HOA Governance vs. Court Settlements: Lessons from The Villages at Aviano

1. The "Election That Never Was": A Community in Conflict

What happens when the most fundamental right of a homeowner—the right to elect the leadership that governs their community—is traded away in a private legal settlement? This central question fueled a protracted legal battle between homeowner Arleen D. Jouxson and The Villages at Aviano Condominium Association.

The dispute stems from an annual election scheduled for April 13, 2021. Despite the fact that 81 absentee ballots had been returned by the deadline—more than enough to satisfy the 10% quorum requirement—the Board abruptly canceled or "continued" the meeting, citing unspecified "unfairness" in the process. The voting was never completed. Instead, the Board eventually seated two directors through a private settlement agreement following a Superior Court lawsuit. This move bypassed the ballot box entirely, sparking a procedural tug-of-war at the Arizona Office of Administrative Hearings (OAH).

2. The Legal Flashpoint: Seating Directors via Settlement

The core of the OAH proceedings, designated as "Issue #1," was whether the Association violated its governing documents and state law by seating Eloise Figueroa and Linda Bahr via a court settlement rather than a traditional member election.

The Petitioner’s Argument

• Prohibited Seating Method: Directors cannot be "elected" by a board contract or settlement agreement.
• Breach of Governance Rights: The Association allegedly violated Bylaw 3.1 and Declaration 6.2, which reserve the right to elect the board exclusively to the unit owners.
• Statutory Violation: The action ran afoul of ARS § 33-1243.B, which expressly prohibits a board from acting on behalf of the association to elect its own members.
• The Quorum Reality: Petitioner noted that 81 absentee ballots were returned by the deadline, proving a quorum was met and the cancellation of the election was unnecessary and improper.

The Respondent’s Defense

• Superior Court Resolution: The seating was the result of a settlement in a Superior Court lawsuit (CV 2021-006916) filed by Ms. Figueroa specifically to enforce her being seated on the board despite the election’s cancellation.
• Vote Certification: The Association claimed it certified that Figueroa and Bahr had received the highest number of votes from the pre-election ballots that were submitted.
• Jurisdictional Shield: The Association argued that a settlement agreement is a private contract, not a "community document" subject to the OAH tribunal’s authority under ARS § 32-2199.

3. Jurisdiction and the "Community Document" Dilemma

Administrative Law Judge (ALJ) Thomas Shedden initially struggled with the jurisdictional boundaries of this case. He first granted a Motion to Dismiss regarding the election issue, reasoning that a "Settlement Agreement" entered in Superior Court is a private contract, distinct from "Community Documents" like Bylaws or Declarations.

However, the Petitioner’s Motion for Reconsideration brought a "meteor" of a legal argument to the forefront: ARS § 33-1203. This statute explicitly states that provisions of the condominium chapter cannot be varied by agreement. Petitioner’s counsel, Ellen Davis, argued that if a board could use a private contract to bypass statutory election requirements, it would create a "slippery slope" or a "parade of horribles." Under such a theory, a board could theoretically use a contract to sell off common elements or even dissolve the association without member consent. This "silver bullet" argument forced the tribunal to take supplemental arguments on whether the Board had the power to contract away member rights.

4. The Quorum Question: A Secondary Dispute

A secondary issue ("Issue #2") concerned a Special Board Meeting held on June 25, 2021. The Petitioner alleged that Figueroa and Bahr, newly seated via the settlement, conducted business without a quorum in violation of Bylaw 3.9.

While this issue initially survived the Association's efforts to dismiss it, the narrative focus of the case eventually shifted. By the June 21, 2022, session, Petitioner’s counsel confirmed that this second issue was no longer being pursued as the community’s focus narrowed to the fundamental right of members to hold an actual election.

5. Behind the Scenes: Evidence and "Cumulative" Testimony

Modern HOA litigation carries significant logistical weight. The hearings were managed via Google Meet, which the ALJ used not just for remote participation but to record the official proceedings.

The ALJ was notably firm regarding judicial efficiency, issuing warnings against "unnecessary cumulative evidence" and limiting the number of witnesses who could testify to the same facts.

Call-Out: Judicial Efficiency & Record Integrity ALJ Shedden requested that any audio recordings intended for evidence be accompanied by written transcripts. He noted that playing raw audio during a hearing is time-consuming and makes it nearly impossible to clearly identify speakers for the official record. Reflecting on his approach to the complex jurisdictional questions, the Judge remarked, "I’d rather promise that I’ll do something thoroughly, which is more my style anyway."

6. Final Takeaways: What Every Homeowner Should Know

The conflict at The Villages at Aviano serves as a stark warning about the high stakes of community litigation and the limits of board power:

1. The Power of the Ballot: Member voting is not a suggestion; it is a fundamental right. When boards cancel meetings where a quorum (like the 81 ballots here) is present, they invite severe legal scrutiny.
2. The "Slippery Slope" of Settlements: Boards must be wary of using private court settlements to bypass bylaws. If a board can seat directors by contract, the integrity of the entire governing structure is at risk.
3. The $500 Prevailing Insight: For homeowners, a vital practical takeaway is the filing fee. Under the pay-as-you-go system, if a petitioner prevails on an issue, the association must refund their $500 fee. As ALJ Shedden noted, even if a violation is "cured" before the hearing, a petitioner can still "prevail" simply to recover that cost.
4. Administrative Limits: The OAH has specific, limited jurisdiction. While it can order compliance with community documents, it cannot always provide the same injunctive relief found in Superior Court.
5. Document Integrity: Clear minutes are essential. The Board’s failure to maintain records for the "canceled" meeting on April 13 created a vacuum of transparency that fueled the ensuing litigation.

In the end, transparency in leadership is the only effective defense against the high costs of community division. When board seats are filled in a "private room" rather than at the ballot box, the entire community pays the price in both legal fees and lost trust.

Source Reference Note

The information in this article is derived from the official records of the Arizona Office of Administrative Hearings, Case No. 22F-H2222030-REL.