Case Summary
| Case ID | 17F-H1716021-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2017-03-30 |
| Administrative Law Judge | Diane Mihalsky |
| Outcome | none |
| Filing Fees Refunded | $0.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | John Sellers | Counsel | — |
|---|---|---|---|
| Respondent | Rancho Madera Condominium Association | Counsel | Lydia Peirce Linsmeier, Esq. |
Alleged Violations
A.R.S. § 33-1258
Outcome Summary
The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.
Why this result: Petitioner failed to meet the burden of proof that Respondent violated A.R.S. § 33-1258 because the statute does not require the association to provide records (like signature cards or usernames/passwords) which are not financial records showing actual expenditures and are often held by the financial institution.
Key Issues & Findings
Association financial and other records; applicability
Petitioner, a member of the HOA, alleged the HOA violated A.R.S. § 33-1258 by refusing access to bank account signature cards and read-only user names/passwords. The ALJ found that these items were not 'financial and other records' that the association was statutorily required to provide, as they related to mechanisms for disbursement rather than actual expenditure, and would be maintained by the bank, not the association.
Orders: Petitioner's petition was denied and dismissed.
Filing fee: $0.00, Fee refunded: No
Disposition: respondent_win
- A.R.S. § 33-1258
- A.R.S. § 41-2198.01
Analytics Highlights
- A.R.S. § 33-1258
- A.R.S. § 41-2198.01
- A.R.S. § 41-1092.08
Video Overview
Audio Overview
Decision Documents
17F-H1716021-REL Decision – 549566.pdf
17F-H1716021-REL Decision – 554490.pdf
17F-H1716021-REL Decision – 558591.pdf
Administrative Hearing Briefing: Sellers v. Rancho Madera Condominium Association
Executive Summary
This document synthesizes the proceedings and outcome of the administrative case John Sellers v. Rancho Madera Condominium Association. The core of the dispute was Petitioner John Sellers’s allegation that the Respondent, Rancho Madera Condominium Association, violated Arizona Revised Statute (A.R.S.) § 33-1258 by refusing to produce specific records: bank account signature cards and read-only online banking credentials for the association’s account with Mutual of Omaha.
The Administrative Law Judge (ALJ) ultimately recommended the petition be denied, a decision that was formally adopted by the Commissioner of the Arizona Department of Real Estate. The ruling hinged on a narrow interpretation of the statute. The ALJ concluded that the requested items were not “financial and other records of the association” as required by law. Key findings supporting this conclusion were:
• Custody: The signature cards, if they exist, are records held by the bank (Mutual of Omaha), not the association.
• Nature of Request: Online user names and passwords constitute “information,” not a “document” or “record” in the statutory sense.
• Sufficient Disclosure: The association had already provided a comprehensive set of financial documents (bank statements, contracts, resolutions, etc.) sufficient for a member to ascertain whether the association was prudently managing its funds, thereby satisfying the plain-meaning purpose of A.R.S. § 33-1258.
The petitioner’s arguments that such records must exist under federal banking regulations and that electronic access is superior to paper records were deemed policy arguments to be addressed to the legislature, not grounds for finding a statutory violation.
Case Overview
Case Name
John Sellers, Petitioner, vs. Rancho Madera Condominium Association, Respondent
Case Number
No. 17F-H1716021-REL (also listed as DOCKET NO. 17F-H1716021-REL and CASE NO. HO 17-16/021)
Petitioner
John Sellers (Appeared on his own behalf)
Respondent
Rancho Madera Condominium Association
Respondent’s Counsel
Lydia Peirce Linsmeier, Esq., Carpenter, Hazlewood, Delgado & Bolen, PLC
Adjudicating Body
Arizona Office of Administrative Hearings
Reviewing Body
Arizona Department of Real Estate
Administrative Law Judge
Diane Mihalsky
Commissioner
Judy Lowe, Arizona Department of Real Estate
Core Allegation and Legal Framework
Petitioner’s Claim
On or about December 20, 2016, John Sellers, a condominium owner and member of the Rancho Madera Condominium Association, filed a petition with the Arizona Department of Real Estate. The petition alleged that the association had violated A.R.S. § 33-1258 by refusing to provide two specific items related to its bank account at Mutual of Omaha:
1. Bank account signature cards.
2. Read-only user names and passwords for online access to the account.
Sellers argued that these documents must exist, citing federal banking statutes and regulations intended to combat terrorism.
