John R. Ashley v. Rancho Reyes II Community Association, Inc.

Posted on August 11, 2020 by [email protected]

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

Case Summary

Case ID	20F-H2019032-REL-RHG
Agency	ADRE
Tribunal	OAH
Decision Date	2020-08-11
Administrative Law Judge	Thomas Shedden
Outcome	The ALJ dismissed the petition upon rehearing, finding that the Petitioner failed to prove by a preponderance of the evidence that Respondent violated Bylaws Article III, Section 4, because that provision is unambiguous and applies only to member quorums, not requiring a quorum of Board members at membership meetings.
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	John R Ashley	Counsel	—
Respondent	Rancho Reyes II Community Association, Inc.	Counsel	Wendy Erlich

Alleged Violations

Bylaws Article III, Section 4

Outcome Summary

The ALJ dismissed the petition upon rehearing, finding that the Petitioner failed to prove by a preponderance of the evidence that Respondent violated Bylaws Article III, Section 4, because that provision is unambiguous and applies only to member quorums, not requiring a quorum of Board members at membership meetings.

Why this result: Petitioner failed to carry the burden of proof. The Bylaws were interpreted as a contract whose unambiguous terms (Article III, Section 4) do not support the Petitioner's claim regarding Board quorum at member meetings.

Key Issues & Findings

Failure to establish a quorum of Board members at membership meetings

Petitioner alleged Respondent violated Bylaws Article III, Section 4 by conducting member-meetings without a quorum of Board members present. The ALJ concluded the cited Bylaw provision was unambiguous and imposed no such requirement, only defining a quorum as 1/10th of the membership votes for action at a member meeting.

Orders: The Administrative Law Judge dismissed the petition following the rehearing, concluding the Petitioner had not shown the Respondent violated the cited Bylaws provision.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
Rowland v. Union Hills Country Club, 157 Ariz. 301, 757 P.2d 105 (1988 App.)
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119

Analytics Highlights

Topics: HOA, Bylaws, Quorum, Contract Interpretation, Dismissal, Rehearing

Additional Citations:

McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
Rowland v. Union Hills Country Club, 157 Ariz. 301, 757 P.2d 105 (1988 App.)
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
Ariz. Rev. Stat. § 32-2199.01

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Video Overview

Audio Overview

Decision Documents

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Briefing Document: Ashley v. Rancho Reyes II Community Association, Inc.

Executive Summary

This document synthesizes the key facts, arguments, and legal rulings in the administrative case of John R Ashley v. Rancho Reyes II Community Association, Inc. (No. 20F-H2019032-REL). The central issue revolved around Petitioner John R. Ashley’s allegation that the Respondent, his homeowners’ association, violated its bylaws by conducting member meetings without a quorum of its Board of Directors present.

The Administrative Law Judge (ALJ) ultimately dismissed the petition, a decision that was upheld after a full rehearing. The core of the ruling rested on a plain-text interpretation of the association’s bylaws. The ALJ found that Bylaws Article III, Section 4 unambiguously defines a quorum for member meetings as one-tenth (1/10th) of the general membership, with no requirement for a Board quorum. The separate requirements for a Board quorum are distinctly located in Article VI, which governs meetings of the Directors.

The Petitioner’s arguments—that the Board constituted a separate “class of member” requiring a quorum and that Robert’s Rules of Order should apply—were found to be unsubstantiated by evidence. The ALJ concluded that the Petitioner failed to meet his burden of proof, and the Respondent association was deemed the prevailing party in the matter.

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Case Background and Procedural History

Parties Involved

Entity / Individual

Petitioner

John R. Ashley

Respondent

Rancho Reyes II Community Association, Inc.

Attorney for Respondent

Wendy Erlich, Esq.

Tribunal

Arizona Office of Administrative Hearings (OAH)

Presiding Judge

Thomas Shedden, Administrative Law Judge

Oversight Agency

Arizona Department of Real Estate

Core Allegation

The petitioner, John R. Ashley, filed a single-issue petition on or around December 9, 2019. He alleged that the Rancho Reyes II Community Association, Inc. violated its bylaws, specifically Article III, Section 4, by failing to establish a quorum of its Board of Directors at the annual membership meetings held in December 2017 and December 2018.

Procedural Timeline

• c. December 9, 2019: John R. Ashley files a petition with the Arizona Department of Real Estate.

• February 10, 2020: The Respondent files a Motion to Dismiss Petition, arguing that the cited bylaw does not require a Board quorum at member meetings.

• February 18, 2020: Mr. Ashley files a notice confirming his single issue is the alleged violation of Article III, Section 4.

• March 3, 2020: The ALJ, Thomas Shedden, grants the Respondent’s Motion to Dismiss. The hearing scheduled for March 16, 2020 is vacated.

• March 10, 2020: Mr. Ashley files a Request for Rehearing with the Department of Real Estate.

• March 27, 2020: The Department of Real Estate issues an Order Granting Rehearing.

• July 28, 2020: A full rehearing is conducted at the OAH. Mr. Ashley testifies on his own behalf; the Respondent is represented by counsel but presents no witnesses.

• August 11, 2020: The ALJ issues a final decision after the rehearing, once again dismissing Mr. Ashley’s petition.

Analysis of the Central Dispute: Bylaw Interpretation

The case hinged entirely on the interpretation of the quorum requirements as defined in the association’s bylaws. The Petitioner and Respondent presented conflicting views on the applicability of these rules to member meetings versus director meetings.

Petitioner’s Position (John R. Ashley)

• Primary Argument: Mr. Ashley asserted that Article III, Section 4 required a quorum of the Board of Directors to be present at all meetings of the general membership.

• “Board Membership Class” Theory: He argued that the Board of Directors constituted a third “class of member” alongside homeowners and the original developers. Under this theory, this “class” would need its own quorum at member meetings. The ALJ found no substantial evidence to support the existence of this class in the bylaws.

• Reliance on Robert’s Rules of Order: Mr. Ashley referenced Robert’s Rules of Order to support his position. However, he presented no evidence to show that these rules were incorporated into the association’s Articles of Incorporation, Declaration, or Bylaws, making them inapplicable under the tribunal’s statutory authority.

Respondent’s Position (Rancho Reyes II Community Association, Inc.)

• Plain Text Interpretation: The Respondent argued that Article III, Section 4 is unambiguous and applies solely to the quorum requirements for the general membership, not the Board of Directors.

• Distinct Quorum Rules: The association contended that the bylaws clearly separate the rules for member meetings (Article III) from the rules for director meetings (Article VI). Article VI, Section 3 explicitly sets the quorum for the transaction of business by the Board of Directors.

Controlling Bylaw Provisions

Article

Pertinent Text / Description

Article III, Section 4

Meetings of Members; Quorum

“The presence at the meeting of Members entitled to cast, or of proxies entitled to cast, one-tenth (1/10th) of the votes of each class of membership will constitute a quorum for any action except as otherwise provided…”

Article VI, Section 3

Meetings of Directors; Quorum

Sets out the quorum requirements specifically for Board of Director meetings, showing that a majority of Directors constitutes a quorum for the transaction of business.

Administrative Law Judge’s Findings and Rulings

The ALJ’s decisions, both in the initial dismissal and the final order after rehearing, were consistent and based on established principles of contract law and the evidence presented.

Initial Dismissal (March 3, 2020)

In the initial order, the ALJ granted the Respondent’s Motion to Dismiss based on a direct reading of the bylaws. The ruling stated:

• The bylaws are a contract between the parties.

• The terms of Article III, Section 4 are unambiguous and contain “no requirement for a quorum of Board members to be present at a meeting of the membership.”

• Because the bylaw does not contain the requirement alleged by Mr. Ashley, a violation could not have occurred.

Rehearing Decision (August 11, 2020)

The rehearing allowed for a more extensive review but ultimately affirmed the initial conclusion. The ALJ made several key Conclusions of Law:

• Burden of Proof: Mr. Ashley, as the petitioner, bore the burden of proving his case by a preponderance of the evidence.

• Bylaws as Contract: Citing legal precedent (McNally v. Sun Lakes Homeowners Ass’n #1, Inc.), the decision reiterated that bylaws function as a binding contract.

• Unambiguous Terms: The tribunal is required to give effect to the unambiguous terms of a contract. Article III, Section 4 was found to be clear and unambiguous in its meaning.

• Lack of Evidence: Mr. Ashley failed to present substantial evidence for his key claims:

◦ He did not show that Robert’s Rules of Order were applicable to the matter.

◦ He did not show that the bylaws included a “Board membership class.”

• Final Conclusion: Because Article III, Section 4 does not require a quorum of Board members at a member meeting, Mr. Ashley failed to prove by a preponderance of the evidence that the Respondent had violated it.

Final Order and Implications

Based on the findings from the rehearing, the Administrative Law Judge issued a final, binding order on August 11, 2020.

• Order: “IT IS ORDERED that Petitioner John R. Ashley’s petition is dismissed.”

• Prevailing Party: The Respondent, Rancho Reyes II Community Association, Inc., was deemed the prevailing party in the matter.

• Appeal Rights: The order noted that, as a decision resulting from a rehearing, it is binding on the parties. Any further appeal must be sought through judicial review by filing with the superior court within thirty-five days from the date of service, as prescribed by Arizona Revised Statutes.

Study Guide: Case No. 20F-H2019032-REL

This guide is designed to review the key facts, legal arguments, and procedural history of the administrative case involving John R. Ashley and the Rancho Reyes II Community Association, Inc.

Short-Answer Quiz

Instructions: Answer the following questions in two to three sentences, using only the information provided in the source documents.

1. Who were the Petitioner and Respondent in case No. 20F-H2019032-REL, and what was the primary institution hearing the case?

2. What was the central allegation made by John R. Ashley in his initial petition filed on December 9, 2019?

3. According to the provided documents, what did Bylaws Article III, Section 4 actually require to establish a quorum for a meeting of the members?

4. On what grounds did the Respondent, Rancho Reyes II Community Association, Inc., file its Motion to Dismiss?

5. What was the initial outcome of Mr. Ashley’s petition, as decided in the Administrative Law Judge Decision dated March 3, 2020?

6. Upon what legal standard did the Administrative Law Judge state that bylaws should be interpreted, and what two court cases were cited to support this principle?

7. During the rehearing, Mr. Ashley introduced an argument about different “classes of membership.” What was this argument, and why was it rejected?

8. What role did Robert’s Rules of Order play in Mr. Ashley’s arguments, and what was the tribunal’s official position on construing these rules?

9. What is the standard of proof required in this matter, and which party bore the burden of meeting it?

10. What was the final order issued on August 11, 2020, and what was the specified recourse for a party wishing to appeal it?

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Answer Key

1. The Petitioner was John R. Ashley, and the Respondent was Rancho Reyes II Community Association, Inc. The case was heard in the State of Arizona’s Office of Administrative Hearings (OAH).

2. Mr. Ashley’s central allegation was that the Respondent violated its own Bylaws, specifically Article III, Section 4, by conducting member meetings in December 2017 and December 2018 without a quorum of Board members present.

3. Bylaws Article III, Section 4 required the presence of members or proxies entitled to cast one-tenth (1/10th) of the votes of each class of membership. It contained no provision requiring a quorum of the Board of Directors to be present at a member meeting.

4. The Respondent filed its Motion to Dismiss on the grounds that the petition should be dismissed because Article III, Section 4 of the Bylaws is unambiguous and does not require a quorum of Board members to be present for a meeting of the members.

5. The Administrative Law Judge granted the Respondent’s Motion to Dismiss in an order dated March 3, 2020. Mr. Ashley’s petition was dismissed, and the hearing scheduled for March 16, 2020, was vacated.

6. The judge stated that the Bylaws are a contract between the parties, and unambiguous terms must be given effect. The cases cited were McNally v. Sun Lakes Homeowners Ass’n #1, Inc. and Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C.

7. Mr. Ashley argued that a “Board membership class” existed and that Article III, Section 4 required a quorum of this class. The argument was rejected because he presented no substantial evidence that the Bylaws included such a class.

8. Mr. Ashley argued that Robert’s Rules of Order supported his position. The tribunal determined that construing these rules was not within the scope of its authority and noted that Mr. Ashley failed to provide evidence showing the rules were part of the association’s governing documents.

9. The standard of proof was a “preponderance of the evidence.” The Petitioner, Mr. Ashley, bore the burden of proof on all issues in the matter.

10. The final order, issued after the rehearing, was that Mr. Ashley’s petition was dismissed and the Respondent was deemed the prevailing party. A party wishing to appeal the order was required to seek judicial review with the superior court within thirty-five days from the date the order was served.

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Essay Questions

Instructions: The following questions are designed to test a deeper, synthesized understanding of the case. Formulate comprehensive responses based on the details in the source documents.

1. Discuss the legal reasoning used by the Administrative Law Judge to dismiss the petition, referencing the specific bylaws (Article III, Section 4 and Article VI, Section 3) and legal precedents cited in the decision.

2. Analyze the evolution of John R. Ashley’s arguments from his initial petition to the rehearing. How did his claims change, and why were they ultimately unsuccessful according to the final decision?

3. Explain the distinction between a quorum for a “Meeting of Members” and a “Meeting of Directors” as outlined in the Rancho Reyes II Community Association’s Bylaws. How was this distinction central to the case’s outcome?

4. Describe the procedural timeline of the case from the initial filing on December 9, 2019, to the final order after rehearing on August 11, 2020. What were the key procedural steps and decisions made by the Office of Administrative Hearings and the Department of Real Estate?

5. Based on the legal standards cited in the decision, explain the concepts of “burden of proof” and “preponderance of the evidence.” How did these standards apply to Mr. Ashley’s case and contribute to its dismissal?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, makes findings of fact and conclusions of law, and issues decisions, such as Thomas Shedden in this case.

Burden of Proof

The obligation of a party in a legal case to provide sufficient evidence to support their claim. In this matter, the burden of proof was on the Petitioner, John R. Ashley.

Bylaws

A set of rules governing the internal management of an organization, such as a homeowners association. In this case, they are treated as a binding contract between the association and its members.

Department of Real Estate

The Arizona state agency that has authority over planned communities and homeowner associations, and which granted Mr. Ashley’s request for a rehearing.

Judicial Review

The process by which a party can appeal a decision from an administrative agency (like the OAH) to a court of law (the superior court).

Motion to Dismiss

A formal request filed by a party asking for a case to be dismissed. In this matter, the Respondent filed one arguing that the petitioner’s claim had no legal basis under the Bylaws.

Office of Administrative Hearings (OAH)

The state agency that conducts impartial hearings for other state agencies. The OAH is located at 1740 West Adams Street, Phoenix, Arizona.

Petitioner

The party who initiates a legal action or petition. In this case, John R. Ashley.

Preponderance of the Evidence

The standard of proof in this case, defined 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.”

Prevailing Party

The party who wins a legal dispute. The Respondent was deemed the prevailing party in the final order.

Quorum

The minimum number of members of an assembly or society that must be present at any of its meetings to make the proceedings of that meeting valid.

Rehearing

A second hearing of a case, granted in this matter by the Department of Real Estate after the initial petition was dismissed.

Respondent

The party against whom a petition is filed. In this case, Rancho Reyes II Community Association, Inc.

4 Surprising Legal Lessons from One Man’s Fight With His Homeowners Association

Introduction: The Rules We All Live By

If you live in a planned community, condominium, or cooperative, you live by a set of rules. For the most part, we assume these governing documents—like the bylaws of a Homeowners Association (HOA)—are straightforward. We pay our dues, keep our lawns tidy, and expect the association to manage the common areas.

But what happens when there’s a disagreement over what those rules actually mean? Disputes can arise from simple misunderstandings, and the consequences can be more complex than anyone anticipates.

A close look at a real administrative case, the dispute between John R. Ashley and the Rancho Reyes II Community Association, reveals some surprisingly impactful lessons about how community rules are interpreted in a legal setting. His fight provides a playbook of critical legal principles, revealing how the literal text of community documents can override common assumptions and even procedural standards.

The Takeaways

Here are the core lessons that emerged from the Administrative Law Judge’s decisions in the case.

The most fundamental principle guiding the judge’s decision was simple: an HOA’s bylaws are not just a set of community guidelines. They are a formal, legally binding contract between the association and its members. This concept was directly referenced from a previous case, McNally v. Sun Lakes Homeowners Ass’n #1, Inc.

This contractual nature means that the exact terms must be followed to the letter by both parties—the homeowners and the association’s board. This means that when a document’s language is unambiguous, a court will not consider outside evidence or ‘common sense’ understandings to alter its meaning. The words on the page are all that matters. The judge’s decision underscored this point with a powerful statement:

and the parties are required to comply with the terms of that contract.

A core legal principle is that when the terms of a contract are clear and unambiguous, they must be given their plain and ordinary meaning. You cannot add requirements that simply aren’t there.

Mr. Ashley’s entire case rested on his belief that a quorum of the Board of Directors was required to be present at member meetings. However, the Administrative Law Judge dismissed this argument by pointing directly to the text of the bylaws. Article III, Section 4, which governs member meetings, only required a quorum of “one-tenth (1/10th) of the votes of each class of membership.”

A separate section, Article VI, set the quorum requirements for Board meetings. The judge noted this clear distinction, stating that the tribunal is required to “give effect to those unambiguous terms.” This demonstrates a crucial principle of contract law: the structure of the document is part of its meaning. A requirement located under the ‘Meetings of Directors’ article cannot be unilaterally applied to the ‘Meetings of Members’ article.

In his petition, Mr. Ashley referenced Robert’s Rules of Order to support his position on meeting procedures. Many organizations use this manual as a standard for conducting business, and it’s often assumed to be a universal default.

However, the judge found this argument irrelevant. Why? Because Mr. Ashley “presented no evidence to show that Roberts Rules are part of the ‘Articles of Incorporation, the Declaration, or [the] Bylaws.'” The judge also noted that interpreting such external rules was not within the tribunal’s authority. This provides a critical lesson: external standards, no matter how common, only apply if an organization’s own governing documents explicitly adopt them.

Just as external rules can’t be imported without being explicitly adopted, internal rules cannot be invented out of thin air, as Mr. Ashley’s next argument demonstrated.

During a rehearing, Mr. Ashley presented a creative but ultimately unsuccessful argument. He claimed that the Board of Directors constituted a “third class of member” and, therefore, required its own separate quorum at member meetings according to the language in Article III, Section 4.

The Administrative Law Judge swiftly rejected this novel interpretation. The decision concluded that Mr. Ashley “did not present substantial evidence that the Bylaws include a ‘Board membership class.'” This final point reinforces the central theme: arguments must be grounded in the literal text of the contract (the bylaws). This underscores the ultimate lesson: the burden of proof was on Mr. Ashley to show his interpretations were supported by the text. His failure to do so, both in referencing Robert’s Rules and in proposing a new ‘Board membership class,’ was the foundation of the judge’s decision.

Conclusion: Read the Fine Print

The dismissal of John R. Ashley’s petition is a stark reminder for every homeowner living under association rules. In the world of community governance, good intentions, common practices, and creative interpretations take a back seat. Precision, clarity, and—above all—the literal text of the governing documents are paramount.

When was the last time you read the specific documents that govern your own community?

Case Participants

Petitioner Side

John R Ashley (petitioner)
Appeared on his own behalf

Respondent Side

Wendy Erlich (respondent attorney)
Wendy Erlich Attorney PLLC
Represented Rancho Reyes II Community Association, Inc.

Neutral Parties

Thomas Shedden (ALJ)
Office of Administrative Hearings
Judy Lowe (commissioner)
Arizona Department of Real Estate
LDettorre (ADRE staff recipient)
Arizona Department of Real Estate
Recipient of final order transmission
AHansen (ADRE staff recipient)
Arizona Department of Real Estate
Recipient of final order transmission
djones (ADRE staff recipient)
Arizona Department of Real Estate
Recipient of final order transmission
DGardner (ADRE staff recipient)
Arizona Department of Real Estate
Recipient of final order transmission
ncano (ADRE staff recipient)
Arizona Department of Real Estate
Recipient of final order transmission

Other Participants

A. Leverette (clerical staff)
Signed document transmission in initial order

Mary J Bartle vs. Saguaro West Owner’s Association

Posted on January 30, 2020 by [email protected]

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

Case Summary

Case ID	19F-H1919059-REL-RHG
Agency	ADRE
Tribunal	OAH
Decision Date	2020-01-30
Administrative Law Judge	Thomas Shedden
Outcome	The Administrative Law Judge affirmed the original conclusion and dismissed the petition, finding that the Petitioner failed to meet the burden of proof that the Association violated Bylaws Article VIII, section 8(d) regarding the contested $49,000.50 fund transaction.
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Mary J Bartle	Counsel	—
Respondent	Saguaro West Owner's Association	Counsel	Nicole Payne, Esq.

Alleged Violations

Bylaws Article VIII, section 8(d)

Outcome Summary

The Administrative Law Judge affirmed the original conclusion and dismissed the petition, finding that the Petitioner failed to meet the burden of proof that the Association violated Bylaws Article VIII, section 8(d) regarding the contested $49,000.50 fund transaction.

Why this result: Petitioner failed to show by a preponderance of the evidence that the transactions violated the specific duties of the treasurer set out in Bylaws Article VIII, section 8(d).

Key Issues & Findings

Alleged violation of Treasurer duties regarding fund transactions

The petitioner alleged the Association violated Bylaws Article VIII, section 8(d) by withdrawing and redepositing $49,000.50 from the operating account. The ALJ concluded that Petitioner failed to show by a preponderance of the evidence that these transactions violated the specific duties of the treasurer set forth in that section.

Orders: Petitioner Mary J. Bartle’s petition is dismissed and Respondent is deemed the prevailing party in this matter.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
ARIZ. REV. STAT. section 32-2199.02(B)
ARIZ. REV. STAT. section and title 12, chapter 7, article 6
ARIZ. REV. STAT. section 12-904(A)

Analytics Highlights

Topics: HOA, Bylaws, Treasurer Duties, Dismissal, Burden of Proof, Rehearing

Additional Citations:

ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
ARIZ. REV. STAT. section 32-2199.02(B)
ARIZ. REV. STAT. section and title 12, chapter 7, article 6
ARIZ. REV. STAT. section 12-904(A)

Video Overview

Audio Overview

Decision Documents

19F-H1919059-REL-RHG Decision – 767041.pdf

Uploaded 2026-01-23T17:29:24 (94.6 KB)

Briefing Document: Bartle vs. Saguaro West Owner’s Association (Case No. 19F-H1919059-REL-RHG)

Executive Summary

This briefing document analyzes the Administrative Law Judge Decision in the matter of Mary J. Bartle vs. Saguaro West Owner’s Association. The final order, issued on January 30, 2020, dismissed the petition brought by Ms. Bartle. The core of the case revolved around a financial transaction where $49,000.50 was withdrawn from the Association’s operating account on October 22, 2018, and redeposited on November 30, 2018.

The petitioner, Ms. Bartle, alleged this transaction violated a specific provision of the Association’s bylaws—Article VIII, section 8(d)—which outlines the duties of the Treasurer. Despite two hearings, the Administrative Law Judge consistently concluded that Ms. Bartle failed to meet her burden of proof. The central finding was that while evidence suggested the transaction “may have been in violation of the law or otherwise improper,” the petitioner did not demonstrate, by a preponderance of the evidence, how this transaction specifically violated any of the enumerated duties of the Treasurer as set forth in the cited bylaw. The decision underscores a critical legal distinction between a potentially improper act and a proven violation of the specific bylaw under which the complaint was filed.

Case Overview

Case Name

Mary J. Bartle, Petitioner, vs. Saguaro West Owner’s Association, Respondent

Case Number

19F-H1919059-REL-RHG

Jurisdiction

Arizona Department of Real Estate, Office of Administrative Hearings (OAH)

Presiding Judge

Administrative Law Judge Thomas Shedden

Petitioner

Mary J. Bartle (representing herself)

Respondent

Saguaro West Owner’s Association (represented by Nicole Payne, Esq.)

Rehearing Date

January 14, 2020

Final Decision Date

January 30, 2020

Procedural History and Core Allegation

The case proceeded through an initial hearing and a subsequent rehearing, following a specific timeline of events:

• April 22, 2019: Ms. Bartle filed the initial petition with the Arizona Department of Real Estate.

• August 29, 2019: The first hearing was held. At the outset, a discussion was held to narrow the scope of the hearing. Ms. Bartle agreed to limit her petition to a single issue.

• The Single Issue: Whether the Association violated Bylaws Article VIII, section 8(d) through a withdrawal of $49,000.50 on October 22, 2018, and a redeposit of the same amount on November 30, 2018.

• September 18, 2019: The initial Administrative Law Judge Decision was issued, dismissing Ms. Bartle’s petition.

• October 23, 2019: Ms. Bartle filed a request for a rehearing, asserting an error in the admission of evidence.

• November 18, 2019: The Department of Real Estate granted the request for a rehearing.

• January 14, 2020: The rehearing was convened. Ms. Bartle testified, while the Respondent presented no witnesses.

• January 30, 2020: The final Administrative Law Judge Decision was issued, reaffirming the dismissal of the petition.

At the rehearing, Ms. Bartle testified “to the effect that laws must have been violated by the withdrawal and redepositing of the $49,000.50 without the Association’s members being provided any notice of these transactions.”

Analysis of Bylaw and Judicial Findings

Bylaw Article VIII, Section 8(d): The Treasurer’s Duties

The entirety of the petitioner’s case rested on proving a violation of the specific duties outlined for the Treasurer in the Association’s bylaws. The text of the bylaw is as follows:

The Treasurer shall receive and deposit in the Association’s bank accounts all monies received by the Association and shall disburse such funds as directed by resolution [of] the Board of Directors; shall properly prepare and sign all checks before presenting them to be co-signed; keep proper books of account; cause an annual audit of the Association’s books to be made by a public accountant at the completion of each fiscal year; and shall prepare an annual budget to be presented to the membership at the annual meeting; to cause all Federal and State reports to be prepared; and shall prepare all monthly statements of finance for the Board of Directors.

