Case Summary
| Case ID | 25F-H049-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2025-12-02 |
| Administrative Law Judge | Adam D. Stone |
| Outcome | none |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Jeremy Whittaker | Counsel | — |
|---|---|---|---|
| Respondent | Val Vista Lakes Community Association | Counsel | B. Austin Baillio |
Alleged Violations
A.R.S. § 33-1811
Outcome Summary
The Administrative Law Judge denied the petition, ruling that the Association did not violate A.R.S. § 33-1811. The ALJ interpreted the statute's phrase 'action for compensation' to require proof that the conflicted director's relative received direct additional compensation (such as a bonus or raise) resulting from the contract. Since the Petitioner did not prove the relative received such specific compensation, the Tribunal concluded the statute was not triggered, despite acknowledging the relationship existed.
Why this result: Petitioner failed to prove by a preponderance of the evidence that the board members' relative received a direct financial benefit (compensation) from the specific contracts, which the ALJ deemed necessary to trigger the statutory disclosure requirement.
Key Issues & Findings
Conflict of interest; contracts
Petitioner argued contracts with CHDB Law were void because two directors were immediate family to a partner at the firm and failed to disclose this conflict in open meetings before action was taken.
Orders: Petition denied. Tribunal found Petitioner did not sustain burden of proof that a violation of A.R.S. § 33-1811 occurred.
Filing fee: $500.00, Fee refunded: No
Disposition: petitioner_loss
- A.R.S. § 33-1811
Audio Overview
Decision Documents
25F-H049-REL Decision – 1325671.pdf
25F-H049-REL Decision – 1326128.pdf
25F-H049-REL Decision – 1327595.pdf
25F-H049-REL Decision – 1328824.pdf
25F-H049-REL Decision – 1340610.pdf
25F-H049-REL Decision – 1341273.pdf
25F-H049-REL Decision – 1341623.pdf
25F-H049-REL Decision – 1346067.pdf
25F-H049-REL Decision – 1346912.pdf
25F-H049-REL Decision – 1350318.pdf
25F-H049-REL Decision – 1355212.pdf
25F-H049-REL Decision – 1367233.pdf
25F-H049-REL Decision – 1374019.pdf
Briefing Document: Analysis of Whitaker v. Val Vista Lakes Community Association Hearing
Executive Summary
This document synthesizes testimony and arguments from the administrative hearing in the matter of Whitaker v. Val Vista Lakes Community Association (Docket 25F-H049-REL). The central issue is an alleged violation of Arizona Revised Statute (ARS) § 33-1811, which governs conflicts of interest for board members of homeowners associations. The petitioner, Jeremy Whitaker, alleges that board members Diana Evershower and Brody Herado failed to properly declare conflicts of interest arising from their familial relationships with Jonathan Evershower, a partner at the association’s legal counsel, Carpenter Hazlewood Delgado Bolan (CHDB).
The petitioner contends that numerous actions for compensation involving CHDB—including new engagements, litigation directives, rate increases, and invoice approvals—were undertaken without the required per-issue conflict declarations in an open meeting, as mandated by statute. The respondent, Val Vista Lakes, counters that the statute places the onus on individual directors, not the association, and that no violation occurred because there was no direct financial or other tangible benefit to the directors or their relative. Furthermore, the respondent argues that potential conflicts were disclosed, and that sensitive legal matters are appropriately handled in executive session to protect attorney-client privilege. The hearing featured conflicting testimony from current and former board members, centering on the interpretation of “benefit” under the statute, whether required disclosures were ever made publicly, and the procedural validity of the association’s engagement with its legal counsel.
Central Dispute: Interpretation and Application of ARS § 33-1811
The core of the case revolves around the specific requirements of ARS § 33-1811. The statute dictates that if a board action for compensation would “benefit” a director or their immediate family (including a spouse or child), that director “shall declare a conflict of interest for that issue.” The statute further specifies the declaration must be made “in an open meeting of the board of directors before the board discusses or takes action on that issue.”
Petitioner’s Position
• Per-Transaction Disclosure: The petitioner argues, citing the Arizona Court of Appeals case Arizona’s Biltmore Hotel Villas v. Tomlinfinny, that conflict disclosures must be transaction-specific and contemporaneous. A single, past disclosure is legally insufficient to cover all future actions.
• Broad Definition of “Benefit”: The word “financial” does not appear in the statute. The petitioner posits that “benefit” encompasses more than direct pecuniary gain, including reputational enhancement, shared overhead costs, and the overall economic health of the law firm, which benefits all partners.
• Open Meeting Mandate is Absolute: Disclosures made in executive session or implied through email votes do not satisfy the statute’s explicit “open meeting” requirement. The petitioner asserts that the proper procedure is to declare the conflict in an open session before recessing to an executive session for privileged discussion.
