The Petitioner’s petition was affirmed in part (violation of A.R.S. § 33-1258 regarding documents) and denied in part (no violation of A.R.S. § 33-1248 regarding open meetings). Respondent was ordered to reimburse $500.00 of the filing fee and comply with A.R.S. § 33-1258.
Why this result: Petitioner failed to prove the violation of A.R.S. § 33-1248 because evidence of improper notice was lacking and the topic discussed in executive session was likely covered by a statutory exemption.
Key Issues & Findings
Access to Association Records
Respondent violated A.R.S. § 33-1258 by failing to provide certain requested 2021 invoices that were in existence at the time of the request within the statutory 10-day period.
Orders: Respondent must comply with A.R.S. § 33-1258 going forward. Petitioner reimbursed $500.00 filing fee.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
A.R.S. § 33-1258
A.R.S. § 33-1805
Open Board Meetings
Petitioner failed to establish a violation of A.R.S. § 33-1248 regarding the March 25, 2021, board meeting, as the issue regarding notice was not established and the topic discussed (Landscaping Bid Review) likely fell under a statutory exemption.
Orders: Petitioner failed to establish the alleged violation of A.R.S. § 33-1248.
Can I demand to inspect every single HOA document in person at the management office?
Short Answer
No. While records must be reasonably available, you do not have the right to peruse all documents at will.
Detailed Answer
The Administrative Law Judge ruled that the statute requiring records be 'reasonably available' does not grant an unlimited right to inspect all documents in person. The HOA can withhold certain confidential documents, and sorting through everything to remove them may be considered unduly burdensome.
Alj Quote
Nothing in the statute however, grants a condominium unit owner the right to peruse all of the association’s documents at will as some documents may properly be withheld.
Legal Basis
A.R.S. § 33-1258
Topic Tags
Records Request
Inspection Rights
Question
Is it a violation if the HOA fails to provide requested invoices within 10 days?
Short Answer
Yes. If the documents exist and are not provided within the statutory timeframe, it is a violation.
Detailed Answer
The ALJ found the Association in violation of the law because they acknowledged that requested invoices existed at the time of the request but were not provided to the homeowner.
Alj Quote
Respondent’s witness acknowledged that certain invoices requested by Petitioner were in existence at the time of the request, but were not provided to Petitioner. Such a failure to provide the documents requested was a violation of A.R.S. § 33-1258.
Legal Basis
A.R.S. § 33-1258
Topic Tags
Records Request
Invoices
Timeliness
Question
Can the HOA Board discuss vendor contracts or issues in a closed executive session?
Short Answer
Yes, if the discussion involves specific complaints or performance issues regarding an individual employee of the contractor.
Detailed Answer
The ALJ ruled that a 'Landscaping Bid Review' was properly held in executive session because the testimony indicated it involved specific performance issues with an employee of the landscaping company.
Alj Quote
Respondent’s witness asserted that the issue regarding the landscaping bid review was a specific performance issue with an employee of the landscaping company. As that topic falls under the exception listed in A.R.S. § 33-1248(A)(4), Respondent properly considered the issue in an executive session closed to its members.
Legal Basis
A.R.S. § 33-1248(A)(4)
Topic Tags
Open Meetings
Executive Session
Vendors
Question
Will the HOA be fined if they are found to have violated records request laws?
Short Answer
Not necessarily. The ALJ has discretion regarding civil penalties.
Detailed Answer
In this case, even though a violation was found regarding the failure to provide invoices, the judge decided that no civil penalty was appropriate based on the facts presented.
Alj Quote
Based on the facts presented, the Administrative Law Judge finds no civil penalty is appropriate in this matter.
Legal Basis
Administrative Discretion
Topic Tags
Penalties
Enforcement
Question
Who has the burden of proof in a dispute with the HOA?
Short Answer
The homeowner (Petitioner) must prove the violation by a preponderance of the evidence.
Detailed Answer
The homeowner is responsible for providing evidence that outweighs the evidence offered by the HOA. If the homeowner fails to provide sufficient evidence (such as proof of when a meeting agenda was issued), the claim will likely fail.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1248 and A.R.S. § 33-1258.
Legal Basis
A.A.C. R2-19-119
Topic Tags
Legal Standards
Burden of Proof
Question
Can I get my filing fee reimbursed if I win?
Short Answer
Yes, typically for the portion of the case on which you prevail.
Detailed Answer
The ALJ ordered the Association to reimburse the homeowner $500.00, which represented the filing fee for the specific issue (records request) where the homeowner won.
Alj Quote
IT IS FURTHER ORDERED that Respondent reimburse Petitioner their $500.00 filing fee for the issue on which they prevailed.
Legal Basis
Order
Topic Tags
Remedies
Fees
Question
What if I suspect the HOA altered a document they sent me?
Short Answer
You must provide proof. Mere assertion is not enough.
Detailed Answer
The homeowner claimed a landscaping contract was altered but provided no evidence. The ALJ ruled that an assertion without merit cannot be the basis for finding a violation.
Alj Quote
Petitioner’s assertion that the landscaping contract was altered in some way is completely without merit and cannot be the basis for a finding that Respondent violated A.R.S. § 33-1258.
Legal Basis
Evidence
Topic Tags
Evidence
Fraud Allegations
Question
Do Open Meeting laws apply to Condominium Associations?
Short Answer
Yes, under A.R.S. § 33-1248.
Detailed Answer
Although the homeowner originally cited the Planned Community statutes (A.R.S. § 33-1804), the hearing proceeded under the correct Condominium statutes (A.R.S. § 33-1248), which contain similar open meeting requirements.
Alj Quote
After discussion, the hearing proceeded with the understanding that the statutes applicable to the instant matter were A.R.S. § 33-1248… and A.R.S. § 33-1258…
Legal Basis
A.R.S. § 33-1248
Topic Tags
Jurisdiction
Condos vs HOAs
Case
Docket No
21F-H2121059-REL
Case Title
Jeffrey D Points vs. Olive 66 Condominium Association
Decision Date
2021-09-08
Alj Name
Tammy L. Eigenheer
Tribunal
OAH
Agency
ADRE
Questions
Question
Can I demand to inspect every single HOA document in person at the management office?
Short Answer
No. While records must be reasonably available, you do not have the right to peruse all documents at will.
Detailed Answer
The Administrative Law Judge ruled that the statute requiring records be 'reasonably available' does not grant an unlimited right to inspect all documents in person. The HOA can withhold certain confidential documents, and sorting through everything to remove them may be considered unduly burdensome.
Alj Quote
Nothing in the statute however, grants a condominium unit owner the right to peruse all of the association’s documents at will as some documents may properly be withheld.
Legal Basis
A.R.S. § 33-1258
Topic Tags
Records Request
Inspection Rights
Question
Is it a violation if the HOA fails to provide requested invoices within 10 days?
Short Answer
Yes. If the documents exist and are not provided within the statutory timeframe, it is a violation.
Detailed Answer
The ALJ found the Association in violation of the law because they acknowledged that requested invoices existed at the time of the request but were not provided to the homeowner.
Alj Quote
Respondent’s witness acknowledged that certain invoices requested by Petitioner were in existence at the time of the request, but were not provided to Petitioner. Such a failure to provide the documents requested was a violation of A.R.S. § 33-1258.
Legal Basis
A.R.S. § 33-1258
Topic Tags
Records Request
Invoices
Timeliness
Question
Can the HOA Board discuss vendor contracts or issues in a closed executive session?
Short Answer
Yes, if the discussion involves specific complaints or performance issues regarding an individual employee of the contractor.
Detailed Answer
The ALJ ruled that a 'Landscaping Bid Review' was properly held in executive session because the testimony indicated it involved specific performance issues with an employee of the landscaping company.
Alj Quote
Respondent’s witness asserted that the issue regarding the landscaping bid review was a specific performance issue with an employee of the landscaping company. As that topic falls under the exception listed in A.R.S. § 33-1248(A)(4), Respondent properly considered the issue in an executive session closed to its members.
Legal Basis
A.R.S. § 33-1248(A)(4)
Topic Tags
Open Meetings
Executive Session
Vendors
Question
Will the HOA be fined if they are found to have violated records request laws?
Short Answer
Not necessarily. The ALJ has discretion regarding civil penalties.
Detailed Answer
In this case, even though a violation was found regarding the failure to provide invoices, the judge decided that no civil penalty was appropriate based on the facts presented.
Alj Quote
Based on the facts presented, the Administrative Law Judge finds no civil penalty is appropriate in this matter.
Legal Basis
Administrative Discretion
Topic Tags
Penalties
Enforcement
Question
Who has the burden of proof in a dispute with the HOA?
Short Answer
The homeowner (Petitioner) must prove the violation by a preponderance of the evidence.
Detailed Answer
The homeowner is responsible for providing evidence that outweighs the evidence offered by the HOA. If the homeowner fails to provide sufficient evidence (such as proof of when a meeting agenda was issued), the claim will likely fail.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1248 and A.R.S. § 33-1258.
Legal Basis
A.A.C. R2-19-119
Topic Tags
Legal Standards
Burden of Proof
Question
Can I get my filing fee reimbursed if I win?
Short Answer
Yes, typically for the portion of the case on which you prevail.
Detailed Answer
The ALJ ordered the Association to reimburse the homeowner $500.00, which represented the filing fee for the specific issue (records request) where the homeowner won.
Alj Quote
IT IS FURTHER ORDERED that Respondent reimburse Petitioner their $500.00 filing fee for the issue on which they prevailed.
Legal Basis
Order
Topic Tags
Remedies
Fees
Question
What if I suspect the HOA altered a document they sent me?
Short Answer
You must provide proof. Mere assertion is not enough.
Detailed Answer
The homeowner claimed a landscaping contract was altered but provided no evidence. The ALJ ruled that an assertion without merit cannot be the basis for finding a violation.
Alj Quote
Petitioner’s assertion that the landscaping contract was altered in some way is completely without merit and cannot be the basis for a finding that Respondent violated A.R.S. § 33-1258.
Legal Basis
Evidence
Topic Tags
Evidence
Fraud Allegations
Question
Do Open Meeting laws apply to Condominium Associations?
Short Answer
Yes, under A.R.S. § 33-1248.
Detailed Answer
Although the homeowner originally cited the Planned Community statutes (A.R.S. § 33-1804), the hearing proceeded under the correct Condominium statutes (A.R.S. § 33-1248), which contain similar open meeting requirements.
Alj Quote
After discussion, the hearing proceeded with the understanding that the statutes applicable to the instant matter were A.R.S. § 33-1248… and A.R.S. § 33-1258…
Legal Basis
A.R.S. § 33-1248
Topic Tags
Jurisdiction
Condos vs HOAs
Case
Docket No
21F-H2121059-REL
Case Title
Jeffrey D Points vs. Olive 66 Condominium Association
Decision Date
2021-09-08
Alj Name
Tammy L. Eigenheer
Tribunal
OAH
Agency
ADRE
Case Participants
Petitioner Side
Jeffrey D Points(petitioner) Appeared on their own behalf
Respondent Side
MacKenzie Hill(respondent attorney) The Brown Law Group, PLLC Represented Olive 66 Condominium Association
Nathan Tennyson(respondent attorney) Represented Olive 66 Condominium Association
Cathy Hacker(association manager) Olive 66 Condominium Association Provided testimony as Association Manager,
Musa(individual/contractor) Mentioned regarding 1099s and invoices; referred to as 'Musa', and 'M. Sayegh'
Lorinda Brown(individual/contractor) Mentioned regarding 1099s and invoices
Neutral Parties
Tammy L. Eigenheer(ALJ) Office of Administrative Hearings
Judy Lowe(ADRE Commissioner) Arizona Department of Real Estate
Other Participants
Tim(individual) Mentioned regarding 1099s/invoices; reportedly 'has not done any work on the property',
The final decision affirmed the denial of Issues 1, 2, and 3, and the granting of Issue 4. The Association was found to have violated ARIZ. REV. STAT. § 33-1805 for failing to provide complete records in a timely manner, resulting in the reimbursement of 1/4 of the filing fee.
Why this result: Petitioners failed to sustain the burden of proof regarding alleged violations of CC&Rs Section 5, Architectural Design Guidelines Section 4.0, and A.R.S. § 33-1804(A), (D), and (E).
Key Issues & Findings
Alleged violation of CC&Rs Section 5
Petitioners alleged that the HOA violated the Covenants, Conditions and Restrictions (CC&Rs), Section 5, by allowing construction on Lot 7 without prior ARC approval of required documents.
Orders: Petition denied.
Filing fee: $125.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
CC&Rs Section 5
Alleged violation of Community Agricultural Design Guidelines Section 4.0
Petitioners alleged that the HOA violated the Architectural Design Guidelines, Section 4.0, by failing to require the required $5,000.00 Construction Compliance Deposit for Lot 7.
Orders: Petition denied.
Filing fee: $125.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
Architectural Design Guidelines Section 4.0
ARIZ. REV. STAT. § 10-3821
Alleged violation of A.R.S. § 33-1804(A), (D), and (E)
Petitioners alleged that the Board conducted an unnoticed closed meeting in violation of Arizona open meeting statutes.
Orders: Petition denied.
Filing fee: $125.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
ARIZ. REV. STAT. § 33-1804(A)
ARIZ. REV. STAT. § 33-1804(D)
ARIZ. REV. STAT. § 33-1804(E)
ARIZ. REV. STAT § 10-3821
Alleged violation of A.R.S. § 33-1805
Petitioners alleged that the HOA failed to timely and completely fulfill a records request submitted on June 04, 2020, specifically by failing to provide missing email attachments.
Orders: Respondent must reimburse 1/4 of Petitioners' filing fee ($125.00). Respondent must henceforth comply with A.R.S. § 33-1805 and provide the missing email attachments within 10-business days.
Filing fee: $125.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
ARIZ. REV. STAT. § 33-1805
Analytics Highlights
Topics: HOA Statute Violation, Records Request, Filing Fee Refund, Architectural Review, Open Meetings
Briefing Document: Burnes v. Saguaro Crest Homeowners Association
Executive Summary
This document synthesizes the findings and legal proceedings in the case of Clifford (Norm) and Maria Burnes (“Petitioners”) versus the Saguaro Crest Homeowners Association, Inc. (“Respondent”). The dispute, adjudicated by the Arizona Office of Administrative Hearings (OAH), centered on a four-issue petition filed by the Burnes on July 17, 2020. The allegations concerned construction on a neighboring property (Lot 7), specifically violations of architectural rules, failure to collect a construction deposit, violations of open meeting laws, and failure to fulfill a records request.
The Administrative Law Judge (ALJ) found in favor of the Respondent on the first three issues, concluding that the association had not violated its Covenants, Conditions, and Restrictions (CC&Rs) regarding architectural control, had properly honored a waiver for the construction deposit, and had not violated state open meeting laws. However, the ALJ found that the Respondent did violate Arizona Revised Statute § 33-1805 by failing to provide copies of requested records within the statutory 10-day deadline and by providing an incomplete set of documents.
Following the initial decision, the Petitioners were granted a rehearing on the grounds of newly discovered evidence and an allegedly arbitrary decision. The rehearing affirmed the original findings, as the Petitioners conceded they possessed no new evidence that could not have been produced at the original hearing.
The final order requires the Respondent to reimburse the Petitioners for a portion of their filing fee, to comply with the records request statute moving forward, and to provide the specific missing documents from the original request.
Case Background and Procedural History
The case involves property owners Clifford (Norm) and Maria Burnes, who own Lot 6 in the Saguaro Crest subdivision in Tucson, Arizona, and their homeowners’ association. The dispute arose from the construction of a new home on the adjacent Lot 7.
• July 17, 2020: The Petitioners filed a four-issue petition with the Arizona Department of Real Estate.
• August 11, 2020: The Respondent HOA filed its answer, denying all four claims.
• August 19, 2020: The matter was referred to the Office of Administrative Hearings (OAH) for an evidentiary hearing.
• December 2020 & March 2021: Hearings were conducted before Administrative Law Judge Jenna Clark.
• March 22, 2021: The initial ALJ Decision was issued, denying the Petitioners’ claims on three issues but granting their petition on the fourth issue concerning the records request.
• April 28, 2021: The Petitioners filed a Dispute Rehearing Request on the grounds of “Newly discovered material evidence” and that the decision was “arbitrary, capricious, or an abuse of discretion.”
• May 21, 2021: The Commissioner of the Department of Real Estate granted the rehearing request.
• July 20, 2021: The rehearing was conducted.
• August 09, 2021: A Final Administrative Law Judge Decision was issued, affirming the original decision in its entirety.
Analysis of Allegations and Findings
The petition presented four distinct issues for adjudication. The findings for each are detailed below, based on the evidence presented in the hearings.
Issue 1: Alleged Violation of CC&Rs Section 5 (Architectural Control)
• Allegation: The Petitioners claimed the HOA allowed construction on Lot 7 to proceed without the required submission of documents to the Architectural Review Committee (ARC) for approval, specifically concerning modifications to the originally approved plans.
• Key Evidence:
◦ Petitioner Norm Burnes was a member of the ARC that unanimously approved the initial construction plans for Lot 7 on January 3, 2018.
◦ On October 21, 2018, and again on April 14, 2020, Mr. Burnes expressed concerns to the HOA Board that the placement of the home on Lot 7 deviated from the approved plans, negatively impacting the view and privacy of his own home on Lot 6.
◦ In a letter, Mr. Burnes stated, “Mr. Martinez did not honer the approved plan and has placed the house in the original position,” which he claimed was disharmonious and destroyed his view.
◦ The evidence showed that no additional or modified plans were ever submitted to the ARC for review after the initial January 2018 approval.
◦ The construction plans for Lot 7 were approved by Pima County on May 4, 2018.
• Conclusion:No violation found. The ALJ concluded that the “ARC cannot approve or deny proposed plans unless they are submitted for review.” Since no modified plans were ever presented, the ARC did not violate the CC&Rs. The decision also noted that the construction complied with the local government’s building authority.
• Allegation: The Petitioners claimed the HOA allowed construction on Lot 7 without collecting the required $5,000 refundable Construction Compliance Deposit.
• Key Evidence:
◦ In a meeting on May 3, 2020, the HOA Board of Directors decided to honor a Construction Compliance Deposit Waiver that had been previously granted to the Martinez family (owners of Lot 7).
◦ The rationale for such waivers was that they were granted during an economic downturn to incentivize property purchases in the subdivision.
◦ Crucially, the HOA “does not possess a corporate record that any such Construction Compliance Deposit Waiver was previously granted to the Martinez family.”
• Conclusion:No violation found. The ALJ determined that it was “clear that Lot 7 was granted a construction compliance deposit waiver.” The lack of a documented record explaining the details of the waiver was acknowledged but considered moot because it was not a specifically “noticed issue” in the petition.
• Allegation: The Petitioners claimed the HOA Board conducted an unnoticed meeting on or about May 20, 2020, to consider matters relevant to Petitioner Norm Burnes, violating state open meeting laws.
• Key Evidence:
◦ On April 18, 2020, Mr. Burnes requested an urgent meeting with the Board, which was held the following day.
◦ On May 20, 2020, the Board acted via unanimous written consent, as permitted under A.R.S § 10-3821, to restrict Mr. Burnes’s participation as an ARC member only on matters related to Lot 7.
◦ The Board’s written consent stated, “[T]he Board of Directors hereby unanimously agree that [Petitioner] be removed as an ARC Member for all ARC related matters concerning Lot 7.” This action was taken due to Mr. Burnes’s personal complaints against the Lot 7 owner, creating a conflict of interest.
• Conclusion:No violation found. The ALJ found that the Board’s failure to notice the April 19 meeting was an excused exception because the Petitioner himself had requested it as an urgent matter. The action on May 20 was not an illegal meeting but a permissible action taken via written consent without a meeting. Furthermore, the Board did not remove Mr. Burnes from the ARC entirely, but only restricted his involvement on the specific issue where he had a conflict.
Issue 4: Alleged Violation of A.R.S. § 33-1805 (Records Request)
• Allegation: The Petitioners claimed the HOA failed to fulfill a records request in accordance with state law.
• Key Evidence:
◦ On June 4, 2020, the Petitioners submitted a comprehensive request to review “ALL of the documents of the HOA” and for copies of documents falling into 17 specific categories, demanding fulfillment within 10 days.
◦ The statutory deadline for the HOA to comply with both the review and copy requests was June 18, 2020.
◦ The HOA made the documents available for review on June 16, 2020 (within the deadline).
◦ However, the HOA provided copies of the documents only on June 24, 2020, six days past the statutory deadline.
◦ Upon receiving the copies, Mr. Burnes notified the HOA the same day that “[S]ome of the attachments for some emails are not included within in this package from this documentation.” [sic]
• Conclusion:Violation found. The ALJ determined that the HOA violated the statute, which requires copies of requested records to be provided within ten business days. The Respondent’s argument that the Petitioner’s clarification on June 16 reset the deadline was explicitly rejected. The decision also noted that the documents provided were incomplete.
The Rehearing
The Petitioners’ request for a rehearing was granted, but it did not alter the case’s outcome.
• Grounds for Rehearing: The request was based on claims of newly discovered evidence and that the original findings on issues 1-3 were arbitrary or capricious.
• Rehearing Proceedings: During the rehearing, the “Petitioners offered no ‘new’ evidence and instead conceded that they wished to present evidence which they had in their possession during the prior hearing, that they markedly had decided not to present.”