Key Judicial Findings and Conclusions

The Administrative Law Judge’s decision hinged on the petitioner’s failure to connect the disputed financial transaction to a specific violation of the duties listed above. The judge made a clear distinction between the potential impropriety of the transaction and the narrow scope of the legal claim.

• Initial Hearing Conclusion: The decision from the first hearing, which the judge took notice of in the rehearing, established the core finding:

• Rehearing Conclusion: The final decision after the rehearing reinforced this exact point, stating:

Ultimately, the case was dismissed because Ms. Bartle did not meet the legal standard required to prove her specific claim.

Legal Framework and Final Order

Applicable Legal Standards

The decision was grounded in several key legal principles cited by the Administrative Law Judge:

• Jurisdiction: The Arizona Department of Real Estate possesses authority over the matter pursuant to ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11.

• Burden of Proof: Ms. Bartle, as the petitioner, bore the burden of proof on all issues.

• Standard of Proof: The standard was a “preponderance of the evidence,” defined 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.”

• Contractual Nature of Bylaws: Citing McNally v. Sun Lakes Homeowners Ass’n #1, Inc., the decision notes that “The Bylaws are a contract between the parties and the parties are required to comply with its terms.”

Final Order and Implications

Based on the failure to meet the burden of proof, the Administrative Law Judge issued a binding order with the following key points:

1. Dismissal: Petitioner Mary J. Bartle’s petition is dismissed.

2. Prevailing Party: The Respondent, Saguaro West Owner’s Association, is deemed the prevailing party.

3. Appeal Rights: A party wishing to appeal the order must seek judicial review with the superior court within thirty-five days from the date the order was served, as prescribed by ARIZ. REV. STAT. sections 12-904(A) and Title 12, Chapter 7, Article 6.

Study Guide: Bartle v. Saguaro West Owner’s Association

This guide provides a detailed review of the Administrative Law Judge Decision in case number 19F-H1919059-REL-RHG. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms to facilitate a comprehensive understanding of the legal matter.

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Quiz: Short-Answer Questions

Instructions: Answer the following questions in two to three complete sentences, drawing all information directly from the case document.

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

2. What specific financial transaction was the central subject of the petitioner’s complaint?

3. Which specific article and section of the Association’s Bylaws did the petitioner claim was violated?

4. What was the legal standard of proof that the petitioner was required to meet, and who had the burden of proof?

5. On what grounds did Ms. Bartle file her request for a rehearing after the initial decision?

6. According to the judge’s decision, what was the key failure in the petitioner’s argument regarding the financial transaction?

7. What was the final order issued by the Administrative Law Judge on January 30, 2020?

8. Although the judge dismissed the petition, what did the decision state about the nature of the financial transactions?

9. Which government department granted the request for a rehearing and has authority over this type of matter?

10. What options does a party have if they wish to appeal the final administrative law judge order?

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Answer Key

1. The primary parties were the Petitioner, Mary J. Bartle, and the Respondent, Saguaro West Owner’s Association. Ms. Bartle brought the petition against the Association, alleging a violation of its bylaws.

2. The central subject was the withdrawal of $49,000.50 from the Association’s operating account on October 22, 2018. The same amount was subsequently redeposited into the account on November 30, 2018.

3. The petitioner claimed the Association violated Bylaws Article VIII, section 8(d). This section outlines the specific duties and responsibilities of the Association’s Treasurer.

4. The standard of proof was a “preponderance of the evidence.” The burden of proof was on the petitioner, Ms. Bartle, to demonstrate that the Association had violated the bylaw.

5. Ms. Bartle filed her Rehearing Request on the grounds that there was an error in the admission of evidence. She specifically referenced documents dated July 5, August 6, and September 13, 2019, in her request.

6. The key failure was that Ms. Bartle did not show by a preponderance of the evidence that the withdrawal and redeposit specifically violated any of the treasurer’s duties as explicitly listed in Bylaws Article VIII, section 8(d). Her claim was too narrow for the evidence she presented.

7. The final order was that Petitioner Mary J. Bartle’s petition be dismissed. The Respondent, Saguaro West Owner’s Association, was deemed to be the prevailing party in the matter.

8. The decision stated that there was evidence to suggest that the withdrawal and redeposit of the $49,000.50 “may have been in violation of the law or otherwise improper.” However, this was not sufficient to prove a violation of the specific bylaw in question.

9. The Arizona Department of Real Estate granted the rehearing on November 18, 2019. This department has authority over the matter as established by ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11.

10. A party wishing to appeal the order must seek judicial review as prescribed by Arizona Revised Statutes. The appeal must be filed with the superior court within thirty-five days from the date the order was served upon the parties.

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Essay Questions

Instructions: Consider the following questions for a deeper analysis of the case. Formulate a comprehensive response based solely on the information provided in the source document.

1. Analyze the concept of “preponderance of the evidence” as defined in the decision. Explain why Mary J. Bartle failed to meet this standard, despite the judge’s acknowledgment that the transaction may have been “improper” or in “violation of the law.”

2. Discuss the procedural significance of limiting the hearing to the single issue of Bylaws Article VIII, section 8(d). How might the case’s outcome have differed if the scope of the hearing had been broader?

3. Trace the complete timeline of the case from the initial petition filing in April 2019 to the final order in January 2020. What do the key events and dates reveal about the process of administrative hearings and rehearings?

4. Based on the full text of Bylaws Article VIII, section 8(d), what specific types of evidence would the petitioner have needed to present to successfully prove that the treasurer’s duties were violated by the $49,000.50 transaction?

5. Evaluate the distinction made by the Administrative Law Judge between a transaction that is potentially illegal or improper and a transaction that specifically violates the duties enumerated in Bylaws Article VIII, section 8(d). Why is this distinction critical to the final order of dismissal?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, weighs evidence, and issues decisions on matters under the jurisdiction of a government agency. In this case, the ALJ was Thomas Shedden.

ARIZ. ADMIN. CODE

The Arizona Administrative Code, a compilation of rules and regulations of Arizona’s state agencies. Section R2-19-119 is cited as establishing the standard of proof.

ARIZ. REV. STAT.

The Arizona Revised Statutes, which are the codified laws of the state of Arizona. Various sections are cited to establish jurisdiction and the appeals process.

Bylaws

A set of rules established by an organization, such as a homeowners’ association, to regulate itself. In this case, the bylaws are treated as a binding contract between the parties.

Conclusion of Law

The section of a legal decision where the judge applies legal principles and statutes to the established facts of the case.

Finding of Fact

The section of a legal decision that lists the factual determinations made by the judge based on the evidence presented during the hearing.

Judicial Review

The process by which a court of law reviews the decision of a lower court or an administrative agency to determine if the decision was legally sound.

Office of Administrative Hearings (OAH)

A state agency that provides a neutral forum for conducting administrative hearings for other state agencies. The hearings in this matter were held at the OAH.

Petitioner

The party who initiates a lawsuit or files a petition seeking a legal remedy. In this case, the petitioner was Mary J. Bartle.

Preponderance of the Evidence

The standard of proof in most civil cases. It is met when the evidence presented has the most convincing force and is sufficient to incline a fair and impartial mind to one side of an issue over the other.

Prevailing Party

The party in a legal dispute who is successful and in whose favor the judgment is rendered. In this case, the Respondent was deemed the prevailing party.

Rehearing

A second hearing of a case to consider new evidence or to argue against the original decision on the basis of an error. Ms. Bartle’s request for a rehearing was granted.

Respondent

The party against whom a petition is filed. In this case, the respondent was the Saguaro West Owner’s Association.

A Homeowner Found a Mysterious $49,000 Transaction in Her HOA’s Books. The Reason She Lost in Court Is a Lesson for Everyone.

Introduction: The David-vs-Goliath Fight That Didn’t Go as Planned

For many homeowners, dealing with a Homeowners’ Association (HOA) can feel like a constant battle for transparency and fairness. It’s a common story: a resident raises concerns about financial decisions made behind closed doors, only to be met with resistance or silence. But what happens when a homeowner pushes back and takes that fight to an administrative hearing?

After an initial hearing and a persistent request for a rehearing, the final decision in Mary J. Bartle’s case against the Saguaro West Owner’s Association seemed, on the surface, like a clear-cut quest for accountability. The dispute centered on a single, alarming event: the withdrawal and subsequent redeposit of $49,000.50 from the association’s operating account without any notice to the members. It appeared to be a straightforward case of a concerned resident demanding answers.

However, the ruling from the administrative hearing offers a surprising and crucial lesson in how the legal system operates. The outcome reveals that suspicion, no matter how justified, is not enough to win. This article breaks down the top counter-intuitive takeaways from the judge’s decision and what they mean for any homeowner considering a legal challenge against their HOA.

Takeaway 1: A “Suspicious” Act Isn’t a Guaranteed Win

Feeling Something Is Wrong Isn’t the Same as Proving It.

The core facts of the case were not in dispute. On October 22, 2018, $49,000.50 was withdrawn from the Saguaro West Owner’s Association’s operating account. On November 30, 2018, the exact same amount was redeposited. Members were not notified of these transactions. To any reasonable observer, this activity raises immediate questions.

Even the Administrative Law Judge presiding over the case acknowledged the questionable nature of the transaction. In his final decision, he validated Ms. Bartle’s initial concerns with a striking statement:

The evidence shows that $49,000.50 was withdrawn from the Association’s account in October 2018 and the same amount was deposited in November 2018, and there is evidence to suggest that the transactions may have been in violation of the law.

This is the most stunning part of the case: the judge agreed that the transaction looked suspicious and might have broken the law, yet Ms. Bartle still lost. This reveals a critical distinction in legal proceedings. A judge is not an arbiter of general fairness but an interpreter of specific laws and rules. The judge’s comment shows he understood the spirit of Ms. Bartle’s complaint, but his hands were tied by the letter of her petition. The legal system requires more than a gut feeling; it demands specific proof that a specific rule was violated, which leads directly to the next critical lesson.

Takeaway 2: You Must Prove theExactRule Was Broken

Specificity Is Your Only Weapon.

Ms. Bartle’s case was ultimately narrowed to a single, highly specific issue: whether the $49,000.50 transaction violated Article VIII, section 8(d) of the association’s bylaws. This is a crucial detail because courts and administrative bodies require this rigid specificity to ensure fairness, prevent “moving goalposts,” and keep proceedings focused on the actual claims filed, not a general feeling of grievance.

Her entire case hinged on proving a violation of that specific section and no other. The rule in question outlines the treasurer’s duties, which include the power to: “receive and deposit…all monies,” “disburse such funds as directed,” “sign all checks,” and “keep proper books of account.”

The judge’s conclusion was brutally precise. He found that Ms. Bartle had “not shown by a preponderance of the evidence” that the transaction violated any of those specific, listed duties. She couldn’t prove the treasurer failed to deposit money or keep proper books; she could only prove a strange transaction occurred that wasn’t explicitly forbidden by the rule she cited. This is a critical lesson: it doesn’t matter if an HOA’s action feels wrong; what matters is whether you can prove it violated the precise rule you cited in your petition.

Takeaway 3: The Burden of Proof Rests Entirely on the Accuser

It’s Your Job to Build the Case, Not Theirs to Disprove It.

In a civil administrative hearing like this, the petitioner—Ms. Bartle—carries the “burden of proof.” The standard she had to meet was the “preponderance of the evidence.” The legal definition for this is:

“superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

In simple terms, she had to present enough convincing evidence to make the judge believe that her version of events was more likely true than not. The judge’s decision explicitly states that Ms. Bartle bore this burden and ultimately failed to meet it.

One of the most powerful details from the case file illustrates this point perfectly: the Saguaro West Owner’s Association, though represented by legal counsel, “presented no witnesses.” They didn’t have to. They didn’t need to explain the transaction or justify their actions because Ms. Bartle failed to build a strong enough case to prove her specific claim. The onus was completely on her to prove her argument, and when it fell short, the case was dismissed.

Conclusion: A Sobering Reminder for Homeowners

The case of Mary Bartle is a sobering reminder that winning a legal fight against a well-resourced entity like an HOA is less about moral rightness and more about meticulous legal strategy and precision.

While the judge acknowledged that Ms. Bartle’s concerns about the $49,000.50 transaction were potentially valid, her petition was dismissed not on a simple technicality, but because of a core principle of law: the failure to prove that the specific rule cited had actually been broken. Her case highlights the immense challenge for individual homeowners seeking transparency. It leaves us asking, if the legal bar is this specific, what practical recourse do residents have when they feel something is fundamentally wrong?

Case Participants

Petitioner Side

Mary J Bartle (petitioner)
Appeared on her own behalf and testified

Respondent Side

Nicole Payne (attorney)
Carpenter, Hazlewood, Delgado & Bolen, PLC
Counsel for Saguaro West Owner's Association
Edith Rudder (attorney)
Carpenter, Hazlewood, Delgado & Bolen, PLC
Counsel for Saguaro West Owner's Association

Neutral Parties

Thomas Shedden (ALJ)
Judy Lowe (Commissioner)
Arizona Department of Real Estate

Victor L Pattarozzi v. Estrella Vista Homeowners Association

Posted on June 5, 2019 by [email protected]

Case Summary

Case ID	19F-H1919047-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2019-06-05
Administrative Law Judge	Thomas Shedden
Outcome	The Administrative Law Judge dismissed the petition, ruling that the Architectural Committee meetings of the HOA were not 'regularly scheduled' within the meaning of ARIZ. REV. STAT. § 33-1804, and therefore the HOA was not required to hold them open to association members.
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Victor L Pattarozzi	Counsel	—
Respondent	Estrella Vista Homeowners Association	Counsel	Andrew Apodaca, Esq.

Alleged Violations

ARIZ. REV. STAT. § 33-1804

Outcome Summary

The Administrative Law Judge dismissed the petition, ruling that the Architectural Committee meetings of the HOA were not 'regularly scheduled' within the meaning of ARIZ. REV. STAT. § 33-1804, and therefore the HOA was not required to hold them open to association members.

Why this result: The petitioner failed to prove that the committee meetings met the requirement of being 'regularly scheduled' because the committee did not meet at fixed or uniform intervals, but rather considered applications as they were received.

Key Issues & Findings

Whether the Architectural Committee meetings are 'regularly scheduled' and thus required to be open to members.

Petitioner alleged the HOA violated ARS 33-1804 by failing to hold open meetings of its Architectural Committee (ARC). The ALJ found that because the ARC did not meet on a set schedule or at uniform intervals, it did not hold 'regularly scheduled' meetings as required by the statute, and thus was not required to be open.

Orders: Petitioner's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

ARIZ. REV. STAT. § 33-1804
ARIZ. REV. STAT. § 33-1805
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
Gutierrez v. Industrial Commission of Arizona
State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968)
U.S. Parking v. City of Phoenix, 160 Ariz. 210, 772 P.2d 33 (App. 1989)
Deer Valley, v. Houser, 214 Ariz. 293, 296, 152 P.3d 490, 493 (2007)

Analytics Highlights

Topics: HOA Open Meetings, Architectural Review Committee, Statutory Interpretation, Regularly Scheduled

Additional Citations:

ARIZ. REV. STAT. § 33-1804
ARIZ. REV. STAT. § 33-1805
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
Gutierrez v. Industrial Commission of Arizona
State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968)
U.S. Parking v. City of Phoenix, 160 Ariz. 210, 772 P.2d 33 (App. 1989)
Deer Valley, v. Houser, 214 Ariz. 293, 296, 152 P.3d 490, 493 (2007)

Video Overview

Audio Overview

Decision Documents

19F-H1919047-REL Decision – 713039.pdf

Uploaded 2026-04-24T11:19:09 (89.8 KB)

19F-H1919047-REL Decision – 713039.pdf

Uploaded 2026-01-23T17:29:01 (89.8 KB)

Briefing Document: Pattarozzi vs. Estrella Vista Homeowners Association (Case No. 19F-H1919047-REL)

Executive Summary

This document provides an analysis of the Administrative Law Judge Decision in the matter of Victor L. Pattarozzi vs. Estrella Vista Homeowners Association, Case No. 19F-H1919047-REL. The central issue was whether the homeowner association’s Architectural Review Committee (ARC) was in violation of Arizona state law by not holding open meetings for its members.

The petition, brought by Mr. Pattarozzi, was ultimately dismissed. The Administrative Law Judge, Thomas Shedden, concluded that the Petitioner failed to prove that the Respondent violated ARIZ. REV. STAT. § 33-1804. The decision hinged on the interpretation of the phrase “regularly scheduled committee meetings.” The Judge found that since the ARC did not meet at fixed, uniform, or recurring intervals, but rather on an as-needed basis to review applications, its meetings were not “regularly scheduled” within the meaning of the statute. Consequently, the legal requirement for such meetings to be open to all association members did not apply. The Judge further determined that the state’s declared policy in favor of open meetings explicitly referenced only the association’s and board of directors’ meetings, not committee meetings, and therefore could not be used to compel the ARC meetings to be open.

Case Overview

Case Number

19F-H1919047-REL

Petitioner

Victor L. Pattarozzi

Respondent

Estrella Vista Homeowners Association

Presiding Judge

Thomas Shedden, Administrative Law Judge

Hearing Date

May 16, 2019

Decision Date

June 5, 2019

Jurisdiction

Office of Administrative Hearings, Arizona Department of Real Estate

Allegation: The Petitioner, Victor L. Pattarozzi, alleged that the Estrella Vista Homeowners Association violated ARIZ. REV. STAT. § 33-1804 by failing to hold open meetings for its Architectural Committee (referred to as the Architectural Review Committee or ARC).

Defense: The Respondent association contended that its ARC meetings were not required to be open to members because the meetings were not “regularly scheduled.”

Central Legal Issue: The Definition of “Regularly Scheduled”

The case revolved entirely around the interpretation of a key phrase within Arizona’s planned community statutes.

Governing Statute: ARIZ. REV. STAT. § 33-1804(A) states:

“Notwithstanding any provision in the declaration, bylaws or other documents to the contrary, all meetings of the members’ association and the board of directors, and any regularly scheduled committee meetings, are open to all members of the association….”

The core legal question was whether the ARC’s method of conducting business constituted “regularly scheduled” meetings.

Competing Arguments

• Petitioner’s Position (Mr. Pattarozzi):

◦ Mr. Pattarozzi argued that the association could hold weekly ARC meetings and simply cancel them if no applications were pending for review.

◦ He supplied dictionary definitions for “regular” and “regularly” to support his interpretation:

▪ Regularly: (1) “in a regular manner”; (2) “on a regular basis: at regular intervals”.

▪ Regular: (1) “constituted, conducted, scheduled, or done in conformity with established or prescribed usages, rules, or discipline”; (2) “recurring, attending, or functioning at fixed, uniform, or normal intervals”.

◦ He also contended that the state’s declared policy in favor of open meetings, as outlined in subsection 33-1804(F), should be broadly construed to require ARC meetings to be open.

• Respondent’s Position (Estrella Vista HOA):

◦ The association maintained that its ARC meetings were not required to be open because they do not occur on a set schedule. Instead, they are convened only as needed when applications are received.

Findings of Fact

The decision outlined the specific operational procedures of the Architectural Review Committee.

• Composition and Process: The ARC consists of five members. It does not meet on a predetermined schedule. Instead, applications are forwarded by the management company to the Board President, Stuart Glenn.

• “Rubber Stamp” Approvals: The ARC has a pre-approved “rubber stamp” process for certain requests, such as solar panel installations and repainting with a pre-approved color. These requests are approved without further review by the full committee.

• Application Volume: As of the May 16, 2019 hearing, the ARC had received twelve applications in 2019. Of these, eight were subject to the “rubber stamp” approval process.

• Non-Standard Applications: For any application not meeting the rubber-stamp criteria, Mr. Glenn forwards it to the other four ARC members, who individually report back on their approval or disapproval.

Legal Reasoning and Decision

The Administrative Law Judge’s conclusions of law provided a detailed statutory interpretation that led to the dismissal of the petition.

Interpretation of “Regularly Scheduled”

The Judge determined that the legislature intentionally distinguished between different types of meetings. While the law mandates that all meetings of the members’ association and the board of directors must be open, it applies a specific qualifier—”regularly scheduled”—to committee meetings. This implies that not all committee meetings must be open.

The Judge adopted the Petitioner’s second definition of “regular”: “recurring, attending, or functioning at fixed, uniform, or normal intervals.” This interpretation was deemed to provide a fair and sensible result.

The Judge explicitly rejected the Petitioner’s first definition—”done in conformity with established or prescribed usages, rules, or discipline”—on the grounds that it would render the word “regular” redundant. The Judge reasoned that all committee meetings are presumed to be conducted according to established rules, so applying this definition would make the statutory language trivial.

Rejection of the “Open Meeting Policy” Argument

The Petitioner argued that subsection 33-1804(F), which declares a state policy in favor of open meetings, should apply. The Judge rejected this argument based on the specific text of the statute:

“It is the policy of this state as reflected in this section that all meetings of a planned community, whether meetings of the members’ association or meetings of the board of directors of the association, be conducted openly ….”

The Judge noted that this policy statement explicitly references only meetings of the “members’ association” and the “board of directors,” and omits any mention of committee meetings. Therefore, the policy could not be used to compel the ARC meetings to be open.

Final Order

Ruling: IT IS ORDERED that Victor L. Pattarozzi’s petition is dismissed.

Justification: The Petitioner, who bore the burden of proof, did not establish by a preponderance of the evidence that the Estrella Vista Homeowners Association violated ARIZ. REV. STAT. § 33-1804. The Judge concluded that the ARC “does not hold ‘regularly scheduled’ meetings within the meaning of” the statute.

Next Steps: The decision is binding unless a party files a request for rehearing with the Commissioner of the Department of Real Estate within 30 days of the service of the Order.

Study Guide: Pattarozzi v. Estrella Vista Homeowners Association

This study guide provides a comprehensive review of the Administrative Law Judge Decision in case number 19F-H1919047-REL, concerning a dispute between Victor L. Pattarozzi and the Estrella Vista Homeowners Association. The guide includes a quiz with an answer key, a set of essay questions for deeper analysis, and a glossary of key terms found within the legal decision.

Quiz: Short-Answer Questions

Answer the following questions in 2-3 complete sentences, based on the information provided in the source document.

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

2. What specific violation did Petitioner Victor L. Pattarozzi allege against the Respondent, the Estrella Vista Homeowners Association?

3. What was the central argument made by the Estrella Vista Homeowners Association to defend its Architectural Review Committee’s meeting practices?

4. Describe the composition of the Architectural Review Committee (ARC) and its method for reviewing applications.

5. What was the “rubber stamp” process used by the ARC, and how many of the 12 applications received in 2019 were approved this way?

6. What suggestion did Mr. Pattarozzi offer for how the ARC could schedule its meetings to comply with his interpretation of the statute?

7. Which of Mr. Pattarozzi’s proposed definitions for the word “regular” did the Administrative Law Judge ultimately accept as the most appropriate interpretation in this context?

8. According to the judge’s Conclusions of Law, why was Mr. Pattarozzi’s argument regarding the open meetings policy statement in subsection 33-1804(F) rejected?

9. Who bears the burden of proof in this matter, and what is the required standard of proof?

10. What was the final Order issued by the Administrative Law Judge in this case, and on what date was it issued?

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Answer Key

1. The primary parties were the Petitioner, Victor L. Pattarozzi, who brought the complaint, and the Respondent, the Estrella Vista Homeowners Association, which was defending its actions. Mr. Pattarozzi appeared on his own behalf, while the HOA was represented by Andrew Apodaca, Esq. and its Board president, Stuart Glenn.

2. Mr. Pattarozzi alleged that the Estrella Vista Homeowners Association violated ARIZ. REV. STAT. sections 33-1804 and 33-1805. His specific claim was that the HOA’s Architectural Review Committee (ARC) was failing to hold open meetings as required by section 33-1804.

3. The HOA’s position was that its ARC meetings were not required to be open to all members because the meetings were not “regularly scheduled.” The statute only mandates that “regularly scheduled committee meetings” must be open.

4. The ARC consists of five members and does not meet on a set schedule, instead considering applications as they are received. The Board president, Mr. Glenn, receives applications, determines if they meet “rubber-stamp” criteria, and if not, forwards them to the other four members for their agreement or disagreement.

5. The “rubber stamp” process was a pre-approved method for approving requests for solar panels and repainting using preapproved colors without further review. Of the twelve applications received by the ARC in 2019, eight were subject to this rubber-stamp approval.

6. Mr. Pattarozzi argued that the Respondent could schedule ARC meetings on a weekly basis. If there were no applications pending for a given week, the HOA could simply cancel the meeting.

7. The judge accepted Mr. Pattarozzi’s second definition of “regular,” which was “recurring, attending, or functioning at fixed, uniform, or normal intervals.” The judge concluded this meant only committee meetings scheduled on a recurring basis at uniform intervals must be open.

8. The argument was rejected because the policy statement in subsection 33-1804(F) explicitly references only the “meetings of the members’ association or meetings of the board of directors.” Because committee meetings were not mentioned in that specific subsection, the judge ruled that its strong policy in favor of open meetings did not apply to them.

9. The Petitioner, Mr. Pattarozzi, bears the burden of proof. The standard of proof required to decide all issues in the matter is a “preponderance of the evidence.”

10. The final Order was that Victor L. Pattarozzi’s petition be dismissed. This Order was issued on June 5, 2019.

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Essay Questions

1. Analyze the Administrative Law Judge’s interpretation of ARIZ. REV. STAT. section 33-1804. Discuss how the judge used principles of statutory interpretation, such as giving meaning to every word and considering legislative intent, to differentiate between board meetings and committee meetings.