• Association Liability: The actions were taken by individuals acting in their official capacity as board members, making the association liable for the violations.
Respondent’s Position
• No Association Duty: The respondent’s counsel argues that ARS § 33-1811 imposes a duty on individual board members, not the association as an entity. Therefore, the association cannot, as a matter of law, violate the statute.
• No Proven Benefit: The central defense is that no benefit accrued to the directors or their relative. Testimony asserts Jonathan Evershower is a “named partner” but not a shareholder, receives no bonuses, and his salary is derived solely from his own billable hours on matters unrelated to Val Vista Lakes.
• Conflict with Attorney-Client Privilege: The respondent contends that forcing disclosures of legal engagements into open session would conflict with ARS § 33-1804, which authorizes legal discussions in executive session to protect attorney-client privilege.
• Superior Court Precedent: Counsel claims a Maricopa County Superior Court judge has already ruled in a related matter (Nathan Brown lawsuit) that no violation of the statute occurred.
The Alleged Conflict of Interest
The conflict centers on two board members and their relationship to a partner at the CHDB law firm.
• Diana Evershower: Board Treasurer and mother of Jonathan Evershower.
• Brody Herado: Board member and husband of Jonathan Evershower.
• Jonathan Evershower: Identified as a “named partner” at CHDB Law. Testimony indicates he is not a shareholder, receives no bonuses, and his compensation is based on his personal billable hours for clients other than Val Vista Lakes. He does not perform any work for the Val Vista Lakes account.
Key Areas of Contention and Evidence
1. The Nature of “Benefit”
A significant portion of testimony was dedicated to defining whether Jonathan Evershower and, by extension, his family on the board, benefited from CHDB’s work for the association.
Arguments for Benefit (Petitioner)
Arguments Against Benefit (Respondent)
Reputational Benefit: Witness Bill Satell, an attorney and former board president, testified that securing a large client like Val Vista Lakes (over 2,000 members) provides a significant “reputational benefit” that helps the firm attract more clients. He cited a CHDB legal brief where the firm touted itself as “one of the largest community association law firms in the southwest” as evidence of this marketing advantage.
No Financial Link: Brody Herado and Diana Evershower testified that their relative receives no direct financial gain, bonuses, or partnership distributions from Val Vista Lakes’ business. His salary is described as entirely separate from this revenue stream.
Shared Overhead and Firm Viability: Mr. Satell and Mr. Thompson testified that revenue from any client contributes to the firm’s overall health, paying for shared overhead (rent, utilities, malpractice insurance) and ensuring its continued existence, which benefits all partners.
Speculative and Intangible: Respondent’s counsel dismissed the idea of “reputational benefit” as vague, speculative, and not the intended scope of the statute, which was designed to prevent kickback schemes.
Statutory Language: The petitioner repeatedly emphasized that the statute uses the word “benefit” without the qualifier “financial,” implying a broader legislative intent.
“Amazon” Analogy: Respondent’s counsel offered a hypothetical: if a board member worked for Amazon, they would not be expected to declare a conflict every time the association bought lake chemicals from Amazon, as the benefit is too remote.
2. The Disclosure Controversy
Whether any valid disclosures were ever made is a central factual dispute.
• Petitioner’s Evidence: The petitioner claims that despite subpoenas for all open meeting conflict declarations and a review of all open meeting video recordings, the respondent produced no evidence of a valid, per-issue declaration being made in an open meeting. Witnesses Sharon Maiden and Mark Thompson testified they never saw such a disclosure.
• Respondent’s Evidence:
◦ Brody Herado and Diana Evershower testified they did disclose their “potential conflict” or relationship multiple times.
◦ Specific instances cited include a town hall meeting, a board training session, and a February 2023 or 2024 open meeting regarding the renewal of a contract for the management company, First Service Residential (FSR).
◦ However, both witnesses were unable to provide specific dates or point to meeting minutes or videos for most other alleged disclosures, particularly those related to specific legal engagements.
◦ A key piece of evidence introduced by the petitioner is a legal brief from a prior hearing (Exhibit C) where the respondent’s counsel, Joshua Bolan, stated that Mr. Herado and Mrs. Evershower “disclose[d] their conflict to the newly elected board as required by Arizona law” in the “first executive session.”
3. Procedural and Contractual Disputes
The process by which CHDB was engaged and compensated was heavily scrutinized.
• The 2005 Engagement Letter: The respondent claims a 2005 engagement letter with Carpenter Hazelwood (CHDB’s predecessor) remains in effect and authorizes ongoing legal work without new board votes. Former board presidents Satell and Maiden testified that during their tenures, other firms were appointed as general counsel, superseding any prior agreement, and that they were unaware of the 2005 letter. The petitioner notes the letter is unsigned by any association representative and is not supported by any meeting minutes.
