Case Summary
| Case ID | 22F-H2222064-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2022-09-29 |
| Administrative Law Judge | Sondra J. Vanella |
| Outcome | The Administrative Law Judge affirmed the petition, finding that the HOA violated A.R.S. § 33-1804 by improperly holding a closed executive session primarily focused on reviewing homeowner comments on design guidelines that did not meet the statutory exceptions for closure. The ALJ ordered the HOA to reimburse the petitioner's filing fee and comply with the statute in the future. |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Kathy J. Green, MD | Counsel | — |
|---|---|---|---|
| Respondent | Cross Creek Ranch Community Association | Counsel | Nick Eicher, Esq. |
Alleged Violations
A.R.S. § 33-1804
Outcome Summary
The Administrative Law Judge affirmed the petition, finding that the HOA violated A.R.S. § 33-1804 by improperly holding a closed executive session primarily focused on reviewing homeowner comments on design guidelines that did not meet the statutory exceptions for closure. The ALJ ordered the HOA to reimburse the petitioner's filing fee and comply with the statute in the future.
Key Issues & Findings
Alleged violation of open meetings requirements regarding closed executive session.
The Respondent HOA held a closed executive session on June 9, 2022, noticed under A.R.S. § 33-1804(A)(1) (legal advice), to discuss approximately 72 homeowner comments on proposed design guideline revisions. The ALJ found that the meeting did not qualify under exceptions (A)(1) or (A)(2) as no legal advice was given and the discussion of most comments did not constitute pending or contemplated litigation.
Orders: Petitioner's petition is affirmed. Respondent must reimburse the Petitioner the $500.00 filing fee and is directed to comply with the requirements of A.R.S. § 33-1804 going forward.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
- 33-1804(A)(1)
- 33-1804(A)(2)
- 33-1804(B)
- 33-1804(F)
Analytics Highlights
- 33-1804
- 33-1804(A)
- 33-1804(A)(1)
- 33-1804(A)(2)
- 33-1804(F)
Video Overview
Audio Overview
Decision Documents
22F-H2222064-REL Decision – 1003060.pdf
22F-H2222064-REL Decision – 989940.pdf
22F-H2222064-REL Decision – 1003060.pdf
22F-H2222064-REL Decision – 989940.pdf
This summary concerns the administrative hearing held on September 16, 2022, regarding the matter of Kathy J. Green (Petitioner) versus Cross Creek Ranch Community Association (Respondent), Docket No. 22F-H2222064-REL.
Key Facts and Legal Issue
The dispute centered on whether the Respondent Homeowners Association (HOA) violated Arizona Revised Statute (A.R.S.) § 33-1804 by holding a closed executive session on June 9, 2022. A.R.S. § 33-1804 establishes the state policy that all meetings of a planned community association's board of directors must be conducted openly and that any provisions of the statute must be construed in favor of open meetings. A meeting may only be closed if the portion is strictly limited to specific exceptions, such as legal advice (A.R.S. § 33-1804(A)(1)) or pending or contemplated litigation (A.R.S. § 33-1804(A)(2)).
The meeting was held to discuss 72 comments solicited from homeowners regarding proposed revisions to the Architectural Review Committee (ARC) Design Guidelines.
Key Arguments
Petitioner's Position:
The Petitioner, Kathy Green, alleged that the closed session was improper because it was noticed under A.R.S. § 33-1804(A)(1) (legal advice), yet the Board stipulated that no legal advice was given during the session. Evidence showed the Board President had emailed management prior to the meeting asking, "I don't want this to be an open meeting. Can we classify it under ARC Legal Review and keep it closed?". Petitioner argued that the meeting unlawfully conducted association business, noting that minutes showed a review of owner comments, non-board ARC members were present, and the minutes did not show discussion of legal advice or pending litigation. Furthermore, emails demonstrated that the Board later attempted to retroactively justify the meeting under A.R.S. § 33-1804(A)(2) (contemplated litigation).
Respondent's Position:
The Respondent, Cross Creek Ranch Community Association, argued that the closure was justified under A.R.S. § 33-1804(A)(2) because certain owner comments, including those from the Petitioner and her husband, were perceived as threats of litigation concerning the design guidelines. The Board testified that it met to holistically consider the risk of litigation, gauge membership sentiment, and conduct a cost-benefit analysis regarding the threatened lawsuits.