2. Evaluate the strength of Victor L. Pattarozzi’s case. What were his key arguments, including his use of dictionary definitions and the policy statement in subsection 33-1804(F), and why did the judge ultimately find them unconvincing?

3. Discuss the concept of “preponderance of the evidence” as defined in the decision. Explain how this standard of proof applied to Mr. Pattarozzi’s petition and why he failed to meet it.

4. Examine the operational procedures of the Architectural Review Committee (ARC). How did the “rubber stamp” process and the ad-hoc nature of their meetings support the Respondent’s position that the meetings were not “regularly scheduled”?

5. Based on the judge’s reasoning, what specific changes would the Estrella Vista Homeowners Association’s Architectural Committee need to make for its meetings to be considered “regularly scheduled” and therefore required to be open to all members under Arizona law?

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Glossary of Key Terms

Definition

Administrative Law Judge

An official, in this case Thomas Shedden, who presides over administrative hearings, weighs evidence, and makes legal decisions and orders.

Architectural Review Committee (ARC)

A committee of the Estrella Vista Homeowners Association, consisting of five members, responsible for reviewing and approving member applications for things like solar panels and house painting.

ARIZ. ADMIN. CODE

The Arizona Administrative Code, a set of state regulations. In this case, § R2-19-119 established the standard of proof.

ARIZ. REV. STAT.

Arizona Revised Statutes, the laws enacted by the Arizona state legislature. Sections 33-1804 and 33-1805 were the statutes central to this case.

Burden of Proof

The obligation to prove one’s assertion. In this matter, the burden of proof was on the Petitioner, Mr. Pattarozzi.

Department of Real Estate

The Arizona state agency with legal authority over this matter, which issued the initial Notice of Hearing.

Dismissed

The legal term for the final Order in this case, meaning the Petitioner’s petition was rejected and no action was taken against the Respondent.

Office of Administrative Hearings

The venue where the hearing for this case was held on May 16, 2019.

Petitioner

The party who files a petition or brings a legal action against another. In this case, Victor L. Pattarozzi.

Preponderance of the Evidence

The standard of proof required in this case, defined 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.”

Respondent

The party against whom a petition is filed or an action is brought. In this case, the Estrella Vista Homeowners Association.

Statutory Interpretation

The process by which judges interpret and apply legislation. The decision outlines several principles, such as giving words their ordinary meanings and ensuring no part of a statute is redundant.

Briefing Document: Pattarozzi vs. Estrella Vista Homeowners Association (Case No. 19F-H1919047-REL)

Executive Summary

Case Overview

Case Number

19F-H1919047-REL

Petitioner

Victor L. Pattarozzi

Respondent

Estrella Vista Homeowners Association

Presiding Judge

Thomas Shedden, Administrative Law Judge

Hearing Date

May 16, 2019

Decision Date

June 5, 2019

Jurisdiction

Office of Administrative Hearings, Arizona Department of Real Estate

Defense: The Respondent association contended that its ARC meetings were not required to be open to members because the meetings were not “regularly scheduled.”

Central Legal Issue: The Definition of “Regularly Scheduled”

The case revolved entirely around the interpretation of a key phrase within Arizona’s planned community statutes.

Governing Statute: ARIZ. REV. STAT. § 33-1804(A) states:

The core legal question was whether the ARC’s method of conducting business constituted “regularly scheduled” meetings.

Competing Arguments

• Petitioner’s Position (Mr. Pattarozzi):

◦ Mr. Pattarozzi argued that the association could hold weekly ARC meetings and simply cancel them if no applications were pending for review.

◦ He supplied dictionary definitions for “regular” and “regularly” to support his interpretation:

▪ Regularly: (1) “in a regular manner”; (2) “on a regular basis: at regular intervals”.

◦ He also contended that the state’s declared policy in favor of open meetings, as outlined in subsection 33-1804(F), should be broadly construed to require ARC meetings to be open.

• Respondent’s Position (Estrella Vista HOA):

Findings of Fact

The decision outlined the specific operational procedures of the Architectural Review Committee.

• Application Volume: As of the May 16, 2019 hearing, the ARC had received twelve applications in 2019. Of these, eight were subject to the “rubber stamp” approval process.

Legal Reasoning and Decision

The Administrative Law Judge’s conclusions of law provided a detailed statutory interpretation that led to the dismissal of the petition.

Interpretation of “Regularly Scheduled”

Rejection of the “Open Meeting Policy” Argument

The Petitioner argued that subsection 33-1804(F), which declares a state policy in favor of open meetings, should apply. The Judge rejected this argument based on the specific text of the statute:

Final Order

Ruling: IT IS ORDERED that Victor L. Pattarozzi’s petition is dismissed.

Next Steps: The decision is binding unless a party files a request for rehearing with the Commissioner of the Department of Real Estate within 30 days of the service of the Order.

Case Participants

Petitioner Side

Victor L Pattarozzi (petitioner)
Appeared and testified on his own behalf

Respondent Side

Andrew Apodaca (attorney)
Goering, Roberts, Rubin, Brogna, Enos & Treadwell-Rubin, P.C.
Attorney for Respondent Estrella Vista Homeowners Association
Stuart Glenn (board member)
Estrella Vista Homeowners Association
Board president who presented testimony for Respondent

Neutral Parties

Thomas Shedden (ALJ)
Office of Administrative Hearings
Judy Lowe (ADRE Commissioner)
Arizona Department of Real Estate
Recipient of transmittal
Felicia Del Sol (Administrative Staff)
Listed in the final section of the document

Pointe Tapatio Community Association vs. Lanye C. and Devin E. Wilkey

Posted on May 7, 2019 by [email protected]

Case Summary

Case ID	19F-H1919044-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2019-05-07
Administrative Law Judge	Thomas Shedden
Outcome	partial
Filing Fees Refunded	$0.00
Civil Penalties	$500.00

Parties & Counsel

Petitioner	Pointe Tapatio Community Association	Counsel	Lauren Vie
Respondent	Lanye C. Wilkey and Devin E. Wilkey	Counsel	Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
ARIZ. REV. STAT. § 32-2199.02
ARIZ. REV. STAT. section 32-2199.04
ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty

Additional Citations:

ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
ARIZ. REV. STAT. § 32-2199.02
ARIZ. REV. STAT. section 32-2199.04
ARIZ. REV. STAT. section 41-1092.09

Video Overview

Audio Overview

Decision Documents

19F-H1919044-REL Decision – /home/jeremy/azhoa/repos/azoah_decisions/portal_documents/19F-H1919044-REL-RHG/733509.pdf

Uploaded 2026-04-17T05:44:04 (38.6 KB)

19F-H1919044-REL Decision – /home/jeremy/azhoa/repos/azoah_decisions/portal_documents/19F-H1919044-REL/706518.pdf

Uploaded 2026-04-17T05:44:08 (36.5 KB)

19F-H1919044-REL Decision – /home/jeremy/azhoa/repos/azoah_decisions/portal_documents/19F-H1919044-REL/706560.pdf

Uploaded 2026-04-17T05:44:11 (108.8 KB)

19F-H1919044-REL Decision – 706518.pdf

Uploaded 2026-01-23T17:28:45 (36.5 KB)

19F-H1919044-REL Decision – 706560.pdf

Uploaded 2026-01-23T17:28:49 (108.8 KB)

Administrative Hearing Briefing: Pointe Tapatio Community Association vs. Wilkey

Executive Summary

This document details the findings and decision of an administrative law judge in the case of Pointe Tapatio Community Association versus residents Layne C. and Devin E. Wilkey. The core issue was the operation of a payroll processing company, Devau Human Resources, from the Wilkeys’ residential unit. The Association alleged this violated community CC&Rs, which prohibit non-residential uses that create traffic or parking. The Wilkeys admitted that two employees commuted to the unit daily but argued they had received permission from a former property manager.

The judge found in favor of the Association, concluding that the daily commute of two employees constituted the creation of “traffic and parking,” a direct and unambiguous violation of the CC&Rs. The judge deemed the residents’ claims of verbal permission to be unsubstantiated and irrelevant, as the covenant’s language was clear. Consequently, the judge ordered the Wilkeys to cease all business operations at the unit within 35 days and imposed a civil penalty of $500.

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Case Overview

Case Name

Pointe Tapatio Community Association, Petitioner, vs. Lanye C. Wilkey and Devin E. Wilkey, Respondent.

Case Number

19F-H1919044-REL

Jurisdiction

Office of Administrative Hearings (Arizona Department of Real Estate)

Hearing Date

April 26, 2019

Decision Date

May 7, 2019

Administrative Law Judge

Thomas Shedden

Petitioner’s Counsel

Lauren Vie, Esq.

Respondent’s Counsel

Joseph Velez, Esq.

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Central Allegation and Governing Covenant

The Pointe Tapatio Community Association (Petitioner) alleged that Layne C. Wilkey and Devin E. Wilkey (Respondents) violated the community’s Covenants, Conditions, and Restrictions (CC&Rs) by using their residential unit as an office for their business.

The specific provision at issue is Article 3, Section 3.1 of the CC&Rs, which states:

“Residential. Each Residence shall be used, improved, and devoted exclusively to first class residential use, and no gainful occupation, profession, trade, business, religion, or other non-residential use which creates traffic [or] parking … shall be conducted from any Residence [or part thereof.]”

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Key Findings of Fact

The Business Operation

• Respondents: Layne C. Wilkey (mother) and Devin E. Wilkey (son) are co-owners of the unit at 720 E. North Lane, Unit 1 (Lot 50).

• Company: They own and operate Devau Human Resources, a payroll processing company, from this unit. The business also operates from a second, commercial site in Tempe.

• History: The business was moved into the residential unit from a commercial location in late 2009.

• Public Presence: Devau’s website and Google Maps both list the 720 E. North Lane address as an office location, with stated office hours from 9:00 a.m. to 5:00 p.m., Monday through Friday. The website notes it is a “mailing address only.”

• Admission: Ms. Wilkey acknowledged during testimony that they consider the unit to be an office.

Employee Activity and Impact

• The Wilkeys acknowledged that two Devau employees commute to the unit to work.

• One employee works from 9:30 a.m. to 4:00 p.m., Monday through Thursday.

• A second employee works from 9:30 a.m. to 5:00 p.m., Monday through Friday.

• These employees at times park their vehicles on the community’s streets.

• The business does not have clients or customers who visit the unit.

The Dispute Over Permission

• Respondents’ Claim: The Wilkeys asserted they had permission to operate the business from Howard Flisser, a former property manager. They admitted they had no written confirmation and had never spoken to Mr. Flisser directly about it.

◦ Ms. Wilkey testified that in 2009, she asked her husband, who asked a salesperson, who then allegedly asked Mr. Flisser and relayed that it was permissible.

◦ Mr. Wilkey testified that his now-deceased father would not have taken the risk of moving the business without permission.

• Petitioner’s Rebuttal: Board member Paula Duistermars testified that Mr. Flisser stated a few days before the hearing that he could not recall giving permission and, on two occasions during the conversation, volunteered that he had never given permission.

• Authority: Ms. Duistermars also testified that Mr. Flisser lacked the authority to grant such permission; only the Board of Directors could do so.

Association’s Stance and Actions

• Notification: Through a letter dated August 8, 2018, the Association informed the Wilkeys of the violation and required compliance by August 31, 2018.

• Petition: The Association filed the petition that initiated the hearing on or about January 17, 2019.

• Other Businesses: The Association permits certain home-based businesses that do not generate traffic or parking, such as telecommuting and online teaching, without requiring Board permission.

• Complaints: Ms. Duistermars acknowledged she was unaware of any specific complaints regarding traffic, parking, or noise from the Wilkeys’ unit. However, she testified that the Board was first made aware of the business operation when another resident brought the issue to its attention.

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Legal Analysis and Conclusions

• Standard of Proof: The judge determined all issues based on a “preponderance of the evidence,” defined as evidence with the most convincing force.

• CC&Rs as Contract: The CC&Rs are a legally binding contract between the Association and the residents.

• Unambiguous Language: The judge found the language in CC&R Article 3, Section 3.1 to be clear and unambiguous. Such covenants must be enforced to give effect to the parties’ original intent.

• Direct Violation: The judge concluded that the evidence overwhelmingly showed the Wilkeys were operating a business from their unit. The admission that two employees drive to the unit and park on the street proves that the business creates both traffic and parking.

• Violation Trigger: The creation of any traffic or parking by the business is sufficient to constitute a violation. The CC&R does not require that the traffic or parking cause a secondary violation or generate resident complaints. Therefore, the lack of other complaints was deemed to have little probative value.

• Final Conclusion: Based on the facts, the Wilkeys are in clear violation of CC&R Article 3, Section 3.1.

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Final Order and Penalties

Based on the findings of fact and conclusions of law, the Administrative Law Judge issued the following orders:

1. Compliance Order: Respondent Layne C. Wilkey and Devin E. Wilkey must cease all business operations at 720 E. North Lane, Unit 1 (Lot 50) within thirty-five (35) days of the Order’s effective date.

2. Civil Penalty: The Respondents must pay a civil penalty of $500.00 to the Department of Real Estate within sixty (60) days of the Order’s effective date. Payment must be made by cashier’s check or money order.

3. Filing Fee: The Petitioner’s request for a refund of its filing fee was denied, as the judge found no legal authority to grant it.

The Order is binding unless a request for rehearing is filed with the Commissioner of the Department of Real Estate within 30 days of service.

Study Guide:Pointe Tapatio Community Association v. Wilkey

This guide provides a comprehensive overview of the administrative law case Pointe Tapatio Community Association v. Wilkey, Case No. 19F-H1919044-REL, heard before the Arizona Office of Administrative Hearings. It details the central conflict, the arguments presented by both parties, the legal standards applied, and the final judgment.

Case Summary

The Pointe Tapatio Community Association (Petitioner) filed a complaint against homeowners Layne C. Wilkey and Devin E. Wilkey (Respondent), alleging that they were violating the community’s Covenants, Conditions, and Restrictions (CC&Rs) by operating a business, Devau Human Resources, from their residential unit. The Association argued that the business, which employed two individuals who commuted to the property, generated traffic and parking, explicitly prohibited by the CC&Rs for non-residential activities. The Wilkeys contended they had received verbal permission years prior and that the business was not disruptive. The Administrative Law Judge found in favor of the Association, ruling that the Wilkeys were in clear violation of the community’s governing documents.

Key Parties & Entities

Name / Entity

Key Actions & Involvement

Pointe Tapatio Community Association

Petitioner

The homeowners’ association that filed the petition alleging a CC&R violation. Represented by Lauren Vie, Esq.

Layne C. Wilkey & Devin E. Wilkey

Respondent

Mother and son, co-owners of the unit at 720 E. North Lane, Unit 1. Operators of Devau Human Resources. Represented by Joseph Velez, Esq.

Thomas Shedden

Administrative Law Judge (ALJ)

Presided over the hearing, made findings of fact, drew conclusions of law, and issued the final order.

Arizona Department of Real Estate

Regulatory Body

Issued the initial Notice of Hearing and has legal authority over such disputes under ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11.

Paula Duistermars

Board Member, Pointe Tapatio

Testified on behalf of the Association, detailing the Board’s position and interactions regarding the violation.

Howard Flisser

Property Manager (Former or Current)

Named by the Wilkeys as the source of verbal permission to operate their business; Flisser denied recalling this.

Devau Human Resources

Business Entity

A payroll processing company owned by the Wilkeys, operating out of the residential unit and a commercial site in Tempe.

Office of Administrative Hearings

Adjudicative Body

The venue for the hearing, located at 1740 West Adams Street, Lower Level, in Phoenix, Arizona.

Case Timeline

• Late 2009: The Wilkeys move their business, Devau Human Resources, from a commercial location into their unit at Pointe Tapatio.

• August 8, 2018: Pointe Tapatio sends a letter informing the Wilkeys they are out of compliance with the CC&Rs and must comply by August 31, 2018.

• January 17, 2019 (approx.): Pointe Tapatio files a petition with the Arizona Department of Real Estate.

• February 28, 2019: The Arizona Department of Real Estate issues a Notice of Hearing.

• April 26, 2019: The administrative hearing is held before ALJ Thomas Shedden.

• May 7, 2019: ALJ Thomas Shedden issues the final decision and order.

Central Conflict: CC&R Article 3, Section 3.1

The core of the dispute revolved around the interpretation and enforcement of a specific restrictive covenant within the community’s governing documents.

• The Allegation: Pointe Tapatio alleged that the Wilkeys were using their unit as an office for a “gainful occupation,” which is not a “first class residential use.”

• The Specific Provision: Article 3, Section 3.1 of the CC&Rs states:

• The Triggering Condition: The prohibition is not absolute. It applies specifically to non-residential uses that create traffic or parking.

Arguments and Evidence

Arguments & Evidence Presented

Petitioner (Pointe Tapatio)

Employee Activity: The Wilkeys acknowledged two employees drive to the unit to work Monday through Friday, creating traffic and parking on community streets.
Public Information: Devau’s website and Google Maps listed the residential unit as an office address with set business hours (9:00 a.m. to 5:00 p.m.).
Owner Admission: Ms. Wilkey acknowledged during testimony that they consider the unit to be an office.
Lack of Authority: Board member Paula Duistermars testified that property manager Howard Flisser did not have the authority to grant permission for a business; only the Board could. She also testified that Flisser could not recall giving permission and had volunteered that he never did.

Respondent (The Wilkeys)

Verbal Permission: The Wilkeys claimed they received verbal permission from property manager Howard Flisser in 2009. They admitted they never spoke to him directly and had nothing in writing.
Implied Permission: Mr. Wilkey argued his father would not have taken the risk of moving the payroll business without permission, implying it must have been granted.
No Direct Complaints: It was acknowledged that the Association was not aware of specific complaints filed against the Wilkeys for traffic, parking, or noise issues.
Residential Use: Mr. Wilkey testified that he considers the unit one of his two primary residences, though he did not provide a responsive answer when asked how often he stayed there.

The Judge’s Decision & Legal Reasoning

ALJ Thomas Shedden concluded that the Wilkeys were in violation of the CC&Rs based on a “preponderance of the evidence.”

• The Wilkeys operate Devau Human Resources, a payroll processing company, from the unit.

• Two employees commute to the unit for work and sometimes park on community streets.

• The business is publicly listed at the residential address.

• The Wilkeys’ claim of verbal permission from Howard Flisser was not substantiated. Testimony from Paula Duistermars indicated Flisser could not recall, and in fact denied, giving such permission.

• The Association does permit some home businesses (e.g., telecommuting, online teaching) that do not create traffic or parking and do not require Board permission.

1. CC&Rs as a Contract: The CC&Rs constitute a binding contract between the homeowners and the Association.

2. Unambiguous Language: The language in Article 3, section 3.1 is clear and unambiguous. It prohibits businesses that create traffic or parking.

3. Violation Proven: The evidence clearly showed the Wilkeys’ business created both traffic and parking due to its two commuting employees. This is a direct violation of the unambiguous terms of the CC&R.

4. No Other Violation Needed: The fact that no other rules (e.g., specific parking ordinances) were broken is irrelevant. The creation of any traffic or parking by the business is sufficient to trigger the violation as written.

1. Cease Operations: The Wilkeys were ordered to comply with CC&R Article 3, section 3.1 by ceasing business operations at the unit within 35 days.

2. Civil Penalty: The Wilkeys were ordered to pay a civil penalty of $500.00 to the Department of Real Estate within 60 days.

3. Filing Fee Request Denied: The Association’s request to have its filing fee refunded was denied because it cited no legal authority showing the judge had the power to grant it.

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Answer the following questions in 2-3 complete sentences based on the information in the case file.

1. Who were the petitioner and the respondents in this case, and what was their relationship?

2. What specific activity led the petitioner to claim the respondents were violating the CC&Rs?

3. According to Article 3, section 3.1, what condition makes a non-residential use of a property a violation?

4. What was the respondents’ primary defense for operating their business from the unit?

5. Why did the Administrative Law Judge find the respondents’ primary defense unconvincing?

6. What two specific pieces of evidence demonstrated that the business created traffic and parking?

7. What is the legal standard of proof required in this type of administrative hearing, and what does it mean?

8. What two penalties were imposed on the Wilkeys in the final order?

9. Does the Pointe Tapatio Community Association prohibit all home-based businesses? Explain.

10. Who was Howard Flisser, and what was his significance to the respondents’ case?

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Answer Key

1. The petitioner was the Pointe Tapatio Community Association. The respondents were Layne C. Wilkey and Devin E. Wilkey, who were homeowners within the community and co-owners of the unit in question.

2. The Wilkeys were operating their payroll processing company, Devau Human Resources, out of their residential unit. This included having two employees commute to the property to work during business hours.

3. A non-residential use becomes a violation if it “creates traffic [or] parking.” The rule does not require a certain amount of traffic or parking, only that it is created by the business activity.

4. The respondents’ primary defense was that they had received verbal permission to operate the business from the community’s property manager, Howard Flisser, back in 2009.

5. The judge found the defense unconvincing because the Wilkeys had no written proof, had not spoken to Mr. Flisser directly, and testimony from a board member indicated Mr. Flisser could not recall—and later denied—ever giving such permission. Furthermore, the property manager likely lacked the authority to grant it.

6. The evidence was the Wilkeys’ own acknowledgement that two of their employees drive to the unit to work on a weekly basis. This commuting by non-resident employees necessarily creates traffic and, at times, requires them to park on community streets.

7. The standard of proof is a “preponderance of the evidence.” This means the greater weight of the evidence must be sufficient to incline a fair and impartial mind to one side of the issue over the other, even if it does not remove all reasonable doubt.

8. The Wilkeys were ordered to cease all business operations at the unit within 35 days. They were also ordered to pay a civil penalty of $500.00 to the Department of Real Estate within 60 days.

9. No, the association does not prohibit all home-based businesses. It allows for activities like telecommuting and teaching online classes, which do not require board permission because they do not create traffic or parking.

10. Howard Flisser was the property manager whom the Wilkeys claimed gave them verbal permission to run their business. His significance was central to their defense, but his alleged permission was unsubstantiated and contradicted by later testimony.

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Essay Questions

The following questions are designed for longer-form analysis. No answers are provided.

1. Analyze the concept of “preponderance of the evidence” as applied in this case. How did the evidence presented by Pointe Tapatio meet this standard, while the Wilkeys’ evidence did not?

2. Discuss the legal principle that CC&Rs are treated as contracts. Explain how Judge Shedden applied contract law principles, particularly regarding “unambiguous” language, to reach his conclusion.

3. Evaluate the Wilkeys’ defense strategy, focusing on their claim of verbal permission from Howard Flisser. Why was this argument legally insufficient? What kind of evidence would have been necessary to make it successful?

4. Examine the distinction the Pointe Tapatio Community Association makes between permissible home-based businesses (like telecommuting) and impermissible ones (like Devau Human Resources). What is the key factor in this distinction according to the CC&Rs, and how does it relate to the core purpose of residential covenants?

5. Based on the judge’s order, discuss the remedies available to a homeowner’s association in Arizona when a CC&R violation is proven. What penalties were imposed, and what penalty was requested but denied?

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Glossary of Key Terms

• Administrative Law Judge (ALJ): A judge and trier of fact who presides over administrative hearings, such as disputes handled by the Office of Administrative Hearings. The ALJ renders decisions, called orders, based on evidence and legal arguments.

• CC&Rs (Covenants, Conditions, and Restrictions): The governing legal documents that set out the rules for a planned community or subdivision. In this case, they are treated as a legally binding contract between the association and the homeowners.

• Civil Penalty: A monetary fine levied by a government agency or administrative court for a violation of a statute or rule. In this case, a $500 penalty was imposed on the Wilkeys for violating the community documents.

• Conclusions of Law: The section of a judicial decision where the judge applies legal principles and statutes to the established facts of the case to reach a judgment.

• Findings of Fact: The section of a judicial decision that formally lists the factual determinations made by the judge based on the evidence presented at the hearing.

• Order: The final ruling or judgment issued by an Administrative Law Judge that directs the parties on what actions they must take.

• Petitioner: The party who initiates a legal action or files a petition seeking a legal remedy. In this case, the Pointe Tapatio Community Association.

• Preponderance of the Evidence: The standard of proof in most civil and administrative cases. It requires the trier of fact to believe that it is more likely than not that a claim is true, based on the evidence presented.

• Respondent: The party against whom a petition is filed or an appeal is brought. In this case, Layne C. Wilkey and Devin E. Wilkey.

4 Surprising Lessons from an HOA Lawsuit That Shut Down a 10-Year-Old Home Business

Introduction: The Rise of the Home Office and the Rules You Didn’t Know Existed

In an age where the line between the living room and the corner office has all but vanished, millions of us have embraced working from home. But as we settle into our home-based routines, a critical question often goes unasked: Are you truly familiar with your homeowner’s association (HOA) rules regarding home-based businesses?

For the Wilkey family, owners of Devau Human Resources, the answer to that question proved to be a costly one. After operating their payroll processing company from their home for nearly a decade without a single complaint, they found themselves in a legal battle that ultimately shut them down. Their case serves as a powerful cautionary tale about what can happen when long-standing home businesses collide with the fine print of HOA rules.

1. It’s Not About Complaints, It’s About the Contract

One of the most chilling lessons from the Wilkey case is that the HOA’s action wasn’t triggered by angry neighbors complaining about noise or traffic. In fact, Board member Paula Duistermars testified that she was unaware of any such complaints. The issue arose simply because “a resident brought the issue to [the Board’s] attention.”

This reveals a crucial legal reality: your business’s existence, not its impact, can be the sole trigger for enforcement. It doesn’t take a chorus of angry neighbors—just one person notifying the Board of a potential rule violation is enough. The Covenants, Conditions, and Restrictions (CC&Rs) are a legally binding contract, and the court’s decision was not based on whether the business was a nuisance, but simply whether it complied with the contract’s terms. Your takeaway: You must operate as if the rulebook will be enforced literally, because it can be.