• Executive Session and Email Votes: Testimony and exhibits (emails, executive session minutes) showed that decisions to engage CHDB for specific matters, such as the Nathan Brown lawsuit, were made either via unanimous consent emails or in executive session. This prevented any possibility of an open meeting disclosure before the board acted.
• Rate Increases: Former director Mark Thompson testified that a CHDB rate sheet proposing new 2025 rates was provided to the board as part of an executive session packet and was never discussed in an open meeting. He affirmed that this constituted an “action for compensation” under the statute.
• Insurance Company Engagement: For the Nathan Brown lawsuit, the respondent argues the ultimate decision to hire CHDB was made by the association’s insurance carrier, not the board, thereby negating any conflict. The petitioner and witness Sharon Maiden counter-testified that the board first voted to engage CHDB on the matter in December 2023, months before it was turned over to insurance in February 2024.
Summary of Key Witness Testimonies
Witness
Key Testimony Points
Brody Herado
Board Member
Acknowledged his husband is a partner at CHDB but claimed there is no actual conflict due to a lack of financial benefit. Testified he disclosed the relationship in open and executive sessions “multiple times,” specifically citing a February 2023/2024 FSR meeting, but could not recall other specific dates.
Diana Evershower
Board Treasurer
Stated she does not believe a conflict exists but disclosed a “potential conflict” as advised during a board training. Denied personally approving a CHDB invoice despite her name appearing on the general ledger. Claimed disclosures were made but could not provide specific dates or meeting minutes.
Bill Satell
Former President, Attorney
Opined that a conflict exists under a broad reading of “benefit,” including reputational gain. Testified CHDB was not general counsel during his tenure and was superseded by other firms.
Sharon Maiden
Former President
Testified CHDB was not general counsel during her tenure. Stated she never witnessed Herado or Evershower make an open meeting conflict declaration on a CHDB matter. Confirmed votes to engage CHDB were taken in executive session or via email. Described a scheduled open meeting to discuss the conflict being canceled after the board majority became “unavailable.”
Mark Thompson
Former Director
Testified he never witnessed an open meeting declaration by Herado or Evershower regarding CHDB. Confirmed a CHDB rate sheet was discussed exclusively in executive session. Stated he received a letter from CHDB’s counsel, Joshua Bolan, which he perceived as threatening and intimidating regarding his testimony.
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{ “case”: { “docket_no”: “25F-H049-REL”, “case_title”: “Jeremy Whittaker v. Val Vista Lakes Community Association”, “decision_date”: “2025-12-02”, “alj_name”: “Adam D. Stone”, “tribunal”: “OAH”, “agency”: “ADRE” }, “questions”: [ { “question”: “If a board member’s relative works for a vendor hired by the HOA, is that automatically a conflict of interest requiring disclosure?”, “short_answer”: “Not necessarily. The ALJ ruled that if there is no evidence the relative received specific additional compensation (like a bonus or raise) from the contract, a violation may not exist.”, “detailed_answer”: “The ALJ determined that a conflict of interest under A.R.S. § 33-1811 requires evidence that the specific contract or decision resulted in compensation for the relative. In this case, testimony indicated the relative received a salary based on their own billable hours, not the HOA’s contract.”, “alj_quote”: “Mr. Whittaker did not present any evidence that Mr. Ebertshauser received any additional compensation such as a raise, a bonus or other incentive from CHDB Law once they were hired by Val Vista Lakes.”, “legal_basis”: “A.R.S. § 33-1811”, “topic_tags”: [ “conflict of interest”, “vendor contracts”, “compensation” ] }, { “question”: “Does a law firm paying for a relative’s office space or insurance count as ‘compensation’ that triggers a conflict of interest?”, “short_answer”: “No. The ALJ distinguished between a ‘benefit’ (like overhead) and ‘compensation,’ ruling that the statute requires the latter.”, “detailed_answer”: “The decision clarified that while professional overhead provided by a firm is a benefit to an employee/partner, it does not constitute ‘compensation’ under the statute’s requirement for a ‘contract, decision or other action for compensation.'”, “alj_quote”: “Further, the fact that a law firm pays for malpractice insurance, or an office space, is not compensation, rather it is a benefit.”, “legal_basis”: “A.R.S. § 33-1811”, “topic_tags”: [ “legal