• Outcome: Because no new evidence was presented, the Petitioners were precluded from recalling witnesses or offering additional exhibits. The ALJ found no basis to alter the original findings and affirmed the March 22, 2021, decision.
Final Order
The Final Administrative Law Judge Decision, dated August 9, 2021, affirmed the original order. The Respondent, Saguaro Crest Homeowners Association, is mandated to perform the following actions:
1. Denial and Granting of Petitions: The Petitioners’ petition is denied for Issues 1, 2, and 3. The petition is granted for Issue 4.
2. Reimbursement: The Respondent must reimburse the Petitioners for one-quarter of their filing fee, amounting to $500.00, to be paid in certified funds.
3. Future Compliance: The Respondent must henceforth comply with the requirements of A.R.S. § 33-1805 regarding member access to association records.
4. Provision of Documents: The Respondent must provide the Petitioners with the missing email attachments related to the June 4, 2020, records request within 10 business days of the final order’s effective date.
Study Guide – 21F-H2120002-REL-RHG
Study Guide: Burnes v. Saguaro Crest Homeowners Association, Inc.
Short-Answer Quiz
Instructions: Answer the following ten questions based on the provided source documents. Each answer should be approximately two to three sentences.
1. Identify the primary parties in this legal dispute and describe their relationship within the Saguaro Crest community.
2. What were the four specific allegations the Petitioners filed against the Respondent on July 17, 2020?
3. Explain Petitioner Norm Burnes’s initial role with the Architectural Review Committee (ARC) and how the Board of Directors later altered his participation.
4. Describe the controversy surrounding the $5,000 Construction Compliance Deposit for the construction on Lot 7.
5. What was the central grievance expressed by the Petitioners regarding the placement and construction of the new home on Lot 7?
6. What action did the Board of Directors take on May 20, 2020, without a formal, noticed meeting, and under what legal authority did they act?
7. Summarize the timeline and outcome of the Petitioners’ June 4, 2020, records request to the Association.
8. Why did the Administrative Law Judge ultimately rule in favor of the Petitioners on Issue 4, regarding the violation of ARIZ. REV. STAT. § 33-1805?
9. On what grounds did the Petitioners request a rehearing, and what was the judge’s finding regarding the “new evidence” they wished to present?
10. What was the final, affirmed order issued by the Administrative Law Judge in this case?
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Answer Key
1. The primary parties are Clifford (Norm) S. and Maria Burnes (the “Petitioners”) and the Saguaro Crest Homeowners Association, Inc. (the “Respondent”). The Petitioners are property owners in the Saguaro Crest subdivision, making them members of the Association, which is the governing body for the community.
2. The Petitioners alleged that the Association (1) improperly allowed construction on Lot 7 without required ARC approval in violation of CC&Rs Section 5; (2) allowed this construction without the required Construction Compliance Deposit; (3) conducted an unnoticed meeting in violation of ARIZ. REV. STAT. § 33-1804; and (4) failed to fulfill a records request in violation of ARIZ. REV. STAT. § 33-1805.
3. Petitioner Norm Burnes was named to serve as an Architecture Review Committee (ARC) member effective December 5, 2017, and he participated in the unanimous approval of the Lot 7 construction plans. On May 20, 2020, the Board of Directors restricted his participation as an ARC member for all matters concerning Lot 7 due to his personal complaints, which created a conflict of interest.
4. The Association’s Architectural Design Guidelines require a refundable $5,000 Construction Compliance Deposit. The Board decided to honor a discretionary waiver for Lot 7, which was said to have been granted during an economic downturn to incentivize purchases, though the Association possessed no corporate record of the waiver being granted.
5. The Petitioners’ central grievance was that the house on Lot 7 was placed too close to their backyard (on Lot 6), destroying their views, violating their privacy, and causing stress. They contended that the owner of Lot 7 did not honor the approved plan and built the house in its original, unapproved position.
6. On May 20, 2020, the Board of Directors acted without a noticed meeting to restrict Petitioner Norm Burnes’s participation on the ARC for matters related to Lot 7. They acted under the authority of ARIZ. REV. STAT § 10-3821, which permits action without a meeting if all directors provide written consent, which they obtained via individual signatures.
7. On June 4, 2020, Petitioners requested to review all Association records and receive copies of documents from 17 specific categories. The Association offered a review on June 16 (within the 10-day limit), but did not provide the requested copies until June 24, which was after the statutory deadline of June 18. Furthermore, the copies provided were incomplete, missing some email attachments.
8. The Judge ruled a violation occurred because the Association failed to provide copies of the requested records within the ten business days mandated by the statute. The Judge rejected the Association’s argument that the Petitioner’s clarification on June 16 reset the deadline, stating the Association was obligated to timely clarify and provide the documents.
9. The Petitioners requested a rehearing on the grounds of “Newly discovered material evidence” and that the initial decision was “arbitrary, capricious, or an abuse of discretion.” The judge found that the Petitioners offered no new evidence, but rather wished to present evidence they had possessed but strategically chose not to use in the original hearing.
10. The final, affirmed order granted the Petitioners’ petition regarding Issue 4 and denied it for Issues 1-3. The Respondent was ordered to reimburse the Petitioners for ¼ of their filing fee ($500.00), comply with ARIZ. REV. STAT. § 33-1805 going forward, and provide the missing email attachments from the records request within 10 business days.
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Essay Questions
Instructions: The following questions are designed for a more in-depth, essay-style response. Answers are not provided.
1. Analyze the legal concept of “burden of proof by a preponderance of the evidence” as it was applied in this case. Explain why the Administrative Law Judge concluded that the Petitioners successfully met this burden for the records request violation but failed to do so for their allegations concerning the CC&Rs, the construction deposit, and the open meeting laws.
2. Discuss the role, authority, and limitations of a Homeowners’ Association’s Architectural Review Committee (ARC) as depicted in the source documents. Evaluate the Saguaro Crest ARC’s actions and failures to act regarding the construction on Lot 7, and explain why the Judge determined that no violation of CC&Rs Section 5 had occurred.
3. Examine the conflict of interest involving Petitioner Norm Burnes’s dual roles as an aggrieved neighbor and a member of the ARC. Detail how this conflict emerged, the specific actions the Board of Directors took to address it, and the legal justification for those actions.
4. Trace the full timeline of events related to the Board of Directors’ meetings in April and May 2020. Analyze the Petitioners’ claim that these constituted a violation of Arizona’s open meeting laws (ARIZ. REV. STAT. § 33-1804) and the Judge’s legal reasoning for concluding that no violation was established.
5. Evaluate the Petitioners’ request for a rehearing. Based on the Final Administrative Law Judge Decision, explain the legal standard for granting a rehearing based on “newly discovered material evidence” and why the Petitioners’ offer of proof failed to meet this standard.
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
The presiding official (Jenna Clark) at the Office of Administrative Hearings who hears evidence, makes Findings of Fact and Conclusions of Law, and issues orders in the case.
Architectural Review Committee (ARC)
A committee established by the Association’s CC&Rs, charged with implementing Architectural Guidelines to maintain aesthetic standards within the community. In this case, Petitioner Norm Burnes was a member.
Arizona Department of Real Estate (Department)
The state agency authorized to receive and decide petitions for hearings from members of homeowners’ associations in Arizona.
ARIZ. REV. STAT.
Abbreviation for Arizona Revised Statutes, which are the codified laws of the state of Arizona. Specific statutes, such as § 33-1804 (open meeting laws) and § 33-1805 (records access), were central to this case.
Board of Directors (the Board)
The overseeing body of the Saguaro Crest Homeowners Association, comprised of a President, Vice President, and Treasurer.
Burden of Proof
The obligation of a party in a legal proceeding (in this case, the Petitioners) to produce evidence that proves the claims they have made against the other party.
Covenants, Conditions, and Restrictions (CC&Rs)
The governing documents for the Saguaro Crest community that form an enforceable contract between the Association and each property owner, controlling aspects of property use.
Construction Compliance Deposit (CCD)
A refundable $5,000.00 deposit required by Section 4.0 of the Association’s Architectural Design Guidelines, which became a point of contention regarding Lot 7.
Office of Administrative Hearings (OAH)
An independent state agency in Arizona where the evidentiary hearings for this case were held.
Petitioners
Clifford (Norm) S. Burnes and Maria Burnes, the property owners of Lot 6 who filed the petition against the Homeowners Association.
Preponderance of the Evidence
The standard of proof required in this proceeding, defined as evidence that is more convincing and has superior weight, making it more probable that a contention is true than not true.
Respondent
The Saguaro Crest Homeowners Association, Inc., the non-profit corporation governing the subdivision and the party against whom the petition was filed.
Blog Post – 21F-H2120002-REL-RHG
He Sued His HOA and Won… Sort Of. 4 Shocking Lessons from a Neighbor vs. HOA Showdown
Introduction: The Neighbor’s Nightmare
It’s a scenario that sparks anxiety for any homeowner: you look out your window and see the first signs of a new construction project on the property next door. The questions immediately flood your mind. Will it block my view? Will I lose my privacy? Will this new structure change the character of the neighborhood I love?
When a decision by a Homeowners’ Association (HOA) feels threatening, the impulse to fight back is strong. But what does that fight actually look like, and what does it mean to “win”?
The real-life case of the Burnes family versus the Saguaro Crest HOA in Arizona provides a masterclass in the unexpected realities of neighbor-versus-HOA disputes. They took their fight to an administrative hearing, and the official legal decision reveals surprising and counter-intuitive lessons for any homeowner. Here are the four most impactful takeaways from that legal showdown—critical warnings for anyone who thinks going to battle with their HOA is a straightforward affair.
1. He Helped Approve the Plans He Grew to Hate
In a turn of profound irony, the petitioner leading the charge against the HOA, Mr. Norm Burnes, was a serving member of the very committee that set the entire conflict in motion: the HOA’s Architectural Review Committee (ARC).
On January 3, 2018, the ARC, including Mr. Burnes, unanimously approved the construction plans for the neighboring home on Lot 7. At the time, they were just plans on paper. But more than two years would pass before Mr. Burnes raised an alarm—long after the abstract lines on a page had become concrete and steel next door. On April 14, 2020, with construction underway, the reality of the new build became a personal grievance. Mr. Burnes wrote to the board, explaining that the new house was a “constant source of stress” for his family, that his privacy was “violated / gone,” and that his cherished views were “destroyed.”
In his own words, the impact was devastating:
“A large part of the value to me for my house was the view from the back patio. That’s gone now. The view from my kitchen and bedroom windows are destroyed.”
This is a powerful lesson in unintended consequences. It reveals how abstract plans can become deeply personal issues once construction begins. More importantly, it highlights the inherent conflict that can arise when a homeowner acts in an official capacity for the community while also trying to protect their own personal interests.
2. The HOA Won on Substance, But Lost on a Technicality
The Burnes family filed a formal petition with four distinct allegations against their HOA. In a striking outcome, the judge sided with the HOA on the three major, substantive issues at the heart of the dispute.
• Construction Plans: The judge found the HOA was not at fault for the final build. No modified plans were ever submitted for the ARC to review after the initial approval, and the construction itself complied with the local government’s authority.
• $5,000 Deposit: The judge concluded that the Lot 7 owner had been granted a waiver for the required construction deposit, even though the HOA lacked a formal record of it—a stroke of luck for the board that highlights the critical importance of meticulous record-keeping.
• Improper Meeting: The judge determined that the Board had not improperly removed Mr. Burnes from the ARC; they had only “removed [him] as an ARC Member for all ARC related matters concerning Lot 7,” a targeted recusal due to his direct conflict of interest, not a full removal from the committee. Furthermore, the meeting Mr. Burnes complained about was deemed a valid emergency meeting held at his own request.
Despite winning on these core points, the HOA was found in violation of the law on the fourth issue: a simple procedural error. The HOA had violated Arizona statute ARIZ. REV. STAT. § 33-1805 by failing to provide copies of requested records within the legally mandated 10-business day deadline. While the HOA allowed the Burnes family to review the documents on time (on June 16, within the June 18 deadline), they failed to provide the physical copies until June 24, four business days past the legal deadline.
This demonstrates a critical lesson for any organization. An entity can win the arguments on major issues but still be found in violation of the law for a minor administrative slip-up. Procedural diligence isn’t just good practice; it’s a legal requirement that can define the outcome of a case.
3. A Legal “Victory” Doesn’t Always Solve the Real Problem
So, what did the Burnes family “win” after their long and stressful legal battle? The judge’s final order was clear and specific. They received:
• A reimbursement of 1/4 of their filing fee ($500).
• An order for the HOA to provide the missing email attachments from their records request.
• An order for the HOA to comply with the records-request law in the future.
This outcome stands in stark contrast to Mr. Burnes’s original, deeply personal complaint. His fight began because the new house was a “constant source of stress” and had destroyed his backyard view. The legal ruling, however, did nothing to halt or alter the construction on Lot 7. The neighbor’s house, the very source of the entire conflict, remained exactly where it was.
This is a sobering look at the difference between a legal remedy and a practical solution. Winning in an administrative hearing is defined strictly by the letter of the law. The legal system addresses violations of statutes and governing documents, which may not align with—or offer any solution for—the personal grievance that ignited the conflict in the first place.
4. You Don’t Get a Do-Over for a Bad Strategy
Unhappy with the initial decision, the petitioners filed for a rehearing. The official grounds they cited were serious: they claimed to have “Newly discovered material evidence that could not with reasonable diligence have been discovered and produced at the original hearing.”
But when the rehearing began, the reality was quite different. As stated in the final decision, the petitioners conceded that they possessed no new evidence at all. Instead, they admitted they had strategically chosen not to present certain evidence during the first hearing and were now asking for a second chance to do so.
The judge’s response was swift and decisive. The petitioners were “precluded from recalling… witnesses, or offering additional exhibits,” and the original decision was affirmed.
This serves as a stark reminder that legal proceedings are formal and final. A trial or administrative hearing is not a practice run. The petitioners’ admission that they deliberately withheld evidence was a fatal strategic error, turning their request for a second chance into a confirmation of their first failure.
Conclusion: The Letter vs. The Spirit of the Law
The showdown between the Burnes family and the Saguaro Crest HOA is a compelling story of unintended consequences, procedural missteps, and strategic blunders. But taken together, the lessons reveal a single, powerful truth: the legal system is designed to correct violations of law, not to soothe personal grievances. The family won on a paperwork technicality but lost on every issue that mattered to their quality of life. The HOA won on the substance of the dispute but was penalized for failing to follow administrative rules.
The case leaves us with a critical question to consider. When you find yourself in a dispute, is it more important to be legally ‘right,’ or to find a practical resolution? As the Burnes family discovered, the two are not always the same thing.
Case Participants
Petitioner Side
Clifford Burnes(petitioner/ARC member) Saguaro Crest Homeowners Association, Inc. Also known as Norm S. Burnes
Maria Burnes(petitioner) Saguaro Crest Homeowners Association, Inc.
Cynthia F. Burnes(petitioner attorney) Counsel for Petitioners
Jacob A. Kubert(petitioner attorney) Counsel for Petitioners
Debora Brown(witness) Witness for Petitioners
Respondent Side
John Crotty(respondent attorney) Law Offices of Farley, Choate & Wood Counsel for Respondent
Kelsea Dressen(respondent attorney) Law Offices of Farley, Choate & Wood Counsel for Respondent (also listed as Kelsey P. Dressen)
Esmerelda Martinez(board member/witness) Saguaro Crest Homeowners Association, Inc. Board President
Dave Madill(board member) Saguaro Crest Homeowners Association, Inc. Board Vice President
Julie Stevens(board member) Saguaro Crest Homeowners Association, Inc. Board Treasurer
Raul Martinez(lot owner) Saguaro Crest Homeowners Association, Inc. Owner of Lot 7
Ramona Martinez(lot owner) Saguaro Crest Homeowners Association, Inc. Owner of Lot 7
Joseph Martinez(ARC member) Saguaro Crest Homeowners Association, Inc.
Jamie Argueta(ARC member) Saguaro Crest Homeowners Association, Inc.
Jesus Carranza(substitute ARC member) Saguaro Crest Homeowners Association, Inc.
Neutral Parties
Jenna Clark(ALJ) OAH
Judy Lowe(Commissioner) Arizona Department of Real Estate
Dan Gardener(ADRE staff) Arizona Department of Real Estate Recipient of order transmission (listed as DGardner)
c. serrano(administrative staff) Transmitted decision/order
The final decision affirmed the denial of Issues 1, 2, and 3, and the granting of Issue 4. The Association was found to have violated ARIZ. REV. STAT. § 33-1805 for failing to provide complete records in a timely manner, resulting in the reimbursement of 1/4 of the filing fee.
Why this result: Petitioners failed to sustain the burden of proof regarding alleged violations of CC&Rs Section 5, Architectural Design Guidelines Section 4.0, and A.R.S. § 33-1804(A), (D), and (E).
Key Issues & Findings
Alleged violation of CC&Rs Section 5
Petitioners alleged that the HOA violated the Covenants, Conditions and Restrictions (CC&Rs), Section 5, by allowing construction on Lot 7 without prior ARC approval of required documents.
Orders: Petition denied.
Filing fee: $125.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
CC&Rs Section 5
Alleged violation of Community Agricultural Design Guidelines Section 4.0
Petitioners alleged that the HOA violated the Architectural Design Guidelines, Section 4.0, by failing to require the required $5,000.00 Construction Compliance Deposit for Lot 7.
Orders: Petition denied.
Filing fee: $125.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
Architectural Design Guidelines Section 4.0
ARIZ. REV. STAT. § 10-3821
Alleged violation of A.R.S. § 33-1804(A), (D), and (E)
Petitioners alleged that the Board conducted an unnoticed closed meeting in violation of Arizona open meeting statutes.
Orders: Petition denied.
Filing fee: $125.00, Fee refunded: No
Disposition: petitioner_loss
Cited:
ARIZ. REV. STAT. § 33-1804(A)
ARIZ. REV. STAT. § 33-1804(D)
ARIZ. REV. STAT. § 33-1804(E)
ARIZ. REV. STAT § 10-3821
Alleged violation of A.R.S. § 33-1805
Petitioners alleged that the HOA failed to timely and completely fulfill a records request submitted on June 04, 2020, specifically by failing to provide missing email attachments.
Orders: Respondent must reimburse 1/4 of Petitioners' filing fee ($125.00). Respondent must henceforth comply with A.R.S. § 33-1805 and provide the missing email attachments within 10-business days.
Filing fee: $125.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
ARIZ. REV. STAT. § 33-1805
Analytics Highlights
Topics: HOA Statute Violation, Records Request, Filing Fee Refund, Architectural Review, Open Meetings
Additional Citations:
ARIZ. REV. STAT. § 32-2102
ARIZ. REV. STAT. § 32-2199
ARIZ. REV. STAT. § 32-2199.01
ARIZ. REV. STAT. § 32-2199.02
ARIZ. REV. STAT. § 32-2199.05
ARIZ. REV. STAT. § 33-1804(A)
ARIZ. REV. STAT. § 33-1804(D)
ARIZ. REV. STAT. § 33-1804(E)
ARIZ. REV. STAT. § 33-1805
ARIZ. REV. STAT. § 10-3821
CC&Rs Section 5
Architectural Design Guidelines Section 4.0
Video Overview
Audio Overview
Decision Documents
21F-H2120002-REL Decision – 866263.pdf
Uploaded 2025-12-09T10:06:10 (268.5 KB)
21F-H2120002-REL Decision – 902726.pdf
Uploaded 2025-10-09T03:35:42 (239.9 KB)
Briefing Doc – 21F-H2120002-REL
Briefing Document: Burnes v. Saguaro Crest Homeowners Association, Final Decision
Executive Summary
This document synthesizes the Final Administrative Law Judge Decision in the case of Clifford and Maria Burnes (“Petitioners”) versus the Saguaro Crest Homeowners Association (“Respondent”), case number 21F-H2120002-REL-RHG. The dispute centered on a four-issue petition alleging violations by the Association related to new construction on a neighboring property (Lot 7), an unnoticed Board meeting, and the fulfillment of a records request.
Following an initial hearing and a subsequent rehearing, the Administrative Law Judge (ALJ) largely affirmed the original decision. The Petitioners failed to meet their burden of proof on three of the four issues, with the judge finding no violations by the Association regarding architectural controls, the waiver of a construction deposit, or the conduct of a Board meeting.
However, the Petitioners successfully proved that the Association violated Arizona Revised Statute § 33-1805 by failing to timely and completely fulfill a comprehensive records request. The final order requires the Association to reimburse the Petitioners for a portion of their filing fee ($500), comply with the records statute moving forward, and provide the specific missing documents (email attachments) from the original request. The rehearing was granted on the basis of “newly discovered evidence,” but the Petitioners conceded during the proceeding that they possessed no new evidence, leading the ALJ to rely solely on the record from the first hearing.
I. Background and Procedural History
The case involves a dispute between property owners Clifford and Maria Burnes and their homeowners’ association, Saguaro Crest, located in Tucson, Arizona. The Association is governed by Covenants, Conditions, and Restrictions (CC&Rs) recorded in 2006 and Architectural Design Guidelines adopted in 2018.
Procedural Timeline
July 17, 2020
Petitioners file a 4-issue petition with the Arizona Department of Real Estate.
August 11, 2020
Respondent (HOA) denies all claims in its answer.
Dec 11, 2020 & Mar 1-2, 2021
An evidentiary hearing is held before the Office of Administrative Hearings (OAH).
March 22, 2021
The Administrative Law Judge (ALJ) issues the initial decision.