2. The Deciding Factor: A Single Clause About “Traffic and Parking”

The entire legal dispute hinged on the precise wording of one specific rule. The HOA wasn’t enforcing a vague, blanket ban on all home businesses; its power came from a single, carefully worded clause in the CC&Rs.

The relevant section, Article 3, section 3.1, stated:

“Each Residence shall be used, improved, and devoted exclusively to first class residential use, and no gainful occupation, profession, trade, business, religion, or other non-residential use which creates traffic [or] parking … shall be conducted from any Residence [or part thereof.]”

As a legal analyst, I can tell you why this clause was so powerful: its focus on a tangible impact (“creates traffic [or] parking”) made it highly defensible. A blanket prohibition on “all businesses” might be open to challenge, but this specific, impact-based rule was nearly impossible to argue against once the facts were established. The Wilkeys’ business was found in violation specifically because it created traffic and parking, which is also why the HOA permitted other home businesses, like telecommuting, that did not.

3. Your Two-Person TeamIsa Traffic Problem

Many homeowners assume that business traffic rules are meant to prevent a steady stream of clients visiting a residential property. The Wilkeys had no clients come to their unit. However, this did not protect them.

The undisputed fact that proved decisive was that two of the company’s employees commuted to the home to work—one from Monday to Thursday and the other from Monday to Friday. The judge concluded that this daily employee commute constituted the creation of “traffic and parking” as prohibited by the CC&Rs. The employees at times parking on the community’s common streets provided concrete, undeniable evidence of this. This case sets a precedent that a micro-business with just one or two employees commuting to the home can be deemed in violation—a scenario many entrepreneurs wouldn’t even consider a “traffic” issue.

4. “He Said We Could” Is Not a Legal Defense

The Wilkeys asserted that they had received verbal permission to operate their business from the property manager back in 2009. This defense completely fell apart under legal scrutiny.

Courts prioritize written agreements and official board actions over “he said/she said” accounts, especially when they involve multi-level hearsay (in this case, a husband asking a salesperson who asked the manager). The defense failed for several clear reasons: the Wilkeys had no written proof, the manager denied recalling or ever giving such permission, and most importantly, a Board member testified that the manager lacked the authority to grant this permission anyway. Only the Board could.

The takeaway is unambiguous: Never rely on verbal assurances. Get all permissions from your HOA Board in writing, or they do not legally exist.

Conclusion: Know Your Rules Before You Unpack Your Desk

The story of the Wilkey family is a stark reminder that HOA documents are not mere suggestions; they are legally binding contracts where every word matters. The Wilkeys’ experience is a costly lesson for every home-based professional. Proactive compliance is your only true protection. The final outcome was an order for them to cease all business operations from their home within 35 days and pay a $500 civil penalty.

You might have been working from home for years without a problem, but have you ever read the fine print on what your community actually allows?

Case Participants

Petitioner Side

Lauren Vie (HOA attorney)
Attorney for Petitioner
Paula Duistermars (board member)
Pointe Tapatio Community Association
Presented testimony for Petitioner
Beth Mulchay (HOA attorney)
Mulchay Law Firm, P.C.
Listed on transmission list

Respondent Side

Layne C. Wilkey (respondent)
Devin E. Wilkey (respondent)
Joseph A Velez (respondent attorney)
For Respondent

Neutral Parties

Thomas Shedden (ALJ)
Judy Lowe (Commissioner)
Arizona Department of Real Estate

Other Participants

Howard Flisser (property manager)
Statements regarding alleged business permission were discussed
Felicia Del Sol (unknown)

Tom J Martin v. SaddleBrooke Home Owners Association #1, Inc.

Posted on April 26, 2019 by [email protected]

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

Case Summary

Case ID	19F-H1918022-REL-RHG
Agency	ADRE
Tribunal	OAH
Decision Date	2019-05-10
Administrative Law Judge	Thomas Shedden
Outcome	The Administrative Law Judge affirmed the dismissal of the petition on rehearing, ruling that the HOA's website and policy manual are not 'community documents' as defined by statute, and therefore the Department has no jurisdiction to adjudicate disputes regarding them. Additionally, the requested financial relief was outside the ALJ's authority.
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Tom J Martin	Counsel	—
Respondent	SaddleBrooke Home Owners Association #1, Inc.	Counsel	Carolyn B. Goldschmidt

Alleged Violations

ARIZ. REV. STAT. § 32-2199.01(A); ARIZ. REV. STAT. § 33-1802(2)

Outcome Summary

The Administrative Law Judge affirmed the dismissal of the petition on rehearing, ruling that the HOA's website and policy manual are not 'community documents' as defined by statute, and therefore the Department has no jurisdiction to adjudicate disputes regarding them. Additionally, the requested financial relief was outside the ALJ's authority.

Why this result: Lack of subject matter jurisdiction because the alleged violations did not involve the declaration, bylaws, articles of incorporation, or rules of the planned community.

Key Issues & Findings

Alleged violation of HOA website and Policy Manual (Policy BC-3) regarding pickleball courts

Petitioner alleged that the HOA violated its website and policy manual by failing to provide pickleball courts as marketed. The Respondent moved to dismiss for lack of jurisdiction, arguing these documents are not community documents. The ALJ affirmed the dismissal, finding that policies and website statements do not fall under the statutory definition of community documents in A.R.S. § 33-1802(2), thus the Department lacked jurisdiction.

Orders: Petitioner Tom J. Martin’s petition is dismissed.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

ARIZ. REV. STAT. § 32-2199.01
ARIZ. REV. STAT. § 33-1802
ARIZ. REV. STAT. § 32-2199.02
McNally v. Sun Lakes Homeowners Ass’n #1, Inc.

Analytics Highlights

Topics: jurisdiction, community documents, policy manual, pickleball courts, dismissal, rehearing

Additional Citations:

ARIZ. REV. STAT. § 32-2199.01
ARIZ. REV. STAT. § 33-1802(2)
ARIZ. REV. STAT. § 32-2199.02
ARIZ. REV. STAT. § 1-213
ARIZ. REV. STAT. § 12-904
Walker v. Scottsdale, 163 Ariz. 206, 786 P.2d 1057 (App. 1989)
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)

Video Overview

Audio Overview

Decision Documents

19F-H1918022-REL-RHG Decision – 704322.pdf

Uploaded 2026-01-23T17:27:17 (89.7 KB)

Briefing Document: Martin v. SaddleBrooke Home Owners Association #1, Inc. (Case No. 19F-H1918022-REL-RHG)

Executive Summary

This document synthesizes the Administrative Law Judge Decision in the case of Tom J. Martin versus SaddleBrooke Home Owners Association #1, Inc., which resulted in the dismissal of the petitioner’s case. The decision, issued on May 10, 2019, centered on a critical jurisdictional question: whether an HOA’s website content and internal policy manual constitute “community documents” under Arizona state law.

The Administrative Law Judge (ALJ) concluded they do not. The petitioner’s claim, which alleged the HOA failed to provide pickleball courts as promised on its website and in its “Policy Number BC-3,” was dismissed because it did not allege a violation of a legally recognized “community document.” According to Arizona Revised Statutes, such documents are strictly defined as the declaration, bylaws, articles of incorporation, and formally adopted rules. As the petitioner’s initial filing cited only the website and a policy not adopted as a rule, the Office of Administrative Hearings lacked the statutory jurisdiction to hear the case. Furthermore, the ALJ determined that the petitioner’s requested relief—a financial award of $463,112 or the construction of eight new courts—was beyond the scope of the tribunal’s authority.

Case Overview

Case Name

Tom J. Martin v. SaddleBrooke Home Owners Association #1, Inc.

Case Number

19F-H1918022-REL-RHG

Tribunal

Arizona Office of Administrative Hearings

Petitioner

Tom J. Martin

Respondent

SaddleBrooke Home Owners Association #1, Inc.

Presiding Judge

Administrative Law Judge Thomas Shedden

Date of Decision

May 10, 2019

Petitioner’s Core Allegations and Requested Relief

The petition filed by Tom J. Martin on September 28, 2018, was founded on the central allegation that the SaddleBrooke HOA violated its own website content and its internal policy manual, specifically “Policy Number BC-3.”

• Primary Allegation: The HOA failed to fulfill its advertised and marketed promise to provide pickleball courts.

• Cited Violations: In the initial petition, Martin explicitly alleged violations of the HOA’s website and policy manual. While he checked boxes on the petition form indicating violations of the CC&Rs and Bylaws, he failed to identify any specific provisions from those documents.

• Requested Relief: The petitioner sought a significant remedy from the HOA, requesting one of the following:

1. Financial support in the amount of $463,112.00 for the expansion of pickleball courts in Bobcat Canyon.

2. The provision of eight new pickleball courts within a two-mile radius of the community within one year.

3. A commitment from the HOA to be financially responsible for the maintenance of pickleball courts in an amount equal to its spending on eight tennis courts.

Procedural History and Key Arguments

The case progressed through several key stages, culminating in a rehearing and a final dismissal.

1. Initial Petition (September 28, 2018): Mr. Martin filed his single-issue petition with the Arizona Department of Real Estate.

2. Respondent’s Motion to Dismiss (November 30, 2018): The HOA argued that the Department of Real Estate lacked jurisdiction over the matter. Its core argument was that hearings under ARIZ. REV. STAT. § 32-2199.01 are limited to violations of “community documents,” and that a website and an internal policy do not meet the legal definition of such documents. The HOA also contended the requested relief was outside the tribunal’s authority.

3. Petitioner’s Response (December 4, 2018): In his response, Mr. Martin argued that a “policy” should be interpreted as a “rule” under its ordinary meaning. He further asserted that another HOA policy (CE-3) defined “governing documents” to include “Rules and Regulations,” and therefore Policy BC-3 should be considered a governing document.

4. Initial Dismissal (December 12, 2018): The ALJ dismissed the petition, finding that it had not alleged a violation meeting the statutory requirements.

5. Request for Rehearing (December 31, 2018): Mr. Martin requested a rehearing, reasserting that a “policy” is a “rule.” In this request, he newly alleged that the HOA had violated specific provisions: Bylaws article 4, section 6(3) and Articles of Incorporation Article XII, by failing to implement policy BC-3.

6. Rehearing (April 16, 2019): A rehearing was conducted where both parties presented their cases. The respondent renewed its argument regarding lack of jurisdiction.

Central Legal Dispute: The Definition of “Community Documents”

The determinative issue of the case was the precise legal definition of “community documents” and whether the petitioner’s claims fell within that scope.

• Statutory Definition: The court’s decision was anchored in ARIZ. REV. STAT. § 33-1802(2), which defines community documents as:

◦ The declaration (CC&Rs)

◦ Bylaws

◦ Articles of incorporation, if any

◦ Rules, if any

• The Court’s Finding: The ALJ concluded that this legislative definition is exclusive and does not include “a planned community’s statements of policy, statements on its website, or advertising and marketing material.”

• Petitioner’s Argument Rejected: Mr. Martin’s argument that Policy BC-3 should be considered a rule was found to be “not persuasive.” A critical finding of fact was that the “Respondent has not adopted policy BC-3 as a rule” under the authority granted in its CC&Rs (section 4.5). The tribunal must follow the legislature’s explicit definition.

Administrative Law Judge’s Conclusions and Final Order

The ALJ’s conclusions of law led directly to the dismissal of the petition on jurisdictional grounds.

• Lack of Jurisdiction: Because Mr. Martin’s original petition only alleged that the respondent violated its website and policy manual—neither of which are “community documents” under Arizona law—the petition failed to meet the foundational requirements for a hearing under ARIZ. REV. STAT. § 32-2199.01(A).

• Improper Relief Requested: The ALJ also concluded that the relief Mr. Martin sought was not within the tribunal’s authority. Under ARIZ. REV. STAT. § 32-2199.02, an ALJ may order a party to abide by statutes or community documents and may levy civil penalties. The statute does not grant the authority to order large financial payments for construction or to mandate specific capital improvement projects.

• Final Order: Based on these conclusions, the petition was dismissed.

IT IS ORDERED that Petitioner Tom J. Martin’s petition is dismissed.

The decision, having been issued as the result of a rehearing, is binding on the parties. Any appeal must be filed for judicial review with the superior court within thirty-five days from the date of the order’s service.

Study Guide: Martin v. SaddleBrooke Home Owners Association #1, Inc.

This guide provides a detailed review of the Administrative Law Judge Decision in the case of Tom J. Martin vs. SaddleBrooke Home Owners Association #1, Inc. (No. 19F-H1918022-REL-RHG). It is designed to test and deepen understanding of the case’s facts, legal arguments, and final outcome.

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Short-Answer Quiz

Answer the following questions in 2-3 complete sentences, based on the information provided in the source document.

1. Who were the Petitioner and Respondent in case No. 19F-H1918022-REL-RHG?

2. What was the central allegation made by the Petitioner in his initial petition filed on or about September 28, 2018?

3. Describe the two alternative forms of relief the Petitioner requested in his petition.

4. On what primary legal grounds did the Respondent file its Motion to Dismiss?

5. According to Arizona Revised Statute section 33-1802(2), what are the four types of documents that constitute “community documents”?

6. Explain the two main arguments the Petitioner made in his Response to the Motion to Dismiss for why Policy BC-3 should be considered a governing document.

7. What new violation did the Petitioner allege in his request for a rehearing on December 31, 2019?

8. According to the Administrative Law Judge’s findings, what was the final outcome of the Petitioner’s petition and the primary reason for this decision?

9. According to A.R.S. § 32-2199.02, what powers does an administrative law judge have if a violation of community documents is found?

10. What is the process and time frame for a party wishing to appeal this Administrative Law Judge order?

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Answer Key

1. The Petitioner was Tom J. Martin, who appeared on his own behalf. The Respondent was SaddleBrooke Home Owners Association #1, Inc., which was represented by Carolyn B. Goldschmidt, Esq.

2. In his initial petition, Mr. Martin’s single-issue allegation was that the Respondent violated its website and its policy manual, specifically Policy Number BC-3. He included printouts from the website and a copy of the policy with his petition.

3. The Petitioner requested financial support in the sum of $463,112.00 for the expansion of pickleball courts in Bobcat Canyon. Alternatively, he requested that the Respondent provide eight pickleball courts within a two-mile radius of the community within one year, and be financially responsible for their maintenance at a level equal to its spending on eight tennis courts.

4. The Respondent argued that the Arizona Department of Real Estate lacked jurisdiction over the matter. This was because hearings are limited to disputes over “community documents,” and neither the website nor Policy BC-3 qualified as such under the definition provided in ARIZ. REV. STAT. section 33-1802(2).

5. Arizona Revised Statute section 33-1802(2) defines “community documents” as “the declaration, bylaws, articles of incorporation, if any, and rules, if any.”

6. First, Mr. Martin argued that based on A.R.S. § 1-213, the word “policy” should be given its ordinary meaning, which is a rule. Second, he asserted that because the Respondent’s own policy CE-3 defines “governing documents” to include Rules and Regulations, then BC-3 must be a governing document.

7. In his request for a rehearing, Mr. Martin alleged for the first time that the Respondent had violated its bylaws, specifically article 4, section 6(3), by failing to implement policy BC-3. He also alleged a violation of Articles of Incorporation Article XII.

8. The Administrative Law Judge ordered that Mr. Martin’s petition be dismissed. The dismissal was based on the finding that the petition did not meet the requirements of A.R.S. § 32-2199.01(A) because it alleged violations of a website and a policy manual, which are not legally defined as “community documents.”

9. If a violation is found, an administrative law judge may order any party to abide by the statute or document at issue. The judge may also levy a civil penalty for each violation and, if the petitioner prevails, order the respondent to pay the petitioner’s filing fee.

10. A party wishing to appeal the order must seek judicial review by filing an appeal with the superior court. This appeal must be filed within thirty-five days from the date a copy of the order was served upon the parties, as prescribed by A.R.S. section 12-904(A).

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Essay Questions

The following questions are designed for a more in-depth analysis of the case. Formulate a comprehensive response for each question based on the facts and legal principles presented in the decision.

1. Analyze the concept of jurisdiction as it applies to this case. Why was the distinction between “community documents” and other materials like websites or policy manuals the central factor in the judge’s jurisdictional decision?

2. Trace the procedural history of this case, from Mr. Martin’s initial petition to the final order of dismissal. Identify the key filings, arguments, and decisions at each stage of the process.

3. Evaluate the legal arguments presented by Mr. Martin. Explain his reasoning for equating a “policy” with a “rule” and why the Administrative Law Judge ultimately found this argument unpersuasive, citing relevant statutes and case law mentioned in the decision.

4. Discuss the limitations on the relief an Administrative Law Judge can grant in disputes involving planned communities, as outlined in A.R.S. § 32-2199.02. How did Mr. Martin’s requested relief fall outside the scope of the judge’s authority?

5. Explain the legal principle that when a legislature defines a word or term, a tribunal must follow that definition. How did this principle, as cited in Walker v. Scottsdale, directly influence the outcome of Mr. Martin’s petition?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, makes findings of fact and conclusions of law, and issues decisions. In this case, the ALJ was Thomas Shedden.

ARIZ. REV. STAT. (A.R.S.)

The abbreviation for Arizona Revised Statutes, which are the codified laws of the State of Arizona.

Articles of Incorporation

A set of formal documents filed with a government body to legally document the creation of a corporation. Defined in A.R.S. § 33-1802(2) as one of the “community documents.”

Bylaws

A set of rules adopted by an organization, such as an HOA, to govern its internal management and operations. Defined in A.R.S. § 33-1802(2) as one of the “community documents.”

CC&Rs (Covenants, Conditions, and Restrictions)

Rules governing the use of land within a particular planned community. Section 4.5 of the Respondent’s CC&Rs sets out its authority to adopt rules.

Community Documents

As defined by A.R.S. § 33-1802(2), these are “the declaration, bylaws, articles of incorporation, if any, and rules, if any.” The central legal issue of the case was whether the Respondent’s website and policy manual qualified as community documents.

Jurisdiction

The official power to make legal decisions and judgments. The Respondent argued, and the ALJ agreed, that the Office of Administrative Hearings did not have jurisdiction because the alleged violations did not involve “community documents.”

Motion to Dismiss

A formal request by a party for a court or tribunal to dismiss a case. The Respondent filed a Motion to Dismiss on November 30, 2018, arguing a lack of jurisdiction.

Petitioner

The party who files a petition initiating a legal case. In this matter, the Petitioner was Tom J. Martin.

Rehearing

A second hearing of a case to reconsider the issues and arguments, granted in this instance after the initial dismissal. The rehearing was conducted on April 16, 2019.

Respondent

The party against whom a petition is filed. In this matter, the Respondent was SaddleBrooke Home Owners Association #1, Inc.

Regulations adopted by a planned community association. The decision notes that while the Respondent has the authority to adopt rules, it had not adopted policy BC-3 as a rule.

4 Harsh Lessons from a Homeowner’s Failed Lawsuit Against His HOA

Introduction: The Promise vs. The Paperwork

Imagine finding the perfect community. Its website advertises fantastic amenities, including the pickleball courts you’ve been dreaming of. The association’s own policy manual seems to confirm this commitment. But what happens when the courts are never built and the homeowner association (HOA) doesn’t deliver on these perceived promises?

This isn’t a hypothetical scenario. It’s the central conflict in the case of Tom J. Martin versus the SaddleBrooke HOA in Arizona. Mr. Martin believed his HOA was legally obligated to provide pickleball courts based on its policies and marketing materials. His subsequent lawsuit, however, failed spectacularly, revealing some surprising truths about HOA disputes. This case provides several critical, counter-intuitive lessons for any current or future homeowner about the difference between a promise and a legally enforceable contract.

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1. A “Policy” Isn’t Always a Legally Binding “Rule”

Mr. Martin’s argument was straightforward: he believed the HOA violated its own “policy manual,” specifically a section referred to as Policy BC-3, by not providing pickleball courts. He contended that, in the ordinary sense of the word, a “policy” is a rule that must be followed.

The judge, however, dismissed the case based on a harsh legal reality. According to Arizona law, the court’s jurisdiction in this type of hearing is limited to violations of official “community documents.” The judge was bound by the statute’s specific definition of what constitutes these documents.

Based on Arizona Revised Statute § 33-1802(2), “community documents” are strictly defined as:

• The declaration (often called CC&Rs)

• Bylaws

• Articles of incorporation

• Rules

Crucially, the HOA’s own CC&Rs specified the exact procedure for how to adopt an enforceable rule, and the association had never subjected Policy BC-3 to that formal process. It wasn’t just a legal technicality; the HOA was following its own governing documents about how to create—or not create—a binding rule. Because the pickleball policy had not been formally adopted, it was legally unenforceable in this hearing.

Key Takeaway Analysis: In a legal dispute, the common-sense meaning of a word can be overruled by a specific statutory definition. It’s not enough to read an HOA’s policy manual. As a homeowner, you must cross-reference that policy with the CC&Rs or Bylaws to confirm the HOA has followed its own stated procedure for adopting it as a formal, legally binding rule.

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2. Marketing Materials Are Not Governing Documents

To support his case, Mr. Martin presented printouts from the HOA’s website. He felt these materials advertised and marketed the availability of pickleball courts, stating in a legal filing that “the Association is in violation for not providing pickleball courts as advertised and marketed….”

The judge’s conclusion was unequivocal: advertising and marketing materials, just like the internal policy manual, do not qualify as “community documents.” The legal definition is exclusive, and an HOA’s website is not on the list. Therefore, promises or suggestions made on a website carry no legal weight in a dispute over violations of governing documents.

Key Takeaway Analysis: There is a significant gap between marketing promises and legally enforceable obligations. For potential buyers, this is a critical warning. The glossy brochure, the community website, and the sales pitch might paint a picture of community life, but that picture is not guaranteed by the legally binding documents you sign at closing.

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3. You Must Allege a Violation of theRightDocument

The case also reveals a crucial lesson in legal procedure. In his initial petition, Mr. Martin only alleged violations of the HOA’s website and its policy manual. While his petition form indicated alleged violations of the “CC&Rs and Bylaws,” he failed to identify any specific provisions within those official documents that the HOA had actually violated.

It was only after his case was first dismissed that he attempted to specify violations of the Bylaws and Articles of Incorporation in his request for a rehearing. By then, it was too late. The initial petition failed to allege a violation of a legitimate community document.

Key Takeaway Analysis: Precision is paramount. To successfully challenge an HOA in an administrative hearing, a homeowner cannot just have a general grievance. You must be able to pinpoint the exact article, section, and provision of an official “community document” (like the CC&Rs or Bylaws) that was violated and state it clearly in your initial complaint.

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4. The Court May Not Have the Power to Grant Your Request

Mr. Martin was clear about what he wanted the court to do. He requested one of two specific forms of relief:

• Provide financial support of $463,112.00 for the expansion of pickleball courts in Bobcat Canyon.

• Alternatively, construct eight new pickleball courts within a two-mile radius of the community within one year, with the HOA being financially responsible for their maintenance.

The judge noted a final, critical problem with the case: the requested relief was “not within the scope of the Administrative Law Judge’s authority.” The law governing these hearings simply did not give the judge the power to order an HOA to undertake a massive, six-figure construction project.

Key Takeaway Analysis: Even if you have a valid case and prove the HOA violated a rule, the court or tribunal you are in has limits. An administrative hearing might only be empowered to levy a civil penalty or issue an order for the HOA to abide by an existing rule. It likely cannot force the HOA to build new facilities or make large capital expenditures. This highlights the need to research the legal venue before you file to ensure it has the authority to grant the specific outcome you are seeking.

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Conclusion: Read Before You Litigate

The outcome of Mr. Martin’s lawsuit underscores the critical difference between a homeowner’s reasonable expectations and an HOA’s legally enforceable covenants. For homeowners, disputes are won or lost based on the precise wording of official governing documents—the CC&Rs, bylaws, and formal rules.

Before you challenge your HOA, have you read the fine print to see if their promise is written in the one place that truly matters?

Case Participants

Petitioner Side

Tom J. Martin (petitioner)
Appeared on his own behalf

Respondent Side

Carolyn B. Goldschmidt (respondent attorney)
Goldschmidt, Shupe, PLLC
Michael S. Shupe (attorney)
Goldschmidt, Shupe, PLLC
Recipient of transmittal

Neutral Parties

Thomas Shedden (ALJ)
Judy Lowe (ADRE Commissioner)
Arizona Department of Real Estate
Recipient of transmittal
LDettorre (ADRE staff)
Arizona Department of Real Estate
Recipient of transmittal (Identified by email handle portion)
AHansen (ADRE staff)
Arizona Department of Real Estate
Recipient of transmittal (Identified by email handle portion)
djones (ADRE staff)
Arizona Department of Real Estate
Recipient of transmittal (Identified by email handle portion)
DGardner (ADRE staff)
Arizona Department of Real Estate
Recipient of transmittal (Identified by email handle portion)
ncano (ADRE staff)
Arizona Department of Real Estate
Recipient of transmittal (Identified by email handle portion)

Other Participants

JS (Unknown staff)
Transmittal initials

Brad W. Stevens vs. Mogollon Airpark, Inc.

