Tag Archives: emergency meeting

This summary details the proceedings, key arguments, and final decision in the administrative hearing case of *Gregory Ehle v. Fulton Ranch Homeowners Association* (No. 22F-H2222031-REL), held before Administrative Law Judge (ALJ) Velva Moses-Thompson.

Key Facts and Procedural History

Petitioner Gregory Ehle filed a petition with the Arizona Department of Real Estate (AZDRE) around February 2, 2022, alleging four separate violations by the Respondent, Fulton Ranch Homeowners Association (Fulton Ranch). Ehle paid a $500 filing fee, but the tribunal ordered him to remit an additional $1,500 for the four claims. Ehle failed to pay the outstanding fee by the deadline (May 6, 2022). Consequently, and because Ehle failed to notify the tribunal of his preferred single issue, the ALJ determined that the sole issue to be addressed at the June 21, 2022, hearing was an alleged violation of A.R.S. § 33-1804(E)(2) concerning an emergency meeting of the board members.

Hearing Proceedings and Main Arguments

The hearing took place on June 21, 2022. Petitioner Ehle, appearing on his own behalf, initially failed to appear, but the hearing proceeded after he connected virtually.

Petitioner's Argument: Ehle contended that a November 12, 2020, notice issued by Fulton Ranch regarding the cessation of responses to his emails constituted a matter of urgency that should have necessitated an emergency board meeting. Ehle alleged that if an emergency meeting had been conducted, the required minutes were not published at the next regular board meeting. However, under examination, Ehle conceded that he was unaware of whether an emergency board meeting was actually held.

Respondent's Argument: Fulton Ranch, represented by Emily Mann, Esq., argued for dismissal on multiple grounds, including a potential bar by the one-year statute of limitations. The primary argument, supported by testimony from Kevin Hearty (Division Vice President for the community manager, CCMC), was that no emergency board meeting occurred between September 2020 and November 12, 2020. Fulton Ranch asserted that A.R.S. § 33-1804(E)(2) governs the *procedure* for an emergency meeting, and since no meeting was held, no violation of the procedure could have occurred.

Outcome and Legal Decision

The ALJ issued the decision on July 11, 2022.

Key Legal Points and Findings:

1. Petitioner bore the burden of proof to establish a violation by a preponderance of the evidence.
2. The weight of the evidence showed that Fulton Ranch did not hold an emergency board meeting regarding the decision concerning Mr. Ehle's emails.
3. The ALJ explicitly concluded that A.R.S. § 33-1804(E)(2) allows the Board to conduct an emergency meeting, but the statute does not require the Board to hold one. Ehle failed to provide legal authority supporting his contention that a meeting was mandatory.

Final Decision: Because Ehle failed to establish that Fulton Ranch violated A.R.S. § 33-1804(E)(2), the Administrative Law Judge dismissed the petition.

Administrative Hearing Briefing: Carr v. Sunset Plaza Condo Association

Executive Summary

This briefing document analyzes the Administrative Law Judge’s decision in the case of David B. Carr versus the Sunset Plaza Condo Association (Case No. 18F-H1817003-REL). The central conflict involved a petition filed by Mr. Carr, a condominium owner, alleging that the Association’s Board of Management violated Arizona’s open meeting law and engaged in financial mismanagement.

The final ruling was a partial victory for the petitioner. The judge found that Sunset Plaza violated Ariz. Rev. Stat. § 33-1248 by failing to provide members with proper notice of board meetings where decisions were made to hire Kinney Management Services and the Mulcahy Law Firm. The Association admitted to this failure, citing a misunderstanding of the law, and pledged future compliance. As the prevailing party on this specific issue, Mr. Carr was awarded reimbursement for his $500 filing fee.

However, the judge dismissed all of Mr. Carr’s other allegations. The claim that a meeting to hire Osselaer Management Company violated the open meeting law was rejected, as the judge deemed it a valid emergency meeting exempt from notice requirements. Furthermore, Mr. Carr’s claims of financial mismanagement and inaccurate record-keeping in violation of the Association’s bylaws were not substantiated. The judge accepted the Association’s defense that alleged financial discrepancies stemmed from a change in accounting practices by a new management company, not from an actual deficit. No civil penalty was imposed on the Association.

I. Case Overview

• Case Number: 18F-H1817003-REL

• Forum: Office of Administrative Hearings, Phoenix, Arizona

• Petitioner: David B. Carr

• Respondent: Sunset Plaza Condo Association

• Administrative Law Judge: Velva Moses-Thompson

• Hearing Date: November 21, 2017

• Decision Date: November 22, 2017

• Core Dispute: A petition filed by a condo owner alleging the association’s board violated state statutes and its own bylaws concerning open meetings, financial record-keeping, and the execution of contracts.

II. Petitioner’s Allegations (David B. Carr)

On August 14, 2017, Mr. Carr filed a petition outlining two primary grievances against the Sunset Plaza Condo Association.

A. Violation of Open Meeting Law (Ariz. Rev. Stat. § 33-1248)

Mr. Carr alleged that the Association’s Board of Management took official action without holding properly authorized and noticed board meetings. This resulted in unapproved contracts and expenditures.