April 28, 2021
Petitioners file a dispute rehearing request, alleging newly discovered evidence.
May 21, 2021
The Commissioner of the Department of Real Estate grants the rehearing request.
July 20, 2021
The rehearing is held. Petitioners concede they have no “new” evidence.
August 09, 2021
The Final Administrative Law Judge Decision is issued, affirming the initial ruling.
Key Parties
Name / Entity
Clifford & Maria Burnes
Petitioners; owners of Lot 6.
Cynthia F. Burnes, Esq.
Counsel for Petitioners.
Saguaro Crest HOA, Inc.
Respondent.
John Crotty, Esq.
Counsel for Respondent.
Norm Burnes
Petitioner; appointed to the Architectural Review Committee (ARC) in 2017.
Raul & Ramona Martinez
Owners of Lot 7, the property under construction.
Jenna Clark
Administrative Law Judge (ALJ).
II. Analysis of Allegations and Findings
The petition presented four distinct issues for adjudication. The Petitioners bore the burden of proving each violation by a preponderance of the evidence.
Issue 1: Alleged Violation of CC&Rs Section 5 (Architectural Control)
• Petitioners’ Allegation: The Association improperly allowed construction on Lot 7 to proceed without required documents being submitted to the Architectural Review Committee (ARC) for approval.
• Factual Record:
◦ The ARC, which included Petitioner Norm Burnes, unanimously approved construction plans for Lot 7 on January 3, 2018.
◦ Construction began sometime in 2018. Pima County approved the plans on May 4, 2018.
◦ On April 14, 2020, Petitioner Burnes sent a formal letter of concern to the Board, stating the placement of the home on Lot 7 was not per the approved plan and had destroyed their view and privacy. The letter included the following statement:
• Conclusion of Law:No violation found. The ALJ determined that while the construction on Lot 7 was not per the plans the ARC approved on January 3, 2018, no subsequent or modified plans were ever submitted to the ARC for review. The decision states, “The ARC cannot approve or deny proposed plans unless they are submitted for review.” Furthermore, the record shows the construction complies with the local government’s building authority.
• Petitioners’ Allegation: The Association allowed construction on Lot 7 without collecting the required $5,000.00 Construction Compliance Deposit.
• Factual Record:
◦ On May 3, 2020, the Board of Directors decided to honor a Construction Compliance Deposit waiver that had been previously granted to the Martinez family.
◦ This discretionary waiver was reportedly granted during an economic downturn to incentivize property purchases.
◦ Critically, the Association “does not possess a corporate record that any such Construction Compliance Deposit Waiver was previously granted to the Martinez family.”
• Conclusion of Law:No violation found. The ALJ concluded it was “clear that Lot 7 was granted a construction compliance deposit waiver.” The lack of a documented record was noted, but the inquiry was deemed moot as it was not a noticed issue in the petition.
Issue 3: Alleged Violation of A.R.S. § 33-1804 (Unnoticed Meeting)
• Petitioners’ Allegation: The Board of Directors conducted an unnoticed meeting on or about May 20, 2020, to consider matters relevant to Petitioner Norm Burnes.
• Factual Record:
◦ On April 18, 2020, Petitioner requested an urgent meeting with the Board, which was held the next day.
◦ On May 20, 2020, the Board acted with unanimous consent (obtained via individual signatures) to restrict Petitioner Burnes’s participation as an ARC member “regarding all issued related to the construction of Lot 7.”
◦ The Board’s notes state: “[T]he Board of Directors hereby unanimously agree that [Petitioner] be removed as an ARC Member for all ARC related matters concerning Lot 7.”
• Conclusion of Law:No violation found. The judge ruled that the Board’s failure to notice the April 19 meeting was excused as an exception because the Petitioner himself had requested it on an urgent basis. Regarding the May 20 action, the record shows Mr. Burnes was not removed from the ARC entirely, but only recused from matters concerning the Lot 7 dispute in which he had a direct conflict of interest.
Issue 4: Alleged Violation of A.R.S. § 33-1805 (Records Request)
• Petitioners’ Allegation: The Association failed to properly fulfill a records request.
• Factual Record:
◦ On June 4, 2020, Petitioners submitted a comprehensive, 17-point records request and demanded fulfillment within the statutory 10-day period.
◦ On June 16, 2020, the Association made 342 pages of documents available for in-person review but prohibited Petitioners from using their own scanning equipment.
◦ The statutory deadline for compliance was June 18, 2020.
◦ On June 24, 2020, after Petitioners paid a $51.30 fee, the Association provided copies of the documents.
◦ Later that day, Petitioners notified the Association that the document package was incomplete, as “attachments for some emails are not included.”
• Conclusion of Law:Violation established. The ALJ found that the Association failed to comply with the statute. The documents were made available for review within the 10-day window, but the copies were not provided until June 24, after the deadline. More importantly, the copies provided were incomplete. The judge rejected the Association’s argument that a clarification from the Petitioner reset the statutory clock.
III. Final Order and Directives
The Final Administrative Law Judge Decision, issued after the rehearing, affirmed the conclusions of the initial March 22, 2021 decision.
• Petition Status: The petition was granted in part (on Issue 4) and denied in part (on Issues 1, 2, and 3).
• Financial Reimbursement: The Respondent (Saguaro Crest HOA) is ordered to reimburse the Petitioners for one-quarter of their filing fee, amounting to $500.00.
• Statutory Compliance: The Respondent is ordered to henceforth comply with the requirements of A.R.S. § 33-1805 regarding records requests.
• Document Production: The Respondent is ordered to provide the Petitioners with the missing email attachments related to the June 4, 2020 records request within 10 business days of the final order’s effective date.
Study Guide – 21F-H2120002-REL
Study Guide: Burnes v. Saguaro Crest Homeowners Association, Inc.
This study guide provides a detailed review of the Final Administrative Law Judge Decision in the case of Clifford and Maria Burnes versus the Saguaro Crest Homeowners Association, Inc. (No. 21F-H2120002-REL-RHG). The guide includes a short-answer quiz with an answer key, a set of essay questions for deeper analysis, and a comprehensive glossary of key terms used in the legal proceedings.
Short-Answer Quiz
Instructions: Answer the following questions in 2-3 sentences based on the information provided in the case document.
1. Who are the Petitioners and the Respondent in this case, and what is their fundamental relationship?
2. List the four distinct issues the Petitioners alleged against the Respondent in their initial petition.
3. On what grounds did the Petitioners request and receive a rehearing after the initial decision was issued on March 22, 2021?
4. What was the outcome of the Petitioners’ attempt to present new witnesses and exhibits during the rehearing on July 20, 2021?
5. Why did the Administrative Law Judge conclude that the Respondent had not violated Section 5 of the CC&Rs regarding the construction on Lot 7?
6. Explain the controversy surrounding the $5,000 Construction Compliance Deposit and the court’s ultimate finding on the matter.
7. What action did the Board of Directors take against Petitioner Norm Burnes on May 20, 2020, and why was this action not considered a violation of A.R.S. § 33-1804?
8. Which of the four allegations was ultimately successful for the Petitioners, and what specific failures by the Respondent led to this finding?
9. What were the four key orders issued by the Administrative Law Judge in the Final Order?
10. What was Petitioner Norm Burnes’s official role within the Saguaro Crest community, and how did this position create a conflict of interest in the dispute?
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Quiz Answer Key
1. The Petitioners are Clifford and Maria Burnes, who are property owners in the Saguaro Crest subdivision and members of the homeowners’ association. The Respondent is the Saguaro Crest Homeowners Association, Inc. (HOA), which is the governing body for the subdivision.
2. The four issues were: (1) The HOA allowed construction on Lot 7 without required ARC document submission in violation of CC&Rs Section 5; (2) The HOA allowed construction without a required Construction Compliance Deposit; (3) The Board conducted an unnoticed meeting in violation of A.R.S. § 33-1804; (4) The HOA failed to fulfill a records request in violation of A.R.S. § 33-1805.
3. The Petitioners requested a rehearing on the grounds of having “Newly discovered material evidence that could not with reasonable diligence have been discovered and produced at the original hearing.” They also alleged that the original decision was “arbitrary, capricious, or an abuse of discretion.”
4. At the rehearing, the Petitioners conceded they possessed no “newly discovered” evidence, but rather evidence they had strategically chosen not to present previously. Because they did not provide a satisfactory offer of proof for new evidence, they were precluded from recalling witnesses or offering additional exhibits.
5. The Judge found that while the construction on Lot 7 was not per the plans approved by the ARC on January 3, 2018, no additional plans had been submitted for the ARC’s consideration. The Judge reasoned that the ARC cannot approve or deny plans that are not submitted, and the build complied with the local government’s building authority.
6. The Architectural Design Guidelines required a $5,000 deposit, but the owners of Lot 7 had been granted a waiver. Although the HOA did not possess a corporate record of the waiver, the Board voted to honor it. The court found no violation because the waiver had been granted, and the lack of documentation was not the specific issue being litigated.
7. On May 20, 2020, the Board held an unnoticed meeting and, via unanimous consent, restricted Petitioner Burnes’s participation as an ARC member for all matters related to Lot 7. This was not a violation because the failure to notice was excused as an exception, and the Board only removed him from matters concerning Lot 7, not from the ARC entirely.
8. Issue #4, the records request violation, was successful for the Petitioners. The Respondent failed to provide copies of the requested documents within the statutory 10-day deadline, providing them on June 24, 2020, when the deadline was June 18, 2020. Furthermore, the documents provided were incomplete, as they were missing email attachments.
9. The Final Order affirmed the previous decision, ordered the Respondent to reimburse the Petitioners for 1/4 of their filing fee ($500.00), ordered the Respondent to comply with A.R.S. § 33-1805 going forward, and ordered the Respondent to provide the missing email attachments within 10 business days.
10. Petitioner Norm Burnes was a member of the Association’s Architectural Review Committee (ARC). This created a conflict of interest because he was part of the committee that initially approved the Lot 7 construction plans, but he later raised formal complaints against that same construction project due to its impact on his own property (Lot 6).
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Essay Questions
Instructions: The following questions are designed for a more in-depth analysis of the case. No answers are provided.
1. Analyze the concept of “burden of proof” by a “preponderance of the evidence” as it applies to this case. How did the Petitioners succeed in meeting this burden for Issue #4 but fail for the other three issues?
2. Discuss the powers and limitations of a Homeowners’ Association Board and its Architectural Review Committee as illustrated in this case, specifically concerning construction approval, enforcement authority, and the management of member conflicts of interest.
3. The Petitioners’ request for a rehearing was based on “newly discovered material evidence.” Explain why this request ultimately failed to change the outcome and discuss the strategic decisions made by the Petitioners regarding the presentation of evidence.
4. Examine the conflict between a homeowner’s desire for privacy and unobstructed views (as expressed by the Petitioners) and the rights of a neighboring property owner to develop their land. How did the community’s governing documents and the final legal decision address this conflict?
5. Trace the timeline of the records request dispute (Issue #4). What were the specific actions and inactions by the Respondent that led to a finding of a statutory violation, and what does this illustrate about an HOA’s administrative and statutory responsibilities to its members?
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
An independent judge who presides over administrative hearings, makes findings of fact and conclusions of law, and issues decisions. In this case, the ALJ was Jenna Clark.
Architectural Review Committee (ARC)
A committee charged by an HOA’s CC&Rs with implementing architectural guidelines to maintain aesthetic standards and preserve property values. Petitioner Norm Burnes was a member of this committee.
Arizona Department of Real Estate (Department)
The state agency authorized to receive and decide petitions for hearings from members of homeowners’ associations in Arizona.
Arizona Revised Statute (ARIZ. REV. STAT. or A.R.S.)
The codified laws of the State of Arizona. Specific statutes cited include § 33-1804 (regarding open meetings) and § 33-1805 (regarding association records).
Burden of Proof
The obligation on a party in a legal case to prove their allegations. In this proceeding, the Petitioners bore the burden of proving their claims by a preponderance of the evidence.
Covenants, Conditions, and Restrictions (CC&Rs)
The governing legal documents that set up the rules for a planned community. They form an enforceable contract between the HOA and each property owner.
Homeowners’ Association (HOA)
The organization that makes and enforces rules for a subdivision or planned community. In this case, the Saguaro Crest Homeowners Association, Inc. is the Respondent.
Offer of Proof
A presentation of evidence made to a judge to demonstrate the substance and relevance of evidence that a party seeks to introduce. The Petitioners’ offer of proof regarding new evidence was found to be unsatisfactory.
Office of Administrative Hearings (OAH)
An independent state agency that conducts evidentiary hearings for other state agencies. This matter was referred to the OAH by the Department of Real Estate.
Petitioners
The party that initiates a legal action or petition. In this case, Clifford and Maria Burnes are the Petitioners.
Preponderance of the Evidence
The standard of proof in most civil cases. It means that the evidence presented is sufficient to convince the trier of fact that a contention is more probably true than not.
Respondent
The party against whom a petition is filed. In this case, the Saguaro Crest Homeowners Association, Inc. is the Respondent.
Blog Post – 21F-H2120002-REL
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21F-H2120002-REL-RHG
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The provided text is a Final Administrative Law Judge Decision from the Office of Administrative Hearings in Arizona, detailing a dispute between petitioners Clifford and Maria Burnes and the Saguaro Crest Homeowners Association, Inc. The case involved four specific allegations of violations by the Association, including allowing unapproved construction on Lot 7, failing to collect a required construction deposit, conducting an unnoticed meeting, and failing to fulfill a records request. This document affirms an earlier decision, concluding that the Petitioners failed to sustain the burden of proof for the first three issues but succeeded on the fourth issue regarding the violation of Arizona law concerning records requests. Consequently, the Association was ordered to comply with the relevant statute, provide missing email attachments, and reimburse a portion of the Petitioners’ filing fee.
Case Participants
Petitioner Side
Clifford (Norm) S. Burnes(petitioner) Saguaro Crest subdivision property owner; ARC Member
Maria Burnes(petitioner) Saguaro Crest subdivision property owner
Jacob A. Kubert(attorney)
Cynthia F. Burnes(attorney)
Debora Brown(witness)
Respondent Side
John Crotty(attorney) Law Offices of Farley, Choate & Wood
Kelsea Dressen(attorney) Law Offices of Farley, Choate & Wood
Esmerelda Martinez(board president; witness) Saguaro Crest HOA Board of Directors President of the Board
Dave Madill(board member) Saguaro Crest HOA Board of Directors Vice President of the Board
Julie Stevens(board member) Saguaro Crest HOA Board of Directors Treasurer of the Board
Raul Martinez(property owner) Owner of Lot 7 and 13 Construction on his property (Lot 7) is subject of the dispute
Ramona Martinez(property owner) Owner of Lot 7
Neutral Parties
Jenna Clark(ALJ) Office of Administrative Hearings
Sadot Negreté(observer)
Judy Lowe(ADRE Commissioner) Arizona Department of Real Estate
Dan Gardener(ADRE contact) Arizona Department of Real Estate Also listed as DGardner
c. serrano(administrative staff) Office of Administrative Hearings
Other Participants
Jamie Argueta(ARC member; property seller) Saguaro Crest HOA Architectural Review Committee Sold Lots 7 and 13 to Martinez family
Joseph Martinez(ARC member) Saguaro Crest HOA Architectural Review Committee
Jesus Carranza(substitute ARC member) Saguaro Crest HOA Architectural Review Committee Substitute for Petitioner during Lot 7 discussion
Petitioners were the prevailing party because the Respondent acknowledged violating the CC&Rs by approving the pergola. Respondent was ordered to refund the $500.00 filing fee, but the request for a civil penalty was denied.
Key Issues & Findings
View Obstruction by Pergola Approval
Petitioners alleged that Respondent, by granting approval in February 2018 for the construction of a pergola on lot 47, violated the CC&Rs requirement that an unobstructed view of the Santa Rita Mountains be maintained for owners of View Lots (Lot 46) and sought a civil penalty.
Orders: Respondent acknowledged the violation, rescinded the pergola approval prior to the Notice of Hearing, and was ordered to pay Petitioners the $500.00 filing fee. A civil penalty was sought but denied.
Administrative Hearing Briefing: Fern & Hedges v. San Ignacio Heights, Inc.
Executive Summary
This briefing document analyzes the Administrative Law Judge (ALJ) Decision in the case of Donald S. Fern & Judith A. Hedges v. San Ignacio Heights, Inc. (No. 21F-H2120005-REL). The central conflict involved an allegation by Petitioners that the Respondent, their homeowners’ association, violated its own Covenants, Conditions, and Restrictions (CC&Rs) by approving a pergola on an adjacent property that obstructed their mountain view.
The Respondent initially defended its approval but, after the Petitioners filed a formal complaint, reversed its position, admitted the approval was an error, and rescinded it. Despite this corrective action, the hearing proceeded. The ALJ’s final decision declared the Petitioners the “prevailing party,” as their legal action prompted the resolution. Consequently, the Respondent was ordered to reimburse the Petitioners’ $500 filing fee. However, the ALJ denied the Petitioners’ request for an additional civil penalty, stating they had not met the burden of proof for such an assessment. The decision effectively resolved the core dispute in the Petitioners’ favor while limiting the financial penalty on the Respondent.
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Case Overview
This matter was brought before the Arizona Office of Administrative Hearings concerning a dispute over view obstruction within a planned community.
Case Detail
Information
Case Name
Donald S. Fern & Judith A. Hedges, Petitioner, vs. San Ignacio Heights, Inc., Respondent.
Case Number
21F-H2120005-REL
Presiding Judge
Administrative Law Judge Thomas Shedden
Hearing Date
November 3, 2020
Decision Date
November 20, 2020
Core Allegation
Respondent violated its own CC&Rs, specifically Article VI (D) “View Obstructions,” which mandates that “An unobstructed view of the Santa Rita Mountains shall be maintained for Owners of View Lots.”
Petitioners’ Property
Lot 46, located at 1546 West Acala Street in Green Valley, a designated “view lot.”
Disputed Structure
A pergola constructed on the neighboring Lot 47.
The hearing was conducted without testimony, with the decision based on the administrative record and closing arguments from both parties.
Chronology of Key Events
The dispute unfolded over a period of more than two years, marked by the Respondent’s significant change in position after formal legal action was initiated.
• February 2018: The Respondent’s Architectural Review Committee (ARC) grants approval to the owners of Lot 47 to construct a pergola.
• On or Before July 30, 2018: Petitioners purchase Lot 46. They contend the pergola was built after the previous owners of their lot had moved but before their purchase was finalized.
• December 2019: Petitioners attempt to resolve the issue directly with the owners of Lot 47 but are unsuccessful.
• January 15, 2020: In a letter, the Respondent’s Board informs the Petitioners that it is standing by its February 2018 decision to approve the pergola.
• July 24, 2020: Petitioners file a formal petition with the Arizona Department of Real Estate.
• August 20, 2020: The Respondent’s Board holds a special executive session and determines that the approval of the pergola was “made in error.” The Board rescinds the approval.
• August 25, 2020: The Respondent files its answer to the petition, stating the approval has been rescinded and requesting the Department dismiss the matter.
• October 5, 2020: The Department does not dismiss the matter and issues a Notice of Hearing.
• November 3, 2020: At the hearing, the Respondent’s counsel informs the tribunal that a contractor is scheduled to remove the pergola on the following day.
Central Arguments and Positions
Petitioners (Donald S. Fern & Judith A. Hedges)
• Violation: The pergola on Lot 47 constitutes a view obstruction in direct violation of CC&R Article VI(D).
• Relief Sought: The Petitioners initially sought the removal of the structure. After the Respondent rescinded its approval, the Petitioners argued that the Respondent should be assessed a civil penalty for the violation.
Respondent (San Ignacio Heights, Inc.)
• Initial Defense (Pre-Litigation): The Respondent offered two primary reasons for upholding its initial approval:
1. The previous owners of the Petitioners’ lot (Lot 46) were given notice of the pergola request and did not object at the time of its approval in February 2018.
2. The configuration of the nine lots on West Acala Street makes a “truly unobstructed view” impossible, and for the Petitioners, achieving such a view would require removing eight other houses.
• Post-Petition Position: After the formal petition was filed, the Respondent’s position shifted entirely.
1. Admission of Error: The Respondent formally acknowledged that the approval of the pergola was a mistake and rescinded it.
2. Mootness: The Respondent argued that because it had provided the relief the Petitioners requested (rescission of approval), the matter was resolved and should be dismissed.
Administrative Law Judge’s Decision and Rationale
The ALJ’s decision addressed the acknowledged violation, the status of the parties, and the appropriateness of financial penalties.
Findings on the Violation
• The Respondent explicitly acknowledged its violation of CC&R Article VI(D) by granting approval for the pergola.
• Because the Respondent had already rescinded its approval and the structure was scheduled for removal, the ALJ determined that an order compelling the Respondent to abide by the CC&Rs was unnecessary.
Prevailing Party Status
• Despite the Respondent’s admission of error and corrective actions occurring before the formal hearing, the ALJ designated the Petitioners as the prevailing party.
• The rationale is that the Petitioners’ legal action was the catalyst for the Respondent’s decision to rescind its approval and resolve the violation.
Financial Orders and Penalties
• Filing Fee: Pursuant to ARIZ. REV. STAT. § 32-2199.02(A), the ALJ is required to order the respondent to pay the petitioner’s filing fee if the petitioner prevails. Consequently, the Respondent was ordered to pay the Petitioners’ $500.00 filing fee.