Posted on March 1, 2019 by [email protected]

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

Case Summary

Case ID	18F-H1818029-REL-RHG, 18F-H1818045-REL, 18F-H1818054-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2018-10-18
Administrative Law Judge	Thomas Shedden
Outcome	The Administrative Law Judge ruled partially in favor of Petitioner Warren R. Brown, finding that Mogollon Airpark, Inc. violated ARIZ. REV. STAT. section 33-1803(A) by imposing a $25 late payment fee, and ordered the fee rescinded and the $500 filing fee refunded,,,. The ALJ ruled against both Petitioners (Brown and Stevens) regarding the challenge to the $325 assessment increase, dismissing those petitions because they failed to prove the HOA violated A.R.S. § 33-1803(A),,,.
Filing Fees Refunded	$1,500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Warren R. Brown	Counsel	—
Respondent	Mogollon Airpark, Inc.	Counsel	Gregory A. Stein, Esq.; Mark K. Sahl, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1803(A)
ARIZ. REV. STAT. section 33-1803(A)
ARIZ. REV. STAT. section 33-1803(A)

Outcome Summary

The Administrative Law Judge ruled partially in favor of Petitioner Warren R. Brown, finding that Mogollon Airpark, Inc. violated ARIZ. REV. STAT. section 33-1803(A) by imposing a $25 late payment fee, and ordered the fee rescinded and the $500 filing fee refunded,,,. The ALJ ruled against both Petitioners (Brown and Stevens) regarding the challenge to the $325 assessment increase, dismissing those petitions because they failed to prove the HOA violated A.R.S. § 33-1803(A),,,.

Why this result: Petitioners Warren R. Brown and Brad W. Stevens failed to prove by a preponderance of the evidence that the combined $325 assessment increase violated ARIZ. REV. STAT. section 33-1803(A) because their definition of 'regular assessment' as encompassing all assessments enacted through proper procedures was not supported by statutory construction principles,.

Key Issues & Findings

Challenge to assessment increase exceeding 20% limit (Brown Docket 18F-H1818029-REL-RHG)

Petitioner Brown alleged the combined $325 increase, consisting of a $116 regular increase and a $209 special assessment, violated A.R.S. § 33-1803(A) because 'regular assessment' refers to the creation process, making the total increase subject to the 20% cap,,,,.

Orders: Petition dismissed. Respondent Mogollon Airpark, Inc. deemed the prevailing party in the 029 matter,,,.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

Challenge to assessment increase exceeding 20% limit (Stevens Docket 18F-H1818054-REL)

Petitioner Stevens alleged the total $325 assessment increase violated A.R.S. § 33-1803(A) and raised accompanying allegations of deceptive accounting and lack of authority to impose special assessments,,.

Orders: Petition dismissed. Respondent deemed the prevailing party in the 054 matter,,,,.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

Challenge to late payment charges (Brown Docket 18F-H1818045-REL)

Petitioner Brown alleged that the $25 late fee and 18% interest charged by Mogollon violated the statutory limits set forth in A.R.S. § 33-1803(A),,. The ALJ found the $25 late charge violated the statute because the limit applies to all 'assessments',.

Orders: Petitioner Warren R. Brown deemed the prevailing party. Mogollon Airpark Inc. must rescind the $25 late fee and pay Mr. Brown his filing fee of $500.00 within thirty days,.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

Analytics Highlights

Topics: HOA assessment cap, Late fee violation, Statutory construction, Regular assessment definition, Special assessment, Filing fee refund

Additional Citations:

ARIZ. REV. STAT. section 33-1803(A)
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
Deer Valley, v. Houser, 214 Ariz. 293, 296, 152 P.3d 490, 493 (2007)
U.S. Parking Sys v. City of Phoenix, 160 Ariz. 210, 211, 772 P.2d 33, 34 (App. 1989)

Video Overview

Audio Overview

Decision Documents

18F-H1818054-REL-RHG Decision – 692388.pdf

Uploaded 2026-04-24T11:14:31 (102.8 KB)

18F-H1818054-REL-RHG Decision – 666285.pdf

Uploaded 2026-04-24T11:14:35 (151.9 KB)

18F-H1818054-REL-RHG Decision – 672623.pdf

Uploaded 2026-04-24T11:14:39 (144.6 KB)

Briefing Document: Brown and Stevens vs. Mogollon Airpark, Inc.

Executive Summary

This document synthesizes the findings and conclusions from a consolidated administrative law case involving petitioners Warren R. Brown and Brad W. Stevens against their homeowners’ association (HOA), Mogollon Airpark, Inc. The central dispute concerned a 2018 assessment increase of $325, which represented a 39.4% increase over the previous year, and the imposition of a new $25 late fee.

The petitioners argued that the entire assessment increase violated Arizona Revised Statute § 33-1803(A), which limits annual regular assessment increases to 20%. They contended that the term “regular” describes the procedural enactment of an assessment, making the entire 325increaseasingleregularassessment.Conversely,theHOAassertedthatithadbifurcatedtheincreaseintoacompliant14.1116) regular assessment increase and a separate $209 special assessment, which is not subject to the 20% statutory cap.

The Administrative Law Judge (ALJ) ultimately sided with Mogollon Airpark on the assessment increase, dismissing the petitions of both Mr. Brown and Mr. Stevens. The ALJ’s rationale, based on principles of statutory construction, was that “regular assessment” refers to a type of assessment, distinct from a “special assessment,” and that to rule otherwise would render the word “regular” meaningless in the statute. A subsequent rehearing requested by Mr. Stevens was also denied on the same grounds.

However, the ALJ ruled in favor of Mr. Brown on the matter of the late fee. The decision found that the statutory limit on late fees applies to all “assessments,” not just regular ones, making the HOA’s $25 fee a clear violation. Underlying the legal challenges were substantial allegations by the petitioners of deceptive accounting and financial mismanagement by the HOA to create a “fabricated shortfall,” though the ALJ noted these issues were outside the narrow scope of the administrative hearing and better suited for civil court.

Case Overview and Parties Involved

This matter consolidates three separate petitions filed with the Arizona Department of Real Estate, which were heard by the Office of Administrative Hearings.

• Petitioners:

◦ Warren R. Brown (Docket Nos. 18F-H1818029-REL-RHG & 18F-H1818045-REL)

◦ Brad W. Stevens (Docket No. 18F-H1818054-REL)

• Respondent:

◦ Mogollon Airpark, Inc.

• Venue and Adjudication:

◦ Tribunal: Office of Administrative Hearings, Phoenix, Arizona

◦ Administrative Law Judge: Thomas Shedden

◦ Hearing Date (Consolidated Matters): September 28, 2018

◦ Rehearing Date (Stevens Matter): February 11, 2019

Key Financial Figures

Amount/Rate

Calculation/Note

Previous Year’s Assessment (2017)

The baseline for calculating the increase percentage.

Total 2018 Assessment Increase

The total amount disputed by the petitioners.

Total Increase Percentage

($325 / $825)

“Regular Assessment” Increase

As classified by Mogollon Airpark, Inc. (14.1% increase).

“Special Assessment”

As classified by Mogollon Airpark, Inc.

New Late Fee

Challenged as exceeding statutory limits.

New Interest Rate

For past-due accounts.

Statutory Late Fee Limit

Greater of $15 or 10%

Per ARIZ. REV. STAT. § 33-1803(A).

Statutory Assessment Increase Limit

20% over prior year

Per ARIZ. REV. STAT. § 33-1803(A), applies to regular assessments.

Analysis of Core Legal Disputes

The hearings focused on two primary violations of Arizona statute alleged by the petitioners.

The 2018 Assessment Increase (39.4%)

The crux of the case in dockets 029 and 054 was the interpretation of the term “regular assessment” within ARIZ. REV. STAT. § 33-1803(A).

• Petitioners’ Position (Brown & Stevens):

◦ The total $325 increase, constituting a 39.4% hike, is a clear violation of the 20% statutory cap.

◦ The term “regular assessment” as used in the statute refers to the process by which an assessment is created (i.e., by motion, second, and vote). As the entire $325 was passed via this standard procedure, it constitutes a single regular assessment.

◦ They further argued that Mogollon Airpark, Inc.’s governing documents (Bylaws and CC&Rs) do not provide any explicit authority to impose “special assessments,” meaning any assessment levied must be a regular one.

• Respondent’s Position (Mogollon Airpark, Inc.):

◦ The assessment was properly bifurcated into two distinct parts: a $116 increase to the regular assessment (a 14.1% increase, well within the 20% limit) and a $209 special assessment.

◦ “Regular assessment” and “special assessment” are established terms of art in the HOA industry, denoting different types of assessments, not the process of their creation.

◦ The existence of both terms in other parts of Arizona law, such as § 33-1806, demonstrates the legislature’s intent to treat them as separate categories.

Late Fees and Interest Charges

In docket 045, Mr. Brown challenged the legality of the newly instituted penalties for late payments.

• Petitioner’s Position (Brown):

◦ The statute explicitly limits late fees to “the greater of fifteen dollars or ten percent of the amount of the unpaid assessment.”

◦ The HOA’s imposition of a flat $25 late fee is a direct violation of this provision. An invoice provided as evidence showed Mr. Brown was charged this $25 fee plus $1.57 in interest.

• Respondent’s Position (Mogollon Airpark, Inc.):

◦ The HOA argued that the statutory limitation on late fees applied only to regular assessments, not to special assessments. This argument was explicitly rejected by the ALJ.

Underlying Allegations of Financial Misconduct

While the administrative hearings were limited to the specific statutory violations, the petitions were motivated by deep-seated concerns over the HOA’s financial management. These allegations were not adjudicated but were noted by the ALJ.

• Core Allegation: The petitioners claimed the HOA treasurer and others engaged in “deceptive and nonstandard accounting methods” to manufacture a financial crisis and justify the assessment increase.

• Specific Claims:

◦ Mr. Brown alleged that the accounting was “deliberately misleading” to obscure the fact that the 2016 board left the treasury approximately “$200,000 better off.”

◦ Mr. Stevens submitted a 45-page petition with over 600 pages of exhibits detailing the alleged improprieties, including “keeping two sets of books,” to create a “fabricated shortfall.” He testified that he believed the HOA possessed over $1 million and did not need an increase.

• Judicial Comment: The ALJ noted that these complex financial allegations were not addressed in the hearing and suggested that “the civil courts may be better suited than an administrative tribunal to address the issues they raise.”

Judicial Decisions and Rationale

The ALJ issued separate findings and orders for each docket, culminating in a split decision. The rulings on the assessment increase were further solidified in a subsequent rehearing.

Summary of Outcomes

Docket No.

Petitioner

Core Issue

Ruling

Prevailing Party

18F-H1818029-REL-RHG

Warren R. Brown

Assessment Increase

Petition Dismissed

Mogollon Airpark, Inc.

18F-H1818054-REL

Brad W. Stevens

Assessment Increase

Petition Dismissed

Mogollon Airpark, Inc.

18F-H1818045-REL

Warren R. Brown

$25 Late Fee

Violation Found

Warren R. Brown

Rationale for Initial Decision (October 18, 2018)

• On the Assessment Increase: The ALJ found that the petitioners failed to prove by a preponderance of the evidence that a violation occurred. The ruling rested on statutory interpretation:

◦ The petitioners’ definition of “regular assessment” as a process was rejected because it would render the word “regular” in the statute “trivial or void,” as all assessments are presumed to follow a regular process.

◦ The only “fair and sensible result” that gives meaning to every word in the statute is to interpret “regular” and “special” as distinct types of assessments.

• On the Late Fees: The ALJ found that Mr. Brown successfully proved a violation.

◦ The statutory text on late fees applies to “assessments” generally, without the qualifier “regular.”

◦ Mogollon’s argument required adding the word “regular” where the legislature did not use it, which violates principles of statutory construction.

◦ Order: Mogollon was ordered to rescind the $25 fee assessed against Mr. Brown and reimburse his $500 filing fee.

Rationale for Rehearing Decision (March 1, 2019)

Mr. Stevens’s request for a rehearing on his dismissed petition was granted but ultimately denied again.

• Mr. Stevens’s Rehearing Arguments: He argued the ALJ erred by not applying a definition of “special assessment” from the case Northwest Fire District v. U.S. Home of Arizona and reasserted that an assessment unauthorized by the HOA’s documents must logically be a regular one.

• ALJ’s Rejection:

◦ The reliance on Northwest Fire District was “misplaced” because that case applies to special taxing districts created under a different state title, not private HOAs.

◦ The argument that an unauthorized special assessment becomes a regular one was deemed “nonsensical.” The ALJ noted, “More reasonably, if Mogollon has no authority to issue a special assessment, any such assessment would be void.”

◦ The core statutory interpretation from the initial hearing was affirmed. The petition was dismissed a final time.

Study Guide: Brown and Stevens v. Mogollon Airpark, Inc.

Short Answer Quiz

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

1. Identify the petitioners and the respondent in this consolidated legal matter and describe their relationship.

2. What specific financial changes did Mogollon Airpark, Inc. implement in 2018 that led to the legal dispute?

3. What was the central legal argument presented by petitioners Warren R. Brown and Brad W. Stevens regarding the assessment increase?

4. How did Mogollon Airpark, Inc. justify its total assessment increase of $325 in the face of the legal challenge?

5. Explain the Administrative Law Judge’s primary reason for dismissing the petitions concerning the assessment increase (the 029 and 054 matters).

6. What was the specific subject of the petition in the 045 matter, and what was the final ruling in that case?

7. What was the judge’s legal reasoning for finding Mogollon’s $25 late fee to be in violation of the statute?

8. Why did the hearing not address the petitioners’ underlying allegations of deceptive accounting and financial impropriety?

9. What is the standard of proof required in this matter, and which parties were responsible for meeting it?

10. In the rehearing for the 054 matter, what was Brad Stevens’s argument regarding the definition of “special assessment,” and why did the judge find his reliance on the Northwest Fire District case to be misplaced?

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Quiz Answer Key

1. The petitioners were Warren R. Brown and Brad W. Stevens, who were members of the homeowners’ association (HOA). The respondent was Mogollon Airpark, Inc., the HOA itself. The dispute arose from actions taken by the HOA board that the petitioners, as members, believed to be unlawful.

2. In 2018, Mogollon Airpark, Inc. raised its total annual assessment by $325 over the previous year’s $825. Additionally, the HOA instituted a new late payment fee of $25 and began charging 18% interest on past-due accounts.

3. The petitioners’ central argument was that the total $325 assessment increase, representing a 39.4% hike over the prior year, violated ARIZ. REV. STAT. section 33-1803(A). This statute prohibits an HOA from imposing a “regular assessment” that is more than 20% greater than the previous year’s assessment without member approval.

4. Mogollon Airpark, Inc. argued that the $325 increase was composed of two separate parts: a $116 increase to the “regular assessment” (14.1%) and a $209 “special assessment.” They contended that the 20% statutory limit in section 33-1803(A) applies only to regular assessments, not special assessments, and therefore their actions were lawful.

5. The judge dismissed the petitions based on principles of statutory construction. He concluded that “regular assessment” is a specific type of assessment, distinct from a “special assessment,” and that if “regular” merely referred to the process of passing an assessment (motion, second, vote), the word would be redundant and meaningless in the statute. Since the regular assessment portion of the increase was below the 20% threshold, no violation occurred.

6. The 045 matter, filed by Warren R. Brown, specifically challenged Mogollon’s new $25 late fee and 18% interest charge. The judge ruled in favor of Mr. Brown, deeming him the prevailing party, and ordered Mogollon to rescind the $25 late fee and refund his $500 filing fee.

7. The judge found the $25 late fee violated the statute because the section of ARIZ. REV. STAT. section 33-1803(A) limiting late charges applies to “assessments” generally, not just “regular assessments.” Unlike the clause on assessment increases, the legislature did not use the limiting word “regular,” so applying that limitation would violate principles of statutory construction.

8. The hearing did not address the allegations of deceptive accounting because the petitions filed by Mr. Brown (029) and Mr. Stevens (054) were “single-issue petitions.” This limited the scope of the hearing strictly to the question of whether Mogollon violated the specific statute, section 33-1803(A). The judge noted that civil courts may be a more suitable venue for the financial allegations.

9. The standard of proof required was a “preponderance of the evidence.” The burden of proof was on the petitioners, Messrs. Brown and Stevens, to prove their respective allegations against the respondent, Mogollon Airpark, Inc.

10. Mr. Stevens argued that the definition of “special assessment” from the case Northwest Fire District v. U.S. Home of Arizona should be applied, which it failed to meet. The judge found this reliance misplaced because that case applies to special taxing districts created under ARIZ. REV. STAT. Title 48, and Mogollon Airpark, Inc. is an HOA, not such a taxing district.

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Essay Questions

Instructions: The following questions are designed for a more in-depth, essay-format response. Do not provide answers.

1. Analyze the competing interpretations of the term “regular assessment” as presented by the petitioners and the respondent. Discuss the Administrative Law Judge’s final interpretation and the principles of statutory construction used to arrive at that conclusion.

2. The Administrative Law Judge’s decision distinguishes between the legality of the assessment increase and the legality of the late fee. Explain the legal reasoning behind this split decision, focusing on the specific wording of ARIZ. REV. STAT. section 33-1803(A) and the different statutory construction applied to each clause.

3. Discuss the procedural limitations of the hearings as described in the legal decision, specifically referencing the concept of a “single-issue petition.” How did this limitation affect the scope of the case and prevent the judge from ruling on certain serious allegations made by Brown and Stevens?

4. Based on the “Findings of Fact,” describe the background allegations of financial misconduct made by the petitioners against Mogollon’s treasurer and board. Although not ruled upon, explain how these allegations served as the primary motivation for their legal challenges regarding the assessment and fee increases.

5. Trace the procedural history of the “029 matter,” from its original petition and dismissal to the eventual rehearing and final order. What does this process reveal about the requirements for filing a successful petition with the Office of Administrative Hearings?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, weighs evidence, and makes legal rulings and decisions, in this case, Judge Thomas Shedden.

ARIZ. REV. STAT. section 33-1803(A)

The specific Arizona statute at the heart of the dispute. It limits HOA regular assessment increases to 20% over the prior year and caps late payment charges to the greater of $15 or 10% of the unpaid assessment.

Assessment

A fee or charge levied by a homeowners’ association on its members to cover operating expenses, reserve funds, and other costs.

Bylaws

A set of rules adopted by an organization, like an HOA, to govern its internal management and operations. Part of the governing documents.

Covenants, Conditions & Restrictions. These are legal obligations recorded in the deed of a property, governing its use and maintenance. Part of the governing documents.

Consolidated Matter

A legal procedure where multiple separate cases or petitions involving common questions of law or fact are combined into a single hearing to promote efficiency.

Docket Number

A unique number assigned by a court or administrative office to identify a specific case. The matters in this case were identified as 029, 045, and 054.

Governing Documents

The collection of legal documents, including CC&Rs and Bylaws, that establish the rules and authority of a homeowners’ association.

Petitioner

The party who files a petition initiating a legal action in an administrative or court proceeding. In this case, Warren R. Brown and Brad W. Stevens.

Preponderance of the Evidence

The standard of proof in this case. It means the greater weight of the evidence shows that a fact is more likely than not to be true.

Regular Assessment

As interpreted by the ALJ, a specific type of recurring annual assessment for an HOA’s general operating budget, subject to the 20% increase limit in section 33-1803(A).

Respondent

The party against whom a petition is filed. In this case, Mogollon Airpark, Inc.

Single-Issue Petition

A petition that limits the scope of the administrative hearing to a single, specific legal question or alleged violation, as was the case for the 029 and 054 matters.

Special Assessment

As interpreted by the ALJ, a one-time or non-recurring assessment levied for a specific purpose (e.g., replenishing a reserve fund). The ALJ found it is not subject to the 20% annual increase cap that applies to regular assessments.

Statutory Construction

The process and principles used by judges to interpret and apply legislation. The judge used these principles to determine the meaning of “regular” and “assessment” in the statute.

How One Word Let an HOA Raise Dues by 40%—And 4 Surprising Lessons for Every Homeowner

Imagine opening your annual bill from your Homeowner’s Association (HOA) and discovering your dues have skyrocketed by nearly 40% overnight. This isn’t a hypothetical scenario. It’s precisely what happened to homeowners in the Mogollon Airpark community in Arizona when their HOA board raised the annual assessment by $325, from $825 to $1,150—a staggering 39.4% increase.

But the homeowners weren’t just angry about the amount; they alleged the increase was justified by a “fabricated shortfall” created through “deceptive and nonstandard accounting methods.” At first glance, the hike also seemed legally impossible. Arizona state law, specifically ARIZ. REV. STAT. section 33-1803(A), clearly states that an HOA cannot impose a regular assessment that is more than 20% greater than the previous year’s. So how did the Mogollon Airpark board legally circumvent this cap? The answer, found in the fine print of an administrative law judge’s decision, reveals critical lessons for every homeowner about the power of language, legal strategy, and reading the fine print.

1. The Power of a Name: The “Special Assessment” Loophole

The HOA’s strategy was deceptively simple. Instead of raising the annual assessment by the full $325, the Mogollon Airpark board split the increase into two distinct parts. First, it raised the “regular assessment” by $116. This amounted to a 14.1% increase over the previous year’s $825, keeping it well within the 20% legal limit. The remaining $209 was then levied as a separate fee, which the board classified as a “special assessment.”

When homeowners challenged this, the Administrative Law Judge sided with the HOA. The judge’s ruling was based on a strict reading of the statute: the 20% cap applies only to “regular assessments,” not “special assessments.” By simply calling a portion of the increase a “special assessment,” the HOA legally circumvented the very law designed to protect homeowners from massive, sudden fee hikes.

Lesson 1 for Homeowners: The name of a fee is everything. State-mandated caps on “regular” assessments offer zero protection if your HOA can simply reclassify an increase as a “special” assessment.

2. Every Word Is a Battlefield: “Regular” Doesn’t Mean What You Think

The homeowners, petitioners Warren Brown and Brad Stevens, built their case on a common-sense interpretation of the law. They argued that the term “regular assessment” in the statute referred to the process by which an assessment is created—that is, any fee approved through a regular motion, second, and vote by the board. By this logic, the entire $325 increase was a single “regular assessment” and therefore violated the 20% cap. They also argued that the HOA had no authority under its own governing documents to impose a special assessment in the first place.

The judge, however, rejected this definition. The judge reasoned that lawmakers don’t add words to statutes for no reason. If “regular” simply meant “voted on normally,” the word would be redundant, as all assessments are assumed to be passed this way. To give the word meaning, it must refer to a specific type of assessment. To support this interpretation, the judge pointed to another Arizona statute, 33-1806, which explicitly uses the distinct terms “regular assessments” and “special assessment[s].” This proved that the state legislature intended for them to be entirely different categories of fees, cementing the HOA’s victory on the main issue.

Lesson 2 for Homeowners: Every word in a statute has a purpose. Courts assume lawmakers don’t use words accidentally, and a layperson’s “common-sense” definition of a term can be easily defeated by established principles of legal interpretation.

3. A Small Victory on a Technicality: Why You Should Still Read the Fine Print

While the homeowners lost the battle over the 39.4% dues increase, one petitioner, Mr. Brown, secured a small but significant win on a separate issue: late fees. The Mogollon Airpark board had instituted a new $25 late fee, which Mr. Brown challenged.

Arizona law limits late fees to “the greater of fifteen dollars or ten percent of the amount of the unpaid assessment.” The HOA argued that this limit, like the 20% cap, only applied to regular assessments. This time, the judge disagreed. The judge’s logic was a textbook example of statutory interpretation: when lawmakers include a specific word in one part of a law but omit it from another, courts assume the omission was deliberate. In the section of the law governing late fees, the limit applies to “assessments” in general; the word “regular” is conspicuously absent.

Because the HOA’s $25 fee exceeded the legal limit, the judge ruled in favor of Mr. Brown. The court ordered the HOA to rescind the illegal late fee and, importantly, to reimburse Mr. Brown for his $500 filing fee.

Lesson 3 for Homeowners: The fine print cuts both ways. While one word can create a loophole for an HOA, the absence of that same word elsewhere can be your most powerful weapon.

4. Fighting the Right Battle in the Right Place: The Allegations a Judge Couldn’t Hear

Underlying the dispute over the 20% cap were much more serious allegations. The homeowners’ petitions claimed the HOA board used “deceptive and nonstandard accounting methods,” including keeping “two sets of books,” to create a “fabricated shortfall” and justify the massive fee increase.

Yet, none of these explosive claims were ever addressed during the hearing. The reason was a crucial matter of legal procedure. The homeowners had filed what are known as “single-issue petitions,” which focused narrowly and exclusively on the violation of the 20% assessment cap in statute 33-1803(A). This strategic choice legally prevented the judge from considering the broader allegations of financial mismanagement, regardless of their merit.

In a pointed footnote, the judge highlighted the procedural constraints and suggested the homeowners had chosen the wrong legal venue for their most serious claims:

Considering the nature of Messrs. Brown and Stevens’s allegations, the civil courts may be better suited than an administrative tribunal to address the issues they raise.

Lesson 4 for Homeowners: Your legal strategy is as important as your evidence. Choosing the right claims to file and the right venue to file them in can determine whether a judge is even allowed to hear your most compelling arguments.

Conclusion: Your Most Powerful Tool

The case of Mogollon Airpark is a powerful illustration of how legal battles are won and lost not on broad principles of fairness, but on the precise definitions of individual words. The presence of the word “regular” in one clause of the law cost the homeowners their central fight, allowing the HOA to circumvent the 20% cap. In a stunning contrast, the absence of that very same word in another clause handed them a clear victory on late fees.

This case is a stark reminder of the power hidden in legal definitions and fine print. It leaves every homeowner with a critical question: Do you really know what your governing documents—and the state laws that bind them—truly allow?

