Case Summary
| Case ID |
21F-H2120003-REL |
| Agency |
ADRE |
| Tribunal |
OAH |
| Decision Date |
2021-06-03 |
| Administrative Law Judge |
Thomas Shedden |
| Outcome |
loss |
| Filing Fees Refunded |
$500.00 |
| Civil Penalties |
$0.00 |
Parties & Counsel
| Petitioner |
Keith D Smith |
Counsel |
— |
| Respondent |
Sierra Foothills Condominium Association |
Counsel |
Stuart Rayburn |
Alleged Violations
CC&R section 7.1(C)
ARIZ. REV. STAT. section 33-1248
Outcome Summary
The petition was dismissed as the Petitioner failed to prove by a preponderance of the evidence that the Association violated CC&R section 7.1(C) or ARIZ. REV. STAT. section 33-1248. The rule limiting sign use was deemed reasonable.
Why this result: Petitioner failed to meet the burden of proof on both issues.
Key Issues & Findings
Alleged unreasonable discrimination in adopting rules regarding common elements (monument sign)
Petitioner alleged the Association violated CC&R 7.1(C) by adopting a rule limiting the use of the common element monument sign to only owners in Building B, arguing this was unreasonable discrimination against Building A owners.
Orders: Petition dismissed for this issue.
Filing fee: $250.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
- CC&R section 7.1(C)
- CC&R section 6.26(a)
- ARIZ. REV. STAT. section 33-1217
Alleged open meeting law violation at the June 10, 2020 Board meeting
Petitioner alleged the Board violated open meeting laws by communicating via email and reaching a decision prior to the June 10, 2020 meeting, claiming the President called for a vote without discussion.
Orders: Petition dismissed for this issue.
Filing fee: $250.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
- ARIZ. REV. STAT. section 33-1248
Analytics Highlights
Topics: Condominium, Commercial HOA, Signage rules, Open meeting law, Discrimination
Additional Citations:
- ARIZ. REV. STAT. section 33-1248
- CC&R section 7.1(C)
- ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
- ARIZ. ADMIN. CODE § R2-19-119
- ARIZ. REV. STAT. § 41-1092.07(F)(6)
Decision Documents
21F-H2120003-REL Decision – 837073.pdf
Uploaded 2026-01-23T17:34:29 (103.9 KB)
Briefing Doc – 21F-H2120003-REL
Smith v. Sierra Foothills Condominium Association: A Briefing on the Monument Sign Dispute
Executive Summary
This briefing document synthesizes two Administrative Law Judge (ALJ) decisions concerning a dispute between Keith D. Smith, a commercial condominium unit owner, and the Sierra Foothills Condominium Association. The core of the dispute is a rule enacted by the Association on June 10, 2020, which restricts the use of a common element monument sign exclusively to unit owners in one of the property’s two buildings.
Mr. Smith filed a petition alleging two primary violations:
1. Unreasonable Discrimination: The sign rule violated the Association’s Covenants, Conditions, and Restrictions (CC&Rs) by unfairly discriminating against owners in his building.
2. Open Meeting Law Violation: The Association’s Board violated state open meeting laws by allegedly deciding on the rule via email before the public meeting and calling for a vote without discussion.
The Administrative Law Judge dismissed Mr. Smith’s petition in an initial decision on November 16, 2020, and again after a rehearing in a final decision on June 3, 2021. The judge concluded that Mr. Smith failed to meet his burden of proof on both claims. The sign rule was deemed a reasonable measure to address the differing visibility and street frontage of the two buildings. The allegation of an open meeting law violation was dismissed due to a lack of substantial evidence from the petitioner and credible contradictory testimony from the Association’s representatives.
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Case Overview
This matter was adjudicated by the Office of Administrative Hearings for the Arizona Department of Real Estate. The case involves a petition filed by a unit owner against his condominium association regarding rules governing common elements.
Detail
Description
Case Numbers
21F-H2120003-REL (Original)
21F-H2120003-REL-RHG (Rehearing)
Petitioner
Keith D. Smith (Owner in Building A)
Respondent
Sierra Foothills Condominium Association
Presiding Judge
Administrative Law Judge Thomas Shedden
Key Dates
July 24, 2020: Petition filed by Keith D. Smith.