• Civil Penalty: The Petitioners argued for the assessment of a civil penalty against the Respondent. The ALJ denied this request, stating in the Conclusions of Law that “Petitioners have not proven that the Respondent should be assessed a civil penalty.” The decision does not provide further detail on the reasoning for this conclusion.
Legal Framework
• Jurisdiction: The Arizona Department of Real Estate has authority over the matter under ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11, as the case involves alleged violations of community documents.
• Standard of Proof: The Petitioners bore the burden of proof, which is a “preponderance of the evidence” as defined in ARIZ. ADMIN. CODE § R2-19-119.
Final Order
The decision, issued on November 20, 2020, concluded with the following binding orders:
1. IT IS ORDERED that Petitioners Donald S. Fern and Judith A. Hedges are the prevailing party in this matter.
2. IT IS FURTHER ORDERED that Respondent San Ignacio Heights Inc. must pay to Petitioners their filing fee of $500.00 within thirty days of receipt of the Order.
The order is final unless a party files for a rehearing with the Commissioner of the Department of Real Estate within 30 days of service.
Study Guide – 21F-H2120005-REL
Study Guide: Fern & Hedges v. San Ignacio Heights, Inc. (Case No. 21F-H2120005-REL)
This study guide provides a detailed review of the Administrative Law Judge Decision in the matter between Donald S. Fern & Judith A. Hedges (Petitioners) and San Ignacio Heights, Inc. (Respondent). It includes a quiz to test comprehension, essay questions for deeper analysis, and a comprehensive glossary of key terms.
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Short Answer Quiz
Answer the following questions in 2-3 sentences based on the provided source document.
1. Who were the primary parties involved in this case, and what was their relationship?
2. What specific rule from the community’s governing documents was at the center of the dispute?
3. What physical structure caused the dispute, and where was it located relative to the Petitioners’ property?
4. What two arguments did the Respondent initially use to defend its decision to approve the structure?
5. At what point did the Respondent’s Board change its position, and what action did it take?
6. What is the legal standard of proof required in this case, and which party had the burden of meeting it?
7. Despite the Respondent admitting its error before the hearing, why were the Petitioners declared the “prevailing party”?
8. What specific financial penalty was ordered against the Respondent in the final decision?
9. Why did the Administrative Law Judge decide not to levy a civil penalty against the Respondent?
10. What did the Respondent’s counsel state at the hearing regarding the future of the structure in question?
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Answer Key
1. The primary parties were the Petitioners, homeowners Donald S. Fern and Judith A. Hedges, and the Respondent, their homeowners’ association, San Ignacio Heights, Inc. The Petitioners filed a complaint against the homeowners’ association for allegedly violating community rules.
2. The dispute centered on Article VI (D) of the “Second Amended and Restated Declaration of CC&Rs,” titled “View Obstructions.” This rule states that “An unobstructed view of the Santa Rita Mountains shall be maintained for Owners of View Lots.”
3. The dispute was caused by a pergola that the Respondent’s Architectural Review Committee (ARC) approved for construction on lot 47. This lot was adjacent to the Petitioners’ property, lot 46, which is designated as a “view lot” under the CC&Rs.
4. The Respondent initially argued that the approval was valid because (1) the previous owners of lot 46 were notified but did not object, and (2) the configuration of the lots meant a truly unobstructed view was impossible and would require removing eight other houses.
5. The Board changed its position on August 20, 2020, after the Petitioners had already filed their complaint. In a special executive session, the Board determined its February 2018 approval of the pergola was an error and officially rescinded that approval.
6. The standard of proof is a “preponderance of the evidence,” defined as evidence with the most convincing force. The Petitioners bore the burden of proof to show that the alleged violation occurred.
7. The Petitioners were declared the “prevailing party” because their legal action was the cause of the Respondent’s decision to rescind the erroneous approval. Under Arizona statute, a tribunal is required to order the respondent to pay the filing fee to the prevailing party.
8. The Judge ordered the Respondent, San Ignacio Heights Inc., to pay the Petitioners their filing fee of $500.00. The payment was to be made within thirty days of receipt of the order.
9. The Judge did not levy a civil penalty because the decision explicitly states, “Petitioners have not proven that the Respondent should be assessed a civil penalty.”
10. At the November 3, 2020 hearing, the Respondent’s counsel informed the tribunal that the owners of lot 47 had a contractor scheduled to remove the pergola the very next day.
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Essay Questions for Further Study
The following questions are designed for a more in-depth analysis of the case. Answers are not provided.
1. Analyze the timeline of events from the initial approval of the pergola in February 2018 to the final order in November 2020. How did the Respondent’s actions and communications contribute to the escalation of the dispute, and at what points could it have potentially been resolved before reaching a formal hearing?
2. Discuss the legal concept of the “prevailing party” as it applies to this case. Explain why the Petitioners were granted this status and what financial remedy it entitled them to, even though the Respondent had already conceded the central issue before the hearing.
3. Examine the two initial arguments made by the Respondent to justify its approval of the pergola. Based on the case outcome, why were these arguments ultimately insufficient to defend its position, leading the Board to rescind its approval?
4. Based on the “Conclusions of Law” section, explain the role and authority of the Administrative Law Judge in this type of dispute. What specific powers did the judge have according to Arizona statutes, and how were they applied or not applied in the final order?
5. The decision notes that no testimony was taken and the ruling was based on the administrative record. Discuss the potential advantages and disadvantages of this approach for both the Petitioners and the Respondent in this specific case.
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
The official (Thomas Shedden) who presides over hearings at the Office of Administrative Hearings and renders a binding legal decision and order.
ARIZ. ADMIN. CODE § R2-19-119
The section of Arizona’s administrative rules cited in the decision that establishes the “preponderance of the evidence” as the standard of proof for the matter.
ARIZ. REV. STAT. § 32-2199.02(A)
The Arizona state law that grants the ALJ the authority to order parties to abide by community documents, levy civil penalties, and order a losing respondent to pay the prevailing petitioner’s filing fee.
Burden of Proof
The legal obligation of a party in a dispute to provide sufficient evidence to prove their claim. In this case, the Petitioners bore the burden of proof.
An acronym for Covenants, Conditions, and Restrictions. In this case, it refers to the “Second Amended and Restated Declaration of CC&Rs,” the official governing documents for the San Ignacio Heights community.
Civil Penalty
A monetary fine that an ALJ may levy for each violation of a statute or community document. A civil penalty was considered but not assessed in this case.
Department of Real Estate
The Arizona state agency with legal authority over disputes concerning alleged violations of a community’s CC&Rs.
Filing Fee
The fee ($500.00 in this case) required by Arizona statute to file a petition with the Department of Real Estate. The Judge ordered the Respondent to repay this fee to the Petitioners.
Petitioner
The party that initiates a legal proceeding by filing a petition. In this case, homeowners Donald S. Fern and Judith A. Hedges.
Preponderance of the Evidence
The standard of proof required in the hearing. It is defined as “The greater weight of the evidence… sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”
Prevailing Party
The party that wins a legal case. The Petitioners were declared the prevailing party, which legally entitled them to have their filing fee reimbursed by the Respondent.
Respondent
The party against whom a petition is filed and who must respond to the allegations. In this case, the homeowners’ association, San Ignacio Heights, Inc.
View Lot
A specific property designation defined in the CC&Rs, such as the Petitioners’ lot 46, which is guaranteed an unobstructed view of the Santa Rita Mountains.
View Obstructions
The title of Article VI (D) of the CC&Rs, the specific rule that the Petitioners alleged the Respondent violated by approving the construction of the pergola.
Blog Post – 21F-H2120005-REL
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This administrative law judge decision details a dispute between Petitioners Donald S. Fern and Judith A. Hedges and Respondent San Ignacio Heights, Inc. regarding a violation of the community’s Covenants, Conditions, and Restrictions (CC&Rs). The petitioners alleged that a pergola approved by the Respondent’s Architectural Review Committee was a view obstruction in violation of Article VI(D) of the CC&Rs. Although the Respondent acknowledged its error and rescinded the approval for the pergola before the hearing, the matter was not dismissed. The Administrative Law Judge ultimately found the Petitioners to be the prevailing party and ordered the Respondent to pay the petitioners’ $500 filing fee, though no additional civil penalty was assessed.
What are the core legal and procedural issues decided in this administrative hearing?
How did the Respondent’s actions impact the Petitioners’ prevailing party status and remedy?
What is the significance of the CC&Rs and view obstruction clause in this dispute?
Audio Overview
Video Overview Video Overview
Mind Map Mind Map
Reports Reports
Flashcards Flashcards
Quiz Quiz
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Case Participants
Petitioner Side
Donald S Fern(petitioner)
Judith A. Hedges(petitioner)
Lance Leslie(petitioner attorney) Law Office of Susan A Siwek
Respondent Side
Michael S. Shupe(respondent attorney) Goldschmidt | Shupe, PLLC
Neutral Parties
Thomas Shedden(ALJ)
Judy Lowe(Commissioner) Arizona Department of Real Estate
LDettorre(ADRE staff) Arizona Department of Real Estate Listed as recipient of transmission
AHansen(ADRE staff) Arizona Department of Real Estate Listed as recipient of transmission
djones(ADRE staff) Arizona Department of Real Estate Listed as recipient of transmission
DGardner(ADRE staff) Arizona Department of Real Estate Listed as recipient of transmission
ncano(ADRE staff) Arizona Department of Real Estate Listed as recipient of transmission
A.R.S. § 33-1817(A)(1); CC&Rs Part 10, Section 10.4
Outcome Summary
Petitioner was deemed the prevailing party after establishing that the Respondent HOA violated A.R.S. § 33-1817(A)(1) and the community documents by improperly recording Amended CC&Rs without proper owner consent. The Respondent was ordered to refund the $500.00 filing fee. However, the ALJ could not grant the requested relief (rescission of the Amended CC&Rs) due to a lack of statutory authority.
Key Issues & Findings
Violation regarding the validity of Amended CC&Rs due to lack of required owner approval.
The Petitioner alleged that the Amended CC&Rs recorded by the Board were invalid because they were not approved by two-thirds (2/3) of the lot owners as required by the CC&Rs and statute. The ALJ agreed, finding the Board acted improperly and violated the documents and statute.
Orders: Respondent was ordered to pay Petitioner the filing fee of $500.00. No civil penalty was assessed. The ALJ determined she lacked the statutory authority to order the rescission of the Amended CC&Rs requested by the Petitioner.
Briefing Document: Karolak vs. VVE – Casa Grande Homeowners Association
Executive Summary
This briefing analyzes the Administrative Law Judge (ALJ) Decision in the case of Douglas J. Karolak vs. VVE – Casa Grande Homeowners Association (No. 20F-H2020041-REL). The central issue was whether the HOA Board had the authority to unilaterally amend and record changes to the community’s Covenants, Conditions, and Restrictions (CC&Rs) without the required homeowner vote.
The petitioner, Douglas J. Karolak, successfully argued that the HOA violated its own governing documents and Arizona state law by filing “Amended CC&Rs” on October 5, 2018, without securing the approval of two-thirds of the lot owners. The HOA contended its actions were a valid exercise of its authority to create “Association Rules.”
ALJ Tammy L. Eigenheer ruled decisively in favor of the petitioner. The decision established a clear legal distinction between the Board’s power to adopt rules and the separate, more stringent process required to formally amend the CC&Rs. The judge found the Board acted improperly, declaring Karolak the prevailing party and ordering the HOA to reimburse his $500 filing fee. Notably, while the judge found the amended document was improperly recorded, she concluded she lacked the statutory authority to order its rescission, which was the remedy the petitioner had requested.
Case Overview
Case Name
Douglas J. Karolak vs. VVE – Casa Grande Homeowners Association
Case Number
20F-H2020041-REL
Arizona Office of Administrative Hearings
Administrative Law Judge
Tammy L. Eigenheer
Hearing Date
May 1, 2020
Decision Date
May 21, 2020
The Central Dispute
The core of the dispute revolved around the legitimacy of a document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates” (Amended CC&Rs), which the HOA Board recorded with the Pinal County Recorder on October 5, 2018.
• Petitioner’s Position (Douglas J. Karolak): The Amended CC&Rs are invalid because they were not approved by “owners of at least two-thirds (2/3) of the Lots,” a requirement explicitly stated in Section 10.4 of the original CC&Rs and supported by Arizona statute A.R.S. § 33-1817(A)(1). Karolak argued that the Board’s action of recording an amendment is fundamentally different from its power to adopt internal “Association Rules.”
• Respondent’s Position (VVE – Casa Grande HOA): The Board argued that its actions were a valid exercise of the authority granted to it under the CC&Rs. It claimed that because the only changes were to Part 7 (Use Restrictions), they fell under the Board’s power to “adopt, amend, or repeal such rules and regulations as it deems reasonable and appropriate” (Section 3.4) and to “modify or waive the foregoing restrictions… by reasonable rules and regulations” (Section 7.43). The Respondent’s counsel did, however, concede that “perhaps the Amended CC&Rs should not have been recorded.”
Factual Background and Chronology
• The VVE – Casa Grande Homeowners Association is a 56-lot community in Casa Grande, Arizona, with 19 lots remaining vacant at the time of the hearing.
• April 30, 1999: The original “Restated Declaration of Covenants, Conditions and Restrictions for VVE” (CC&Rs) was recorded.
• 2014 and 2015: The HOA Board made unsuccessful attempts to amend the CC&Rs through membership votes.
• 2018: Following the failed votes, the Board determined it would make changes to the “rules section” of the CC&Rs under the authority it believed was granted by Section 3.4.
• October 5, 2018: The Board recorded the Amended CC&Rs with the Pinal County Recorder. The HOA acknowledged that these amendments had not been approved by the required two-thirds of lot owners.
Legal Analysis and Key Provisions
The decision rested on the interpretation of specific sections of the community’s CC&Rs and Arizona state law. The judge concluded that the document’s structure clearly separates the process of rulemaking from the process of formal amendment.
Provision
Source
Summary of Stipulation
Amendment Process
CC&Rs Section 10.4
Requires an instrument “executed by the Owners of at least two-thirds (2/3) of the Lots” and recorded to become effective.
Rulemaking Authority
CC&Rs Section 3.4
Empowers the Board to adopt, amend, or repeal “Association Rules” governing the use of the property. States rules have the “same force and effect as if they were set forth in” the CC&Rs.
Statutory Requirement
A.R.S. § 33-1817(A)(1)
Provides that a declaration may be amended by the association via an affirmative vote or written consent of the number of owners specified in the declaration.
The judge’s rationale emphasized that the distinct sections for rulemaking (3.4) and amendments (10.4) demonstrate that the original drafters did not intend for the Board to have the power to unilaterally amend the CC&Rs. The judge stated, “The fact that the two topics are covered as separate topics in the CC&Rs leads to the conclusion that the original drafters of the CC&Rs did not contemplate that the Board had the authority to, on its own, amend the CC&Rs.”
The Court’s Decision and Final Order
The Administrative Law Judge ruled that the petitioner, Douglas J. Karolak, had successfully proven by a preponderance of the evidence that the respondent HOA had acted improperly.
Key Findings:
• The HOA Board did not have the authority to amend the CC&Rs without the approval of two-thirds of the lot owners.
• The Board’s action of recording the Amended CC&Rs on October 5, 2018, was a violation of the community’s governing documents (Section 10.4) and Arizona state law (A.R.S. § 33-1817(A)(1)).
• The Board’s ability to create “Association Rules” is a separate and distinct process from the formal procedure required to amend the Declaration.
Final Order:
• The petitioner, Douglas J. Karolak, was deemed the prevailing party.
• The respondent HOA was ordered to pay the petitioner his $500.00 filing fee within thirty days of the order.
• No civil penalty was found to be appropriate in the matter.
• Critically, the judge determined that under the applicable statute (A.R.S. § 32-2199.02), the Administrative Law Judge does not have the authority to order the Amended CC&Rs rescinded, despite this being the remedy requested by the petitioner.
The order is binding on both parties unless a request for rehearing is filed with the Commissioner of the Department of Real Estate within 30 days of the decision.
Study Guide – 20F-H2020041-REL
Study Guide: Karolak v. VVE – Casa Grande Homeowners Association
This guide is designed to review the key facts, legal arguments, and outcomes of the Administrative Law Judge Decision in the case of Douglas J. Karolak vs. VVE – Casa Grande Homeowners Association (No. 20F-H2020041-REL).
Short-Answer Quiz
Instructions: Answer the following questions in two to three complete sentences, drawing all information directly from the provided legal decision.
1. Who were the petitioner and the respondent in this case, and what was the petitioner’s core allegation?
2. What specific statute and section of the community documents did the petitioner claim the respondent violated?
3. According to Section 10.4 of the original CC&Rs, what was the required procedure for amending the Declaration?
4. Under what authority did the VVE – Casa Grande HOA Board claim it could make changes to the community documents without a membership vote?
5. What key event occurred on or about October 5, 2018, that became the central point of the dispute?
6. What was the respondent’s primary argument for why their actions were valid?
7. What is the “preponderance of the evidence,” and which party bears the burden of proof to establish a violation?
8. Why did the Administrative Law Judge conclude that the Board’s authority to create “Association Rules” was a separate process from amending the CC&Rs?
9. What remedy did the petitioner request, and why was it not granted by the Administrative Law Judge?
10. What was the final order issued by the Judge in this case?
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Answer Key
1. The petitioner was Douglas J. Karolak, a homeowner. The respondent was the VVE – Casa Grande Homeowners Association. Karolak’s core allegation was that the HOA had improperly amended the community’s governing documents.
2. The petitioner alleged a violation of Arizona Revised Statute (A.R.S.) § 33-1817(A)(1). He also claimed a violation of Part 10, Section 10.4 of the community’s Covenants, Conditions, and Restrictions (CC&Rs).
3. Section 10.4 of the CC&Rs stipulated that the Declaration could be amended by an instrument executed by the owners of at least two-thirds (2/3) of the lots. The amendment would not be effective until that instrument was officially recorded.
4. The HOA Board claimed it had the authority to make the changes under Section 3.4 of the CC&Rs. This section empowered the Board to adopt, amend, or repeal “Association Rules” as it deemed reasonable and appropriate.
5. On or about October 5, 2018, the Board recorded a document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates” (Amended CC&Rs) with the Pinal County Recorder. This was done without the required two-thirds vote from the lot owners.
6. The respondent argued that because the only changes made were to Part 7 (Use Restrictions), which fell under the type of rules the Board was authorized to adopt, the Amended CC&Rs were a valid exercise of the Board’s authority. Their counsel did acknowledge, however, that perhaps the document should not have been recorded.
7. A “preponderance of the evidence” is proof that convinces the trier of fact that a contention is more probably true than not. The petitioner bears the burden of proof to establish that the respondent committed the alleged violations by this standard.
8. The Judge concluded they were separate processes because the CC&Rs cover the topics in different sections. This separation led the Judge to believe the original drafters did not intend for the Board to have the authority to amend the CC&Rs on its own.
9. The petitioner requested that the improperly recorded Amended CC&Rs be rescinded. This remedy was not granted because the applicable statute, A.R.S. § 32-2199.02, does not give the Administrative Law Judge the specific authority to order a document rescinded.
10. The final order deemed the petitioner the prevailing party. It further ordered the respondent to repay the petitioner his $500.00 filing fee within thirty days, but found that no civil penalty was appropriate.
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Essay Questions
Instructions: The following questions are designed to promote deeper analysis of the case. Formulate a comprehensive response to each, using only the information presented in the legal decision.
1. Analyze the distinction made by the Administrative Law Judge between the Board’s authority to create “Association Rules” under Section 3.4 and the process for amending the Declaration under Section 10.4. Why was this distinction critical to the case’s outcome?
2. Discuss the legal standard of “preponderance of the evidence” as defined in the decision. How did the petitioner successfully meet this burden of proof to establish the respondent’s violation, and what specific facts supported this conclusion?
3. Examine the respondent’s (HOA’s) argument regarding its authority to amend the CC&Rs. What were the fundamental flaws in this argument, and how did their counsel’s acknowledgment about the recording of the Amended CC&Rs potentially weaken their position?
4. Explain the legal framework governing this dispute, citing the specific Arizona Revised Statutes (A.R.S.) mentioned in the decision. Detail the roles of the Arizona Department of Real Estate, the Office of Administrative Hearings, and the Administrative Law Judge in resolving this type of HOA conflict.
5. Evaluate the final Order of the Administrative Law Judge. While the petitioner was deemed the prevailing party, why was their requested remedy (rescission of the Amended CC&Rs) denied? What does this reveal about the specific limits of the Administrative Law Judge’s authority in such cases under A.R.S. § 32-2199.02?
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
An official who presides over administrative hearings. In this case, Tammy L. Eigenheer of the Office of Administrative Hearings made the findings of fact, conclusions of law, and issued the final order.
A.R.S. § 33-1817(A)(1)
The specific Arizona Revised Statute cited by the petitioner. It states that a declaration may be amended by the association with an affirmative vote or written consent of the number of owners specified in the declaration.
Amended CC&Rs
The document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates,” which the HOA Board recorded on October 5, 2018, without the required two-thirds owner approval.
Association Rules
Rules and regulations that the HOA Board is empowered to adopt, amend, or repeal under Section 3.4 of the CC&Rs to govern the use of Common Areas and other parts of the Project. The Board argued their changes fell under this authority.
Burden of Proof
The obligation to prove one’s assertion. In this case, the petitioner bore the burden of proof to establish the respondent’s violations by a preponderance of the evidence.