Case Participants

Petitioner Side

Warren R. Brown (petitioner)
Appeared pro se
Brad W. Stevens (petitioner)
Appeared pro se; presented testimony/evidence

Respondent Side

Gregory A. Stein (respondent attorney)
CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Mark K. Sahl (respondent attorney)
CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Spelled Mark K. Saul in some transmissions

Neutral Parties

Thomas Shedden (ALJ)
OAH
Judy Lowe (Commissioner)
Arizona Department of Real Estate
Felicia Del Sol (clerk/staff)
Transmitting staff

Nathan Brown v. Val Vista Lakes Community Association

Posted on February 4, 2019 by [email protected]

Case Summary

Case ID	19F-H1918029-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2019-02-04
Administrative Law Judge	Thomas Shedden
Outcome	The Petitioner's claim that the Respondent HOA violated A.R.S. § 33-1803(E) was dismissed, as the notice issued was determined to be a Notice of Non-Compliance (courtesy letter) and not a Notice of Violation required to carry the specific disclosure.
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Nathan Brown	Counsel	—
Respondent	Val Vista Lakes Community Association	Counsel	Clint Goodman, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1803(E)

Outcome Summary

The Petitioner's claim that the Respondent HOA violated A.R.S. § 33-1803(E) was dismissed, as the notice issued was determined to be a Notice of Non-Compliance (courtesy letter) and not a Notice of Violation required to carry the specific disclosure.

Why this result: The Petitioner failed to meet the burden of proof to show that the Respondent violated A.R.S. § 33-1803(E).

Key Issues & Findings

Whether the HOA violated A.R.S. § 33-1803(E) by failing to include notice of the option to petition for an administrative hearing in a Notice of Non-Compliance.

Petitioner alleged that the Respondent's Notice of Non-Compliance regarding dead vegetation was actually a Notice of Violation and lacked the statutory disclosure required by A.R.S. § 33-1803(E). The ALJ found the document was a courtesy letter and not a Notice of Violation, and even if it were, the statute did not require the disclosure in this context because the Petitioner filed the petition before Respondent took enforcement action or completed the statutory response exchange.

Orders: Petitioner Nathan Brown's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

ARIZ. REV. STAT. section 33-1803(E)
ARIZ. REV. STAT. section 32-2199.01
ARIZ. REV. STAT. section 33-1803(C)
ARIZ. REV. STAT. section 33-1803(D)
ARIZ. ADMIN. CODE § R2-19-119
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11

Analytics Highlights

Topics: statutory interpretation, violation notice, non-compliance, courtesy letter, right to petition

Additional Citations:

33-1803(E)
32-2199.01
33-1803(C)
33-1803(D)
R2-19-119

Video Overview

Audio Overview

Decision Documents

19F-H1918029-REL Decision – 686796.pdf

Uploaded 2026-04-25T09:59:54 (88.4 KB)

19F-H1918029-REL Decision – 686796.pdf

Uploaded 2026-01-23T17:27:46 (88.4 KB)

Brown v. Val Vista Lakes Community Association: Case Briefing

Executive Summary

This document provides a detailed analysis of the Administrative Law Judge (ALJ) Decision in case No. 19F-H1918029-REL, wherein Petitioner Nathan Brown’s petition against the Val Vista Lakes Community Association was dismissed. The central issue was whether an initial “Notice of Non-Compliance” sent by the Association constituted a formal “Notice of Violation” under Arizona Revised Statutes (A.R.S.) section 33-1803(E), thereby requiring immediate disclosure of the member’s right to an administrative hearing.

The ALJ ruled decisively in favor of the Respondent Association. The decision rested on two primary conclusions: First, a reasonable reading of the document in question showed it to be a preliminary “courtesy letter” and not a formal Notice of Violation, as it explicitly warned that a Notice of Violation would be issued later if the issue was not remedied. Second, the ALJ determined that even if the document were considered a Notice of Violation, a plain reading of the statute does not require the disclosure of hearing rights to be included in the initial notice itself. The statute allows for this information to be provided at a later stage in the process, specifically after the member has submitted a formal response. The Petitioner’s failure to follow the statutory response procedure was a key factor in the ruling that the Association had not yet been required to provide the disclosure. Ultimately, the Petitioner failed to meet the burden of proof, and his petition was dismissed.

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Case Overview

Case Number

19F-H1918029-REL

Parties

Petitioner: Nathan Brown
Respondent: Val Vista Lakes Community Association

Adjudicator

Administrative Law Judge Thomas Shedden

Office of Administrative Hearings, Phoenix, Arizona

Hearing Date

January 16, 2019

Decision Date

February 4, 2019

Final Outcome

Petition Dismissed; Respondent deemed the prevailing party.

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Background and Timeline of Events

• October 18, 2018: The Val Vista Lakes Community Association mailed a “Notice of Non-Compliance” to Nathan Brown regarding dead vegetation in his yard. The notice requested that the situation be remedied by November 1, 2018, and warned that failure to do so would result in the issuance of a “Notice of Violation that may involve fines.”

• October 24, 2018 (approx.): Mr. Brown filed a petition with the Arizona Department of Real Estate, initiating the legal matter.

• November 11, 2018: The Association issued a formal “Notice of Violation” to Mr. Brown concerning the same issue raised in the initial notice.

• November 27, 2018: The Arizona Department of Real Estate issued a Notice of Hearing.

• January 16, 2019: An administrative hearing was held, with Mr. Brown representing himself and Clint Goodman, Esq. representing the Association. Testimony was heard from Mr. Brown and Simone McGinnis, the Association’s general manager.

• February 4, 2019: ALJ Thomas Shedden issued a decision dismissing Mr. Brown’s petition.

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Core Legal Dispute and Arguments

The dispute centered on the interpretation and application of A.R.S. § 33-1803, which governs the process for notifying homeowners of violations of community documents.

Petitioner’s Position (Nathan Brown)

• Central Claim: The “Notice of Non-Compliance” received on October 18, 2018, was functionally and legally a “Notice of Violation.”

• Alleged Violation: The notice violated A.R.S. § 33-1803(E) because it failed to include “written notice of the member’s option to petition for an administrative hearing on the matter in the state real estate department.”

Respondent’s Position (Val Vista Lakes Community Association)

• Central Claim: The “Notice of Non-Compliance” was not a formal “Notice of Violation” but rather a “courtesy letter,” which is a common industry practice permitted by the Association’s governing documents.

• Defense: Because the initial letter was not a statutory Notice of Violation, the requirements of A.R.S. § 33-1803 were not applicable to that specific communication.

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Administrative Law Judge’s Analysis and Decision

The ALJ concluded that the Petitioner, Mr. Brown, bore the burden of proof by a preponderance of the evidence and failed to meet that standard. The decision was based on a series of factual findings and legal conclusions drawn from a “fair and sensible” interpretation of the statute.

Key Findings of Fact

• The Association mailed Mr. Brown a Notice of Non-Compliance on October 18, 2018.

• This notice informed Mr. Brown of a CC&R violation (dead vegetation) and stated that a failure to remedy the issue would result in a subsequent “Notice of Violation” with potential fines.

• Mr. Brown did not send a written response to the Association regarding the Notice of Non-Compliance, a step outlined in A.R.S. § 33-1803(C).

• Mr. Brown was later issued a formal Notice of Violation on November 11, 2018.

Conclusions of Law (Legal Rationale)

The ALJ’s decision to dismiss the petition was founded on three distinct legal interpretations:

1. Distinction Between Notices: The judge ruled that the initial communication was not a statutory Notice of Violation.

◦ The ruling states, “a reasonable reading of the Notice of Non-Compliance shows that it is not a Notice of Violation, because it informs Mr. Brown that a Notice of Violation would be issued if he did not appropriately address the ‘situation.'”

◦ This established the letter as a preliminary courtesy notice, distinct from the formal enforcement action that triggers statutory requirements.

2. Statutory Interpretation of A.R.S. § 33-1803: The judge concluded that even if the initial notice was a Notice of Violation, the Association still did not violate the statute.

◦ The decision notes, “a plain reading of ARIZ. REV. STAT. section 33-1803 shows that a Notice of Violation is not required to include notice of the right to petition the Department of Real Estate because subsections D and E both show that any required notice can be given at other times.”

◦ The statute outlines a process where the member can respond via certified mail, and the Association’s duty to provide information about contesting the notice (including the right to a hearing) arises from that exchange.

3. Petitioner’s Procedural Failure: The judge found that the Association’s obligations under the statute were never triggered because Mr. Brown bypassed the prescribed process.

◦ The decision highlights that Mr. Brown did not file a written response with the Association but instead filed his petition with the Department just a few days after receiving the initial notice.

◦ The ruling concludes, “a sensible reading of the statute shows that the Respondent was not required to provide Mr. Brown with notice of a right to petition the Department at any time pertinent to this matter.”

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Final Order and Implications

• Order: The ALJ ordered that “Petitioner Nathan Brown’s petition is dismissed.”

• Prevailing Party: The Respondent, Val Vista Lakes Community Association, was deemed the prevailing party in the matter.

• Further Action: The decision is binding unless a party files for a rehearing with the Commissioner of the Department of Real Estate within 30 days of the service of the order, as stipulated by A.R.S. §§ 32-2199.02(B), 32-2199.04, and 41-1092.09.

Study Guide: Brown v. Val Vista Lakes Community Association (No. 19F-H1918029-REL)

Short Answer Quiz

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

1. Who were the primary parties involved in case No. 19F-H1918029-REL, and what were their roles?

2. What specific statute did the Petitioner, Nathan Brown, allege that the Respondent violated?

3. What was the initial issue that prompted the Respondent to contact Mr. Brown on October 18, 2018?

4. What was Nathan Brown’s central legal argument concerning the “Notice of Non-Compliance”?

5. How did the Val Vista Lakes Community Association characterize the “Notice of Non-Compliance,” and why was this distinction critical to its defense?

6. According to the Findings of Fact, what procedural step did Mr. Brown fail to take after receiving the initial notice from the association?

7. What is the standard of proof required in this matter, and which party was responsible for meeting it?

8. What were the Administrative Law Judge’s two primary legal conclusions that led to the dismissal of the petition?

9. What was the final Order issued by the Administrative Law Judge on February 4, 2019?

10. What recourse was available to the parties following the judge’s Order, and what was the specified time limit for that action?

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Answer Key

1. The primary parties were Nathan Brown, who served as the Petitioner, and the Val Vista Lakes Community Association, which was the Respondent. Mr. Brown brought the complaint against the association, which was defending its actions.

2. Nathan Brown alleged that the Respondent violated ARIZ. REV. STAT. section 33-1803(E). This section concerns an association’s obligation to provide a member with written notice of their option to petition for an administrative hearing.

3. The Respondent contacted Mr. Brown regarding dead vegetation in his yard, which was considered a violation of the community’s CC&Rs. The “Notice of Non-Compliance” requested that he remedy the situation by November 1, 2018.

4. Mr. Brown’s central argument was that the “Notice of Non-Compliance” was, in fact, a “Notice of Violation.” Therefore, he contended it should have included written notice of his option to petition for an administrative hearing with the state real estate department, as required by statute.

5. The Association characterized the notice as a “courtesy letter,” which is a common practice for providing an initial warning before formal action. This distinction was critical because the Association argued that as a mere courtesy letter and not a formal “Notice of Violation,” it was not subject to the statutory disclosure requirements of ARIZ. REV. STAT. section 33-1803.

6. Mr. Brown did not send a written response to the Respondent via certified mail within 21 calendar days of the notice. This response is an option provided to members under ARIZ. REV. STAT. section 33-1803(C).

7. The standard of proof was a “preponderance of the evidence.” The burden of proof was on the Petitioner, Nathan Brown, to show that the Respondent had violated the statute.

8. First, the judge concluded that a reasonable reading of the document shows it was not a “Notice of Violation” because it explicitly threatened that one would be issued later. Second, the judge concluded that even if it were a “Notice of Violation,” the statute does not require the hearing disclosure to be in the initial notice, and since Mr. Brown did not follow the response procedure, the Respondent’s obligation to provide that disclosure had not yet been triggered.

9. The final Order was that Petitioner Nathan Brown’s petition be dismissed. The judge also deemed the Respondent to be the prevailing party in the matter.

10. A party could file a request for a rehearing with the Commissioner of the Department of Real Estate. Pursuant to ARIZ. REV. STAT. section 41-1092.09, this request had to be filed within 30 days of the service of the Order.

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Essay Questions

Instructions: Consider the following questions. Formulate comprehensive, evidence-based answers using only the information and legal reasoning presented in the case decision.

1. Analyze the distinction between a “Notice of Non-Compliance” (or “courtesy letter”) and a “Notice of Violation” as presented in this case. Discuss why this distinction was the central point of contention and how the Administrative Law Judge’s interpretation of the document’s plain language resolved the issue.

2. Explain the legal standard of “preponderance of the evidence” as defined in the decision. Discuss how Nathan Brown’s failure to meet this standard, as the party with the burden of proof, was fundamental to the dismissal of his petition.

3. Examine the Administrative Law Judge’s interpretation of the procedural requirements outlined in ARIZ. REV. STAT. section 33-1803(C), (D), and (E). How does the judge’s “sensible reading” of the statute’s timeline and reciprocal obligations undermine the Petitioner’s claim, even setting aside the debate over the notice’s title?

4. Describe the complete procedural timeline of this case, from the initial notice sent by the association to the final order from the Administrative Law Judge. Identify the key dates and actions taken by each party and by the Office of Administrative Hearings.

5. Discuss the role of statutory interpretation in this legal decision. How did the judge apply established legal principles, such as aiming for a “fair and sensible result” and avoiding “absurd and unreasonable construction,” to support the final ruling against the Petitioner?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official, in this case Thomas Shedden, who presides over administrative hearings and makes legal decisions.

ARIZ. REV. STAT.

Abbreviation for Arizona Revised Statutes, which are the codified laws of the state of Arizona. The specific statute at the center of this case is section 33-1803.

Burden of Proof

The obligation of a party in a legal case to prove their allegations. In this matter, the burden of proof was on the Petitioner, Nathan Brown.

An acronym for Covenants, Conditions, and Restrictions. The decision implies these are the governing community documents that Mr. Brown was accused of violating due to dead vegetation.

Courtesy Letter

A term used by the Respondent to describe the “Notice of Non-Compliance.” It is characterized as a common industry practice to inform a resident of an issue before issuing a formal Notice of Violation.

Notice of Non-Compliance

The specific document dated October 18, 2018, sent to Mr. Brown. It informed him of dead vegetation, requested a remedy, and warned that a “Notice of Violation” could follow.

Notice of Violation

A formal notification that a violation has occurred. The decision establishes this as a distinct and more serious step than a “Notice of Non-Compliance,” and one was issued to Mr. Brown on November 11, 2018.

Petitioner

The party who files a petition initiating a legal action. In this case, Nathan Brown was the Petitioner.

Preponderance of the Evidence

The standard of proof required in this hearing. It is defined 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.”

Prevailing Party

The party who wins the legal case. The Administrative Law Judge deemed the Respondent to be the prevailing party.

Rehearing

A legal process to have a case heard again. The parties were notified of their right to request a rehearing with the Commissioner of the Department of Real Estate within 30 days.

Respondent

The party against whom a petition is filed. In this case, the Val Vista Lakes Community Association was the Respondent.

📔

19F-H1918029-REL

1 source

This source is the Administrative Law Judge Decision for a case titled Nathan Brown vs. Val Vista Lakes Community Association, heard by the Arizona Office of Administrative Hearings. The dispute centers on whether a Notice of Non-Compliance sent to Mr. Brown regarding dead vegetation in his yard constitutes a Notice of Violation under ARIZ. REV. STAT. section 33-1803(E). Mr. Brown argued that the Association violated this statute by failing to include written notice of his option to petition for an administrative hearing in the initial notice. However, the Administrative Law Judge found that the initial document was merely a courtesy letter and not a formal Notice of Violation, and further concluded that the statute does not require the disclosure of the right to petition the Department of Real Estate within the initial violation notice. Ultimately, the judge determined that the Association was not required to provide Mr. Brown with the notice of his right to petition at any relevant time and dismissed Mr. Brown’s petition.

Case Participants

Petitioner Side

Nathan Brown (petitioner)
Appeared on his own behalf

Respondent Side

Clint Goodman (HOA attorney)
Goodman Law Group
Appeared for the Respondent
Simone McGinnis (general manager)
Val Vista Lakes Community Association
Presented testimony
Ashley N. Moscarello (HOA attorney)
Goodman Law Group
Recipient of transmission
Clint Brown (HOA attorney)
Goodman Law Group
Recipient of transmission (listed separately from Clint Goodman)

Neutral Parties

Thomas Shedden (ALJ)
Office of Administrative Hearings
Judy Lowe (Commissioner)
Arizona Department of Real Estate
F Del Sol (admin staff)
Transmitted document

Jerry R. Collis vs. Laveen Meadows Homeowners Association

Posted on December 18, 2018 by [email protected]

Case Summary

Case ID	19F-H18020-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2018-12-20
Administrative Law Judge	Thomas Shedden
Outcome	The Petitioner's challenge against the HOA was dismissed because the Petitioner failed to prove by a preponderance of the evidence that the HOA violated the community documents or statutes when issuing citations.
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Jerry R. Collis	Counsel	—
Respondent	Laveen Meadows HOA c/o Planned Development Services	Counsel	Chad Gallacher, Esq.

Alleged Violations

CC&Rs Sections 10.11.2, 10.11.4, and 10.16; A.R.S. § 32-2199.01(A)

Outcome Summary

The Petitioner's challenge against the HOA was dismissed because the Petitioner failed to prove by a preponderance of the evidence that the HOA violated the community documents or statutes when issuing citations.

Why this result: Petitioner failed to meet the burden of proof.

Key Issues & Findings

Challenge to HOA fine citations/improper enforcement of parking and nuisance rules

Petitioner claimed the Respondent HOA improperly issued citations against him for vehicle violations (inoperable vehicle, street parking, nuisance), asserting the HOA could not violate CC&R 10.11.4 but that the citations alleging the violation were unwarranted.

Orders: Petitioner Jerry R. Collis’s petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
ARIZ. REV. STAT. § 32-2199.01

Analytics Highlights

Topics: HOA Enforcement, CC&Rs, Vehicle Parking, Nuisance, Burden of Proof

Additional Citations:

ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
ARIZ. REV. STAT. § 32-2199.01

Video Overview

Audio Overview

Decision Documents

19F-H18020-REL Decision – 677244.pdf

Uploaded 2026-04-24T11:14:51 (97.6 KB)

19F-H18020-REL Decision – 677244.pdf

Uploaded 2026-01-23T17:25:31 (97.6 KB)

Briefing Document: Collis v. Laveen Meadows HOA (Case No. 19F-H18020-REL)

Executive Summary

This document synthesizes the findings and decision in the administrative hearing of Jerry R. Collis (Petitioner) versus the Laveen Meadows HOA (Respondent). The Administrative Law Judge dismissed Mr. Collis’s petition, which alleged the HOA had wrongly issued citations concerning his vehicle.

The central issue revolved around a series of violation notices issued to Mr. Collis for an “Inoperable Vehicle.” While Mr. Collis focused his argument on proving the vehicle was, in fact, operational, the HOA successfully argued that the citations were based on a broader set of violations. These included not only the vehicle’s condition under CC&R Section 10.11.4 but also violations for street parking (Section 10.11.2) and creating a nuisance (Section 10.16) due to its unsightly appearance, which included cobwebs, debris, a flat tire, and a covered window.

The Judge concluded that the petitioner, Mr. Collis, failed to meet the burden of proof. By only addressing the vehicle’s operability, he did not disprove the other valid grounds for the citations. Consequently, the Judge found that the HOA had not violated its own governing documents or state statutes, dismissing the petition and declaring the HOA the prevailing party.

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1. Case Overview and Core Dispute

• Case Number: 19F-H18020-REL

• Parties:

◦ Petitioner: Jerry R. Collis (representing himself)

◦ Respondent: Laveen Meadows HOA (represented by Chad Gallacher, Esq.)

• Adjudicator: Thomas Shedden, Administrative Law Judge

• Hearing Date: December 4, 2018

• Decision Date: December 20, 2018

The Petitioner’s Allegation

On September 17, 2018, Jerry R. Collis filed a petition with the Arizona Department of Real Estate. The initial Notice of Hearing framed the allegation as the Laveen Meadows HOA having violated Article 10, Section 10.11.4 of its Covenants, Conditions, and Restrictions (CC&Rs), which pertains to inoperable vehicles.

At the December 4, 2018 hearing, Mr. Collis clarified his position. He argued that the issue was not that the HOA itself could violate that section, but that the HOA had wrongly issued him citations alleging a violation of that provision when his vehicle was fully operational.

The Respondent’s Position

The Laveen Meadows HOA, represented by Community Manager Lisa Riesland, objected to this reframing of the issue. The HOA contended that the citations issued to Mr. Collis were justified under multiple sections of the CC&Rs, not solely the “inoperable vehicle” clause. The HOA’s actions were based on violations of Sections 10.11.2 (street parking), 10.11.4 (inoperable vehicle), and 10.16 (nuisance).

2. Relevant CC&R Provisions

The dispute centered on the interpretation and application of three specific sections within the Laveen Meadows HOA CC&Rs.

Section

Title / Subject

Description

10.11.4

Inoperable Vehicles

Prohibits any motor vehicle “which are not in operating condition” from being parked in unenclosed areas, including driveways. This section was amended in May 2013 to clarify the definition of “operating condition.”

10.11.2

Street Parking

Prohibits parking on the streets within the community.

Nuisances

Prohibits nuisances, which are defined to include conditions that are “unsightly or that could reasonably cause annoyance to other members of the Association.”

3. Analysis of Evidence and Timeline

Violation Notices and Fines

Between September 2016 and June 2017, the HOA sent seven notifications to Mr. Collis regarding his vehicle. A key finding from the hearing was that while all seven notices stated, “Violation: Vehicle Parking – Inoperable Vehicle,” none of them cited a specific provision of the CC&Rs.

The timeline of notifications and fines is as follows:

• September 19, 2016: Initial letter citing expired tags and an inoperable vehicle on the street. Given 10 days to correct.

• October 11, 2016: Letter warning of a potential $25 fine. Notified of appeal rights. No evidence of appeal by Collis.

• December 1, 2016: A $25 fine was charged to Mr. Collis’s account. Mr. Collis appealed this to the HOA Board.

• January 26, 2017: The HOA Board sent a letter to Mr. Collis denying his appeal.

• April 20, 2017: A $50 fine and a $10 mailing fee were charged. No evidence of appeal.

• May 9, 2017: A $100 fine and a $10 mailing fee were charged. No evidence of appeal.

• May 23, 2017: A $100 fine and a $10 mailing fee were charged. No evidence of appeal.

• June 8, 2017: A $100 fine and a $10 mailing fee were charged. No evidence of appeal.

• June 26, 2017: A $100 fine and a $10 mailing fee were charged. No evidence of appeal.

For each fine assessed from October 2016 onwards, the HOA’s letters informed Mr. Collis of his right to appeal to the Board and to request an administrative hearing. The record shows no evidence that Mr. Collis requested an administrative hearing for any of the fines prior to filing his petition in 2018.

Competing Testimonies

• Petitioner (Collis): Testified that his vehicle was never inoperable. He acknowledged that at the time of the June 2017 letters, the vehicle had a flat tire and a covered window, but explained this was the result of vandalism.

• Respondent (HOA): Community Manager Lisa Riesland provided testimony deemed “credible” by the Judge. She stated that the vehicle’s condition constituted a nuisance under Section 10.16. Specific details included:

◦ Cobwebs and debris on or beneath the vehicle.

◦ At various times, cobwebs extended from the vehicle to the ground, trapping leaves.

◦ The condition was deemed “unsightly.”

4. Legal Conclusions and Final Order

Burden of Proof

The Judge established that Mr. Collis, as the petitioner, bore the burden of proof. The standard required was a “preponderance of the evidence,” meaning evidence sufficient to incline a fair and impartial mind to one side of the issue over the other.

Judge’s Rationale

The decision rested on the following legal conclusions:

1. CC&Rs as a Contract: The CC&Rs constitute a binding contract between the homeowner and the HOA, requiring both parties to comply with its terms. The HOA must act reasonably in exercising its authority.

2. Multiple Grounds for Citations: The preponderance of evidence demonstrated that the HOA’s citations were based on violations of Sections 10.11.2 (street parking), 10.11.4 (inoperable vehicle), and 10.16 (nuisance).

3. Insufficiency of Petitioner’s Argument: Because the citations were multifaceted, Mr. Collis’s argument that his vehicle was in operating condition was insufficient to prove the citations were unwarranted. His claim did not address the evidence of street parking or the unsightly conditions that constituted a nuisance.

4. Failure to Meet Burden of Proof: Ultimately, the Judge concluded: “Mr. Collis has failed to show that the Respondent violated any of the CC&Rs, other community documents, or the statutes that regulate planned communities.”

Final Order

IT IS ORDERED that Petitioner Jerry R. Collis’s petition is dismissed.

The decision established the Laveen Meadows HOA as the prevailing party. This order is binding unless a rehearing is requested with the Commissioner of the Department of Real Estate within 30 days of the service of the order (December 20, 2018).

Study Guide: Collis v. Laveen Meadows HOA

This guide provides a detailed review of the Administrative Law Judge Decision in the matter of Jerry R. Collis (Petitioner) versus Laveen Meadows HOA (Respondent), Case No. 19F-H18020-REL. It includes a short-answer quiz with an answer key, a set of essay questions for deeper analysis, and a glossary of key terms found within the legal document.

Short-Answer Quiz

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

1. Who were the primary parties involved in this administrative hearing, and who represented them?

2. What was the original violation Mr. Collis alleged against the Laveen Meadows HOA in his petition filed on September 17, 2018?

3. How did Mr. Collis clarify or reframe the issue he was raising during the December 4, 2018 hearing?

4. According to the HOA’s community manager, Lisa Riesland, what three CC&R sections were the basis for the citations issued to Mr. Collis?

5. What common phrase was used to describe the violation in all seven notifications sent to Mr. Collis, and what crucial detail did these notifications omit?

6. Describe the initial fine issued to Mr. Collis, including the date of the letter and the amount.

7. What physical evidence did the HOA present to support its claim that Mr. Collis’s vehicle created an “unsightly condition” under CC&R Section 10.16?