October 26, 2020: Original hearing conducted.
November 16, 2020: Initial decision issued, dismissing the petition.
June 3, 2021: Rehearing decision issued, reaffirming dismissal.
Central Issues and Allegations
The dispute centered on a monument sign with space for only five businesses at a commercial condominium property consisting of two buildings, Building A and Building B.
1. The Monument Sign Rule (CC&R Violation)
At a meeting on June 10, 2020, the Association’s Board adopted a rule limiting the use of the monument sign to unit owners in Building B. Mr. Smith, an owner in Building A, alleged this violated the Association’s governing documents.
• Petitioner’s Allegations:
◦ The rule violates CC&R Section 7.1(C), which states that rules “shall not unreasonably discriminate among Owners and Occupants.”
◦ The rule violates the principle of CC&R Section 6.26(a), which requires use restrictions within Article 6 of the CC&Rs to be applicable to all occupants.
◦ As an owner, Mr. Smith holds an undivided interest in the common elements, meaning no owner should have exclusive use of the sign. He argued the rule amounted to an improper “partition” of a common element.
• Respondent’s Position:
◦ The rule is reasonable and non-discriminatory because it addresses a fundamental inequity in property layout: Building A has street frontage for signage, while Building B does not.
◦ The limited space on the monument sign (five slots) necessitates a managed approach to its use.
◦ While initially questioning if the sign was a common element, the Association waived this argument by acknowledging it as such in its official answer.
2. The June 10, 2020 Board Meeting (Open Meeting Law Violation)
Mr. Smith alleged that the Board’s conduct during the meeting at which the rule was passed violated Arizona’s open meeting law, specifically ARIZ. REV. STAT. section 33-1248.
• Petitioner’s Allegations:
◦ The Association’s president called for a vote on the new rule “without discussion,” implying a decision had already been made.
◦ Mr. Smith asserted that Board members must have “Obviously communicated with each other via email and reached their decision without ever hearing my argument.”
• Respondent’s Position:
◦ Association President Stuart Rayburn and witness Harold Bordelon provided “credible testimony” that a “protracted discussion lasting about an hour and a half” occurred before the vote.
◦ They testified that Mr. Smith himself spoke for approximately twenty minutes during this discussion.
Evidence and Proposed Solutions
• Petitioner’s Evidence: Mr. Smith testified on his own behalf and submitted an email from the City of Phoenix regarding signage rules. He also presented two estimates for altering the monument sign to accommodate more businesses—one by reducing the size of existing signs (which he offered to fund) and another by enlarging the monument itself.
• Respondent’s Evidence: The Association presented testimony from its president, Stuart Rayburn, and Harold Bordelon. They submitted Section 705 of the City of Phoenix’s Zoning Ordinance, which they argued showed flexibility in the sign code. Mr. Bordelon testified that some of Mr. Smith’s proposed alterations to the sign did not comply with the city code.
Administrative Law Judge’s Rulings and Rationale
The ALJ’s decisions in both the original hearing and the rehearing were consistent, leading to the dismissal of Mr. Smith’s petition. The core rationale rested on the petitioner’s failure to meet the required burden of proof.
Original Decision (November 16, 2020)
The initial ruling found decisively in favor of the Association.
• On the CC&R Violation: The ALJ concluded that Mr. Smith did not prove a violation of CC&R Section 7.1(C) for two primary reasons:
1. The rule was not unreasonable, as it rationally addressed the physical disadvantage of Building B, which “does not have street frontage,” compared to Building A, which does.
2. Mr. Smith’s reliance on CC&R Section 6.26(a) was misplaced, as “by its express terms, CC&R section 6.26 applies only to CC&R Article 6, and not Article 7,” where the Board’s authority to make rules resides.
• On the Open Meeting Law Violation: The ALJ found the allegation unsupported.
◦ Mr. Smith “offered no substantial evidence” for his claim of pre-meeting communication.
◦ His testimony that the Board called for a vote “without discussion is proven to be in error” based on credible opposing testimony.
