# Briefing Document: Kidd and Glazer v. Heritage Village III Homeowners Association

## Executive Summary

This briefing document details the legal proceedings and final decision in the consolidated matters of *Taylor Kidd and Jerome L. Glazer vs. Heritage Village III Homeowners Association* (Case Nos. 24F-H037-REL and 24F-H039-REL). The dispute centered on the Respondent’s approval of a $1.55 million "Landscape Improvement Project" and a subsequent $9,385.24 special assessment per homeowner, conducted without a membership vote.

The Office of Administrative Hearings (OAH) ultimately ruled in favor of the Petitioners, Taylor Kidd and Jerome L. Glazer. The Administrative Law Judge (ALJ) determined that the Association’s governing documents explicitly incorporated the "McCormick Ranch CC&Rs," which require a two-thirds majority vote for capital improvement assessments. Because no such vote was held, the Association was found in violation of its Covenants, Conditions, and Restrictions (CC&Rs). The Association was ordered to reimburse the Petitioners' filing fees.

## Procedural History and Case Background

The following table outlines the timeline and administrative milestones of the case:

| Date | Event | Details |
| :--- | :--- | :--- |
| **February 27, 2024** | Petition Filed (Kidd) | Taylor Kidd filed a single-issue petition regarding the landscape project and paid a $500 fee. |
| **February 29, 2024** | Petition Filed (Glazer) | Jerome L. Glazer filed a similar single-issue petition and paid a $500 fee. |
| **May 28, 2024** | Consolidation Order | ALJ Tammy L. Eigenheer ordered the cases consolidated for administrative efficiency. |
| **May 28, 2024** | Cease & Desist Denied | The ALJ denied Glazer's request to halt project expenditures, citing a lack of authority to issue such orders. |
| **May 30, 2024** | Original Hearing Date | Postponed due to a medical emergency involving Petitioner Glazer’s domestic partner. |
| **July 19, 2024** | Rescheduled Hearing | Continued again due to a widespread computer outage. |
| **August 9, 2024** | Evidentiary Hearing | Held before ALJ Adam D. Stone. |
| **August 23, 2024** | Final Decision | ALJ Stone ruled in favor of Petitioners, granting their petitions. |
| **September 23, 2024** | Minute Entry | ALJ Stone declined to consider a Motion for Rehearing, stating such requests must go to the Arizona Department of Real Estate. |

## Detailed Analysis of Key Themes

### 1. Incorporation of External Governing Documents
The central legal conflict involved which CC&Rs governed the Association's actions. While the Association’s own CC&Rs were silent on the requirement for a membership vote for capital improvements, Article VII, Section 1 of their documents stated that the McCormick Ranch CC&Rs "are made part hereof and are hereby referenced as to the provisions required for this entire property." 

The McCormick Ranch CC&Rs (Article III, Section 4) explicitly require the "assent of two-thirds (2/3) of the votes cast by Voting Owners" for special assessments related to capital improvements. The ALJ concluded that the Association could not cherry-pick which parts of the McCormick Ranch CC&Rs applied; the incorporation was total.

### 2. Board Authority vs. Member Consent
The Association, through Board member Jennifer Hutsko, argued that the Board had a fiduciary duty to maintain the property, which was suffering from a 40-year-old failing irrigation system and diseased trees. They contended that since the Association’s specific CC&Rs were silent on voting for maintenance, the Board could act unilaterally. 

The Petitioners successfully argued that the "Landscape Improvement Project" constituted a capital improvement rather than routine maintenance. Consequently, the procedural requirement for a membership vote took precedence over the Board's unilateral decision-making authority.

### 3. Administrative Economy and Efficiency
The Respondent successfully moved to consolidate the Kidd and Glazer cases under ARIZ. ADMIN. CODE R2-19-109(A). The consolidation was granted to avoid "potentially inconsistent rulings" and to promote administrative efficiency, as both matters involved objections from different homeowners to the same Board action. Despite objections from Taylor Kidd regarding potential delays, the ALJ found that the substantially similar factual and legal issues justified a single hearing.

### 4. Jurisdictional Limits of the OAH
A significant procedural theme was the ALJ's limited authority. When Petitioner Glazer requested a Cease and Desist Order to stop the Association from spending funds on the project, the ALJ denied the request, stating, "The Administrative Law Judge is without the authority to issue such an order in this matter." This highlights that while the OAH can adjudicate violations of community documents, its power to grant injunctive-style relief is restricted.

## Important Quotes with Context

> **"Respondent violated McCormick Ranch CC&R’s Article III, Section 4, as it did not take the required vote, as well as and the Association CC&R’s Article VII, Section 1, by failing to follow the McCormick Ranch CC&R’s in regards to the same."**
— *ALJ Adam D. Stone, Final Decision (August 23, 2024)*. This quote summarizes the legal basis for the ruling, confirming that the Association is bound by the voting requirements of the incorporated documents.

> **"The letter also informed homeowners that there was a project cost of $1,557,950.00, which would be divided amongst the 166 homeowners, resulting in a special assessment in the amount of $9,385.24 per homeowner."**
— *Findings of Fact regarding Taylor Kidd's testimony*. This provides the financial context of the dispute and the scale of the financial burden placed on the homeowners without their consent.

> **"While the Administrative Law Judge acknowledges that the decision to consolidate these matters is not required by the applicable rule, it is certainly permitted in this instance as these matters involve substantially similar factual or legal issues."**
— *ALJ Tammy L. Eigenheer, Order Consolidating Matters (May 28, 2024)*. This clarifies the standard for consolidation in administrative hearings, prioritizing "administrative economy."

> **"The document, consisting of Motion for Rehearing, will not be considered as no further action can be taken on the matter. All requests for rehearing must be made directly to the Arizona Department of Real Estate."**
— *ALJ Adam D. Stone, Minute Entry (September 23, 2024)*. This illustrates the finality of the OAH's role and the transition of the case back to the Department of Real Estate for any further administrative appeals.

## Actionable Insights

*   **Review Incorporation Clauses:** Homeowners' associations must carefully review their governing documents for "incorporation by reference" clauses. If an HOA's documents incorporate the rules of a master association (like McCormick Ranch), those rules are legally binding even if they are more restrictive than the HOA's own specific bylaws.
*   **Definition of Capital Improvements:** Boards should clearly distinguish between routine maintenance and "capital improvements." While maintenance may fall under Board authority, major projects—especially those requiring significant special assessments—often trigger mandatory voting requirements.
*   **Special Assessment Procedures:** Before levying a special assessment, Boards must ensure they have met all procedural prerequisites, such as membership votes and quorum requirements, as dictated by the hierarchy of their governing documents.
*   **Reimbursement Risks:** Under ARIZ. REV. STAT. § 32-2199.02(A), if an Association is found in violation, they are legally required to reimburse the Petitioner’s filing fees. In this case, the Association was ordered to pay $1,000 total ($500 to each Petitioner).
*   **Appellate Path:** Parties dissatisfied with an ALJ decision must file their request for a rehearing with the Commissioner of the Department of Real Estate within 30 days of the order, rather than filing with the Office of Administrative Hearings.