An acronym for Covenants, Conditions, and Restrictions. These are the governing legal documents for a planned community. The original “Restated Declaration of Covenants, Conditions and Restrictions for VVE” was recorded on April 30, 1999.
Department
Refers to the Arizona Department of Real Estate, the agency with which the petitioner filed his Homeowners Association (HOA) Dispute Process Petition.
An acronym for Homeowners Association. In this case, the VVE – Casa Grande Homeowners Association, an association of 56 lot owners in Casa Grande, Arizona.
Office of Administrative Hearings
The office responsible for conducting hearings for disputes filed with state agencies like the Department of Real Estate.
Petitioner
The party who initiates a legal action or petition. In this case, homeowner Douglas J. Karolak.
Preponderance of the Evidence
The evidentiary standard required to win the case, defined as “such proof as convinces the trier of fact that the contention is more probably true than not.”
Respondent
The party against whom a petition is filed. In this case, the VVE – Casa Grande Homeowners Association.
Blog Post – 20F-H2020041-REL
Your HOA Just Changed the Rules? Why This Homeowner’s $500 Victory is a Warning to Everyone
For millions of Americans, living in a planned community means living under the authority of a Homeowners Association (HOA). While intended to protect property values, these relationships can often feel one-sided, with boards issuing mandates and homeowners feeling powerless to push back. It’s a common frustration, but it’s rare to see a single homeowner challenge their board and force a legal reckoning.
A recent case from Arizona, Douglas J. Karolak versus the VVE – Casa Grande Homeowners Association, provides a critical case study in board overreach and the surprising limits of legal victory. Karolak alleged his HOA board violated its own governing documents and state law by improperly changing the community’s core rules.
He took his case to an administrative law judge and, in a significant ruling, he won. But the outcome of this seemingly straightforward dispute was far from simple. The final decision reveals a shocking twist that holds critical lessons for every homeowner about the difference between being right on paper and getting the remedy you actually want.
There’s a Huge Difference Between a ‘Rule Change’ and a ‘Declaration Amendment’
The first lesson from this case is a critical one for every homeowner: understand the constitutional hierarchy of your community’s documents. The core of the dispute was the HOA Board’s attempt to amend its foundational document, the CC&Rs (Covenants, Conditions, and Restrictions), without getting the required approval from the homeowners.
Here are the key facts of the case:
• The Original Rule: The community’s CC&Rs explicitly stated in Section 10.4 that any amendment required a vote and execution by “at least two-thirds (2/3) of the Lots.” This is the highest level of authority in a planned community, akin to a constitution.
• The Failed Attempts: The Board had tried to get this two-thirds vote in both 2014 and 2015, but was unsuccessful.
• The Workaround: In 2018, the Board decided to bypass the homeowners. It used a separate power granted in Section 3.4 of the CC&Rs—the authority to create day-to-day “Association Rules”—to make what it called changes to the “‘rules section’ of the CC&Rs, specifically targeting the Use Restrictions in Part 7.”
The judge’s conclusion was crystal clear: The CC&Rs were drafted to treat the power to create “rules” and the power to “amend” the declaration as two entirely separate processes. This separation acts as a crucial check on the board’s power, preventing a small group from unilaterally changing the fundamental property rights of all owners. As the judge noted, “the original drafters of the CC&Rs did not contemplate that the Board had the authority to, on its own, amend the CC&Rs.”
Recording a Document Doesn’t Magically Make It Valid
To make their changes appear official, the HOA Board took a significant step. On October 5, 2018, they filed a document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates (Amended CC&Rs)” with the Pinal County Recorder.
For the average homeowner, a formally recorded document filed with the county looks final, official, and legally binding. It’s an intimidating piece of paper that suggests any challenge would be futile.
However, the judge’s ruling highlights a critical legal truth: procedural legitimacy is paramount. An official-looking document, even one filed with the county, is invalid if the legal process required to create it was ignored. The judge found that because the Board did not follow the correct internal procedure—securing the two-thirds vote from homeowners—the very act of recording the document was improper. Even the HOA’s own lawyer seemed to concede this point during the hearing, acknowledging that “perhaps the Amended CC&Rs should not have been recorded.”
The Winner’s Paradox: You Can Be Right and Still Not Get Your Desired Fix
The final order from the Administrative Law Judge was unambiguous: Douglas Karolak, the petitioner, was officially deemed the “prevailing party.” The judge concluded that the HOA had acted in violation of its own community documents and Arizona state law. This was a clear-cut victory for the homeowner.
But here is the shocking twist. Karolak’s requested remedy was for the illegally filed “Amended CC&Rs” to be rescinded—in other words, to have them officially nullified and removed. This seems like the logical and necessary fix to the problem.
The judge, however, was bound by the limits of her authority. The final decision states plainly: “The Administrative Law Judge does not have the authority under the applicable statute to order the Amended CC&Rs rescinded.” This highlights a critical jurisdictional gap. The Administrative Law Judge’s role in this venue is to determine if a violation occurred and assign limited penalties, not to perform the function of a higher court, which might have the power to void a recorded document.
So, what was the actual remedy for this clear violation? The judge ordered the HOA to repay Karolak his $500 filing fee. No other civil penalty was issued. The homeowner won the argument but did not get the one thing he asked for to correct the board’s improper action.
A Victory on Paper, A Question in Practice
The case of Douglas J. Karolak is a powerful real-world lesson. It proves that a single homeowner, armed with a thorough understanding of their community’s governing documents, can successfully challenge an overreaching HOA board and win. It confirms that procedural shortcuts, even when filed and recorded, do not make an illegal action legal.
But it also reveals the frustrating limitations that can exist within the legal process. The homeowner was proven right, but the improperly filed document remains on the books, unable to be rescinded in this specific venue. It raises a crucial question for homeowners everywhere: How do you ensure your victory has real teeth?
Case Participants
Petitioner Side
Douglas J. Karolak(petitioner)
Respondent Side
David A. Fitzgibbons III(HOA attorney) Fitzgibbons Law Offices PLC Represented VVE – Casa Grande Homeowners Association
CV Mathai(witness) VVE – Casa Grande Homeowners Association
John Kelsey(witness) VVE – Casa Grande Homeowners Association
Kristi Kelsey(witness) VVE – Casa Grande Homeowners Association
William Findley(witness) VVE – Casa Grande Homeowners Association
Kay Niemi(witness) VVE – Casa Grande Homeowners Association
Mark Korte(witness) VVE – Casa Grande Homeowners Association
Felicia Del Sol(property manager rep) Norris Management
Neutral Parties
Tammy L. Eigenheer(ALJ) Office of Administrative Hearings
Judy Lowe(Commissioner) Arizona Department of Real Estate
A.R.S. § 33-1817(A)(1); CC&Rs Part 10, Section 10.4
Outcome Summary
Petitioner was deemed the prevailing party after establishing that the Respondent HOA violated A.R.S. § 33-1817(A)(1) and the community documents by improperly recording Amended CC&Rs without proper owner consent. The Respondent was ordered to refund the $500.00 filing fee. However, the ALJ could not grant the requested relief (rescission of the Amended CC&Rs) due to a lack of statutory authority.
Key Issues & Findings
Violation regarding the validity of Amended CC&Rs due to lack of required owner approval.
The Petitioner alleged that the Amended CC&Rs recorded by the Board were invalid because they were not approved by two-thirds (2/3) of the lot owners as required by the CC&Rs and statute. The ALJ agreed, finding the Board acted improperly and violated the documents and statute.
Orders: Respondent was ordered to pay Petitioner the filing fee of $500.00. No civil penalty was assessed. The ALJ determined she lacked the statutory authority to order the rescission of the Amended CC&Rs requested by the Petitioner.
Briefing Document: Karolak vs. VVE – Casa Grande Homeowners Association
Executive Summary
This briefing analyzes the Administrative Law Judge (ALJ) Decision in the case of Douglas J. Karolak vs. VVE – Casa Grande Homeowners Association (No. 20F-H2020041-REL). The central issue was whether the HOA Board had the authority to unilaterally amend and record changes to the community’s Covenants, Conditions, and Restrictions (CC&Rs) without the required homeowner vote.
The petitioner, Douglas J. Karolak, successfully argued that the HOA violated its own governing documents and Arizona state law by filing “Amended CC&Rs” on October 5, 2018, without securing the approval of two-thirds of the lot owners. The HOA contended its actions were a valid exercise of its authority to create “Association Rules.”
ALJ Tammy L. Eigenheer ruled decisively in favor of the petitioner. The decision established a clear legal distinction between the Board’s power to adopt rules and the separate, more stringent process required to formally amend the CC&Rs. The judge found the Board acted improperly, declaring Karolak the prevailing party and ordering the HOA to reimburse his $500 filing fee. Notably, while the judge found the amended document was improperly recorded, she concluded she lacked the statutory authority to order its rescission, which was the remedy the petitioner had requested.
Case Overview
Case Name
Douglas J. Karolak vs. VVE – Casa Grande Homeowners Association
Case Number
20F-H2020041-REL
Arizona Office of Administrative Hearings
Administrative Law Judge
Tammy L. Eigenheer
Hearing Date
May 1, 2020
Decision Date
May 21, 2020
The Central Dispute
The core of the dispute revolved around the legitimacy of a document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates” (Amended CC&Rs), which the HOA Board recorded with the Pinal County Recorder on October 5, 2018.
• Petitioner’s Position (Douglas J. Karolak): The Amended CC&Rs are invalid because they were not approved by “owners of at least two-thirds (2/3) of the Lots,” a requirement explicitly stated in Section 10.4 of the original CC&Rs and supported by Arizona statute A.R.S. § 33-1817(A)(1). Karolak argued that the Board’s action of recording an amendment is fundamentally different from its power to adopt internal “Association Rules.”
• Respondent’s Position (VVE – Casa Grande HOA): The Board argued that its actions were a valid exercise of the authority granted to it under the CC&Rs. It claimed that because the only changes were to Part 7 (Use Restrictions), they fell under the Board’s power to “adopt, amend, or repeal such rules and regulations as it deems reasonable and appropriate” (Section 3.4) and to “modify or waive the foregoing restrictions… by reasonable rules and regulations” (Section 7.43). The Respondent’s counsel did, however, concede that “perhaps the Amended CC&Rs should not have been recorded.”
Factual Background and Chronology
• The VVE – Casa Grande Homeowners Association is a 56-lot community in Casa Grande, Arizona, with 19 lots remaining vacant at the time of the hearing.
• April 30, 1999: The original “Restated Declaration of Covenants, Conditions and Restrictions for VVE” (CC&Rs) was recorded.
• 2014 and 2015: The HOA Board made unsuccessful attempts to amend the CC&Rs through membership votes.
• 2018: Following the failed votes, the Board determined it would make changes to the “rules section” of the CC&Rs under the authority it believed was granted by Section 3.4.
• October 5, 2018: The Board recorded the Amended CC&Rs with the Pinal County Recorder. The HOA acknowledged that these amendments had not been approved by the required two-thirds of lot owners.
Legal Analysis and Key Provisions
The decision rested on the interpretation of specific sections of the community’s CC&Rs and Arizona state law. The judge concluded that the document’s structure clearly separates the process of rulemaking from the process of formal amendment.
Provision
Source
Summary of Stipulation
Amendment Process
CC&Rs Section 10.4
Requires an instrument “executed by the Owners of at least two-thirds (2/3) of the Lots” and recorded to become effective.
Rulemaking Authority
CC&Rs Section 3.4
Empowers the Board to adopt, amend, or repeal “Association Rules” governing the use of the property. States rules have the “same force and effect as if they were set forth in” the CC&Rs.
Statutory Requirement
A.R.S. § 33-1817(A)(1)
Provides that a declaration may be amended by the association via an affirmative vote or written consent of the number of owners specified in the declaration.
The judge’s rationale emphasized that the distinct sections for rulemaking (3.4) and amendments (10.4) demonstrate that the original drafters did not intend for the Board to have the power to unilaterally amend the CC&Rs. The judge stated, “The fact that the two topics are covered as separate topics in the CC&Rs leads to the conclusion that the original drafters of the CC&Rs did not contemplate that the Board had the authority to, on its own, amend the CC&Rs.”
The Court’s Decision and Final Order
The Administrative Law Judge ruled that the petitioner, Douglas J. Karolak, had successfully proven by a preponderance of the evidence that the respondent HOA had acted improperly.
Key Findings:
• The HOA Board did not have the authority to amend the CC&Rs without the approval of two-thirds of the lot owners.
• The Board’s action of recording the Amended CC&Rs on October 5, 2018, was a violation of the community’s governing documents (Section 10.4) and Arizona state law (A.R.S. § 33-1817(A)(1)).
• The Board’s ability to create “Association Rules” is a separate and distinct process from the formal procedure required to amend the Declaration.
Final Order:
• The petitioner, Douglas J. Karolak, was deemed the prevailing party.
• The respondent HOA was ordered to pay the petitioner his $500.00 filing fee within thirty days of the order.
• No civil penalty was found to be appropriate in the matter.
• Critically, the judge determined that under the applicable statute (A.R.S. § 32-2199.02), the Administrative Law Judge does not have the authority to order the Amended CC&Rs rescinded, despite this being the remedy requested by the petitioner.
The order is binding on both parties unless a request for rehearing is filed with the Commissioner of the Department of Real Estate within 30 days of the decision.
Study Guide – 20F-H2020041-REL
Study Guide: Karolak v. VVE – Casa Grande Homeowners Association
This guide is designed to review the key facts, legal arguments, and outcomes of the Administrative Law Judge Decision in the case of Douglas J. Karolak vs. VVE – Casa Grande Homeowners Association (No. 20F-H2020041-REL).
Short-Answer Quiz
Instructions: Answer the following questions in two to three complete sentences, drawing all information directly from the provided legal decision.
1. Who were the petitioner and the respondent in this case, and what was the petitioner’s core allegation?
2. What specific statute and section of the community documents did the petitioner claim the respondent violated?
3. According to Section 10.4 of the original CC&Rs, what was the required procedure for amending the Declaration?
4. Under what authority did the VVE – Casa Grande HOA Board claim it could make changes to the community documents without a membership vote?
5. What key event occurred on or about October 5, 2018, that became the central point of the dispute?
6. What was the respondent’s primary argument for why their actions were valid?
7. What is the “preponderance of the evidence,” and which party bears the burden of proof to establish a violation?
8. Why did the Administrative Law Judge conclude that the Board’s authority to create “Association Rules” was a separate process from amending the CC&Rs?
9. What remedy did the petitioner request, and why was it not granted by the Administrative Law Judge?
10. What was the final order issued by the Judge in this case?
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Answer Key
1. The petitioner was Douglas J. Karolak, a homeowner. The respondent was the VVE – Casa Grande Homeowners Association. Karolak’s core allegation was that the HOA had improperly amended the community’s governing documents.
2. The petitioner alleged a violation of Arizona Revised Statute (A.R.S.) § 33-1817(A)(1). He also claimed a violation of Part 10, Section 10.4 of the community’s Covenants, Conditions, and Restrictions (CC&Rs).
3. Section 10.4 of the CC&Rs stipulated that the Declaration could be amended by an instrument executed by the owners of at least two-thirds (2/3) of the lots. The amendment would not be effective until that instrument was officially recorded.
4. The HOA Board claimed it had the authority to make the changes under Section 3.4 of the CC&Rs. This section empowered the Board to adopt, amend, or repeal “Association Rules” as it deemed reasonable and appropriate.
5. On or about October 5, 2018, the Board recorded a document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates” (Amended CC&Rs) with the Pinal County Recorder. This was done without the required two-thirds vote from the lot owners.
6. The respondent argued that because the only changes made were to Part 7 (Use Restrictions), which fell under the type of rules the Board was authorized to adopt, the Amended CC&Rs were a valid exercise of the Board’s authority. Their counsel did acknowledge, however, that perhaps the document should not have been recorded.
7. A “preponderance of the evidence” is proof that convinces the trier of fact that a contention is more probably true than not. The petitioner bears the burden of proof to establish that the respondent committed the alleged violations by this standard.
8. The Judge concluded they were separate processes because the CC&Rs cover the topics in different sections. This separation led the Judge to believe the original drafters did not intend for the Board to have the authority to amend the CC&Rs on its own.
9. The petitioner requested that the improperly recorded Amended CC&Rs be rescinded. This remedy was not granted because the applicable statute, A.R.S. § 32-2199.02, does not give the Administrative Law Judge the specific authority to order a document rescinded.
10. The final order deemed the petitioner the prevailing party. It further ordered the respondent to repay the petitioner his $500.00 filing fee within thirty days, but found that no civil penalty was appropriate.
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Essay Questions
Instructions: The following questions are designed to promote deeper analysis of the case. Formulate a comprehensive response to each, using only the information presented in the legal decision.
1. Analyze the distinction made by the Administrative Law Judge between the Board’s authority to create “Association Rules” under Section 3.4 and the process for amending the Declaration under Section 10.4. Why was this distinction critical to the case’s outcome?
2. Discuss the legal standard of “preponderance of the evidence” as defined in the decision. How did the petitioner successfully meet this burden of proof to establish the respondent’s violation, and what specific facts supported this conclusion?
3. Examine the respondent’s (HOA’s) argument regarding its authority to amend the CC&Rs. What were the fundamental flaws in this argument, and how did their counsel’s acknowledgment about the recording of the Amended CC&Rs potentially weaken their position?
4. Explain the legal framework governing this dispute, citing the specific Arizona Revised Statutes (A.R.S.) mentioned in the decision. Detail the roles of the Arizona Department of Real Estate, the Office of Administrative Hearings, and the Administrative Law Judge in resolving this type of HOA conflict.
5. Evaluate the final Order of the Administrative Law Judge. While the petitioner was deemed the prevailing party, why was their requested remedy (rescission of the Amended CC&Rs) denied? What does this reveal about the specific limits of the Administrative Law Judge’s authority in such cases under A.R.S. § 32-2199.02?
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
An official who presides over administrative hearings. In this case, Tammy L. Eigenheer of the Office of Administrative Hearings made the findings of fact, conclusions of law, and issued the final order.
A.R.S. § 33-1817(A)(1)
The specific Arizona Revised Statute cited by the petitioner. It states that a declaration may be amended by the association with an affirmative vote or written consent of the number of owners specified in the declaration.
Amended CC&Rs
The document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates,” which the HOA Board recorded on October 5, 2018, without the required two-thirds owner approval.
Association Rules
Rules and regulations that the HOA Board is empowered to adopt, amend, or repeal under Section 3.4 of the CC&Rs to govern the use of Common Areas and other parts of the Project. The Board argued their changes fell under this authority.
Burden of Proof
The obligation to prove one’s assertion. In this case, the petitioner bore the burden of proof to establish the respondent’s violations by a preponderance of the evidence.
An acronym for Covenants, Conditions, and Restrictions. These are the governing legal documents for a planned community. The original “Restated Declaration of Covenants, Conditions and Restrictions for VVE” was recorded on April 30, 1999.
Department
Refers to the Arizona Department of Real Estate, the agency with which the petitioner filed his Homeowners Association (HOA) Dispute Process Petition.
An acronym for Homeowners Association. In this case, the VVE – Casa Grande Homeowners Association, an association of 56 lot owners in Casa Grande, Arizona.
Office of Administrative Hearings
The office responsible for conducting hearings for disputes filed with state agencies like the Department of Real Estate.
Petitioner
The party who initiates a legal action or petition. In this case, homeowner Douglas J. Karolak.
Preponderance of the Evidence
The evidentiary standard required to win the case, defined as “such proof as convinces the trier of fact that the contention is more probably true than not.”
Respondent
The party against whom a petition is filed. In this case, the VVE – Casa Grande Homeowners Association.
Blog Post – 20F-H2020041-REL
Your HOA Just Changed the Rules? Why This Homeowner’s $500 Victory is a Warning to Everyone
For millions of Americans, living in a planned community means living under the authority of a Homeowners Association (HOA). While intended to protect property values, these relationships can often feel one-sided, with boards issuing mandates and homeowners feeling powerless to push back. It’s a common frustration, but it’s rare to see a single homeowner challenge their board and force a legal reckoning.
A recent case from Arizona, Douglas J. Karolak versus the VVE – Casa Grande Homeowners Association, provides a critical case study in board overreach and the surprising limits of legal victory. Karolak alleged his HOA board violated its own governing documents and state law by improperly changing the community’s core rules.
He took his case to an administrative law judge and, in a significant ruling, he won. But the outcome of this seemingly straightforward dispute was far from simple. The final decision reveals a shocking twist that holds critical lessons for every homeowner about the difference between being right on paper and getting the remedy you actually want.
There’s a Huge Difference Between a ‘Rule Change’ and a ‘Declaration Amendment’
The first lesson from this case is a critical one for every homeowner: understand the constitutional hierarchy of your community’s documents. The core of the dispute was the HOA Board’s attempt to amend its foundational document, the CC&Rs (Covenants, Conditions, and Restrictions), without getting the required approval from the homeowners.
Here are the key facts of the case:
• The Original Rule: The community’s CC&Rs explicitly stated in Section 10.4 that any amendment required a vote and execution by “at least two-thirds (2/3) of the Lots.” This is the highest level of authority in a planned community, akin to a constitution.
• The Failed Attempts: The Board had tried to get this two-thirds vote in both 2014 and 2015, but was unsuccessful.
