”: “As are Ms. Terry’s and Ms. Ogle’s criminal backgrounds, as no evidence in the record supports Petitioner’s contention that they should have been subjected to background checks.”, “legal_basis”: “Evidentiary Standard / Governing Documents”, “topic_tags”: [ “Board Eligibility”, “Criminal Background”, “Discrimination” ] }, { “question”: “What is the standard of proof for a homeowner suing their HOA in an administrative hearing?”, “short_answer”: “The homeowner (Petitioner) must prove their claims by a ‘preponderance of the evidence.'”, “detailed_answer”: “The burden lies with the person bringing the complaint to show that their claims are more likely true than not. This does not require removing all doubt, but the evidence must have ‘superior evidentiary weight’ to incline an impartial mind to one side.”, “alj_quote”: “Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Article 4 sections 2 and 3, and Article 8 sections 2 and 3 of the Association’s Bylaws.”, “legal_basis”: “Arizona Law of Evidence”, “topic_tags”: [ “Legal Procedure”, “Burden of Proof”, “Hearing Process” ] }, { “question”: “Does the ADRE have jurisdiction to hear disputes about violations of CC&Rs and Bylaws?”, “short_answer”: “Yes. The Department has the authority to hear disputes between owners and associations regarding violations of community documents.”, “detailed_answer”: “The ALJ confirmed that the dispute was within the Department’s jurisdiction, citing statutes that allow owners to petition for hearings concerning violations of community documents (like CC&Rs and Bylaws) or statutes regulating planned communities.”, “alj_quote”: “The owner or association may petition the department for a hearing concerning violations of community documents or violations of the statutes that regulate planned communities as long as the petitioner has filed a petition with the department and paid a filing fee…”, “legal_basis”: “A.R.S. § 32-2199 et seq.”, “topic_tags”: [ “Jurisdiction”, “ADRE Authority”, “Dispute Resolution” ] }, { “question”: “If I win my case against the HOA, can I get my filing fee back?”, “short_answer”: “Yes, the ALJ has the discretion to order the HOA to reimburse the filing fee, often proportional to the success of the petition.”, “detailed_answer”: “In this case, because the petitioner’s petition was ‘granted in part,’ the ALJ ordered the HOA to reimburse 3/4 of the 500filingfee(375).”, “alj_quote”: “IT IS FURTHER ORDERED that Respondent reimburse ¾ of Petitioner’s filing fee (e.g. $375.00) in certified funds.”, “legal_basis”: “Administrative Order”, “topic_tags”: [ “Remedies”, “Fees”, “Financial Reimbursement” ] }, { “question”: “Will the ALJ automatically remove Board members from office if they find a violation in how they were appointed?”, “short_answer”: “Not necessarily. The ALJ may find a violation and order future compliance without granting a request to immediately remove the current Board.”, “detailed_answer”: “Although the ALJ found the Board members were not appointed in accordance with the Bylaws, the specific request to remove them from office was denied. The order focused on ensuring the HOA complies with Bylaws moving forward (presumably by holding the required elections).”, “alj_quote”: “IT IS FURTHER ORDERED that Petitioner’s prayer to remove the Association’s current Board from office is denied.”, “legal_basis”: “Administrative Remedy”, “topic_tags”: [ “Remedies”, “Board Removal”, “Enforcement” ] } ] }
Case Participants
Petitioner Side
- Raymond M Uyleman (petitioner)
Appeared on his own behalf
Respondent Side
- Natalie Terry (respondent representative/HOA president)
Casita Royale Townhomes Association
Appeared on behalf of Respondent; current HOA President - Carmel Ogle (witness/HOA secretary)
Casita Royale Townhomes Association
Witness for Respondent; current HOA Secretary
Neutral Parties
- Jenna Clark (ALJ)
OAH - Louis Dettorre (commissioner)
Arizona Department of Real Estate
Other Participants
- Gary Knutson (former board member)
Casita Royale Townhomes Association
Former President/Treasurer who transferred positions leading to dispute - John Paquin (former board member)
Casita Royale Townhomes Association
Former Vice President (resigned 2014) - Carol Paquin (former board member)
Casita Royale Townhomes Association
Former Secretary (passed away 2011)