Rehearing Decision (June 3, 2021)
Mr. Smith requested a rehearing on several grounds, including alleged irregularities, errors of law, and claims that the findings were arbitrary or not supported by evidence. The ALJ granted the rehearing but ultimately reaffirmed the original decision.
• Scope of the Rehearing: The judge clarified that the rehearing was limited to the two original issues and could not consider new evidence or allegations not raised in the initial petition.
◦ Evidence that Mr. Smith claimed to have (an email supporting the open meeting violation) was not considered because it was not offered at the original hearing.
◦ Arguments related to new statutes (e.g., ARIZ. REV. STAT. section 33-1217 on partitioning common elements) were dismissed as they were not part of the original petition.
• Reaffirmation of Rulings:
◦ The judge reiterated that CC&R Section 6.26(a) explicitly limits its effect to Article 6. He noted that Mr. Smith himself had argued the CC&Rs “should be read and applied as one continuous document unless the document clearly states otherwise,” which it did in this case.
◦ The conclusion that the sign rule was reasonable was upheld.
◦ The dismissal of the open meeting law claim was reaffirmed, as Mr. Smith still presented no substantial evidence, instead relying on a “rhetorical question” about how a vote could be called without prior communication.
Key Legal Standards Applied
The ALJ’s decisions were guided by specific legal principles and administrative codes.
Standard
Application in the Case
Burden of Proof
The Petitioner, Keith D. Smith, bore the burden to prove his allegations by a “preponderance of the evidence.” The ALJ concluded this standard was not met.
Preponderance of the Evidence
Defined as evidence with the “most convincing force” that is sufficient to “incline a fair and impartial mind to one side of the issue rather than the other.”
Substantial Evidence
The standard required for an ALJ’s decision, defined as evidence a “reasonable mind would use to reach a conclusion.”
Scope of Adjudication
The hearing and subsequent decisions were strictly limited to the issues formally raised and paid for in the original petition, pursuant to ARIZ. REV. STAT. § 41-1092.07(F)(6).
Admissibility of Evidence
Evidence not presented at the original hearing cannot be considered in a rehearing, as established by ARIZ. ADMIN. CODE § R2-19-115.
Study Guide – 21F-H2120003-REL
Study Guide: Smith v. Sierra Foothills Condominium Association
This guide provides a comprehensive review of the administrative case Keith D. Smith v. Sierra Foothills Condominium Association, based on the initial Administrative Law Judge Decision and the subsequent Decision on Rehearing. It is designed to test and deepen understanding of the facts, legal arguments, and outcomes of the proceedings.
Quiz: Short Answer Questions
Instructions: Answer the following questions in 2-3 sentences based on the provided case documents.
1. Who were the primary parties in this case, and what were their respective roles?
2. What were the two central allegations Keith D. Smith made against the Sierra Foothills Condominium Association in his petition?
3. What specific action did the Association’s Board take on June 10, 2020, that initiated this dispute?
4. What justification did the Association provide for creating a rule that exclusively benefited the owners of units in Building B?
5. On what grounds did the Administrative Law Judge (ALJ) reject Mr. Smith’s argument that the sign rule violated CC&R section 6.26(a)?
6. What was the “preponderance of the evidence” standard, and who bore the burden of meeting it in this case?
7. Why was Mr. Smith’s allegation of an open meeting law violation dismissed in the original hearing?
8. What were the primary grounds Mr. Smith cited when requesting a rehearing of the initial decision?
9. In the rehearing, Mr. Smith mentioned having an email that supported his open meeting law claim. Why did the ALJ refuse to consider this evidence?
10. What was the final outcome of both the original hearing on October 26, 2020, and the subsequent rehearing decision on June 3, 2021?
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Quiz Answer Key
1. The primary parties were Keith D. Smith, the Petitioner, and the Sierra Foothills Condominium Association, the Respondent. Mr. Smith, an owner of a unit in Building A, filed a petition alleging violations by the Association, which manages the common elements of the condominium complex.
2. Mr. Smith alleged that the Association had violated CC&R section 7.1(C) by creating an unreasonable and discriminatory rule. He also alleged a violation of the open meeting law, ARIZ. REV. STAT. section 33-1248, claiming the Board made its decision before the public meeting.