Governing Statute: A.R.S. § 33-1258
The case revolved around the interpretation of A.R.S. § 33-1258, “Association financial and other records.” The key provisions of this statute state:
• A. Right to Examine: “Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member…”
• Timeline: An association has ten business days to fulfill a request for examination and ten business days to provide copies upon request.
• Fees: An association may charge a fee of not more than fifteen cents per page for copies.
• B. Withholdable Records: The statute allows an association to withhold records related to:
1. Privileged attorney-client communication.
2. Pending litigation.
3. Records of board meetings not required to be open to all members.
4. Personal, health, or financial records of individual members or employees.
5. Records related to job performance or complaints against employees.
• C. Legal Prohibitions: An association is not required to disclose records if doing so would violate state or federal law.
The Uniform Condominium Act, of which this statute is a part, does not provide a more specific definition of “financial and other records.”
Factual Findings and Evidence Presented
Records Provided by the Association
Prior to the hearing, the Respondent had already provided the Petitioner with a substantial volume of financial records. Emails attached to the initial petition indicated that the following documents were furnished:
• All bank statements
• Account opening documentation
• Forms for members’ direct debit authorizations
• The Board’s resolution authorizing the opening of the bank account
• Agreements between the property management company, Trestle Management Group, and Mutual of Omaha regarding fees, indemnities, and netting
• The association’s insurance certificate
• The association’s management contract with Trestle Management Group
Witness Testimony
A hearing was held on March 7, 2017, where testimony was presented by both parties.
• Petitioner’s Testimony: John Sellers testified on his own behalf and submitted ten exhibits.
• Respondent’s Witnesses:
◦ Marc Vasquez (Vice President of Trestle Management Group): Testified that all signature cards for the association’s bank accounts were held by the bank at which the accounts were opened. He stated that Mutual of Omaha was the custodian of those cards.
◦ Alan Simpson (Vice President of Respondent’s Board) & Marc Kaplan (President of Respondent’s Board): Both testified that they did not have user names and passwords for the association’s Mutual of Omaha account. They believed, however, that the association’s treasurer may have had such credentials to access the account online.
Administrative Law Judge’s Decision and Rationale
The ALJ’s decision, issued on March 29, 2017, denied the Petitioner’s petition. The reasoning was based on a direct interpretation of A.R.S. § 33-1258 and the evidence presented.
• Burden of Proof: The decision established that the Petitioner bore the burden of proving by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is defined as proof that “convinces the trier of fact that the contention is more probably true than not.”
• Statutory Interpretation: The ALJ determined that the “plain meaning” of A.R.S. § 33-1258 is to provide members with access to documents that allow them to “ascertain whether the association is prudently managing its members’ assessments.” The decision explicitly states that the numerous documents already provided by the Respondent fulfilled this purpose.
• Custody and Control: A central finding was that the requested items were not “records of the association.” The signature cards were records held and maintained by a third party, Mutual of Omaha. The statute does not compel an association to produce records that are not in its possession or under its control.
• Information vs. Documents: The decision drew a distinction between records and information, stating, “The user names and passwords are information, not a document.” Furthermore, it noted that these items “do not relate to Respondent’s actual expenditure of members’ assessments” but rather to the mechanisms for disbursing funds.
• Scope of the Statute: The ALJ concluded that A.R.S. § 33-1258 does not require an association to “create, maintain, or provide this information or documentation to Petitioner, either to serve his convenience or to allow him to ascertain Respondent’s or Mutual of Omaha’s compliance with federal banking statutes that are not incorporated in the Uniform Condominium Act.”
• Policy Arguments: The Petitioner’s contention that “paper access to the account information is inferior to electronic access” was dismissed as “a policy argument that should be addressed to the Legislature.” The statute only requires that records be made “reasonably available,” which the Respondent had done.
Procedural History and Final Outcome
c. Dec. 20, 2016
John Sellers files a petition with the Arizona Department of Real Estate.
Mar. 7, 2017
An evidentiary hearing is held before ALJ Diane Mihalsky. An order is issued holding the record open for the parties to submit legal memoranda regarding the scope of A.R.S. § 33-1258.
Mar. 21, 2017
The deadline for submitting legal memoranda passes, and the record on the matter is closed.
Mar. 29, 2017
ALJ Diane Mihalsky issues the “Administrative Law Judge Decision,” which includes Findings of Fact, Conclusions of Law, and a Recommended Order to deny the Petitioner’s petition.