Final Decision and Outcome
Administrative Law Judge (ALJ) Sondra J. Vanella found that the Petitioner established by a preponderance of the evidence that Respondent violated A.R.S. § 33-1804.
- Violation of A.R.S. § 33-1804(A)(1): The stipulation that no legal advice was given established that the meeting did not meet the requirement for closure under the section for which it was noticed.
- Violation of A.R.S. § 33-1804(A)(2): The ALJ found the argument for "pending or contemplated litigation" to be "tenuous at best". The discussion primarily involved 72 homeowner comments, and the ALJ concluded that none of the comments could be "reasonably construed as contemplating litigation".
- ALJ Finding: The ALJ noted that the Board acknowledged it could have held a separate executive session to discuss the one comment that copied an attorney while holding an open meeting for the majority of the solicited comments. The issue discussed did not fall under the statutory exceptions.
The ALJ affirmed the Petitioner's petition and ordered the Respondent to reimburse the Petitioner the $500.00 filing fee. The Respondent was also directed to comply with the requirements of A.R.S. § 33-1804 moving forward. No civil penalty was found appropriate.
Questions
Question
Can my HOA board hold a closed meeting to discuss homeowner feedback on design guidelines?
Short Answer
No, discussing general homeowner feedback does not qualify for a closed executive session unless it meets specific statutory exceptions like pending litigation.
Detailed Answer
The ALJ ruled that reviewing general comments from homeowners regarding proposed changes to design guidelines is not a valid reason to close a meeting. Even if some comments are critical, the board must discuss them in an open meeting unless they specifically relate to pending or contemplated litigation or legal advice.
Alj Quote
The Administrative Law Judge concludes… that the issue discussed at the June 9, 2022 executive session does not fall under the exceptions listed in A.R.S. §§ 33-1804(A)(1) or (A)(2), and Respondent did not properly consider the issue in an executive session closed to its members.
Legal Basis
A.R.S. § 33-1804
Topic Tags
- open meetings
- design guidelines
- executive session
Question
Does a homeowner saying they 'can and will challenge' a rule in court count as pending litigation?
Short Answer
No, vague statements about potential legal challenges do not necessarily constitute 'contemplated litigation' sufficient to close a meeting.
Detailed Answer
The ALJ found that comments stating changes 'can and will be challenged in court' did not put the Board on notice of imminent lawsuits. Therefore, such comments did not justify closing the meeting under the 'pending or contemplated litigation' exception.
Alj Quote
Further, the Administrative Law Judge concludes that none of the comments can be reasonably construed as contemplating litigation.
Legal Basis
A.R.S. § 33-1804(A)(2)
Topic Tags
- litigation
- definitions
- executive session
Question
Can the board close an entire meeting if they receive just one threat of litigation?
Short Answer
No, the board should only close the portion of the meeting dealing with the specific threat.
Detailed Answer
If an HOA receives many comments and only one contains a potential legal threat (e.g., copying an attorney), the board should hold an executive session for that specific item and discuss the remaining general business in an open meeting.
Alj Quote
As acknowledged by Mr. Chambers, the Board could have held an executive session to discuss only that one comment/letter in which an attorney was copied, and held an open meeting to discuss the other solicited comments.
Legal Basis
A.R.S. § 33-1804(A)(2)
Topic Tags
- procedure
- litigation
- open meetings
Question
Can the HOA claim 'legal advice' as a reason to close a meeting if no attorney is present?
Short Answer
No, the 'legal advice' exception generally requires actual advice being given or discussed from an attorney.
Detailed Answer
The board cannot use the 'legal advice' exception to close a meeting if they are simply preparing questions for an attorney or reviewing documents before sending them to counsel. In this case, the attorney had not yet reviewed the documents, so no legal advice could be discussed.
Alj Quote
Prior to the June 9, 2022 executive session, an attorney had not yet reviewed the proposed revisions to the Guidelines and therefore, did not provide feedback for discussion at that meeting.
Legal Basis
A.R.S. § 33-1804(A)(1)
Topic Tags
- legal advice
- attorney
- executive session
Question
How should HOA board members and managers interpret open meeting laws?
Short Answer
They must interpret the laws in favor of open meetings.
Detailed Answer
Arizona statute explicitly states that the policy of the state is to conduct meetings openly. Any ambiguity in the law should be construed by board members and managers to support openness rather than secrecy.