8. In addition to the unsightly conditions, what two other issues with the vehicle were noted around June 2017, and what was Mr. Collis’s explanation for them?

9. According to the “Conclusions of Law,” who bears the burden of proof in this matter, and what is the required standard of proof?

10. What was the final order issued by the Administrative Law Judge, and what was the legal consequence of this decision for the parties?

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Answer Key

1. The primary parties were Jerry R. Collis, the Petitioner, who appeared on his own behalf, and Laveen Meadows HOA, the Respondent. The Respondent was represented by Chad Gallacher, Esq.

2. Mr. Collis’s original petition, as shown in the Notice of Hearing, alleged that the Laveen Meadows HOA had violated Article 10, Section 10.11.4 of its own CC&Rs. This section pertains to parking motor vehicles that are not in operating condition in unenclosed areas.

3. At the hearing, Mr. Collis acknowledged the HOA could not violate its own rule and clarified that the real issue was that the HOA had wrongly issued him citations for violating Section 10.11.4. He argued that he was not, in fact, in violation of that provision.

4. Lisa Riesland testified that the citations were based not just on Section 10.11.4 (inoperable vehicles), but also on Section 10.11.2, which prohibits parking on the streets, and Section 10.16, which prohibits nuisances.

5. All seven notifications sent to Mr. Collis included the statement: “Violation: Vehicle Parking – Inoperable Vehicle.” However, none of the notifications listed a specific provision of the CC&Rs that had allegedly been violated.

6. The first fine was detailed in a letter dated December 1, 2016. The letter informed Mr. Collis that his account had been charged a $25 fine for the ongoing violation of storing an inoperable vehicle on the street.

7. The HOA presented credible testimony from Lisa Riesland that there were cobwebs and debris on or beneath the vehicle. At various times, these cobwebs extended from the vehicle to the ground and had trapped leaves, creating an unsightly condition.

8. Around June 2017, the vehicle also had a flat tire and a bag or cardboard covering one window. Mr. Collis acknowledged these facts and explained that the vehicle had been vandalized.

9. The “Conclusions of Law” state that Mr. Collis, the petitioner, bears the burden of proof. The standard of proof required to decide all issues in the matter is that of a “preponderance of the evidence.”

10. The Administrative Law Judge ordered that Mr. Collis’s petition be dismissed. This legally binding order deemed the Respondent (Laveen Meadows HOA) to be the prevailing party in the matter.

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Essay Questions

Instructions: The following questions are designed for longer, essay-style responses to encourage a deeper analysis of the case. Answers are not provided.

1. Analyze the discrepancy between Mr. Collis’s initial petition alleging a violation of Section 10.11.4 and the actual issue he raised at the hearing. How did this “reframing” of the issue affect his case, and how did the Respondent react?

2. Discuss the concept of “preponderance of the evidence” as defined in the document. Explain how the Administrative Law Judge applied this standard to the evidence presented by both Mr. Collis and the HOA to reach the final decision.

3. Trace the series of notifications and fines issued by the Laveen Meadows HOA, beginning with the September 19, 2016 letter. Evaluate the HOA’s process and communication based on the details provided in the letters. Did the HOA act reasonably, according to the legal standards cited in the decision?

4. The HOA cited three different CC&R sections (10.11.2, 10.11.4, and 10.16) as the basis for the citations, even though the notifications only stated “Vehicle Parking – Inoperable Vehicle.” Explore the significance of each of these sections and explain why Mr. Collis’s focus on his vehicle being operable was insufficient to win his case.

5. Examine the appeal options available to Mr. Collis at each stage of the violation process. Based on the “Findings of Fact,” what actions did he take or fail to take regarding his appeal rights, and how might this have impacted the overall trajectory of the dispute?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official (Thomas Shedden in this case) who presides over administrative hearings, weighs evidence, and makes legal rulings and decisions.

ARIZ. ADMIN. CODE

The Arizona Administrative Code, a compilation of rules and regulations of Arizona state agencies. Section R2-19-119 is cited as establishing the standard of proof for the hearing.

ARIZ. REV. STAT.

The Arizona Revised Statutes, which are the codified laws of the state of Arizona. Various sections are cited regarding homeowner association disputes and administrative procedures.

Appearances

A formal term for the individuals present and participating in the hearing. In this case, it was Jerry R. Collis and Chad Gallacher, Esq.

The governing body of the Laveen Meadows HOA, to which Mr. Collis had the right to appeal fines. He appealed one fine to the Board, which was denied.

Burden of Proof

The legal obligation of a party in a dispute to provide sufficient evidence to prove their claim. In this case, the burden of proof was on Mr. Collis.

CC&Rs (Covenants, Conditions & Restrictions)

The governing legal documents that set out the rules for a planned community or homeowners’ association. The decision establishes the CC&Rs as a contract between the HOA and its members.

Community Manager

An individual responsible for managing the operations of the HOA. Lisa Riesland served this role for the Respondent and testified at the hearing.

Conclusions of Law

The section of the decision where the Administrative Law Judge applies legal principles and statutes to the established facts to reach a judgment.

Findings of Fact

The section of the decision that lists the established, undisputed facts of the case based on evidence and testimony presented during the hearing.

Nuisance

A condition prohibited by CC&R Section 10.16. It is defined as a condition that is unsightly or could reasonably cause annoyance to other members of the Association.

Operating Condition

A term from CC&R Section 10.11.4, which was amended in May 2013 to clarify its meaning. Mr. Collis argued his vehicle was always in operating condition.

The final, legally binding ruling of the Administrative Law Judge. In this case, the Order was to dismiss the petitioner’s petition.

Petitioner

The party who initiates a legal action or files a petition. In this matter, Jerry R. Collis is the Petitioner.

Preponderance of the Evidence

The standard of proof required in this hearing. It is defined 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.”

Respondent

The party against whom a petition is filed. In this matter, Laveen Meadows HOA is the Respondent.

🏛️

19F-H18020-REL

1 source

The provided text consists of an Administrative Law Judge Decision from the Office of Administrative Hearings concerning a dispute between Petitioner Jerry R. Collis and the Laveen Meadows HOA, which is the Respondent. This decision addresses Mr. Collis’s petition alleging the HOA violated its CC&Rs by improperly issuing citations related to his vehicle. The Findings of Fact detail that Mr. Collis’s vehicle was cited for being inoperable, having expired tags, and creating an unsightly condition defined as a nuisance under multiple CC&R sections. Ultimately, the Conclusions of Law state that Mr. Collis failed to meet his burden of proof to show the HOA violated any community documents or statutes, leading to the dismissal of his petition.

Case Participants

Petitioner Side

Jerry R. Collis (petitioner)

Respondent Side

Chad Gallacher (HOA attorney)
Maxwell & Morgan, P.C.
Counsel for Respondent Laveen Meadows HOA
Lisa Riesland (community manager)
Laveen Meadows HOA
Testified for Respondent

Neutral Parties

Thomas Shedden (ALJ)
Office of Administrative Hearings
Judy Lowe (Commissioner)
Arizona Department of Real Estate

Other Participants

f del sol (admin support)
Signed copy distribution notice

Warren R. Brown vs. Mogollon Airpark, Inc(ROOT)

Posted on October 18, 2018 by [email protected]

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

Case Summary

Case ID	18F-H1818029-REL-RHG; 18F-H1818045-REL; 18F-H1818054-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2018-10-18
Administrative Law Judge	Thomas Shedden
Outcome	The ALJ found Mogollon did not violate ARS § 33-1803(A) concerning the 39.4% assessment increase (Matters 029 and 054), rejecting the Petitioners' interpretation of 'regular assessment.' However, Petitioner Brown prevailed in Matter 045, proving Mogollon violated the late charge limit of ARS § 33-1803(A) by charging a $25 late fee, resulting in a refund of his $500 filing fee and rescission of the fee.
Filing Fees Refunded	$1,500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Warren R. Brown	Counsel	—
Respondent	Mogollon Airpark, Inc.	Counsel	Gregory A. Stein, Esq.; Mark K. Sahl, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1803(A)
ARIZ. REV. STAT. section 33-1803(A)
ARIZ. REV. STAT. section 33-1803(A)

Outcome Summary

The ALJ found Mogollon did not violate ARS § 33-1803(A) concerning the 39.4% assessment increase (Matters 029 and 054), rejecting the Petitioners' interpretation of 'regular assessment.' However, Petitioner Brown prevailed in Matter 045, proving Mogollon violated the late charge limit of ARS § 33-1803(A) by charging a $25 late fee, resulting in a refund of his $500 filing fee and rescission of the fee.

Why this result: The assessment increase claims (029 and 054) were lost because the ALJ determined that interpreting 'regular assessment' as referring to the procedural method (motion, second, vote) would render the word 'regular' trivial or void in the statute.

Key Issues & Findings

Late payment charges limitation (045 Matter)

Petitioner Brown (045 matter) alleged the HOA violated ARS § 33-1803(A) by charging a $25 late fee. The ALJ found that the statutory limitation on late charges applies to all 'assessments,' not just 'regular assessments,' and found the $25 late charge was in violation.

Orders: Mogollon Airpark Inc. must rescind the $25 late fee assessed against Mr. Brown; Mogollon must pay Mr. Brown his filing fee of $500.00 within thirty days.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

ARIZ. REV. STAT. section 33-1803(A)

Assessment increase greater than 20% limit (029 Matter)

Petitioner Brown (029-RHG matter) argued the 39.4% increase violated the 20% cap because 'regular assessment' refers to the procedure for instituting any assessment. The ALJ rejected this interpretation, finding it rendered the word 'regular' void in the statute.

Orders: Petition dismissed.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

ARIZ. REV. STAT. section 33-1803(A)

Assessment increase greater than 20% limit (054 Matter)

Petitioner Stevens (054 matter) alleged the HOA's $325 assessment increase was unlawful under the 20% cap. The ALJ dismissed the petition, applying the same statutory interpretation as in the 029 matter, holding that Mogollon's classification of the majority of the increase as a special assessment was valid under the statute.

Orders: Petition dismissed.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

ARIZ. REV. STAT. section 33-1803(A)

Video Overview

Audio Overview

Decision Documents

18F-H1818029-REL-RHG Decision – 666285.pdf

Uploaded 2026-04-24T11:10:42 (151.9 KB)

18F-H1818029-REL-RHG Decision – 672623.pdf

Uploaded 2026-04-24T11:10:45 (144.6 KB)

Briefing Document: Brown and Stevens v. Mogollon Airpark, Inc.

Executive Summary

This document synthesizes the findings and conclusions of an Administrative Law Judge (ALJ) decision concerning three consolidated petitions filed by residents Warren R. Brown and Brad W. Stevens against their homeowners’ association, Mogollon Airpark, Inc. The core of the dispute revolves around a significant 2018 assessment increase and the legality of associated late fees under Arizona statute.

The central legal question was the interpretation of ARIZ. REV. STAT. section 33-1803(A), which limits an HOA’s ability to “impose a regular assessment that is more than twenty percent greater than the immediately preceding fiscal year’s assessment.” The petitioners argued that the HOA’s total 39.4% increase violated this cap. The HOA contended the increase was comprised of a compliant “regular assessment” and a separate “special assessment” not subject to the cap.

The ALJ’s decision resulted in a split outcome:

• On the Assessment Increase: The judge ruled in favor of Mogollon Airpark, Inc. The petitions challenging the assessment increase were dismissed. The ALJ’s rationale was that statutory construction requires distinguishing between “regular” and “special” assessments, and the 20% cap applies only to the former.

• On the Late Fees: The judge ruled in favor of Petitioner Warren R. Brown. The HOA’s $25 late fee was found to be in violation of the statutory limit, which applies to “assessments” in general, not just “regular assessments.” The HOA was ordered to rescind the fee and reimburse the petitioner’s filing costs.

Underlying these specific legal challenges were broader allegations by the petitioners of deceptive accounting practices and financial mismanagement by the HOA’s treasurer, which they claimed were intended to create a false justification for the assessment increase. These allegations were noted but not adjudicated in this hearing.

I. Case Overview

The matter concerns a consolidated hearing held on September 28, 2018, at the Office of Administrative Hearings in Phoenix, Arizona. Administrative Law Judge Thomas Shedden presided over the case, which combined three separate petitions against the respondent, Mogollon Airpark, Inc.

• Petitioners: Warren R. Brown and Brad W. Stevens.

• Respondent: Mogollon Airpark, Inc.

• Docket Numbers:

◦ 18F-H1818029-REL-RHG (“029 matter”): Warren R. Brown, Petitioner

◦ 18F-H1818045-REL (“045 matter”): Warren R. Brown, Petitioner

◦ 18F-H1818054-REL (“054 matter”): Brad W. Stevens, Petitioner

II. Central Disputes and Allegations

A. The 2018 Assessment Increase (Matters 029 & 054)

The primary dispute centered on Mogollon Airpark’s 2018 assessment changes.

• Previous Assessment (2017): $825

• 2018 Increase: $325, representing a 39.4% total increase.

• HOA’s Breakdown of Increase:

◦ Regular Assessment Increase: $116 (a 14.1% increase over $825)

◦ Special Assessment: $209

• Legal Challenge: The petitioners alleged the total $325 increase violated ARIZ. REV. STAT. section 33-1803(A), which prohibits an HOA from imposing a “regular assessment that is more than [20%] greater than the immediately preceding fiscal year’s assessment” without member approval.

B. Late Fees and Interest Charges (Matter 045)

The second dispute, raised by Mr. Brown, concerned new penalties for late payments.

• New Charges: A $25 late fee and 18% interest on past-due accounts.

• Legal Challenge: Mr. Brown alleged these charges violated the same statute, which limits late fees to “the greater of fifteen dollars or ten percent of the amount of the unpaid assessment.” He presented an invoice showing he was charged a $25 late fee and $1.57 in interest.

C. Underlying Allegations of Financial Impropriety

Although the hearing’s scope was limited, the petitions were rooted in serious allegations of financial misconduct by the HOA. These claims formed the petitioners’ motive for challenging the assessments but were not the direct subject of the ALJ’s ruling.

• Core Claim: The petitioners asserted that Mogollon’s treasurer and others used “deceptive and nonstandard accounting methods,” including keeping two sets of books, to create the appearance of a financial shortfall.

• Alleged Purpose: This “fabricated shortfall” was allegedly used to convince the Board of Directors that a 39.4% dues increase was necessary.

• Petitioners’ Financial View: Mr. Stevens testified that he believed the HOA possessed funds in excess of $1 million and therefore did not require the increased assessment.

• ALJ’s Acknowledgment: The decision noted, “Considering the nature of Messrs. Brown and Stevens’s allegations, the civil courts may be better suited than an administrative tribunal to address the issues they raise. Regardless, the substance of their allegations was not addressed in this hearing.”

III. Arguments of the Parties

The central legal conflict hinged on the interpretation of the term “regular assessment” within the statute.

Petitioners’ Position (Brown & Stevens)

Respondent’s Position (Mogollon Airpark, Inc.)

Assessment Increase

The term “regular assessment” in § 33-1803(A) describes the process by which an assessment is instituted (i.e., by motion, second, and vote). Therefore, the entire $325 increase is a single assessment subject to and in violation of the 20% statutory cap. They further argued the HOA’s governing documents provide no authority to impose “special assessments.”

“Regular assessment” and “special assessment” are distinct types of assessments and industry terms of art. The 20% cap applies only to the regular portion. The $116 regular increase (14.1%) was compliant. The existence of the term “special assessment” in another statute (§ 33-1806) proves the legislature intended this distinction.

Late Fees

The 25latefeeisaclearviolationofthestatutorylimitof”15.00 or 10%.” The statutory text for late fees applies to “assessments” generally, not just “regular assessments.”

The statutory limit on late fees applies only to regular assessments. Since the late fee was charged on a special assessment, it did not violate the statute.

IV. Administrative Law Judge’s Decision and Rationale

The ALJ applied principles of statutory construction to arrive at a split decision, finding for the respondent on the main issue of the assessment increase but for the petitioner on the secondary issue of late fees.

A. Ruling on the Assessment Increase (Matters 029 & 054)

• Conclusion: The petitions filed by Mr. Brown and Mr. Stevens were dismissed. Mogollon Airpark, Inc. was deemed the prevailing party.

• Rationale: The judge concluded that the petitioners had not shown by a preponderance of the evidence that the statute was violated. Their definition of “regular assessment” as a procedural term was found to be inconsistent with principles of statutory construction. The judge reasoned that if “regular” simply meant the standard process of passing an assessment, the word would be redundant (“trivial or void”) because all assessments must follow that process. This interpretation supports the view that the legislature intended to differentiate between types of assessments, and that the 20% cap applies only to the “regular” type.

B. Ruling on Late Fees (Matter 045)

• Conclusion: Petitioner Warren R. Brown was deemed the prevailing party.

• Rationale: The judge rejected Mogollon’s argument that late fee limits apply only to regular assessments. The statutory text states, “Charges for the late payment of assessments are limited to…” without the “regular” qualifier. The ALJ determined that adding the word “regular” where the legislature chose to omit it would violate statutory construction principles. Therefore, the $25 late fee, being greater than the allowed $15 or 10%, was illegal.

V. Final Orders

The ALJ issued the following binding orders on October 18, 2018:

• ORDER FOR DOCKET NO. 18F-H1818029-REL-RHG (Brown vs. Mogollon):

◦ The petition is dismissed.

• ORDER FOR DOCKET NO. 18F-H1818045-REL (Brown vs. Mogollon):

◦ Petitioner Warren R. Brown is deemed the prevailing party.

◦ Mogollon Airpark Inc. must rescind the $25 late fee it assessed against Mr. Brown.

◦ Mogollon Airpark Inc. must pay Mr. Brown his filing fee of $500.00 within thirty days.

• ORDER FOR DOCKET NO. 18F-H1818054-REL (Stevens vs. Mogollon):

◦ The petition is dismissed.

Study Guide: Brown and Stevens v. Mogollon Airpark, Inc.

This study guide provides a review of the consolidated administrative hearing involving petitioners Warren R. Brown and Brad W. Stevens against the respondent, Mogollon Airpark, Inc. The case centers on disputes over Homeowners Association (HOA) assessments and fees under Arizona law.

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Short-Answer Quiz

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

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

2. What specific actions did Mogollon Airpark, Inc. take in 2018 that led to the legal petitions?

3. What was the total percentage increase of the 2018 assessment, and how did Mogollon Airpark, Inc. break down this increase?

4. Explain the petitioners’ main legal argument regarding the assessment increase and which statute they claimed was violated.

5. How did Mogollon Airpark, Inc. legally defend its decision to increase the assessment by more than 20%?

6. What was the central issue in the “045 matter” filed by Warren R. Brown?

7. Upon what legal principle did the Administrative Law Judge primarily rely to reach his conclusions on both the assessment increase and the late fee?

8. Why did the judge rule in favor of Mogollon Airpark on the assessment increase but in favor of Warren R. Brown on the late fee?

9. What were the underlying allegations made by the petitioners concerning Mogollon Airpark’s financial management that were not addressed in the hearing?

10. What was the final outcome and order for each of the three consolidated petitions (029, 045, and 054)?

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Answer Key

1. The petitioners were Warren R. Brown (dockets 029 and 045) and Brad W. Stevens (docket 054), who were members of the HOA. The respondent was Mogollon Airpark, Inc., the HOA being challenged. The matter was decided by Administrative Law Judge Thomas Shedden.

2. Mogollon Airpark, Inc. raised its 2018 assessment by a total of $325. It also instituted a new $25 fee for late payments and began charging 18% interest on past-due accounts.

3. The total increase of $325 over the previous year’s assessment of $825 constituted a 39.4% increase. Mogollon classified this increase as two separate parts: a $116 (14.1%) increase to the “regular assessment” and a $209 “special assessment.”

4. The petitioners argued that the total $325 increase violated ARIZ. REV. STAT. section 33-1803(A), which prohibits an HOA from imposing a “regular assessment” that is more than 20% greater than the previous year’s assessment. They contended that the term “regular assessment” refers to the standard process of levying an assessment (motion, second, vote), not a specific type of assessment.

5. Mogollon Airpark, Inc. argued that the 20% limit in section 33-1803(A) applies only to “regular assessments” and not to “special assessments,” which it claimed is a separate term of art in the industry. Since the increase to the regular assessment was only $116 (14.1%), it was below the 20% statutory threshold and therefore legal.

6. The central issue in the “045 matter” was Warren R. Brown’s allegation that Mogollon’s $25 late fee and 18% interest charge violated section 33-1803(A). The statute limits late charges to the greater of fifteen dollars or ten percent of the unpaid assessment.

7. The judge primarily relied on principles of statutory construction. This involved giving meaning to every word in the statute and not reading words into a provision where the legislature omitted them, which led to different interpretations of the statute’s clauses on assessments versus late fees.

8. The judge ruled against the petitioners on the assessment because their interpretation would make the word “regular” in the statute redundant. However, he ruled for Brown on the late fee because the statutory text limits charges on “assessments” in general, not just “regular assessments,” and to rule otherwise would require adding a word the legislature did not include.

9. The petitioners alleged that Mogollon’s treasurer engaged in deceptive and nonstandard accounting practices, including keeping two sets of books, to create a “fabricated shortfall.” They claimed this was done to falsely justify the need for the assessment increase, as the HOA actually had over $1 million in funds.

10. The petitions in the 029 matter (Brown) and 054 matter (Stevens) concerning the assessment increase were both dismissed. The petition in the 045 matter (Brown) concerning the late fee was successful; Mogollon was ordered to rescind the $25 fee and reimburse Brown’s $500 filing fee.

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Essay Questions

Instructions: Consider the following questions for a more in-depth analysis of the case. Formulate a comprehensive response based solely on the information in the provided legal decision.

1. Analyze the role of statutory construction in the Administrative Law Judge’s decision. How did the interpretation of the specific word “regular” and the general term “assessments” shape the final, divergent outcomes for the consolidated petitions?

2. Discuss the petitioners’ underlying allegations of deceptive accounting practices. Although not the central issue of the hearing, how did these claims frame the dispute, and why did the judge note that civil courts might be better suited to address them?

3. Compare and contrast the legal arguments presented by the petitioners and the respondent regarding the interpretation of ARIZ. REV. STAT. section 33-1803(A). Evaluate the strengths and weaknesses of each side’s position as described in the decision.

4. Trace the procedural history of the “029 matter,” from its initial filing and dismissal to the rehearing. What does this progression reveal about the procedural requirements for filing a successful petition with the Office of Administrative Hearings?

5. Evaluate the outcome of the consolidated hearing. Why was one petitioner successful on one claim while both were unsuccessful on another, despite the claims originating from the same set of actions by the HOA?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official, in this case Thomas Shedden, who presides over hearings at the Office of Administrative Hearings and issues decisions and orders.

ARIZ. REV. STAT. section 33-1803(A)

The specific Arizona statute at the center of the dispute. It limits HOA “regular assessment” increases to 20% over the prior year and caps late payment charges at the greater of $15 or 10% of the unpaid assessment.

Assessment

A fee imposed by an HOA on its members. The case distinguishes between a “regular assessment” (a recurring charge) and a “special assessment” (a one-time charge for a specific purpose).

Burden of Proof

The obligation of the petitioners, Messrs. Brown and Stevens, to prove their allegations against the respondent.

Consolidated Matter

The joining of multiple, separate legal petitions (in this case, 029, 045, and 054) into a single hearing because they involved the same parties and related issues.

Petitioner

A party who files a petition initiating a legal action. In this matter, Warren R. Brown and Brad W. Stevens were the petitioners.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It is defined as evidence with the most convincing force that inclines an impartial mind to one side of an issue over the other.

Respondent

The party against whom a petition is filed. In this matter, Mogollon Airpark, Inc. was the respondent.

Single-Issue Petition

A petition filed with the Department of Real Estate that is limited to a single allegation, which in the case of Mr. Stevens’s 054 matter required a $500 filing fee.

Statutory Construction

The legal process of interpreting and applying legislation. The judge used principles of statutory construction to determine the meaning of “regular assessment” and “assessments” in the relevant statute.

How One Word Created an HOA Loophole for a 40% Fee Hike—And How Another Word Gave a Homeowner a Key Victory

1.0 Introduction: The Dreaded HOA Letter

It’s the letter every homeowner dreads opening. A crisp envelope from the Homeowners Association lands in your mailbox, and inside is a notice that your mandatory fees are about to skyrocket. For a group of homeowners in Arizona’s Mogollon Airpark, this scenario became a reality when their HOA announced a staggering 39.4% increase in their annual assessments.

What followed was a legal battle that provides a fascinating and cautionary tale for every homeowner living under an HOA. The dispute, which pitted homeowners Warren Brown and Brad Stevens against Mogollon Airpark, Inc., didn’t hinge on fairness or financial need, but on the legal interpretation of a single word. This article distills the surprising and counter-intuitive lessons learned from their fight, revealing loopholes and legal technicalities that can make all the difference.

2.0 A 40% Fee Hike Can Be Legal Thanks to the “Special Assessment” Loophole

The core of the dispute was the massive fee hike. Mogollon Airpark, Inc. raised its 2018 assessment by $325 from the previous year’s $825—a 39.4% increase. This seemed to be a clear violation of Arizona law (ARIZ. REV. STAT. section 33-1803(A)), which explicitly prohibits an HOA from increasing a “regular assessment” by more than 20% in one year without a majority vote from members.

The HOA, however, employed a clever strategy. It split the $325 increase into two distinct parts:

• A $116 “regular assessment” increase, which amounted to a legal 14.1% hike.

• A separate $209 “special assessment.”

The HOA argued that the 20% statutory cap only applied to the “regular” portion of the increase, making their move perfectly legal.

The homeowners countered that this was a deceptive maneuver. They argued that the term “regular assessment” in the law refers to the process of creating an assessment (a motion, a second, and a vote), not a specific type of assessment. From their perspective, the entire 39.4% increase was a single action and was therefore illegal.