Mar. 30, 2017
Judy Lowe, Commissioner of the Department of Real Estate, issues a “Final Order.” This order formally accepts and adopts the ALJ’s decision, and the petition is denied.
The Final Order, effective immediately upon service, represented the final administrative action in the matter. The order noted that parties could file a motion for rehearing within 30 days or appeal the final administrative decision through judicial review.
Study Guide:Sellers v. Rancho Madera Condominium Association
This study guide provides a comprehensive review of the administrative case John Sellers v. Rancho Madera Condominium Association, Case No. 17F-H1716021-REL. It covers the key parties, legal arguments, statutory interpretations, and the ultimate decision rendered by the Office of Administrative Hearings and the Arizona Department of Real Estate.
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Short-Answer Quiz
Instructions: Answer the following questions in 2-3 sentences each, based on the information provided in the case documents.
1. What was the central allegation made by the Petitioner, John Sellers, against the Rancho Madera Condominium Association?
2. Identify the specific Arizona Revised Statute (A.R.S.) that formed the basis of the legal dispute and summarize its primary requirement for homeowners’ associations.
3. What specific documents or information did John Sellers request that the association refused to provide?
4. In its defense, what was the association’s stated reason for not producing the requested items?
5. List the documents that the association did provide to the Petitioner prior to the hearing.
6. Who testified on behalf of the Respondent association at the March 7, 2017 hearing?
7. How did the Administrative Law Judge (ALJ) distinguish between “information” and “documents” in her legal conclusions?
8. What is the “burden of proof” in this case, and which party was responsible for meeting it?
9. What was the final outcome of the petition as determined by the Administrative Law Judge and subsequently adopted by the Commissioner of the Department of Real Estate?
10. According to the ALJ’s decision, what is the plain meaning and purpose of A.R.S. § 33-1258?
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Answer Key
1. The Petitioner, John Sellers, alleged that the Respondent, Rancho Madera Condominium Association, had violated A.R.S. § 33-1258. The specific violation was the association’s refusal to provide him with certain records related to its bank account at Mutual of Omaha.
2. The statute at the center of the dispute was A.R.S. § 33-1258, titled “Association financial and other records.” This statute generally requires that all financial and other records of a homeowners’ association be made reasonably available for examination by any member within ten business days of a request.
3. John Sellers requested bank account signature cards for the association’s Mutual of Omaha account. He also requested read-only user names and passwords for online access to that same account.
4. The association denied the request because it asserted that the requested documents and information either did not exist or were not included in the association’s records. It was testified that the signature cards were held by the bank, Mutual of Omaha, as their custodian.
5. The association provided copies of all bank statements, account opening documentation, direct debit authorization forms, the Board’s resolution to open the account, agreements between its management company (Trestle) and the bank, its insurance certificate, and its management contract with Trestle.
6. Three witnesses testified for the Respondent: Alan Simpson (Vice President of the Board), Marc Kaplan (President of the Board), and Marc Vasquez (Vice President of Trestle Management Group).
7. The ALJ concluded that the requested user names and passwords constituted “information,” not a “document” as covered by the statute. She further reasoned that neither the signature cards nor the online credentials related to the actual expenditure of funds, but rather to the mechanisms for disbursement, and were maintained by the bank, not the association.
8. The burden of proof rested on the Petitioner, John Sellers, to establish by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is proof that convinces the trier of fact that a contention is more probably true than not.
9. The Administrative Law Judge issued a recommended order denying the Petitioner’s petition. This decision was then adopted by the Commissioner of the Department of Real Estate in a Final Order, formally denying the petition and making the decision binding on the parties.
10. The ALJ determined the plain meaning of A.R.S. § 33-1258 is that associations must provide members with access to documents that allow them to ascertain whether the association is prudently managing its members’ assessments. The judge noted that arguments for different types of access (e.g., electronic vs. paper) are policy arguments that should be addressed to the Legislature.
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Essay Questions
Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate comprehensive responses based on the facts, legal reasoning, and conclusions presented in the source documents.
1. Analyze the Administrative Law Judge’s interpretation of “financial and other records” under A.R.S. § 33-1258. How did this interpretation, particularly the distinction between disbursement mechanisms and actual expenditures, lead to the denial of John Sellers’ petition?
2. Discuss the concept of “burden of proof” as it applied in this case. Explain what “preponderance of the evidence” means and detail why the Petitioner, according to the ALJ’s findings, failed to meet this standard.