• The Workaround: In 2018, the Board decided to bypass the homeowners. It used a separate power granted in Section 3.4 of the CC&Rs—the authority to create day-to-day “Association Rules”—to make what it called changes to the “‘rules section’ of the CC&Rs, specifically targeting the Use Restrictions in Part 7.”
The judge’s conclusion was crystal clear: The CC&Rs were drafted to treat the power to create “rules” and the power to “amend” the declaration as two entirely separate processes. This separation acts as a crucial check on the board’s power, preventing a small group from unilaterally changing the fundamental property rights of all owners. As the judge noted, “the original drafters of the CC&Rs did not contemplate that the Board had the authority to, on its own, amend the CC&Rs.”
Recording a Document Doesn’t Magically Make It Valid
To make their changes appear official, the HOA Board took a significant step. On October 5, 2018, they filed a document titled “Restated Declaration of Covenants, Conditions and Restrictions for Val Vista Estates (Amended CC&Rs)” with the Pinal County Recorder.
For the average homeowner, a formally recorded document filed with the county looks final, official, and legally binding. It’s an intimidating piece of paper that suggests any challenge would be futile.
However, the judge’s ruling highlights a critical legal truth: procedural legitimacy is paramount. An official-looking document, even one filed with the county, is invalid if the legal process required to create it was ignored. The judge found that because the Board did not follow the correct internal procedure—securing the two-thirds vote from homeowners—the very act of recording the document was improper. Even the HOA’s own lawyer seemed to concede this point during the hearing, acknowledging that “perhaps the Amended CC&Rs should not have been recorded.”
The Winner’s Paradox: You Can Be Right and Still Not Get Your Desired Fix
The final order from the Administrative Law Judge was unambiguous: Douglas Karolak, the petitioner, was officially deemed the “prevailing party.” The judge concluded that the HOA had acted in violation of its own community documents and Arizona state law. This was a clear-cut victory for the homeowner.
But here is the shocking twist. Karolak’s requested remedy was for the illegally filed “Amended CC&Rs” to be rescinded—in other words, to have them officially nullified and removed. This seems like the logical and necessary fix to the problem.
The judge, however, was bound by the limits of her authority. The final decision states plainly: “The Administrative Law Judge does not have the authority under the applicable statute to order the Amended CC&Rs rescinded.” This highlights a critical jurisdictional gap. The Administrative Law Judge’s role in this venue is to determine if a violation occurred and assign limited penalties, not to perform the function of a higher court, which might have the power to void a recorded document.
So, what was the actual remedy for this clear violation? The judge ordered the HOA to repay Karolak his $500 filing fee. No other civil penalty was issued. The homeowner won the argument but did not get the one thing he asked for to correct the board’s improper action.
A Victory on Paper, A Question in Practice
The case of Douglas J. Karolak is a powerful real-world lesson. It proves that a single homeowner, armed with a thorough understanding of their community’s governing documents, can successfully challenge an overreaching HOA board and win. It confirms that procedural shortcuts, even when filed and recorded, do not make an illegal action legal.
But it also reveals the frustrating limitations that can exist within the legal process. The homeowner was proven right, but the improperly filed document remains on the books, unable to be rescinded in this specific venue. It raises a crucial question for homeowners everywhere: How do you ensure your victory has real teeth?
Case Participants
Petitioner Side
Douglas J. Karolak(petitioner)
Respondent Side
David A. Fitzgibbons III(HOA attorney) Fitzgibbons Law Offices PLC Represented VVE – Casa Grande Homeowners Association
CV Mathai(witness) VVE – Casa Grande Homeowners Association
John Kelsey(witness) VVE – Casa Grande Homeowners Association
Kristi Kelsey(witness) VVE – Casa Grande Homeowners Association
William Findley(witness) VVE – Casa Grande Homeowners Association
Kay Niemi(witness) VVE – Casa Grande Homeowners Association
Mark Korte(witness) VVE – Casa Grande Homeowners Association
Felicia Del Sol(property manager rep) Norris Management
Neutral Parties
Tammy L. Eigenheer(ALJ) Office of Administrative Hearings
Judy Lowe(Commissioner) Arizona Department of Real Estate
Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.
Case Summary
Case ID
19F-H1918001-REL
Agency
ADRE
Tribunal
OAH
Decision Date
2019-03-25
Administrative Law Judge
Jenna Clark
Outcome
total
Filing Fees Refunded
$500.00
Civil Penalties
$250.00
Parties & Counsel
Petitioner
Jay A. Janicek
Counsel
Jake Kubert
Respondent
Sycamore Vista No. 8 Homeowners Association
Counsel
Evan Thompson
Alleged Violations
ARIZ. REV. STAT. § 33-1804(B); Association Bylaws Article III, Sections 3 & 4; Association Bylaws Article VIII, Section 1
Outcome Summary
The ALJ granted the petition, concluding that the HOA Board’s unilateral amendment of the Bylaws on November 20, 2017, was an invalid action taken without the required vote of the Association members and without statutory notice, violating ARIZ. REV. STAT. § 33-1804(B) and the Association’s governing documents. The amendment was invalidated, and the Respondent was ordered to refund the Petitioner's filing fee and pay a $250.00 civil penalty.
Key Issues & Findings
Whether Sycamore Vista No. 8 Homeowners Association (Respondent) violated Association Bylaws Article III, Sections 3 & 4 and Article VIII, Section 1 in an action taken by the board on November 20, 2017.
The Board of Directors attempted a third amendment to the Bylaws on November 20, 2017, specifically changing the requirements for the Association's financial review (audit, review, or compilation). The ALJ concluded that this action was invalid because it was taken in the absence of a quorum of Association members voting in favor of the amendment, violating both the Bylaws and statutory notice requirements.
Orders: The petition was granted. The third amendment to the Association Bylaws taken on November 20, 2017, was invalidated. Respondent was ordered to pay the Petitioner the filing fee required by ARIZ. REV. STAT. § 32-2199.01 and pay a civil penalty of $250.00 to the Planned Community Hearing Office Fund.
Briefing Document: Janicek v. Sycamore Vista No. 8 Homeowners Association
Executive Summary
This document synthesizes the findings and legal conclusions from the administrative hearings regarding a dispute between Jay A. Janicek (“Petitioner”) and the Sycamore Vista No. 8 Homeowners Association (“Respondent” or “the Association”). The central issue was whether the Association’s Board of Directors acted outside its authority by unilaterally amending the Association’s Bylaws during a Board meeting on November 20, 2017, without a vote from the general membership.
The Administrative Law Judge (ALJ) determined that the Board’s action violated both the Association’s governing documents and Arizona Revised Statutes (A.R.S. § 33-1804). The ruling emphasized that the term “members” in the Bylaws refers specifically to the body of property owners, not the Board of Directors. Consequently, the third amendment to the Bylaws was invalidated, and the Association was ordered to pay a civil penalty and refund the Petitioner’s filing fees. A rehearing in March 2019 reconfirmed these findings, underscoring the necessity of transparency and membership participation in homeowners’ association governance.
The Department of Real Estate referred the matter to the Office of Administrative Hearings (OAH) following a petition filed by Mr. Janicek on July 25, 2018. The Respondent initially declined to present witnesses or exhibits, choosing to rely on a dispute over textual interpretation. Following an initial ruling in favor of the Petitioner, the Respondent requested a rehearing, which was granted but ultimately resulted in the same conclusion.
The Core Dispute: Bylaw Amendment Authority
The conflict arose from a Board meeting held on November 20, 2017. During this meeting, the Board voted to approve a third amendment to the Association’s Bylaws.
The Specific Amendment
The Board modified Article VIII, Section 6(d). The original text required the Board to:
• “…cause an annual audit of the Association books to be made by a public accountant at the completion of each fiscal year.”
The Board replaced this with language allowing for:
• “…an annual audit, review, or compilation of the Associations financial records to be made by a public accountant within 180 days after the end of the HOA’s fiscal year.”
Conflicting Interpretations of “Members”
The primary legal dispute centered on the interpretation of Bylaws Article XIII, Section 1, which states:
“These Bylaws may be amended at a regular or special meeting of the Board of Directors of the Association by a vote of a majority of a quorum of members present in person or by proxy.” (Emphasis added).
• Petitioner’s Position: “Members” refers to the general membership of the Association (property owners), as defined in Article II, Section 7 and the Declaration. Petitioner argued that the use of “proxy” in this section further proves it refers to members, as Board Directors are not permitted to vote by proxy.
• Respondent’s Position: “Members” refers to the members of the Board of Directors. The Association argued that because the word was not capitalized in Article XIII, it authorized the Board to amend Bylaws at their own meetings, provided a quorum of Directors was present.
Legal Analysis and Evidence
Governing Statutes and Case Law
The ALJ’s decision was informed by Arizona law and established legal principles:
• A.R.S. § 33-1804 (Open Meeting Law): This statute requires that notice of any meeting where a bylaw amendment is proposed must be sent to all members 10 to 50 days in advance. It also mandates that meetings of the board and association be open to all members.
• A.R.S. § 33-1804(F): The legislative intent of the Open Meeting Law is to promote transparency. Petitioner cited a message from Governor Ducey stating that such laws “provide residents the opportunity to resolve issues as a community rather than seek government intervention.”
• Powell v. Washburn (2006): The Arizona Supreme Court held that restrictive covenants (including Bylaws) must be interpreted to give effect to the intention of the parties based on the document in its entirety.
Findings of Fact regarding Authority
The ALJ identified several factors that invalidated the Board’s unilateral action:
1. Differentiated Terminology: The Bylaws consistently use “Directors” when referring to the Board and “Members” when referring to the homeowners. Article VI, Section 3 explicitly uses “Directors” to define a quorum for the Board, while Article XIII uses “members.”
2. Absence of Express Power: Article VII, which outlines the “Powers and Duties of the Board of Directors,” does not expressly grant the Board the authority to amend Bylaws. This power is reserved for the membership.
3. Lack of Notice: No Association members were present at the November 20, 2017, meeting, and no notice was provided to the general membership regarding a proposed amendment to the Bylaws as required by A.R.S. § 33-1804(B).
Conclusions of Law
The ALJ concluded that the Petitioner sustained the burden of proof by a preponderance of the evidence. The final legal determinations were:
• Avoidance of Absurdity: Bylaws must be construed to avoid an absurdity. The ALJ stated, “The voices of few cannot speak for all, unless all have bestowed those few with the power and authority to speak on their behalf.”
• Violation of Statute: The Board’s action violated A.R.S. § 33-1804(B) due to the lack of transparency and failure to provide notice of a bylaw amendment.
• Violation of Governing Documents: The Board acted outside the authority granted to it by the Bylaws, specifically Article III and Article XIII.
Final Order and Penalties
The Administrative Law Judge issued the following orders:
1. Invalidation: The third amendment to the Association Bylaws, enacted on November 20, 2017, is null and void.
2. Restitution of Fees: The Respondent must pay the Petitioner the cost of his filing fee.
3. Civil Penalty: The Respondent was ordered to pay a sum of $250.00 to the Planned Community Hearing Office Fund as a penalty for the violations.
4. Binding Nature: Following the rehearing, the order became binding, with the only further recourse being judicial review in the Superior Court within 35 days.
Study Guide – 19F-H1918001-REL-RHG
Study Guide: Janicek v. Sycamore Vista No. 8 Homeowners Association
This study guide provides a comprehensive review of the legal proceedings between Jay A. Janicek and the Sycamore Vista No. 8 Homeowners Association. It examines the interpretation of governing documents, the application of Arizona Revised Statutes regarding homeowners’ associations, and the limits of a Board of Directors’ authority to amend bylaws.
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Part I: Short-Answer Quiz
Instructions: Answer the following questions in two to three sentences based on the provided legal documents.
1. Who are the primary parties involved in this administrative hearing, and what is their relationship?
2. What specific action taken by the Board of Directors on November 20, 2017, triggered this dispute?
3. How did the Petitioner define the term “member” according to the Association’s governing documents?
4. What was the Respondent’s primary argument regarding the interpretation of Article XIII, Section 1 of the Bylaws?
5. According to ARIZ. REV. STAT. § 33-1804(B), what must a notice of a membership meeting include if a bylaw amendment is proposed?
6. Why did the Petitioner argue that the use of the word “proxy” in the Bylaws supported his interpretation that only general members could amend the Bylaws?
7. What is the legal significance of the Covenants, Conditions, and Restrictions (CC&Rs) in the context of the relationship between an HOA and a property owner?
8. What was the “preponderance of the evidence” standard used by the Administrative Law Judge to reach a decision?
9. What specific penalties and orders were issued against the Respondent in the final decision?
10. What reason did the Administrative Law Judge give for concluding that the Board’s interpretation of the Bylaws was incorrect?
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Part II: Answer Key
1. Who are the primary parties involved in this administrative hearing, and what is their relationship? The Petitioner is Jay A. Janicek, a property owner and member of the Sycamore Vista subdivision. The Respondent is the Sycamore Vista No. 8 Homeowners Association, the entity responsible for governing the residential development where the Petitioner’s property is located.
2. What specific action taken by the Board of Directors on November 20, 2017, triggered this dispute? The Board voted to approve a third amendment to the Association’s Bylaws during a regular meeting. This amendment replaced a requirement for a full annual audit by a public accountant with a choice of an audit, review, or compilation to be completed within 180 days of the fiscal year-end.
3. How did the Petitioner define the term “member” according to the Association’s governing documents? The Petitioner asserted that “Member” refers to those persons entitled to membership as defined in the Declaration, specifically every lot owner. He argued that this definition distinguishes general property owners from the “Directors” who serve on the Board.
4. What was the Respondent’s primary argument regarding the interpretation of Article XIII, Section 1 of the Bylaws? The Respondent argued that the term “members” in Article XIII referred specifically to members of the Board of Directors rather than the general membership. They contended that since the word was not capitalized, it authorized the Board to amend Bylaws at any meeting where a quorum of directors was present.
5. According to ARIZ. REV. STAT. § 33-1804(B), what must a notice of a membership meeting include if a bylaw amendment is proposed? The statute requires that notice be sent to every owner 10 to 50 days in advance of the meeting, stating the date, time, and place. Crucially, the notice must also state the purpose of the meeting, including the general nature of any proposed amendments to the declaration or bylaws.
6. Why did the Petitioner argue that the use of the word “proxy” in the Bylaws supported his interpretation that only general members could amend the Bylaws? The Petitioner noted that the Bylaws allow for voting by “proxy,” a mechanism defined in Article III as applying to votes of the general membership. He argued that because Board members are legally prohibited from voting by proxy, the inclusion of the term in the amendment section proved the section applied to general members.
7. What is the legal significance of the Covenants, Conditions, and Restrictions (CC&Rs) in the context of the relationship between an HOA and a property owner? The CC&Rs constitute an enforceable contract between the Association and each individual property owner. By purchasing a residential unit within the development, the buyer agrees to be bound by the terms, powers, and restrictions outlined in these recorded documents.
8. What was the “preponderance of the evidence” standard used by the Administrative Law Judge to reach a decision? This standard requires the Petitioner to prove that his contention is “more probably true than not.” It is defined as the greater weight of the evidence or evidence that possesses the most convincing force, rather than the absolute removal of all doubt.
9. What specific penalties and orders were issued against the Respondent in the final decision? The Administrative Law Judge invalidated the third amendment to the Bylaws and ordered the Respondent to pay a $250.00 civil penalty to the Planned Community Hearing Office Fund. Additionally, the Respondent was ordered to reimburse the Petitioner for his initial filing fee.
10. What reason did the Administrative Law Judge give for concluding that the Board’s interpretation of the Bylaws was incorrect? The Judge ruled that bylaws must be construed to avoid “absurdity” and that the “voices of few cannot speak for all” without express authority. The governing documents clearly differentiated between “members” (owners) and “directors,” and the Board lacked the power to act where authority was reserved for the membership.
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Part III: Essay Questions
Instructions: Use the provided source context to develop comprehensive responses to the following prompts.
1. The Distinction Between “Members” and “Directors”: Analyze how the specific terminology used in the Sycamore Vista No. 8 Bylaws (Articles II, III, VI, and XIII) influenced the Administrative Law Judge’s decision. How does the consistent use of these terms throughout the document prevent the Board from claiming the powers of the general membership?
2. Statutory Compliance and Transparency: Discuss the importance of ARIZ. REV. STAT. § 33-1804 (the Open Meeting Law) as it relates to this case. Use Governor Ducey’s message regarding H.B. 2411 to explain the legislative intent behind ensuring transparency and participation in HOA governance.
3. The Role of the Office of Administrative Hearings (OAH): Explain the procedural path of this dispute, from the initial petition to the Department of Real Estate to the final rehearing. What is the scope of the OAH’s authority in interpreting contracts between homeowners and associations?
4. Contractual Interpretation and the “Powell v. Washburn” Precedent: Discuss the significance of the Arizona Supreme Court’s holding in Powell v. Washburn regarding restrictive covenants. How does the requirement to give effect to the “intention of the parties” apply to the interpretation of HOA Bylaws?
5. Limits of Board Authority: Based on the Findings of Fact and Conclusions of Law, evaluate the boundaries of a Board of Directors’ power. Under what circumstances can a Board exercise “all powers, duties, and authority” of the Association, and what serves as the definitive limit to that power?
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Part IV: Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
A presiding officer who hears evidence and issues decisions in contested cases involving state agencies.
ARIZ. REV. STAT. § 33-1804
The Arizona statute governing open meetings, notice requirements, and transparency for planned community associations.
Bylaws
The internal rules and regulations that govern the administration and management of an association.
Covenants, Conditions, and Restrictions; the recorded legal documents that establish the rules for a planned community and create a contract between owners and the HOA.
Civil Penalty
A financial fine imposed by a government agency or tribunal as a punishment for a violation of statutes or regulations.
Declarant
The original developer or entity that established the residential subdivision and its governing documents.
Declaration
The primary governing document that defines membership and property rights within a homeowners’ association.
Member
Defined in the source context as a property owner within the Sycamore Vista subdivision who is entitled to membership in the Association.
The Office of Administrative Hearings; an independent state agency that conducts evidentiary hearings for contested cases.
Petitioner
The party who initiates a legal action or petition (in this case, Jay A. Janicek).
Preponderance of the Evidence
The legal standard of proof required in this case, meaning a contention is “more probably true than not.”
A written authorization allowing one person to act or vote on behalf of another, specifically used by Association members.
Quorum
The minimum number of members or directors required to be present at a meeting to legally transact business.
Respondent
The party against whom a legal action or petition is filed (in this case, Sycamore Vista No. 8 HOA).
Restrictive Covenants
Provisions in a deed or other recorded document that limit the use of property and are interpreted to give effect to the intention of the parties.
{
“case”: {
“docket_no”: “19F-H1918001-REL-RHG”,
“case_title”: “Jay A. Janicek, Petitioner, vs. Sycamore Vista No. 8 Homeowners Association (FKA New Tucson Unit No. 8 Homeowners Association, Inc.), Respondent.”,
“decision_date”: “March 25, 2019”,
“tribunal”: “OAH”,
“agency”: “ADRE”
},
“individuals”: [
{
“name”: “Jay A. Janicek”,
“role”: “petitioner”,
“side”: “petitioner”,
“affiliation”: null,
“notes”: “Appeared on his own behalf at initial hearing; observed rehearing.”
},
{
“name”: “Jenna Clark”,
“role”: “ALJ”,
“side”: “neutral”,
“affiliation”: “OAH”,
“notes”: null
},
{
“name”: “Evan Thompson”,
“role”: “HOA attorney”,
“side”: “respondent”,
“affiliation”: “Thompson Krone, P.L.C.”,
“notes”: null
},
{
“name”: “Dennis Legere”,
“role”: “observer”,
“side”: “unknown”,
“affiliation”: null,
“notes”: “Observer present at initial hearing.”
},
{
“name”: “Becky Nutt”,
“role”: “observer”,
“side”: “unknown”,
“affiliation”: null,
“notes”: “Observer present at initial hearing.”
},
{
“name”: “Caleb Rhodes”,
“role”: “observer”,
“side”: “unknown”,
“affiliation”: null,
“notes”: “Observer present at initial hearing.”
},
{
“name”: “Jake Kubert”,
“role”: “petitioner attorney”,
“side”: “petitioner”,
“affiliation”: “Dessaules Law Group”,
“notes”: “Appeared on behalf of Petitioner at rehearing.”
},
{
“name”: “Judy Lowe”,
“role”: “Commissioner”,
“side”: “neutral”,
“affiliation”: “ADRE”,
“notes”: null
},
{
“name”: “Andrew F. Vizcarra”,
“role”: “property manager”,
“side”: “respondent”,
“affiliation”: “Tucson Realty & Trust Co. Management”,
“notes”: “Listed as representative for service of process for Respondent HOA.”