Alj Quote
Toward this end, any person or entity that is charged with the interpretation of these provisions, including members of the board of directors and any community manager, shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings.
Legal Basis
A.R.S. § 33-1804(F)
Topic Tags
- statutory interpretation
- policy
- open meetings
Question
Who has the burden of proof in an administrative hearing against an HOA?
Short Answer
The petitioner (the homeowner filing the complaint) has the burden of proof.
Detailed Answer
The homeowner must prove by a 'preponderance of the evidence' that the HOA violated the statute. This means they must show it is more probable than not that the violation occurred.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1804.
Legal Basis
A.A.C. R2-19-119
Topic Tags
- burden of proof
- hearing procedure
- evidence
Question
Can I get my filing fee back if I win my case against the HOA?
Short Answer
Yes, the ALJ has the authority to order the HOA to reimburse the filing fee.
Detailed Answer
If the homeowner prevails in showing a violation occurred, the judge may order the association to pay back the cost of filing the petition.
Alj Quote
IT IS FURTHER ORDERED that Respondent reimburse Petitioner the $500.00 filing fee.
Legal Basis
Order
Topic Tags
- remedies
- fees
- penalties
Question
Will the HOA always be fined if they violate open meeting laws?
Short Answer
Not necessarily; the judge has discretion on whether to impose a civil penalty.
Detailed Answer
Even if a violation is found, the judge may decide not to issue a civil penalty based on the specific facts of the case.
Alj Quote
Based on the facts presented, the Administrative Law Judge finds no civil penalty is appropriate in this matter.
Legal Basis
Findings of Fact
Topic Tags
- penalties
- enforcement
- fines
Case
- Docket No
- 22F-H2222064-REL
- Case Title
- Kathy J. Green v. Cross Creek Ranch Community Association
- Decision Date
- 2022-09-29
- Alj Name
- Sondra J. Vanella
- Tribunal
- OAH
- Agency
- ADRE
Questions
Question
Can my HOA board hold a closed meeting to discuss homeowner feedback on design guidelines?
Short Answer
No, discussing general homeowner feedback does not qualify for a closed executive session unless it meets specific statutory exceptions like pending litigation.
Detailed Answer
The ALJ ruled that reviewing general comments from homeowners regarding proposed changes to design guidelines is not a valid reason to close a meeting. Even if some comments are critical, the board must discuss them in an open meeting unless they specifically relate to pending or contemplated litigation or legal advice.
Alj Quote
The Administrative Law Judge concludes… that the issue discussed at the June 9, 2022 executive session does not fall under the exceptions listed in A.R.S. §§ 33-1804(A)(1) or (A)(2), and Respondent did not properly consider the issue in an executive session closed to its members.
Legal Basis
A.R.S. § 33-1804
Topic Tags
- open meetings
- design guidelines
- executive session
Question
Does a homeowner saying they 'can and will challenge' a rule in court count as pending litigation?
Short Answer
No, vague statements about potential legal challenges do not necessarily constitute 'contemplated litigation' sufficient to close a meeting.
Detailed Answer
The ALJ found that comments stating changes 'can and will be challenged in court' did not put the Board on notice of imminent lawsuits. Therefore, such comments did not justify closing the meeting under the 'pending or contemplated litigation' exception.
Alj Quote
Further, the Administrative Law Judge concludes that none of the comments can be reasonably construed as contemplating litigation.
Legal Basis
A.R.S. § 33-1804(A)(2)
Topic Tags
- litigation
- definitions
- executive session
Question
Can the board close an entire meeting if they receive just one threat of litigation?
Short Answer
No, the board should only close the portion of the meeting dealing with the specific threat.
Detailed Answer
If an HOA receives many comments and only one contains a potential legal threat (e.g., copying an attorney), the board should hold an executive session for that specific item and discuss the remaining general business in an open meeting.
Alj Quote
As acknowledged by Mr. Chambers, the Board could have held an executive session to discuss only that one comment/letter in which an attorney was copied, and held an open meeting to discuss the other solicited comments.
Legal Basis
A.R.S. § 33-1804(A)(2)
Topic Tags
- procedure
- litigation
- open meetings
Question
Can the HOA claim 'legal advice' as a reason to close a meeting if no attorney is present?
Short Answer
No, the 'legal advice' exception generally requires actual advice being given or discussed from an attorney.