3. Trace the procedural timeline of the case from the initial petition filed around December 20, 2016, to the Final Order dated March 30, 2017. Identify the key legal bodies involved (Office of Administrative Hearings, Department of Real Estate) and their respective roles in the process.
4. Evaluate the Petitioner’s argument that federal banking statutes and regulations intended to fight terrorism necessitated the existence and disclosure of the requested records. Why was this argument ultimately unpersuasive to the court?
5. Examine the exceptions to disclosure outlined in A.R.S. § 33-1258(B). Although not the central issue in the final decision, explain how these exceptions frame the limits of a homeowner’s right to association records.
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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 or recommended orders. In this case, Diane Mihalsky served as the ALJ.
A.R.S. § 33-1258
The specific Arizona Revised Statute at the heart of the case, part of the Uniform Condominium Act. It governs a homeowner association’s duty to make its “financial and other records” available for examination by members.
Burden of Proof
The obligation on a party in a legal case to prove their allegations. In this matter, the Petitioner bore the burden of proof.
Commissioner
The head of a government department. In this case, Judy Lowe, the Commissioner of the Arizona Department of Real Estate, adopted the ALJ’s decision and issued the Final Order.
Evidentiary Hearing
A formal proceeding where parties present evidence (such as documents and testimony) before a judge or hearing officer. The hearing in this case was held on March 7, 2017.
Final Order
A binding decision issued by an administrative agency that concludes a case. In this matter, the Final Order was issued by the Commissioner of the Department of Real Estate on March 30, 2017, denying the petition.
Homeowners’ Association
An organization in a subdivision, planned community, or condominium development that makes and enforces rules for the properties and its residents. In this case, the Rancho Madera Condominium Association.
Petitioner
The party who files a petition initiating a legal or administrative action. In this case, John Sellers.
Preponderance of the Evidence
The standard of proof in most civil and administrative cases. It means that the evidence presented is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, establishing that a claim is “more probably true than not.”
Respondent
The party against whom a petition is filed. In this case, the Rancho Madera Condominium Association.
Trestle Management Group (“Trestle”)
The property management company for the Rancho Madera Condominium Association. The Vice President of Trestle, Marc Vasquez, testified at the hearing.
Uniform Condominium Act
The section of Arizona law (Chapter 9 of Title 33, Arizona Revised Statutes) that governs condominiums. A.R.S. § 33-1258 is part of this act.
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17F-H1716021-REL
3 sources
These sources document the administrative legal proceedings of a dispute between John Sellers (Petitioner) and the Rancho Madera Condominium Association (Respondent) before the Arizona Office of Administrative Hearings. The core issue of the case, No. 17F-H1716021-REL, was the Association’s alleged violation of A.R.S. § 33-1258 by refusing to provide bank account signature cards and read-only user credentials for online access to their bank account. The initial order, dated March 7, 2017, held the record open to allow both parties to submit legal memoranda concerning the scope of corporate records required under the statute. The subsequent Administrative Law Judge Decision, dated March 29, 2017, denied the Petitioner’s petition, concluding that the requested items were not considered financial records the association was legally required to create, maintain, or disclose. Finally, the Commissioner of the Department of Real Estate adopted the ALJ Decision as a Final Order on March 30, 2017.
Case Participants
Petitioner Side
- John Sellers (petitioner)
Respondent Side
- Lydia Peirce Linsmeier (respondent attorney)
Carpenter, Hazlewood, Delgado & Bolen, PLC - Alan Simpson (board member/witness)
Rancho Madera Condominium Association
Vice President of Respondent's board - Marc Kaplan (board member/witness)
Rancho Madera Condominium Association
President of Respondent's Board - Marc Vasquez (property manager/witness)
Trestle Management Group
Vice President of Trestle - Annette Graham (attorney staff)
Carpenter, Hazlewood, Delgado & Bolen, PLC
Derived from email address (Annette.graham)
Neutral Parties
- Diane Mihalsky (ALJ)
Office of Administrative Hearings - Judy Lowe (Commissioner)
Arizona Department of Real Estate - Abby Hansen (HOA Coordinator)
Arizona Department of Real Estate
Also listed as AHansen
Other Participants
- M. Johnson (clerical staff)
Signatory on document transmission - LDettorre (ADRE Staff)
ADRE
Email recipient - djones (ADRE Staff)
ADRE
Email recipient - jmarshall (ADRE Staff)
ADRE
Email recipient - ncano (ADRE Staff)
ADRE
Email recipient