3. On June 10, 2020, the Association’s Board adopted a new rule regarding the monument sign, a common element. This rule limited the use of the sign, which had space for only five businesses, to the owners of units located in Building B.
4. The Association argued the rule was reasonable because Building A has street frontage where signs can be hung, providing visibility. In contrast, Building B lacks street frontage, making the monument sign a critical advertising tool for its occupants.
5. The ALJ rejected the argument because the text of CC&R section 6.26(a) explicitly states its applicability is limited to the restrictions “contained in this Article 6.” The disputed rule was created under the authority of Article 7, so the non-discrimination clause of Article 6 did not apply.
6. The “preponderance of the evidence” is the standard of proof requiring that the evidence be of greater weight and more convincing force, inclining a fair mind to one side of the issue. In this administrative hearing, the Petitioner, Keith D. Smith, bore the burden of proof to show the alleged violations occurred by this standard.
7. The allegation was dismissed due to a lack of substantial evidence. Mr. Smith acknowledged he had no emails to support his claim of prior communication, and the credible testimony of Stuart Rayburn and Harold Bordelon established that a lengthy discussion did occur at the meeting before the vote was taken.
8. Mr. Smith requested a rehearing on several grounds, including alleged irregularity in the proceedings, abuse of discretion by the ALJ, errors of law (such as in the admission or rejection of evidence), and that the decision was arbitrary, capricious, and not supported by the evidence.
9. The ALJ refused to consider the email because evidence must be presented during the original hearing. Since Mr. Smith did not offer the document at the October 26, 2020 hearing, it could not be introduced for the first time in a request for a rehearing.
10. In both the original hearing decision (November 16, 2020) and the rehearing decision (June 3, 2021), Keith D. Smith’s petition was dismissed. The ALJ consistently found that Mr. Smith had failed to meet his burden of proof for both the CC&R violation and the open meeting law violation.
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Essay Questions
Instructions: Formulate detailed responses to the following prompts, synthesizing evidence and arguments from both administrative decisions.
1. Analyze the legal reasoning employed by Administrative Law Judge Thomas Shedden to conclude that the monument sign rule was not an “unreasonable” discrimination among owners under CC&R section 7.1(c).
2. Trace the evolution of Keith D. Smith’s open meeting law allegation from his initial petition through his request for rehearing. Discuss the specific evidence presented (or lack thereof) and explain why the ALJ found his claims unconvincing at every stage.
3. Explain the concept of procedural limitations in administrative hearings, using Mr. Smith’s case as an example. Focus on why the ALJ could only consider two issues, why new evidence was rejected on rehearing, and why other “perceived deficiencies” were not addressed.
4. Discuss the significance of the “common elements” in this dispute. How did Mr. Smith’s claim of an “undivided interest” in the monument sign contrast with the Association’s right to regulate its use, and how was this conflict ultimately resolved by the ALJ?
5. Evaluate the arguments presented regarding CC&R section 6.26(a). Explain Mr. Smith’s interpretation of the clause and the ALJ’s contrary interpretation based on the explicit text of the document.
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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.
Abbreviation for Arizona Revised Statutes, which are the codified laws of the state of Arizona. Sections 33-1248 (open meeting law) and 33-1217 (partition of common elements) were cited.
Burden of Proof
The obligation on a party in a legal case to prove their allegations. In this matter, the burden of proof was on the Petitioner, Keith D. Smith.
CC&Rs (Covenants, Conditions & Restrictions)
The governing legal documents that set up the guidelines for a planned community or condominium. The key sections in this case were 6.10, 6.24, 6.26(a), and 7.1(c).
Common Elements
Parts of a condominium property that are owned in common by all unit owners and managed by the association. The monument sign was acknowledged by the Association as a common element.
Monument Sign
A freestanding sign at the property entrance that was the central subject of the dispute. It had space for only five businesses to advertise.
Office of Administrative Hearings (OAH)
The state agency where the hearings for this case were conducted.