In a surprising ruling, the Administrative Law Judge sided with the HOA. The judge reasoned that if the homeowners’ interpretation was correct and all assessments followed the same “regular” process, then the word “regular” in the statute would be rendered “trivial or void.” By giving meaning to that single word, the judge affirmed that “regular assessments” and “special assessments” are different categories, and the 20% cap only applies to the former. This interpretation effectively creates a significant loophole for HOAs to bypass statutory limits and implement large fee increases.

3.0 The Devil Is in the Details: “Regular Assessment” vs. “Assessments”

While the HOA won the main argument over the 39.4% increase, they lost on a smaller but crucial point: late fees. Along with the assessment hike, the HOA instituted a new $25 late fee for overdue payments.

Homeowner Warren Brown challenged this fee, pointing to the same state law. He argued that the statute limits late fees to “the greater of fifteen dollars or ten percent of the amount of the unpaid assessment.” Since the new $25 fee exceeded this limit, it was a direct violation.

Emboldened by their victory on the assessment increase, the HOA extended its logic, arguing that since the late fee was applied to a special assessment, the statutory limit—which they claimed was intended for regular assessments—did not apply.

This time, the judge decisively ruled in favor of the homeowner. The judge highlighted a critical distinction in the law’s wording. The part of the statute limiting assessment increases uses the specific term “regular assessment.” However, the part of the law limiting late charges uses the broader, more general term “assessments.” The omission of the word “regular” was the key.

The judge’s reasoning was a masterclass in statutory construction:

This argument fails because the statute’s limit on late charges applies to “assessments,” not “regular assessments.” Under Mogollon’s interpretation, it is necessary to add the word “regular” where the legislature chose not to use it. This violates principles of statutory construction.

This outcome underscores the immense importance of precise legal language. The legislature’s choice to omit a single word in one clause of a law gave the homeowner a clear victory and held the HOA accountable.

4.0 Serious Allegations Don’t Guarantee a Day in Court

Underlying the homeowners’ legal challenge were serious allegations of financial misconduct. Mr. Brown and Mr. Stevens claimed the HOA treasurer used “deceptive and nonstandard accounting methods,” kept “two sets of books,” and created a “fabricated shortfall” to justify the assessment increase and “convince the Board that a 39.4% increase in dues was required.”

Surprisingly, none of these explosive allegations were addressed during the hearing. The reason for this is a crucial lesson in legal strategy. The homeowners had filed “single-issue petitions,” which legally limited the scope of the administrative hearing to one narrow question: did the HOA violate the specific statute governing assessment increases (ARIZ. REV. STAT. section 33-1803(A))? All other matters, including the allegations of accounting improprieties, were outside the hearing’s jurisdiction.

The judge explicitly noted this limitation in a footnote to the decision:

Considering the nature of Messrs. Brown and Stevens’s allegations, the civil courts may be better suited than an administrative tribunal to address the issues they raise. Regardless, the substance of their allegations was not addressed in this hearing.

This case is a powerful reminder that in law, the structure of your argument can be more important than the weight of your accusations. By filing a narrow petition, the homeowners guaranteed a hearing on that one issue but forfeited the chance to have their broader, more serious claims heard in that venue.

5.0 A Partial Victory Is Still a Victory

The final outcome of the consolidated case was decidedly mixed. The homeowners lost their primary challenge, and the court upheld the HOA’s $325 assessment increase.

However, Mr. Brown was officially deemed the “prevailing party” in his case regarding the illegal late fees. This was not just a moral victory; it came with a direct order from the judge. Mogollon Airpark Inc. was ordered to:

• Rescind the $25 late fee it assessed against Mr. Brown.

• Pay Mr. Brown back his $500 filing fee for the case.

While it wasn’t the total win they had hoped for, this outcome demonstrates that a single, well-prepared homeowner can successfully hold their HOA accountable for breaking the law, even on smaller matters. It proves that knowing the rules and persevering can lead to tangible results, forcing an association to correct its illegal actions and compensating the homeowner for the cost of the fight.

6.0 Conclusion: Know the Law, Word by Word

The case of Brown and Stevens vs. Mogollon Airpark is a potent lesson in how legal battles are won and lost in the margins. A single word—”regular”—opened a loophole for the HOA to impose a nearly 40% fee hike, while the deliberate absence of that same word in a later clause empowered a homeowner to strike back and win.

This case serves as a powerful reminder that when it comes to the laws governing your community, every word matters. It poses a vital question for all homeowners: are the protections you count on in state law as ironclad as you think, or could they evaporate based on the interpretation of a single adjective?

Case Participants

Petitioner Side

Warren R. Brown (petitioner)
Appeared on his own behalf
Brad W. Stevens (petitioner)
Appeared on his own behalf; presented testimony

Respondent Side

Gregory A. Stein (attorney)
CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Counsel for Respondent Mogollon Airpark, Inc.
Mark K. Sahl (attorney)
CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Counsel for Respondent Mogollon Airpark, Inc.

Neutral Parties

Thomas Shedden (ALJ)
Judy Lowe (Commissioner)
Arizona Department of Real Estate
Felicia Del Sol (clerk)
Transmitted the decision

Lawrence M. Stewart v. Canyon Gate Condominium Association, Inc.

Posted on September 14, 2018 by [email protected]

Case Summary

Case ID	18F-H1818052-REL
Agency	Arizona Department of Real Estate
Tribunal	—
Decision Date	9/14/2018
Administrative Law Judge	TS
Outcome	complete
Filing Fees Refunded	—
Civil Penalties	—

Parties & Counsel

Petitioner	Lawrence M. Stewart	Counsel	Pro Se
Respondent	Canyon Gate Condominium Association, Inc.	Counsel	Mark K. Sahl, Esq., Nicolas C. S. Nogami, Esq.

Alleged Violations

No violations listed

Video Overview

Audio Overview

Decision Documents

18F-H1818052-REL Decision – 683622.pdf

Uploaded 2026-04-24T11:13:55 (95.5 KB)

18F-H1818052-REL Decision – 694095.pdf

Uploaded 2026-04-24T11:13:58 (90.8 KB)

18F-H1818052-REL Decision – 660026.pdf

Uploaded 2026-04-24T11:14:03 (91.5 KB)

18F-H1818052-REL Decision – 720468.pdf

Uploaded 2026-04-24T11:14:06 (103.5 KB)

Administrative Decision Briefing: Stewart v. Canyon Gate Condominium Association, Inc.

This briefing document provides a comprehensive analysis of the legal proceedings and final administrative decisions regarding the dispute between Lawrence M. Stewart and the Canyon Gate Condominium Association, Inc. (Case No. 18F-H1818052-REL and 18F-H1818052-REL-RHG).

Executive Summary

The matter originated from a petition filed by Lawrence M. Stewart on May 21, 2018, alleging that the Canyon Gate Condominium Association, Inc. violated Association Bylaws, specifically Section 5.4, regarding the denial of a variance for unauthorized changes made to common or limited common areas.

Mr. Stewart, while serving as a Board member, modified areas around his unit without prior authorization. Upon being notified of a violation of Section 5.1 of the Covenants, Conditions, and Restrictions (CC&Rs), he sought a formal variance. The Board, consisting of two other members, denied this request on February 18, 2018, leading to Mr. Stewart's resignation and subsequent legal action.

Across two hearings—an initial hearing on September 6, 2018, and a rehearing on January 2, 2019—Administrative Law Judge Thomas Shedden consistently ruled in favor of the Association. The central legal finding was that Bylaw Section 5.4 serves as a "shield" against liability for Board members rather than a "sword" for petitioners to challenge Board decisions. Consequently, the petition was dismissed, and the Association was deemed the prevailing party.

Detailed Analysis of Key Themes

1. Interpretation of Bylaw Section 5.4 (Indemnification and Liability)

The crux of the Petitioner's argument rested on Section 5.4 of the Association Bylaws. Mr. Stewart used this section to assert a "good faith" requirement for Board decisions.

The Provision: Section 5.4 states that as long as a Board member acts in "good faith on the basis of information actually possessed," they shall not be liable for damages or loss related to the approval or disapproval of plans or any act/failure to act by the Association.
The Legal Conflict: The Association argued that Section 5.4 was inapplicable because no Board member had been charged with an act requiring indemnity.
The Ruling: The Administrative Law Judge (ALJ) determined that Section 5.4 does not impose a duty on the Board to act in a specific way toward owners; rather, it is a liability shield. Mr. Stewart eventually acknowledged that Section 5.4 acts as a "shield" and not a "sword," admitting he cited it only because he could find no other "good faith" reference in the governing documents.

2. Allegations of Bias and Lack of Good Faith

Mr. Stewart contended that the Board's decision was not made in good faith and that Board member David Larson was specifically biased against him.

Evidence of Bias: Stewart cited Mr. Larson’s biography, meeting notes from November 2017 regarding "Fair Notice" of enforcement (towing, violation notices), and a letter Larson wrote in October 2018 urging members not to vote for Stewart in an election.
Evidence of Bad Faith: Stewart testified that the Board members were unwilling to physically inspect his changes and only took a "cursory look" at his photographs.
The Ruling: The ALJ found the evidence insufficient to prove bias or bad faith by a preponderance of the evidence. Regarding the meeting notes, Larson’s refusal to discuss Board business in driveways or his intent to enforce CC&Rs did not constitute legal bias against Mr. Stewart’s specific variance request.

3. "Pandora's Box" and Reasonable Enforcement

A significant theme was the Board's rationale for denying the variance.

The Association's Defense: The Board denied the request on the basis that granting it would "open a Pandora’s Box," encouraging other owners to request similar variances for common areas.
Selective Enforcement Claims: Mr. Stewart argued he was treated unfairly, presenting photos of other units allegedly not in conformity with the CC&Rs.
The Ruling: The ALJ determined that the Board's fear of a "Pandora's Box" was a reasonable position for a condominium association. Furthermore, the specifics of Stewart’s changes were deemed not germane to the decision if the Board's policy was to prevent a precedent of common area modifications. The evidence of other non-conforming units was dismissed because there was no proof those owners had requested or been denied variances, nor was it known if they had received prior approval.

Important Quotes with Context

Quote	Context
"Mr. Stewart appeared to acknowledge that section 5.4 acts as a 'shield' and not a 'sword,' but he testified to the effect that that was the only section that included a 'good faith' requirement."	Findings of Fact, Para 21 (Initial Decision). This highlights the Petitioner's struggle to find a legal basis for his claim within the governing documents.
"The Board disapproved his changes because they were fearful of opening a Pandora’s Box of people requesting changes to the common area. This was not an unreasonable position for the Board of a condominium association."	Conclusions of Law, Para 7. The Judge validates the Association’s right to deny variances based on the risk of setting a precedent.
"A preponderance of the evidence is… evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue."	Conclusions of Law, Para 3. This defines the standard of proof Mr. Stewart failed to meet in his allegations of bias.
"Bylaws Section 5.4 does not impose any duty on the Board members, but rather shields them from liability if they have acted in good faith."	Conclusions of Law, Para 5 (Rehearing). This is the definitive legal interpretation that led to the dismissal of the petition.

Actionable Insights

For Homeowners and Board Members

Prior Authorization is Mandatory: Modifications to common or limited common areas must receive written approval before work begins. Attempting to secure a "variance" after the fact (as Mr. Stewart did) places the owner in a precarious legal position where the Board has broad discretion to deny the request to prevent setting a precedent.
Understanding Bylaw Limitations: General "good faith" clauses found in indemnification sections are typically intended to protect the Association and its officers from lawsuits; they do not necessarily provide a cause of action for an owner to overturn a Board's discretionary decision.
Evidence Standards in Administrative Hearings: To prove bias or "bad faith," a petitioner must provide specific, probative evidence that links the bias directly to the decision in question. General disagreements or a Board member’s rigorous enforcement of rules do not legally equate to bias.
Burden of Proof: In these administrative matters, the petitioner bears the burden of proof by a "preponderance of the evidence." If the evidence is equally balanced or insufficient to "incline a fair and impartial mind" to the petitioner's side, the case will be dismissed.

For Association Governance

Consistency in Rationale: The Board's use of a consistent rationale (preventing a "Pandora's Box") was viewed as reasonable by the court. Boards should document the policy-based reasons for denying variances to withstand legal scrutiny.
Recusal Protocols: While Mr. Stewart disputed whether he had agreed to recuse himself, the case underscores the importance of clear, documented recusal when a Board member has a personal interest in a matter before the Board.

Study Guide: Stewart v. Canyon Gate Condominium Association, Inc.

This study guide provides a comprehensive overview of the administrative law cases between Lawrence M. Stewart (Petitioner) and the Canyon Gate Condominium Association, Inc. (Respondent). It explores the legal disputes regarding condominium governance, homeowners' association (HOA) board conduct, and the interpretation of association bylaws.

Case Overview and Entities

The conflict arose when Lawrence M. Stewart, a condominium owner and former board member, made unauthorized changes to the common or limited common areas surrounding his unit. The resulting legal proceedings focused on whether the Association Board acted in good faith and within its authority when it denied Mr. Stewart's request for a variance to keep those changes.

Key Entities and Figures

Entity/Figure	Role
Lawrence M. Stewart	Petitioner; unit owner and former Board member of Canyon Gate Condominium Association.
Canyon Gate Condominium Association, Inc.	Respondent; the homeowners' association governing the condominium complex.
Thomas Shedden	Administrative Law Judge (ALJ) who presided over the hearings and issued the decisions.
David Larson	Board member of the Association; accused of bias by Mr. Stewart.
Sandra Fernandez	Board member of the Association during the dispute.
Arizona Department of Real Estate	The state agency with authority over the matter under Ariz. Rev. Stat. Title 32.

Core Themes and Legal Principles

1. The Nature of Association Bylaws

Bylaws are legally viewed as a contract between the Association and the owners. Both parties are required to comply with the terms of this contract. When exercising authority under these bylaws, the Association must act reasonably.

2. The "Shield vs. Sword" Interpretation of Section 5.4

A central point of contention was Bylaws Article V, Section 5.4 (Liability).

The Provision: It states that Board members are not liable for damages or prejudice resulting from their acts (including approval or disapproval of plans) as long as they act in good faith based on information they possess.
The Interpretation: The court determined that Section 5.4 acts as a "shield" (protecting board members from liability) rather than a "sword" (a provision that owners can use to sue the board for lack of good faith in administrative decisions).

3. Standards of Evidence

Burden of Proof: The Petitioner (Mr. Stewart) carries the burden of proving his claims.
Preponderance of the Evidence: The standard of proof required. This is defined as evidence with the most "convincing force" or "superior evidentiary weight," sufficient to incline an impartial mind toward one side of the issue.

4. Board Reasonableness: The "Pandora’s Box" Defense

The Board denied Mr. Stewart’s variance request because they believed granting it would open a "Pandora’s Box," leading other owners to demand similar changes to common areas. The ALJ ruled this was a reasonable position for a condominium association board to take.

Procedural History

Date	Event
November 15, 2017	Association counsel informs Mr. Stewart he is in violation of CC&Rs Section 5.1.
December 27, 2017	Association attorney erroneously writes that Mr. Stewart recused himself from the matter.
February 18, 2018	Board meeting held. Mr. Stewart resigns. The Board votes to deny the variance and orders restoration of the area.
May 21, 2018	Mr. Stewart files his petition with the Arizona Department of Real Estate.
September 6, 2018	Initial hearing conducted at the Office of Administrative Hearings.
September 14, 2018	ALJ issues decision dismissing the petition.
January 2, 2019	Rehearing conducted.
January 17, 2019	Final ALJ decision issued, again dismissing the petition and affirming the Association as the prevailing party.

Short-Answer Practice Questions

1. What specific section of the CC&Rs did the Association claim Mr. Stewart violated?

Answer: Section 5.1, by making changes to common or limited common areas without prior written permission.

2. Why did the ALJ conclude that the specific details of Mr. Stewart’s changes were not "germane" to the Board's decision?

Answer: Because the Board's denial was based on the policy of not wanting to set a precedent ("opening a Pandora’s Box") for common area modifications, the physical specifics of the changes were irrelevant to that policy-based refusal.

3. What evidence did Mr. Stewart provide to suggest David Larson was biased against him?

Answer: Mr. Stewart cited a biography of Larson, meeting notes where Larson gave "Fair Notice" of enforcement actions, Larson's refusal to discuss board business in driveways, and an October 2018 letter Larson wrote urging members not to vote for Stewart in an election.

4. Why was Mr. Stewart’s evidence regarding other non-conforming units deemed not probative?

Answer: Mr. Stewart could not prove those units had requested and been granted variances (as opposed to having pre-approval or being older than two years), meaning their status did not prove the Board treated him unfairly regarding his specific variance request.

5. How did the ALJ define "Preponderance of the Evidence"?

Answer: It is the greater weight of evidence that has the most convincing force; it is superior evidentiary weight that inclines a fair mind to one side even if it doesn't free the mind of all reasonable doubt.

Essay Prompts for Deeper Exploration

Prompt 1: The Scope of Good Faith and Liability

Analyze the Association’s Bylaw Section 5.4. Discuss the legal distinction between a provision that shields a director from personal liability and a provision that creates an actionable duty of "good faith" toward individual homeowners. Why did the ALJ determine that Mr. Stewart could not use Section 5.4 as a "sword"?

Prompt 2: Fairness in HOA Enforcement

Mr. Stewart argued that he was treated unfairly because other units were not in conformity with the CC&Rs. Evaluate the evidentiary requirements for a "selective enforcement" claim based on the case text. What must a petitioner prove to demonstrate that the board is acting inconsistently or in bad faith when denying a variance?

Prompt 3: Judicial Deference to Board Decisions

The ALJ found the Board’s "Pandora’s Box" argument to be a "reasonable position." Explore the balance of power between individual property rights and the collective authority of a homeowners' association. Under what circumstances should an Administrative Law Judge overrule the discretionary decision of a community board?

Glossary of Important Terms

Administrative Law Judge (ALJ): An official who presides over hearings and makes decisions regarding disputes involving government agencies (in this case, the Department of Real Estate).
CC&Rs: Covenants, Conditions, and Restrictions; the governing documents that dictate the rules for a planned community or condominium.
Common Area: Spaces within a condominium project that are owned or used by all members of the association.
Good Faith: An honest intent to act without taking an unfair advantage over another person; acting on the basis of information actually possessed.
Indemnification: A legal agreement to provide financial protection against loss or liability.
Limited Common Area: A portion of the common area reserved for the exclusive use of one or more (but fewer than all) of the units (e.g., a patio or walkway directly outside a unit).
Preponderance of the Evidence: The standard of proof in civil and administrative cases requiring that a fact be more likely true than not.
Recusal: The act of a person (like a board member) disqualifying themselves from participating in a decision due to a potential conflict of interest.
Variance: An official deviation from the set rules or bylaws granted by the governing body (the Board).

The "Pandora’s Box" Dilemma: Lessons from the Stewart vs. Canyon Gate HOA Dispute

1. Introduction: When Home Improvements Meet HOA Realities

Imagine the satisfaction of completing a home improvement project, only to receive a cease-and-desist letter from your HOA Board. This is the nightmare scenario for many homeowners: you’ve modified a common area or balcony, believing it was your right, only to find you have bypassed the Association’s governing documents. What follows is often a high-stakes legal chess match over board authority and the elusive definition of "good faith."

The dispute in Lawrence M. Stewart vs. Canyon Gate Condominium Association, Inc. serves as a masterclass in this conflict. When Mr. Stewart implemented unauthorized changes to the common areas around his unit, he triggered a legal battle that reached the Arizona Office of Administrative Hearings—not once, but twice. This case provides a critical look at why a Board’s decision to deny a variance is often legally fortified and illustrates the steep uphill climb homeowners face when alleging "bad faith."

2. The Conflict: Unauthorized Changes and the Request for a Variance

The friction began when Mr. Stewart modified common or limited common areas without securing prior Board approval. On November 15, 2017, the Association’s legal counsel issued a stark ultimatum: submit a written request for a variance or face a civil lawsuit to compel the restoration of the area.

At the time, the situation was complicated by the fact that Mr. Stewart was a sitting member of the Board. During a tense Board meeting on February 18, 2018, the atmosphere soured. Sensing that his colleagues, Sandra Fernandez and David Larson, had already made up their minds, Mr. Stewart resigned his position mid-meeting. Immediately following his resignation, the remaining two members voted unanimously to deny the variance.

Perhaps the most telling aspect of the legal proceedings that followed was that the Association presented no witnesses. They did not need to. By relying purely on the legal interpretation of the governing documents and the Petitioner’s failure to meet his burden of proof, the Association successfully defended its position without a single person taking the stand on its behalf.

3. The Legal Tug-of-War: Is Good Faith a "Shield" or a "Sword"?

Mr. Stewart’s primary legal gambit rested on Bylaw Section 5.4, which he argued required the Board to act in "good faith." However, the Association dismantled this argument by clarifying that the bylaw was never intended to be a "sword" used to overturn Board votes. Instead, it is an indemnification provision—a "shield" designed to protect Board members from personal financial liability.

The Administrative Law Judge (ALJ) emphasized that Section 5.4 protects members from damages or monetary loss. Because Mr. Stewart was seeking to validate a variance rather than suing for money, the "shield" was legally irrelevant to his cause of action.

Petitioner’s Interpretation (Mr. Stewart)	Association’s Interpretation (Successful Argument)
Argued Section 5.4 imposes a performance duty on the Board to act in "good faith" when denying variances.	Argued Section 5.4 is an indemnification provision protecting members from personal liability.
Attempted to use the section as a "sword" to invalidate the Board’s vote.	Successfully used the section as a "shield" against liability for damages, not a standard for voting.

4. Proving Bias: Why the "Preponderance of Evidence" Matters

In administrative law, the "burden of proof" is the Petitioner's heaviest lift. Mr. Stewart was required to prove his case by a "Preponderance of Evidence." As defined in Black’s Law Dictionary 1373, this means:

"The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force… sufficient to incline a fair and impartial mind to one side of the issue rather than the other."

Mr. Stewart alleged that Board member David Larson was personally biased against him. To support this, he presented three pieces of evidence across the initial hearing and a subsequent rehearing:

A Professional Biography: A bio of Mr. Larson prepared by the property manager.
Meeting Notes: Notes from November 2017 where Mr. Larson used the term "Fair Notice" regarding towing and enforcement, and stated he was too busy to discuss Board business in driveways.
Election Correspondence (Rehearing Evidence): A letter from October 2018 where Mr. Larson urged members not to vote for Mr. Stewart in an upcoming election.

The ALJ found these "feelings" of bias legally insufficient. The judge noted that the "Fair Notice" comments were standard enforcement language, and the election letter—though part of a contentious rehearing process—did not prove the original variance denial was made in bad faith. Mr. Stewart could not point to any specific biased information, and the court ruled that personal friction does not automatically equate to a legal breach of duty.

5. The "Pandora’s Box" Defense and Selective Enforcement

The Association’s most potent defense was the "Pandora’s Box" argument. They argued that granting a variance for unauthorized work would set a community-wide precedent, effectively stripping the Board of its ability to enforce standards in the future.

Citing the legal precedent of Tierra Ranchos Homeowners Ass'n v. Kitchukov, the ALJ noted that an Association must act "reasonably." The judge found the "Pandora's Box" concern to be a quintessential example of reasonableness. Even if Mr. Stewart’s changes were not "readily seen by others," the Board’s duty is to the long-term integrity of the governing documents, not the aesthetics of a single unit.

Mr. Stewart also claimed "selective enforcement," providing photos of other non-conforming units. The ALJ rejected this evidence for three reasons:

Lack of History: Stewart could not prove if those units had received variances more than two years prior.
Pre-approval Unknown: He could not confirm if those changes had been pre-approved, rendering a variance unnecessary.
No Probative Value: The photos were legally irrelevant because Stewart failed to show those owners had actually gone through the same variance process and been granted an exception.

6. Conclusion: Navigating HOA Disputes with Clarity

The final ruling was clear: the petition was dismissed, and the Canyon Gate Condominium Association was deemed the prevailing party. This case reinforces that Boards are afforded significant discretion when they act to prevent a "Pandora's Box" of non-compliance. Consistency is a Board's greatest defense, and the burden of overturning a decision is a high bar that requires more than just a sense of unfairness.

Key Takeaways for Homeowners

[ ] Prior Approval is Non-Negotiable: Always secure written approval from the Board before modifying common or limited common areas.
[ ] The "Shield" is Not a "Sword": Understand that bylaws regarding "good faith" are often designed to protect Board members from personal liability, not to provide a path to overturn their votes.
[ ] Evidence Over Emotion: To win an administrative hearing, you must provide a "preponderance of evidence." Personal feelings of bias or animosity are rarely enough.
[ ] Respect the Precedent: A Board’s primary responsibility is to the Governing Documents. Decisions based on preventing a negative community-wide precedent are almost always viewed as "reasonable" by the courts.

By adhering strictly to the governing documents and ensuring all approvals are in hand before a single hammer swings, homeowners can avoid the "Pandora’s Box" of costly, protracted litigation.

Case Participants

Petitioner Side

Lawrence M. Stewart (Petitioner)
Appeared on his own behalf

Respondent Side

Mark K. Sahl (Counsel for Respondent)
CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Nichols C. S. Nogami (Counsel for Respondent)
CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Also listed as Nicolas C. S. Nogami in related rehearing documents
Sandra Fernandez (Board Member)
Canyon Gate Condominium Association, Inc.
David Larson (Board Member)
Canyon Gate Condominium Association, Inc.

Neutral Parties

Thomas Shedden (Administrative Law Judge)
Office of Administrative Hearings
Judy Lowe (Commissioner)
Arizona Department of Real Estate
F. Del Sol (Administrative Staff)
Office of Administrative Hearings