},
{
“name”: “Maxwell T. Riddiough”,
“role”: “HOA attorney”,
“side”: “respondent”,
“affiliation”: “Thompson Krone, P.L.C.”,
“notes”: null
}
]
}
{ “case”: { “agency”: “ADRE”, “tribunal”: “OAH”, “docket_no”: “19F-H1918001-REL”, “case_title”: “Jay A. Janicek vs. Sycamore Vista No. 8 Homeowners Association”, “decision_date”: “2019-03-25”, “alj_name”: “Jenna Clark” }, “parties”: [ { “party_id”: “P1”, “role”: “petitioner”, “name”: “Jay A. Janicek”, “party_type”: “homeowner”, “email”: null, “phone”: null, “attorney_name”: “Jake Kubert”, “attorney_firm”: “Dessaules Law Group”, “attorney_email”: null, “attorney_phone”: null }, { “party_id”: “R1”, “role”: “respondent”, “name”: “Sycamore Vista No. 8 Homeowners Association”, “party_type”: “HOA”, “email”: null, “phone”: null, “attorney_name”: “Evan Thompson”, “attorney_firm”: “Thompson Krone, P.L.C.”, “attorney_email”: null, “attorney_phone”: null } ], “issues”: [ { “issue_id”: “ISS-001”, “type”: “statute_and_bylaws”, “citation”: “ARIZ. REV. STAT. § 33-1804(B); Association Bylaws Article III, Sections 3 & 4; Association Bylaws Article VIII, Section 1”, “caption”: “Whether Sycamore Vista No. 8 Homeowners Association (Respondent) violated Association Bylaws Article III, Sections 3 & 4 and Article VIII, Section 1 in an action taken by the board on November 20, 2017.”, “violation(s)”: “Violation of ARIZ. REV. STAT. § 33-1804(B) and Association Bylaws Article III by amending the Bylaws on November 20, 2017, without proper notice and a vote of the Association membership.”, “summary”: “The Board of Directors attempted a third amendment to the Bylaws on November 20, 2017, specifically changing the requirements for the Association’s financial review (audit, review, or compilation)12. The ALJ concluded that this action was invalid because it was taken in the absence of a quorum of Association members voting in favor of the amendment, violating both the Bylaws and statutory notice requirements34.”, “outcome”: “petitioner_win”, “filing_fee_paid”: 500.0, “filing_fee_refunded”: true, “civil_penalty_amount”: 250.0, “orders_summary”: “The petition was granted. The third amendment to the Association Bylaws taken on November 20, 2017, was invalidated. Respondent was ordered to pay the Petitioner the filing fee required by ARIZ. REV. STAT. § 32-2199.01 and pay a civil penalty of $250.00 to the Planned Community Hearing Office Fund56.”, “why_the_loss”: null, “cited”: [ “ARIZ. REV. STAT. § 33-1804(B)”, “Association Bylaws Article III” ] } ], “money_summary”: { “issues_count”: 1, “total_filing_fees_paid”: 500.0, “total_filing_fees_refunded”: 500.0, “total_civil_penalties”: 250.0 }, “outcomes”: { “petitioner_is_hoa”: false, “petitioner_win”: “total”, “summarize_judgement”: “The ALJ granted the petition, concluding that the HOA Board’s unilateral amendment of the Bylaws on November 20, 2017, was an invalid action taken without the required vote of the Association members and without statutory notice, violating ARIZ. REV. STAT. § 33-1804(B) and the Association’s governing documents47. The amendment was invalidated, and the Respondent was ordered to refund the Petitioner’s filing fee and pay a $250.00 civil penalty56.”, “why_the_loss”: null }, “analytics”: { “cited”: [ “ARIZ. REV. STAT. § 33-1804(B)”, “ARIZ. REV. STAT. § 32-2199.02(A)”, “ARIZ. REV. STAT. § 32-2199.05”, “Powell v. Washburn, 125 P.3d 373 (Ariz. 2006)”, “Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)” ], “tags”: [ “HOA Governance”, “Bylaws Amendment”, “Open Meeting Law”, “ARS 33-1804”, “Membership Vote”, “Filing Fee Refund” ] } }
{ “rehearing”:{ “is_rehearing”:true, “base_case_id”:”19F-H1918001-REL”, “original_decision_status”:”affirmed”, “original_decision_summary”:”The original ALJ decision, issued on September 25, 2018, granted the Petitioner’s request, finding that the Sycamore Vista No. 8 Homeowners Association Board violated ARIZ. REV. STAT. § 33-1804(B) and Association Bylaws by unilaterally amending the Bylaws on November 20, 2017, without first calling for a vote by the Association members1,2,3. The order invalidated the amendment, required the Respondent to refund the Petitioner’s filing fee, and imposed a civil penalty of $250.004,5.”, “rehearing_decision_summary”:”The Department granted Respondent’s request for a rehearing, which was held on March 5, 20196,7. The ALJ affirmed the original decision, concluding that the Board’s action on November 20, 2017, violated ARIZ. REV. STAT. § 33-1804(B) and Article III of the Association Bylaws because the action was taken in the absence of a quorum of Association members voting in favor of the proposed amendment8. The rehearing order re-granted the petition, invalidated the third amendment, and reaffirmed the orders for the filing fee refund and the $250.00 civil penalty8,9.”, “issues_challenged”:[ { “issue_id”: “ISS-001”, “summary”: “Whether the HOA Board violated Association Bylaws Article III, Sections 3 & 4 and Article VIII, Section 1, and ARIZ. REV. STAT. § 33-1804(B) in an action taken to amend the Bylaws on November 20, 201710.”, “outcome”: “affirmed_petitioner_win” } ] } }
The matter, Jay A. Janicek vs. Sycamore Vista No. 8 Homeowners Association (Case No. 19F-H1918001-REL-RHG), involves a dispute over the validity of a Bylaw amendment passed by the homeowners’ association (HOA) Board of Directors12. The inclusion of ‘RHG’ in the case number confirms that the final decision resulted from a rehearing requested by the Respondent Association23.
Procedural History: The initial evidentiary hearing was held on September 5, 201824. The Administrative Law Judge (ALJ) issued a decision on September 24, 2018, granting the Petitioner’s request35. The Respondent requested and was granted a rehearing by the Department of Real Estate on November 7, 201836. The rehearing was held on March 5, 2019, where no new evidence was introduced, and the parties presented legal briefs and closing arguments2….
Key Facts and Core Issue: The dispute centered on the validity of the Board’s third amendment to the Association Bylaws, approved on November 20, 2017910. This amendment changed the financial oversight requirement from an annual audit by a public accountant to an annual audit, review, or compilation of financial records1112.
The main legal issue was whether the Board had the authority to unilaterally amend the Bylaws without a vote of the general membership and whether the Board violated ARIZ. REV. STAT. § 33-1804(B), concerning notice requirements for member meetings3…. The determination hinged on the interpretation of Bylaws Article XIII, Section 1, which permits amendments “by a vote of a majority of a quorum of members present in person or by proxy”1617.
Key Arguments: Petitioner Jay Janicek argued that the term “members” in Article XIII referred exclusively to the Association owners, as supported by the Bylaws’ definition of “Member” and the use of the term “proxy” (which applies to owners, not directors)14…. Petitioner asserted that since the Board acted without calling for a member vote and without statutory notice of the proposed amendment, the action was invalid and violated A.R.S. § 33-1804(B)14….
The Association argued that, based on reading the Bylaws in their entirety, the term “members” in Article XIII referred to the Board of Directors, particularly since the amendment was to occur at a meeting of the Board of Directors24….
Rehearing Decision and Outcome: In both the original decision and the rehearing decision, the ALJ reached the same conclusion, finding that the Petitioner sustained the burden of proof2728. The ALJ determined that the Association’s governing documents clearly differentiate between “members” (the body of owners) and “directors” (the elected Board)28…. The Board lacked the power to amend the Bylaws when that authority was delegated to the membership2930.
The ALJ concluded that the Board’s action on November 20, 2017, violated ARIZ. REV. STAT. § 33-1804(B) and Article III of the Association Bylaws because the amendment was adopted in the absence of a quorum of Association members voting in favor3132.
The final outcome of the rehearing was that the Petitioner’s petition was granted32. The Board’s third amendment to the Bylaws was invalidated532. Additionally, the Respondent Association was ordered to pay the Petitioner’s filing fee and a civil penalty of $250.00 for the violation533.
Case Participants
Petitioner Side
Jay A. Janicek(petitioner) Appeared on own behalf at initial hearing; Observed at rehearing.
Jake Kubert(petitioner attorney) Dessaules Law Group
Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.
Case Summary
Case ID
19F-H1918001-REL
Agency
ADRE
Tribunal
OAH
Decision Date
2019-03-25
Administrative Law Judge
Jenna Clark
Outcome
total
Filing Fees Refunded
$500.00
Civil Penalties
$250.00
Parties & Counsel
Petitioner
Jay A. Janicek
Counsel
Jake Kubert
Respondent
Sycamore Vista No. 8 Homeowners Association
Counsel
Evan Thompson
Alleged Violations
ARIZ. REV. STAT. § 33-1804(B); Association Bylaws Article III, Sections 3 & 4; Association Bylaws Article VIII, Section 1
Outcome Summary
The ALJ granted the petition, concluding that the HOA Board’s unilateral amendment of the Bylaws on November 20, 2017, was an invalid action taken without the required vote of the Association members and without statutory notice, violating ARIZ. REV. STAT. § 33-1804(B) and the Association’s governing documents. The amendment was invalidated, and the Respondent was ordered to refund the Petitioner's filing fee and pay a $250.00 civil penalty.
Key Issues & Findings
Whether Sycamore Vista No. 8 Homeowners Association (Respondent) violated Association Bylaws Article III, Sections 3 & 4 and Article VIII, Section 1 in an action taken by the board on November 20, 2017.
The Board of Directors attempted a third amendment to the Bylaws on November 20, 2017, specifically changing the requirements for the Association's financial review (audit, review, or compilation). The ALJ concluded that this action was invalid because it was taken in the absence of a quorum of Association members voting in favor of the amendment, violating both the Bylaws and statutory notice requirements.
Orders: The petition was granted. The third amendment to the Association Bylaws taken on November 20, 2017, was invalidated. Respondent was ordered to pay the Petitioner the filing fee required by ARIZ. REV. STAT. § 32-2199.01 and pay a civil penalty of $250.00 to the Planned Community Hearing Office Fund.
Briefing Document: Janicek v. Sycamore Vista No. 8 Homeowners Association
Executive Summary
This document synthesizes the findings and legal conclusions from the administrative hearings regarding a dispute between Jay A. Janicek (“Petitioner”) and the Sycamore Vista No. 8 Homeowners Association (“Respondent” or “the Association”). The central issue was whether the Association’s Board of Directors acted outside its authority by unilaterally amending the Association’s Bylaws during a Board meeting on November 20, 2017, without a vote from the general membership.
The Administrative Law Judge (ALJ) determined that the Board’s action violated both the Association’s governing documents and Arizona Revised Statutes (A.R.S. § 33-1804). The ruling emphasized that the term “members” in the Bylaws refers specifically to the body of property owners, not the Board of Directors. Consequently, the third amendment to the Bylaws was invalidated, and the Association was ordered to pay a civil penalty and refund the Petitioner’s filing fees. A rehearing in March 2019 reconfirmed these findings, underscoring the necessity of transparency and membership participation in homeowners’ association governance.
The Department of Real Estate referred the matter to the Office of Administrative Hearings (OAH) following a petition filed by Mr. Janicek on July 25, 2018. The Respondent initially declined to present witnesses or exhibits, choosing to rely on a dispute over textual interpretation. Following an initial ruling in favor of the Petitioner, the Respondent requested a rehearing, which was granted but ultimately resulted in the same conclusion.
The Core Dispute: Bylaw Amendment Authority
The conflict arose from a Board meeting held on November 20, 2017. During this meeting, the Board voted to approve a third amendment to the Association’s Bylaws.
The Specific Amendment
The Board modified Article VIII, Section 6(d). The original text required the Board to:
• “…cause an annual audit of the Association books to be made by a public accountant at the completion of each fiscal year.”
The Board replaced this with language allowing for:
• “…an annual audit, review, or compilation of the Associations financial records to be made by a public accountant within 180 days after the end of the HOA’s fiscal year.”
Conflicting Interpretations of “Members”
The primary legal dispute centered on the interpretation of Bylaws Article XIII, Section 1, which states:
“These Bylaws may be amended at a regular or special meeting of the Board of Directors of the Association by a vote of a majority of a quorum of members present in person or by proxy.” (Emphasis added).
• Petitioner’s Position: “Members” refers to the general membership of the Association (property owners), as defined in Article II, Section 7 and the Declaration. Petitioner argued that the use of “proxy” in this section further proves it refers to members, as Board Directors are not permitted to vote by proxy.
• Respondent’s Position: “Members” refers to the members of the Board of Directors. The Association argued that because the word was not capitalized in Article XIII, it authorized the Board to amend Bylaws at their own meetings, provided a quorum of Directors was present.
Legal Analysis and Evidence
Governing Statutes and Case Law
The ALJ’s decision was informed by Arizona law and established legal principles:
• A.R.S. § 33-1804 (Open Meeting Law): This statute requires that notice of any meeting where a bylaw amendment is proposed must be sent to all members 10 to 50 days in advance. It also mandates that meetings of the board and association be open to all members.
• A.R.S. § 33-1804(F): The legislative intent of the Open Meeting Law is to promote transparency. Petitioner cited a message from Governor Ducey stating that such laws “provide residents the opportunity to resolve issues as a community rather than seek government intervention.”
• Powell v. Washburn (2006): The Arizona Supreme Court held that restrictive covenants (including Bylaws) must be interpreted to give effect to the intention of the parties based on the document in its entirety.
Findings of Fact regarding Authority
The ALJ identified several factors that invalidated the Board’s unilateral action:
1. Differentiated Terminology: The Bylaws consistently use “Directors” when referring to the Board and “Members” when referring to the homeowners. Article VI, Section 3 explicitly uses “Directors” to define a quorum for the Board, while Article XIII uses “members.”
2. Absence of Express Power: Article VII, which outlines the “Powers and Duties of the Board of Directors,” does not expressly grant the Board the authority to amend Bylaws. This power is reserved for the membership.
3. Lack of Notice: No Association members were present at the November 20, 2017, meeting, and no notice was provided to the general membership regarding a proposed amendment to the Bylaws as required by A.R.S. § 33-1804(B).
Conclusions of Law
The ALJ concluded that the Petitioner sustained the burden of proof by a preponderance of the evidence. The final legal determinations were:
• Avoidance of Absurdity: Bylaws must be construed to avoid an absurdity. The ALJ stated, “The voices of few cannot speak for all, unless all have bestowed those few with the power and authority to speak on their behalf.”
• Violation of Statute: The Board’s action violated A.R.S. § 33-1804(B) due to the lack of transparency and failure to provide notice of a bylaw amendment.
• Violation of Governing Documents: The Board acted outside the authority granted to it by the Bylaws, specifically Article III and Article XIII.
Final Order and Penalties
The Administrative Law Judge issued the following orders:
1. Invalidation: The third amendment to the Association Bylaws, enacted on November 20, 2017, is null and void.
2. Restitution of Fees: The Respondent must pay the Petitioner the cost of his filing fee.
3. Civil Penalty: The Respondent was ordered to pay a sum of $250.00 to the Planned Community Hearing Office Fund as a penalty for the violations.
4. Binding Nature: Following the rehearing, the order became binding, with the only further recourse being judicial review in the Superior Court within 35 days.
Study Guide – 19F-H1918001-REL-RHG
Study Guide: Janicek v. Sycamore Vista No. 8 Homeowners Association
This study guide provides a comprehensive review of the legal proceedings between Jay A. Janicek and the Sycamore Vista No. 8 Homeowners Association. It examines the interpretation of governing documents, the application of Arizona Revised Statutes regarding homeowners’ associations, and the limits of a Board of Directors’ authority to amend bylaws.
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Part I: Short-Answer Quiz
Instructions: Answer the following questions in two to three sentences based on the provided legal documents.
1. Who are the primary parties involved in this administrative hearing, and what is their relationship?
2. What specific action taken by the Board of Directors on November 20, 2017, triggered this dispute?
3. How did the Petitioner define the term “member” according to the Association’s governing documents?
4. What was the Respondent’s primary argument regarding the interpretation of Article XIII, Section 1 of the Bylaws?
5. According to ARIZ. REV. STAT. § 33-1804(B), what must a notice of a membership meeting include if a bylaw amendment is proposed?
6. Why did the Petitioner argue that the use of the word “proxy” in the Bylaws supported his interpretation that only general members could amend the Bylaws?
7. What is the legal significance of the Covenants, Conditions, and Restrictions (CC&Rs) in the context of the relationship between an HOA and a property owner?
8. What was the “preponderance of the evidence” standard used by the Administrative Law Judge to reach a decision?
9. What specific penalties and orders were issued against the Respondent in the final decision?
10. What reason did the Administrative Law Judge give for concluding that the Board’s interpretation of the Bylaws was incorrect?
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Part II: Answer Key
1. Who are the primary parties involved in this administrative hearing, and what is their relationship? The Petitioner is Jay A. Janicek, a property owner and member of the Sycamore Vista subdivision. The Respondent is the Sycamore Vista No. 8 Homeowners Association, the entity responsible for governing the residential development where the Petitioner’s property is located.
2. What specific action taken by the Board of Directors on November 20, 2017, triggered this dispute? The Board voted to approve a third amendment to the Association’s Bylaws during a regular meeting. This amendment replaced a requirement for a full annual audit by a public accountant with a choice of an audit, review, or compilation to be completed within 180 days of the fiscal year-end.
3. How did the Petitioner define the term “member” according to the Association’s governing documents? The Petitioner asserted that “Member” refers to those persons entitled to membership as defined in the Declaration, specifically every lot owner. He argued that this definition distinguishes general property owners from the “Directors” who serve on the Board.
4. What was the Respondent’s primary argument regarding the interpretation of Article XIII, Section 1 of the Bylaws? The Respondent argued that the term “members” in Article XIII referred specifically to members of the Board of Directors rather than the general membership. They contended that since the word was not capitalized, it authorized the Board to amend Bylaws at any meeting where a quorum of directors was present.
5. According to ARIZ. REV. STAT. § 33-1804(B), what must a notice of a membership meeting include if a bylaw amendment is proposed? The statute requires that notice be sent to every owner 10 to 50 days in advance of the meeting, stating the date, time, and place. Crucially, the notice must also state the purpose of the meeting, including the general nature of any proposed amendments to the declaration or bylaws.
6. Why did the Petitioner argue that the use of the word “proxy” in the Bylaws supported his interpretation that only general members could amend the Bylaws? The Petitioner noted that the Bylaws allow for voting by “proxy,” a mechanism defined in Article III as applying to votes of the general membership. He argued that because Board members are legally prohibited from voting by proxy, the inclusion of the term in the amendment section proved the section applied to general members.
7. What is the legal significance of the Covenants, Conditions, and Restrictions (CC&Rs) in the context of the relationship between an HOA and a property owner? The CC&Rs constitute an enforceable contract between the Association and each individual property owner. By purchasing a residential unit within the development, the buyer agrees to be bound by the terms, powers, and restrictions outlined in these recorded documents.
8. What was the “preponderance of the evidence” standard used by the Administrative Law Judge to reach a decision? This standard requires the Petitioner to prove that his contention is “more probably true than not.” It is defined as the greater weight of the evidence or evidence that possesses the most convincing force, rather than the absolute removal of all doubt.
9. What specific penalties and orders were issued against the Respondent in the final decision? The Administrative Law Judge invalidated the third amendment to the Bylaws and ordered the Respondent to pay a $250.00 civil penalty to the Planned Community Hearing Office Fund. Additionally, the Respondent was ordered to reimburse the Petitioner for his initial filing fee.
10. What reason did the Administrative Law Judge give for concluding that the Board’s interpretation of the Bylaws was incorrect? The Judge ruled that bylaws must be construed to avoid “absurdity” and that the “voices of few cannot speak for all” without express authority. The governing documents clearly differentiated between “members” (owners) and “directors,” and the Board lacked the power to act where authority was reserved for the membership.
——————————————————————————–
Part III: Essay Questions
Instructions: Use the provided source context to develop comprehensive responses to the following prompts.
1. The Distinction Between “Members” and “Directors”: Analyze how the specific terminology used in the Sycamore Vista No. 8 Bylaws (Articles II, III, VI, and XIII) influenced the Administrative Law Judge’s decision. How does the consistent use of these terms throughout the document prevent the Board from claiming the powers of the general membership?
2. Statutory Compliance and Transparency: Discuss the importance of ARIZ. REV. STAT. § 33-1804 (the Open Meeting Law) as it relates to this case. Use Governor Ducey’s message regarding H.B. 2411 to explain the legislative intent behind ensuring transparency and participation in HOA governance.
3. The Role of the Office of Administrative Hearings (OAH): Explain the procedural path of this dispute, from the initial petition to the Department of Real Estate to the final rehearing. What is the scope of the OAH’s authority in interpreting contracts between homeowners and associations?
4. Contractual Interpretation and the “Powell v. Washburn” Precedent: Discuss the significance of the Arizona Supreme Court’s holding in Powell v. Washburn regarding restrictive covenants. How does the requirement to give effect to the “intention of the parties” apply to the interpretation of HOA Bylaws?
5. Limits of Board Authority: Based on the Findings of Fact and Conclusions of Law, evaluate the boundaries of a Board of Directors’ power. Under what circumstances can a Board exercise “all powers, duties, and authority” of the Association, and what serves as the definitive limit to that power?
——————————————————————————–
Part IV: Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
A presiding officer who hears evidence and issues decisions in contested cases involving state agencies.
ARIZ. REV. STAT. § 33-1804
The Arizona statute governing open meetings, notice requirements, and transparency for planned community associations.
Bylaws
The internal rules and regulations that govern the administration and management of an association.
Covenants, Conditions, and Restrictions; the recorded legal documents that establish the rules for a planned community and create a contract between owners and the HOA.
Civil Penalty
A financial fine imposed by a government agency or tribunal as a punishment for a violation of statutes or regulations.
Declarant
The original developer or entity that established the residential subdivision and its governing documents.