Open Meeting Law
A state statute (ARIZ. REV. STAT. section 33-1248) requiring that meetings of governing bodies, like an HOA board, be conducted in public with proper notice and opportunity for member input.
Petitioner
The party who files a petition initiating a legal or administrative action. In this case, Keith D. Smith.
Preponderance of the Evidence
The standard of proof in this case, defined as evidence that has the most convincing force and is sufficient to incline a fair and impartial mind to one side of an issue over the other.
Rehearing
A second hearing of a case to reconsider the initial decision, typically granted on specific grounds such as procedural error or a decision contrary to evidence. Mr. Smith’s request for rehearing was granted but the original decision was upheld.
Respondent
The party against whom a petition is filed. In this case, the Sierra Foothills Condominium Association.
Substantial Evidence
Evidence that a reasonable mind would use to reach a conclusion. The ALJ found that Mr. Smith offered no substantial evidence for his open meeting law claim.
Waived
The voluntary relinquishment of a known right or argument. The Association waived its argument that the monument sign was not a common element by acknowledging that it was in its official Answer.
Blog Post – 21F-H2120003-REL
I Read a 17-Page HOA Lawsuit Over a Sign. Here Are 5 Surprising Lessons for Every Homeowner.
Introduction: The Signpost to a Bigger Story
For anyone living in a community with a Homeowner or Condominium Association, the rulebook can feel like a source of endless frustration. The rules often seem complex, arbitrary, and difficult to challenge. But what really happens when an owner decides to fight back?
I recently analyzed the initial ruling and final rehearing decision—17 pages in all—from just such a fight: a formal petition filed by Keith D. Smith against the Sierra Foothills Condominium Association. This wasn’t a residential dispute over lawn ornaments or paint colors; it was a commercial conflict over who was allowed to use a single monument sign. But within this seemingly small micro-drama are universal lessons that are shockingly relevant to any owner navigating a dispute with their association.
Here are five surprising lessons from Mr. Smith’s legal battle that every owner should understand.
1. Read the Fine Print. No,ReallyRead It.
Mr. Smith’s primary argument was one of unfair discrimination. He owned a unit in Building A and was prohibited from using the monument sign, a common element, while owners in Building B were allowed to use it. He pointed to a specific rule in the governing documents, CC&R section 6.26(a), which stated that use restrictions must be applicable to all owners. This seemed like a clear-cut case of the board violating its own rules.
He lost. The reason was a tiny but critical detail in the fine print. The judge found that the non-discrimination clause Mr. Smith cited explicitly stated it only applied to rules “contained in this Article 6.” The board’s authority to create the sign rule came from a different section entirely, “Article 7,” specifically section 7.1(c), which did not contain the same mandate for equal application.
The judge’s finding on the rehearing was conclusive:
“Section 6.26(a) provides that the use restrictions ‘contained in this Article 6’ are applicable to all owners. Consequently, section 6.26(a) cannot be read to require that rules promulgated under section 7.1(c) must apply to all owners.”
The specific structure and wording of your governing documents are paramount. An assumption about a rule’s general intent is not enough. A single phrase—like “in this Article 6″—can make or break an entire legal argument.
2. What Feels Unfair Isn’t Always Legally “Unreasonable”
From Mr. Smith’s perspective, the situation was fundamentally unfair. As a property owner, he had an undivided interest in all common elements, including the monument sign. To be completely excluded from using it felt like a violation of his ownership rights.
However, the Association and the judge saw it differently. The rule was deemed legally “reasonable” for two logical and practical reasons:
1. The sign had a very limited number of spaces—only five businesses could be advertised.
2. Building A, where Mr. Smith’s unit was located, had valuable street frontage where businesses could place their own signs. Building B, in contrast, had no street frontage, making the monument sign the primary and essential tool for visibility for those businesses.
This is where the fine print from the first lesson comes roaring back. The judge noted that the board’s authority under section 7.1(c) “on its face allows discrimination among owners” as long as it wasn’t unreasonable. The specific language of the documents gave the board the explicit power to treat owners differently, provided there was a rational basis—which, in this case, there was. In association disputes, the legal standard is often “reasonableness,” which is evaluated based on context and logic, not just an individual’s feeling of fairness.