definitions”, “financial benefit” ] }, { “question”: “Is a board member legally required to abstain from voting if they have a conflict of interest?”, “short_answer”: “No. While the ALJ noted it is a ‘best practice’ to abstain, the statute only mandates disclosure, not recusal.”, “detailed_answer”: “The decision clarifies that Arizona law requires a board member to declare the conflict in an open meeting before the discussion or action, but it explicitly permits them to vote on the issue after doing so.”, “alj_quote”: “Admittedly, the best practice of a Board member would be to abstain from voting, however, the statute does not require the same.”, “legal_basis”: “A.R.S. § 33-1811”, “topic_tags”: [ “voting rights”, “board ethics”, “abstention” ] }, { “question”: “Does the type of partnership a relative holds in a firm matter for conflict of interest purposes?”, “short_answer”: “Yes. The ALJ indicated that a ‘true shareholder with profit sharing’ would create a conflict, whereas a partner receiving only a salary might not.”, “detailed_answer”: “The ALJ distinguished between partners who share in the firm’s overall profits (which would be affected by the HOA contract) and those who are salaried based on their own work. Without evidence of profit sharing, the conflict was not proven.”, “alj_quote”: “If Mr. Ebertshauser was a sole practitioner and/or a true shareholder with profit sharing, there would absolutely be a conflict of interest which would need to be disclosed by Ms. Ebertshauser and Mr. Hurtado.”, “legal_basis”: “A.R.S. § 33-1811”, “topic_tags”: [ “profit sharing”, “corporate structure”, “conflict of interest” ] }, { “question”: “Who has the burden of proof in an HOA dispute hearing?”, “short_answer”: “The homeowner (Petitioner) bears the burden of proof by a preponderance of the evidence.”, “detailed_answer”: “The homeowner filing the petition must prove that the HOA violated the statute or governing documents. In this case, the Petitioner failed to demonstrate the violation.”, “alj_quote”: “Petitioner bears the burden of proof to establish that Respondent violated A.R.S. § 33-1811 by a preponderance of the evidence.”, “legal_basis”: “A.R.S. § 41-1092.07(G)(2)”, “topic_tags”: [ “burden of proof”, “legal procedure” ] }, { “question”: “Can I recover my filing fee if I lose my hearing against the HOA?”, “short_answer”: “No. The filing fee is only awarded if the Petitioner prevails.”, “detailed_answer”: “Because the tribunal denied the petition, the homeowner was not entitled to reimbursement of the $500 filing fee.”, “alj_quote”: “IT IS ORDERED that Petitioners’ petition is denied as to a violation of A.R.S. 33-1811, and Petitioner is not entitled to his filing fee of $500.00.”, “legal_basis”: “A.R.S. § 32-2199”, “topic_tags”: [ “filing fees”, “penalties” ] } ] }
Case Participants
Petitioner Side
- Jeremy Whittaker (petitioner)
Homeowner
Appeared on his own behalf - Mark Thompson (witness)
Former Board Member
Called by Petitioner; testified regarding lack of disclosure - Sharon Maiden (witness)
Former Board President
Called by Petitioner; testified regarding lack of open meeting disclosures - Bill Suttell (witness)
Former Board President/Attorney
Called by Petitioner; testified regarding general counsel history and reputational benefit
Respondent Side
- B. Austin Baillio (attorney)
Maxwell & Morgan, P.C.
Represented Val Vista Lakes Community Association - Brodie Hurtado (witness)
Board Member
Called by Petitioner; spouse of Jonathan Ebertshauser; denied conflict/financial benefit - Diana Ebertshauser (witness)
Board Member/Treasurer
Called by Petitioner; mother of Jonathan Ebertshauser; denied conflict/financial benefit - Jonathan Ebertshauser (attorney)
CHDB Law
Partner at CHDB Law; relative of directors Hurtado and Diana Ebertshauser - Josh Bolen (attorney)
CHDB Law
General Counsel for Association; mentioned in testimony regarding executive sessions - Laura Tannery (property manager)
FirstService Residential
General Manager - Bryan Patterson (board member)
Board President
Present at hearing as board representative - Karen Lewis (board member)
Board Secretary
Mentioned in meeting minutes - Brian Solomon (board member)
Board Treasurer
Mentioned in meeting minutes - Jacob Broderick (board member)
Board Vice-President
Mentioned in meeting minutes - Kevin McPhillips (board member)
Director
Mentioned in meeting minutes
Neutral Parties
- Adam D. Stone (ALJ)
Office of Administrative Hearings
Presiding Administrative Law Judge - Susan Nicolson (commissioner)
Arizona Department of Real Estate
Other Participants
- Curtis Ekmark (attorney)
Carpenter Hazlewood (former)
Mentioned in testimony regarding past legal work - Lynn Krupnik (attorney)
Krupnik & Speas
Mentioned in testimony as former General Counsel