Detailed Answer
The board cannot use the 'legal advice' exception to close a meeting if they are simply preparing questions for an attorney or reviewing documents before sending them to counsel. In this case, the attorney had not yet reviewed the documents, so no legal advice could be discussed.
Alj Quote
Prior to the June 9, 2022 executive session, an attorney had not yet reviewed the proposed revisions to the Guidelines and therefore, did not provide feedback for discussion at that meeting.
Legal Basis
A.R.S. § 33-1804(A)(1)
Topic Tags
- legal advice
- attorney
- executive session
Question
How should HOA board members and managers interpret open meeting laws?
Short Answer
They must interpret the laws in favor of open meetings.
Detailed Answer
Arizona statute explicitly states that the policy of the state is to conduct meetings openly. Any ambiguity in the law should be construed by board members and managers to support openness rather than secrecy.
Alj Quote
Toward this end, any person or entity that is charged with the interpretation of these provisions, including members of the board of directors and any community manager, shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings.
Legal Basis
A.R.S. § 33-1804(F)
Topic Tags
- statutory interpretation
- policy
- open meetings
Question
Who has the burden of proof in an administrative hearing against an HOA?
Short Answer
The petitioner (the homeowner filing the complaint) has the burden of proof.
Detailed Answer
The homeowner must prove by a 'preponderance of the evidence' that the HOA violated the statute. This means they must show it is more probable than not that the violation occurred.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1804.
Legal Basis
A.A.C. R2-19-119
Topic Tags
- burden of proof
- hearing procedure
- evidence
Question
Can I get my filing fee back if I win my case against the HOA?
Short Answer
Yes, the ALJ has the authority to order the HOA to reimburse the filing fee.
Detailed Answer
If the homeowner prevails in showing a violation occurred, the judge may order the association to pay back the cost of filing the petition.
Alj Quote
IT IS FURTHER ORDERED that Respondent reimburse Petitioner the $500.00 filing fee.
Legal Basis
Order
Topic Tags
- remedies
- fees
- penalties
Question
Will the HOA always be fined if they violate open meeting laws?
Short Answer
Not necessarily; the judge has discretion on whether to impose a civil penalty.
Detailed Answer
Even if a violation is found, the judge may decide not to issue a civil penalty based on the specific facts of the case.
Alj Quote
Based on the facts presented, the Administrative Law Judge finds no civil penalty is appropriate in this matter.
Legal Basis
Findings of Fact
Topic Tags
- penalties
- enforcement
- fines
Case
- Docket No
- 22F-H2222064-REL
- Case Title
- Kathy J. Green v. Cross Creek Ranch Community Association
- Decision Date
- 2022-09-29
- Alj Name
- Sondra J. Vanella
- Tribunal
- OAH
- Agency
- ADRE
Case Participants
Petitioner Side
- Kathy J. Green (petitioner)
Cross Creek Ranch Owner
Also referred to as Dr. Green, Colonel (retired), - Peter Calogero (witness)
Spouse of Petitioner,
Respondent Side
- Cross Creek Ranch Community Association (respondent)
- Nick Eicher (HOA attorney)
Cross Creek Ranch Community Association,
Also referred to as Nick Iker - Greg Chambers (board president)
Cross Creek Ranch Board
Also appeared as a witness, - Charles Olden (HOA attorney)
Carpenter Hazelwood - Steve Germaine (board member/ARC chair)
Cross Creek Ranch Board/ARC,
Subpoenaed individual,, - John Kinich (board member)
Cross Creek Ranch Board
Also referred to as John Halenich - Lynn Grigg (ARC member)
Cross Creek Ranch ARC, - Dan Donahghue (board member)
Cross Creek Ranch Board, - Lisa Henson (board member)
Cross Creek Ranch Board - Laura Malone (property manager)
Community association manager,, - Edith I. Rudder (HOA attorney)
Carpenter, Hazlewood, Delgado & Bolen LLP,
Recipient of final order - Edward D. O'Brien (HOA attorney)
Carpenter, Hazlewood, Delgado & Bolen LLP,
Recipient of final order
Neutral Parties
- Sondra J. Vanella (ALJ)
OAH
Presided over the matter, - Louis Dettorre (Commissioner)
Arizona Department of Real Estate (ADRE),
Other Participants
- Brian (regional manager)
Homeco/Property Management
Provided guidance to Laura Malone - Miranda Alvarez (legal secretary)
Carpenter, Hazlewood, Delgado & Bolen LLP