3. Suspecting a “Secret Meeting” Isn’t Enough to Prove It
Mr. Smith also alleged that the board violated the open meeting law. He claimed that when the sign issue came up at the board meeting, the president immediately called for a vote without any discussion. This led him to believe the decision had already been made in secret via email.
In his petition, he stated his certainty in plain terms:
“Obviously, the board members communicated with each other via email and reached their decision without ever hearing my argument.”
This claim failed completely. At the hearing, Mr. Smith acknowledged that he had no emails or other documents to support his allegation. Furthermore, the Association’s president and another member presented “credible testimony” that, contrary to Mr. Smith’s recollection, a “protracted” discussion lasting about an hour and a half had, in fact, taken place before the vote was called.
An accusation, no matter how “obvious” it seems to you, is not evidence. To successfully challenge an association’s procedure, you must provide proof. Suspicion and personal interpretation of events are not enough to win a legal claim.
4. Your First Shot Is Often Your Only Shot
After the judge dismissed his initial petition, Mr. Smith filed for a rehearing. In this new request, he tried to introduce new arguments and evidence to bolster his case. Specifically, he raised:
• A brand-new claim that the sign rule violated a state statute (ARIZ. REV. STAT. section 33-1217) concerning the partitioning of common elements.
• A reference to an email he now claimed to possess that would support his open meeting law violation argument.
The judge flatly rejected these new points. The reason was purely procedural: the rules of the legal process require all claims and evidence to be presented in the initial petition and at the original hearing. You cannot hold arguments in reserve to see how the first ruling goes.
The judge’s decision was unequivocal:
“Consequently, evidence that Mr. Smith did not present at the original hearing cannot be considered in this rehearing.”
The legal process is not flexible. You must build your entire case and present all your evidence from the very beginning. Your first shot is often your only shot.
5. The Burden of Proof Is on the Accuser
This may be the most crucial lesson of all. In a dispute like this, the legal responsibility, or “burden of proof,” was on Mr. Smith to prove that the Association had acted improperly. It was not the Association’s job to prove its innocence.
The standard he had to meet was “a preponderance of the evidence.” The judge’s decision included a formal definition of this standard, which clearly explains the high bar an accuser must clear:
“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; 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.”
Ultimately, the judge concluded that Mr. Smith “did not prove” that either of his claims met this standard. His feelings of unfairness and his suspicions of improper procedure were not supported by superior evidentiary weight, and his petition was dismissed. If you decide to formally challenge your association, you are the accuser, and you carry the burden of proof.
Conclusion: Know the Rules of the Game
A seemingly minor dispute over a commercial sign reveals fundamental truths about navigating any rule-based organization, especially an HOA or Condo Association. The outcome hinged on the precise language of the documents, the legal definition of “reasonable,” the high bar for proving misconduct, and the rigid procedures of the hearing process. Mr. Smith’s case serves as a powerful reminder that to successfully challenge the rules, you must first master the rules of the game.
This entire conflict hinged on the specific wording of a few sentences in a thick rulebook. When was the last time you truly read the documents that govern your own community, and what crucial details might be hiding in plain sight?
Case Participants
Petitioner Side
- Keith D Smith (petitioner)
Appeared on his own behalf; Unit Owner
Respondent Side
- Stuart Rayburn (association president)
Sierra Foothills Condominium Association
Representative for Respondent
- Harold Bordelon (witness)
Sierra Foothills Condominium Association
Testified for the Association
Neutral Parties
- Thomas Shedden (ALJ)
Office of Administrative Hearings
- Judy Lowe (commissioner)
Arizona Department of Real Estate
Recipient of transmission
- LDettorre (ADRE staff)
Arizona Department of Real Estate
Recipient of transmission (email handle)
- AHansen (ADRE staff)
Arizona Department of Real Estate
Recipient of transmission (email handle)
- djones (ADRE staff)
Arizona Department of Real Estate
Recipient of transmission (email handle)
- DGardner (ADRE staff)
Arizona Department of Real Estate
Recipient of transmission (email handle)
- ncano (ADRE staff)
Arizona Department of Real Estate
Recipient of transmission (email handle)