Direct Quotation from Petition:

“SUNSET PLAZA CONDOMINIUM ASSOCIATION BOARD OF MANAGEMENT TAKES ACTION WITHOUT HOLDING AUTHORIZED BOARD MEETING IN VIOLATION OF AZ STATUTE 33-1248. THESE UNAUTHORIZED MEETINGS HAVE RESULTED IN CONTRACTS WITH MANAGEMENT FIRMS AND ATTORNEYS. THESE CONTRACTS HAVE RESULTED IN EXPENSES NOT APPROVED OR REVIEWED BY CONDO OWNERS.”

• Specific Contracts Cited:

◦ Kinney Management (October 2016)

◦ Osselaer Real Estate (September 2016)

◦ Mulcahy Law Firm (May 2016)

• Requested Remedy: Cancellation of all contracts entered into without a properly called board meeting and personal repayment of all related expenditures by the signatory.

B. Violation of Bylaws and Financial Mismanagement (Article XI)

Mr. Carr contended that the Association violated Article XI of its bylaws, which requires it to “keep correct and complete books and records of account.” He identified specific financial discrepancies based on his analysis of the Association’s financial statements.

• Alleged Reserve Fund Discrepancy: Mr. Carr claimed an “unexplained reserve deficit of $10,295.09” based on the following figures, noting there were no reported reserve expenses in 2016.

Financial Statement Item

Amount

2015 Year-End Reserve Equity

$10,295.09

2016 Income Statement Reserve Deposit

$9,180.00

2016 Year-End Balance Sheet Reserve Total

$2,295.44

• Additional Discrepancies:

◦ The 2016 year-end balance sheet failed to identify prior and current year operating equity.

◦ An “expanded 2016 balance sheet” calculation revealed a discrepancy of $2,808.42.

• Requested Remedy: A formal audit of the 2016 and 2017 financial statements and improved future reporting to identify reserve balances and homeowner equity.

III. Respondent’s Defense (Sunset Plaza Condo Association)

The Association, represented by Paige Marks, Esq., and through the testimony of board member Marilyn Gelroth, presented a defense against both allegations.

A. Response to Open Meeting Allegations

• Admission: The Association conceded that it “did not provide notice of its board meetings when it decided to hire Kinney and the Mulcahy firm.”

• Justification: This failure was attributed to the board’s misunderstanding of the open meeting law. The Association represented to the judge that it would abide by the law in the future.

• Emergency Meeting Exemption: The Association argued that the decision to hire Osselaer Management was made at a valid emergency board meeting on September 21, 2016.

◦ Timeline of Events: Kinney Management Services retracted its offer to manage the property on September 15, 2016, after receiving notice of a complaint Mr. Carr had filed against them with the Attorney General’s Office.

◦ Urgency: This retraction created an urgent need for a new management company. Ms. Gelroth testified that the board “needed to move quickly because members needed to know where to send payments.” This situation, they argued, constituted an emergency under the law.

B. Response to Financial Allegations

• Flawed Comparison: The Association contended that Mr. Carr’s financial analysis was fundamentally flawed because he “erroneously compared Sunset Plaza’s 2015 year end balance statement to its 2016 income statement,” which are two different types of financial records.

• Change in Accounting Methods: The primary reason for the apparent discrepancies was a change in how financial data was categorized.

◦ The previous management company, Kolby, separated reserve amounts in its financial statements.

◦ The new management company, Osselaer, “does not separate reserve amounts” and is not required by law to do so. This difference in reporting style accounted for the changes Mr. Carr identified as a deficit.

IV. Administrative Law Judge’s Decision and Rationale

The judge, Velva Moses-Thompson, found Ms. Gelroth’s testimony credible and issued a split decision, upholding one of Mr. Carr’s claims while dismissing the other.

A. Finding on Financial Mismanagement Allegation

Conclusion: Petition Dismissed The judge ruled that Mr. Carr “failed to establish by a preponderance of the evidence that Sunset Plaza violated Article XI of Sunset Plaza’s Bylaws.” The Association’s explanation regarding the different accounting methods used by Kolby and Osselaer, and the flawed comparison of financial documents, was accepted as a valid defense.

B. Finding on Open Meeting Law Allegations

Conclusion: Partial Violation Confirmed

• Hiring of Osselaer Management (No Violation): The judge concluded that Sunset Plaza did not violate Ariz. Rev. Stat. § 33-1248 in this instance. The decision was made at a legitimate emergency board meeting, which exempts the board from the 48-hour notice requirement. The minutes of the meeting stated the reason for the emergency.

• Hiring of Kinney Management and Mulcahy Law Firm (Violation Confirmed): The judge found that Mr. Carr “established by preponderance of the evidence that Sunset Plaza violated Ariz. Rev. Stat. 33-1248” when it decided to hire these two firms. The Association did not dispute that it failed to inform members of these board meetings, which was a key factor in the ruling.

C. Final Order

Based on the findings and conclusions of law, the judge issued the following order:

1. Prevailing Party: Petitioner David B. Carr is deemed the prevailing party solely with regard to the violation of Ariz. Rev. Stat. § 33-1248.

2. Reimbursement: Sunset Plaza is ordered to pay Mr. Carr his filing fee of $500.00 within thirty (30) days of the order.

3. Dismissal: All other aspects of Mr. Carr’s petition are dismissed.

4. Penalty: No Civil Penalty is found to be appropriate in the matter.