Declaration
The primary governing document that defines membership and property rights within a homeowners’ association.
Member
Defined in the source context as a property owner within the Sycamore Vista subdivision who is entitled to membership in the Association.
The Office of Administrative Hearings; an independent state agency that conducts evidentiary hearings for contested cases.
Petitioner
The party who initiates a legal action or petition (in this case, Jay A. Janicek).
Preponderance of the Evidence
The legal standard of proof required in this case, meaning a contention is “more probably true than not.”
A written authorization allowing one person to act or vote on behalf of another, specifically used by Association members.
Quorum
The minimum number of members or directors required to be present at a meeting to legally transact business.
Respondent
The party against whom a legal action or petition is filed (in this case, Sycamore Vista No. 8 HOA).
Restrictive Covenants
Provisions in a deed or other recorded document that limit the use of property and are interpreted to give effect to the intention of the parties.
{
“case”: {
“docket_no”: “19F-H1918001-REL-RHG”,
“case_title”: “Jay A. Janicek, Petitioner, vs. Sycamore Vista No. 8 Homeowners Association (FKA New Tucson Unit No. 8 Homeowners Association, Inc.), Respondent.”,
“decision_date”: “March 25, 2019”,
“tribunal”: “OAH”,
“agency”: “ADRE”
},
“individuals”: [
{
“name”: “Jay A. Janicek”,
“role”: “petitioner”,
“side”: “petitioner”,
“affiliation”: null,
“notes”: “Appeared on his own behalf at initial hearing; observed rehearing.”
},
{
“name”: “Jenna Clark”,
“role”: “ALJ”,
“side”: “neutral”,
“affiliation”: “OAH”,
“notes”: null
},
{
“name”: “Evan Thompson”,
“role”: “HOA attorney”,
“side”: “respondent”,
“affiliation”: “Thompson Krone, P.L.C.”,
“notes”: null
},
{
“name”: “Dennis Legere”,
“role”: “observer”,
“side”: “unknown”,
“affiliation”: null,
“notes”: “Observer present at initial hearing.”
},
{
“name”: “Becky Nutt”,
“role”: “observer”,
“side”: “unknown”,
“affiliation”: null,
“notes”: “Observer present at initial hearing.”
},
{
“name”: “Caleb Rhodes”,
“role”: “observer”,
“side”: “unknown”,
“affiliation”: null,
“notes”: “Observer present at initial hearing.”
},
{
“name”: “Jake Kubert”,
“role”: “petitioner attorney”,
“side”: “petitioner”,
“affiliation”: “Dessaules Law Group”,
“notes”: “Appeared on behalf of Petitioner at rehearing.”
},
{
“name”: “Judy Lowe”,
“role”: “Commissioner”,
“side”: “neutral”,
“affiliation”: “ADRE”,
“notes”: null
},
{
“name”: “Andrew F. Vizcarra”,
“role”: “property manager”,
“side”: “respondent”,
“affiliation”: “Tucson Realty & Trust Co. Management”,
“notes”: “Listed as representative for service of process for Respondent HOA.”
},
{
“name”: “Maxwell T. Riddiough”,
“role”: “HOA attorney”,
“side”: “respondent”,
“affiliation”: “Thompson Krone, P.L.C.”,
“notes”: null
}
]
}
{ “case”: { “agency”: “ADRE”, “tribunal”: “OAH”, “docket_no”: “19F-H1918001-REL”, “case_title”: “Jay A. Janicek vs. Sycamore Vista No. 8 Homeowners Association”, “decision_date”: “2019-03-25”, “alj_name”: “Jenna Clark” }, “parties”: [ { “party_id”: “P1”, “role”: “petitioner”, “name”: “Jay A. Janicek”, “party_type”: “homeowner”, “email”: null, “phone”: null, “attorney_name”: “Jake Kubert”, “attorney_firm”: “Dessaules Law Group”, “attorney_email”: null, “attorney_phone”: null }, { “party_id”: “R1”, “role”: “respondent”, “name”: “Sycamore Vista No. 8 Homeowners Association”, “party_type”: “HOA”, “email”: null, “phone”: null, “attorney_name”: “Evan Thompson”, “attorney_firm”: “Thompson Krone, P.L.C.”, “attorney_email”: null, “attorney_phone”: null } ], “issues”: [ { “issue_id”: “ISS-001”, “type”: “statute_and_bylaws”, “citation”: “ARIZ. REV. STAT. § 33-1804(B); Association Bylaws Article III, Sections 3 & 4; Association Bylaws Article VIII, Section 1”, “caption”: “Whether Sycamore Vista No. 8 Homeowners Association (Respondent) violated Association Bylaws Article III, Sections 3 & 4 and Article VIII, Section 1 in an action taken by the board on November 20, 2017.”, “violation(s)”: “Violation of ARIZ. REV. STAT. § 33-1804(B) and Association Bylaws Article III by amending the Bylaws on November 20, 2017, without proper notice and a vote of the Association membership.”, “summary”: “The Board of Directors attempted a third amendment to the Bylaws on November 20, 2017, specifically changing the requirements for the Association’s financial review (audit, review, or compilation)12. The ALJ concluded that this action was invalid because it was taken in the absence of a quorum of Association members voting in favor of the amendment, violating both the Bylaws and statutory notice requirements34.”, “outcome”: “petitioner_win”, “filing_fee_paid”: 500.0, “filing_fee_refunded”: true, “civil_penalty_amount”: 250.0, “orders_summary”: “The petition was granted. The third amendment to the Association Bylaws taken on November 20, 2017, was invalidated. Respondent was ordered to pay the Petitioner the filing fee required by ARIZ. REV. STAT. § 32-2199.01 and pay a civil penalty of $250.00 to the Planned Community Hearing Office Fund56.”, “why_the_loss”: null, “cited”: [ “ARIZ. REV. STAT. § 33-1804(B)”, “Association Bylaws Article III” ] } ], “money_summary”: { “issues_count”: 1, “total_filing_fees_paid”: 500.0, “total_filing_fees_refunded”: 500.0, “total_civil_penalties”: 250.0 }, “outcomes”: { “petitioner_is_hoa”: false, “petitioner_win”: “total”, “summarize_judgement”: “The ALJ granted the petition, concluding that the HOA Board’s unilateral amendment of the Bylaws on November 20, 2017, was an invalid action taken without the required vote of the Association members and without statutory notice, violating ARIZ. REV. STAT. § 33-1804(B) and the Association’s governing documents47. The amendment was invalidated, and the Respondent was ordered to refund the Petitioner’s filing fee and pay a $250.00 civil penalty56.”, “why_the_loss”: null }, “analytics”: { “cited”: [ “ARIZ. REV. STAT. § 33-1804(B)”, “ARIZ. REV. STAT. § 32-2199.02(A)”, “ARIZ. REV. STAT. § 32-2199.05”, “Powell v. Washburn, 125 P.3d 373 (Ariz. 2006)”, “Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)” ], “tags”: [ “HOA Governance”, “Bylaws Amendment”, “Open Meeting Law”, “ARS 33-1804”, “Membership Vote”, “Filing Fee Refund” ] } }
{ “rehearing”:{ “is_rehearing”:true, “base_case_id”:”19F-H1918001-REL”, “original_decision_status”:”affirmed”, “original_decision_summary”:”The original ALJ decision, issued on September 25, 2018, granted the Petitioner’s request, finding that the Sycamore Vista No. 8 Homeowners Association Board violated ARIZ. REV. STAT. § 33-1804(B) and Association Bylaws by unilaterally amending the Bylaws on November 20, 2017, without first calling for a vote by the Association members1,2,3. The order invalidated the amendment, required the Respondent to refund the Petitioner’s filing fee, and imposed a civil penalty of $250.004,5.”, “rehearing_decision_summary”:”The Department granted Respondent’s request for a rehearing, which was held on March 5, 20196,7. The ALJ affirmed the original decision, concluding that the Board’s action on November 20, 2017, violated ARIZ. REV. STAT. § 33-1804(B) and Article III of the Association Bylaws because the action was taken in the absence of a quorum of Association members voting in favor of the proposed amendment8. The rehearing order re-granted the petition, invalidated the third amendment, and reaffirmed the orders for the filing fee refund and the $250.00 civil penalty8,9.”, “issues_challenged”:[ { “issue_id”: “ISS-001”, “summary”: “Whether the HOA Board violated Association Bylaws Article III, Sections 3 & 4 and Article VIII, Section 1, and ARIZ. REV. STAT. § 33-1804(B) in an action taken to amend the Bylaws on November 20, 201710.”, “outcome”: “affirmed_petitioner_win” } ] } }
The matter, Jay A. Janicek vs. Sycamore Vista No. 8 Homeowners Association (Case No. 19F-H1918001-REL-RHG), involves a dispute over the validity of a Bylaw amendment passed by the homeowners’ association (HOA) Board of Directors12. The inclusion of ‘RHG’ in the case number confirms that the final decision resulted from a rehearing requested by the Respondent Association23.
Procedural History: The initial evidentiary hearing was held on September 5, 201824. The Administrative Law Judge (ALJ) issued a decision on September 24, 2018, granting the Petitioner’s request35. The Respondent requested and was granted a rehearing by the Department of Real Estate on November 7, 201836. The rehearing was held on March 5, 2019, where no new evidence was introduced, and the parties presented legal briefs and closing arguments2….
Key Facts and Core Issue: The dispute centered on the validity of the Board’s third amendment to the Association Bylaws, approved on November 20, 2017910. This amendment changed the financial oversight requirement from an annual audit by a public accountant to an annual audit, review, or compilation of financial records1112.
The main legal issue was whether the Board had the authority to unilaterally amend the Bylaws without a vote of the general membership and whether the Board violated ARIZ. REV. STAT. § 33-1804(B), concerning notice requirements for member meetings3…. The determination hinged on the interpretation of Bylaws Article XIII, Section 1, which permits amendments “by a vote of a majority of a quorum of members present in person or by proxy”1617.
Key Arguments: Petitioner Jay Janicek argued that the term “members” in Article XIII referred exclusively to the Association owners, as supported by the Bylaws’ definition of “Member” and the use of the term “proxy” (which applies to owners, not directors)14…. Petitioner asserted that since the Board acted without calling for a member vote and without statutory notice of the proposed amendment, the action was invalid and violated A.R.S. § 33-1804(B)14….
The Association argued that, based on reading the Bylaws in their entirety, the term “members” in Article XIII referred to the Board of Directors, particularly since the amendment was to occur at a meeting of the Board of Directors24….
Rehearing Decision and Outcome: In both the original decision and the rehearing decision, the ALJ reached the same conclusion, finding that the Petitioner sustained the burden of proof2728. The ALJ determined that the Association’s governing documents clearly differentiate between “members” (the body of owners) and “directors” (the elected Board)28…. The Board lacked the power to amend the Bylaws when that authority was delegated to the membership2930.
The ALJ concluded that the Board’s action on November 20, 2017, violated ARIZ. REV. STAT. § 33-1804(B) and Article III of the Association Bylaws because the amendment was adopted in the absence of a quorum of Association members voting in favor3132.
The final outcome of the rehearing was that the Petitioner’s petition was granted32. The Board’s third amendment to the Bylaws was invalidated532. Additionally, the Respondent Association was ordered to pay the Petitioner’s filing fee and a civil penalty of $250.00 for the violation533.
Case Participants
Petitioner Side
Jay A. Janicek(petitioner) Appeared on own behalf at initial hearing; Observed at rehearing.
Jake Kubert(petitioner attorney) Dessaules Law Group
The Administrative Law Judge ruled partially in favor of Petitioner Warren R. Brown, finding that Mogollon Airpark, Inc. violated ARIZ. REV. STAT. section 33-1803(A) by imposing a $25 late payment fee, and ordered the fee rescinded and the $500 filing fee refunded,,,. The ALJ ruled against both Petitioners (Brown and Stevens) regarding the challenge to the $325 assessment increase, dismissing those petitions because they failed to prove the HOA violated A.R.S. § 33-1803(A),,,.
Why this result: Petitioners Warren R. Brown and Brad W. Stevens failed to prove by a preponderance of the evidence that the combined $325 assessment increase violated ARIZ. REV. STAT. section 33-1803(A) because their definition of 'regular assessment' as encompassing all assessments enacted through proper procedures was not supported by statutory construction principles,.
Key Issues & Findings
Challenge to assessment increase exceeding 20% limit (Brown Docket 18F-H1818029-REL-RHG)
Petitioner Brown alleged the combined $325 increase, consisting of a $116 regular increase and a $209 special assessment, violated A.R.S. § 33-1803(A) because 'regular assessment' refers to the creation process, making the total increase subject to the 20% cap,,,,.
Orders: Petition dismissed. Respondent Mogollon Airpark, Inc. deemed the prevailing party in the 029 matter,,,.
Filing fee: $500.00, Fee refunded: No
Disposition: respondent_win
Cited:
4
6
32
33
35
36
73
74
76
77
Challenge to assessment increase exceeding 20% limit (Stevens Docket 18F-H1818054-REL)
Petitioner Stevens alleged the total $325 assessment increase violated A.R.S. § 33-1803(A) and raised accompanying allegations of deceptive accounting and lack of authority to impose special assessments,,.
Orders: Petition dismissed. Respondent deemed the prevailing party in the 054 matter,,,,.
Filing fee: $500.00, Fee refunded: No
Disposition: respondent_win
Cited:
7
20
32
33
35
36
38
61
73
74
76
77
79
94
99
101
Challenge to late payment charges (Brown Docket 18F-H1818045-REL)
Petitioner Brown alleged that the $25 late fee and 18% interest charged by Mogollon violated the statutory limits set forth in A.R.S. § 33-1803(A),,. The ALJ found the $25 late charge violated the statute because the limit applies to all 'assessments',.
Orders: Petitioner Warren R. Brown deemed the prevailing party. Mogollon Airpark Inc. must rescind the $25 late fee and pay Mr. Brown his filing fee of $500.00 within thirty days,.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
5
7
32
34
37
46
47
59
73
75
78
Analytics Highlights
Topics: HOA assessment cap, Late fee violation, Statutory construction, Regular assessment definition, Special assessment, Filing fee refund
Additional Citations:
ARIZ. REV. STAT. section 33-1803(A)
ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
ARIZ. ADMIN. CODE § R2-19-119
McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)
Deer Valley, v. Houser, 214 Ariz. 293, 296, 152 P.3d 490, 493 (2007)
U.S. Parking Sys v. City of Phoenix, 160 Ariz. 210, 211, 772 P.2d 33, 34 (App. 1989)
Briefing Document: Brown and Stevens vs. Mogollon Airpark, Inc.
Executive Summary
This document synthesizes the findings and conclusions from a consolidated administrative law case involving petitioners Warren R. Brown and Brad W. Stevens against their homeowners’ association (HOA), Mogollon Airpark, Inc. The central dispute concerned a 2018 assessment increase of $325, which represented a 39.4% increase over the previous year, and the imposition of a new $25 late fee.
The petitioners argued that the entire assessment increase violated Arizona Revised Statute § 33-1803(A), which limits annual regular assessment increases to 20%. They contended that the term “regular” describes the procedural enactment of an assessment, making the entire 325increaseasingleregularassessment.Conversely,theHOAassertedthatithadbifurcatedtheincreaseintoacompliant14.1116) regular assessment increase and a separate $209 special assessment, which is not subject to the 20% statutory cap.
The Administrative Law Judge (ALJ) ultimately sided with Mogollon Airpark on the assessment increase, dismissing the petitions of both Mr. Brown and Mr. Stevens. The ALJ’s rationale, based on principles of statutory construction, was that “regular assessment” refers to a type of assessment, distinct from a “special assessment,” and that to rule otherwise would render the word “regular” meaningless in the statute. A subsequent rehearing requested by Mr. Stevens was also denied on the same grounds.
However, the ALJ ruled in favor of Mr. Brown on the matter of the late fee. The decision found that the statutory limit on late fees applies to all “assessments,” not just regular ones, making the HOA’s $25 fee a clear violation. Underlying the legal challenges were substantial allegations by the petitioners of deceptive accounting and financial mismanagement by the HOA to create a “fabricated shortfall,” though the ALJ noted these issues were outside the narrow scope of the administrative hearing and better suited for civil court.
Case Overview and Parties Involved
This matter consolidates three separate petitions filed with the Arizona Department of Real Estate, which were heard by the Office of Administrative Hearings.
• Petitioners:
◦ Warren R. Brown (Docket Nos. 18F-H1818029-REL-RHG & 18F-H1818045-REL)
◦ Brad W. Stevens (Docket No. 18F-H1818054-REL)
• Respondent:
◦ Mogollon Airpark, Inc.
• Venue and Adjudication:
◦ Tribunal: Office of Administrative Hearings, Phoenix, Arizona
◦ Administrative Law Judge: Thomas Shedden
◦ Hearing Date (Consolidated Matters): September 28, 2018
◦ Rehearing Date (Stevens Matter): February 11, 2019
Key Financial Figures
Amount/Rate
Calculation/Note
Previous Year’s Assessment (2017)
The baseline for calculating the increase percentage.
Total 2018 Assessment Increase
The total amount disputed by the petitioners.
Total Increase Percentage
($325 / $825)
“Regular Assessment” Increase
As classified by Mogollon Airpark, Inc. (14.1% increase).
“Special Assessment”
As classified by Mogollon Airpark, Inc.
New Late Fee
Challenged as exceeding statutory limits.
New Interest Rate
For past-due accounts.
Statutory Late Fee Limit
Greater of $15 or 10%
Per ARIZ. REV. STAT. § 33-1803(A).
Statutory Assessment Increase Limit
20% over prior year
Per ARIZ. REV. STAT. § 33-1803(A), applies to regular assessments.
Analysis of Core Legal Disputes
The hearings focused on two primary violations of Arizona statute alleged by the petitioners.
The 2018 Assessment Increase (39.4%)
The crux of the case in dockets 029 and 054 was the interpretation of the term “regular assessment” within ARIZ. REV. STAT. § 33-1803(A).
• Petitioners’ Position (Brown & Stevens):
◦ The total $325 increase, constituting a 39.4% hike, is a clear violation of the 20% statutory cap.
◦ The term “regular assessment” as used in the statute refers to the process by which an assessment is created (i.e., by motion, second, and vote). As the entire $325 was passed via this standard procedure, it constitutes a single regular assessment.
◦ They further argued that Mogollon Airpark, Inc.’s governing documents (Bylaws and CC&Rs) do not provide any explicit authority to impose “special assessments,” meaning any assessment levied must be a regular one.
• Respondent’s Position (Mogollon Airpark, Inc.):
◦ The assessment was properly bifurcated into two distinct parts: a $116 increase to the regular assessment (a 14.1% increase, well within the 20% limit) and a $209 special assessment.
◦ “Regular assessment” and “special assessment” are established terms of art in the HOA industry, denoting different types of assessments, not the process of their creation.
◦ The existence of both terms in other parts of Arizona law, such as § 33-1806, demonstrates the legislature’s intent to treat them as separate categories.
Late Fees and Interest Charges
In docket 045, Mr. Brown challenged the legality of the newly instituted penalties for late payments.
• Petitioner’s Position (Brown):
◦ The statute explicitly limits late fees to “the greater of fifteen dollars or ten percent of the amount of the unpaid assessment.”
◦ The HOA’s imposition of a flat $25 late fee is a direct violation of this provision. An invoice provided as evidence showed Mr. Brown was charged this $25 fee plus $1.57 in interest.
• Respondent’s Position (Mogollon Airpark, Inc.):
◦ The HOA argued that the statutory limitation on late fees applied only to regular assessments, not to special assessments. This argument was explicitly rejected by the ALJ.
Underlying Allegations of Financial Misconduct
While the administrative hearings were limited to the specific statutory violations, the petitions were motivated by deep-seated concerns over the HOA’s financial management. These allegations were not adjudicated but were noted by the ALJ.
• Core Allegation: The petitioners claimed the HOA treasurer and others engaged in “deceptive and nonstandard accounting methods” to manufacture a financial crisis and justify the assessment increase.
• Specific Claims:
◦ Mr. Brown alleged that the accounting was “deliberately misleading” to obscure the fact that the 2016 board left the treasury approximately “$200,000 better off.”
◦ Mr. Stevens submitted a 45-page petition with over 600 pages of exhibits detailing the alleged improprieties, including “keeping two sets of books,” to create a “fabricated shortfall.” He testified that he believed the HOA possessed over $1 million and did not need an increase.
• Judicial Comment: The ALJ noted that these complex financial allegations were not addressed in the hearing and suggested that “the civil courts may be better suited than an administrative tribunal to address the issues they raise.”
Judicial Decisions and Rationale
The ALJ issued separate findings and orders for each docket, culminating in a split decision. The rulings on the assessment increase were further solidified in a subsequent rehearing.
Summary of Outcomes
Docket No.
Petitioner
Core Issue
Ruling
Prevailing Party
18F-H1818029-REL-RHG
Warren R. Brown
Assessment Increase
Petition Dismissed
Mogollon Airpark, Inc.
18F-H1818054-REL
Brad W. Stevens
Assessment Increase
Petition Dismissed
Mogollon Airpark, Inc.
18F-H1818045-REL
Warren R. Brown
$25 Late Fee
Violation Found
Warren R. Brown
Rationale for Initial Decision (October 18, 2018)
• On the Assessment Increase: The ALJ found that the petitioners failed to prove by a preponderance of the evidence that a violation occurred. The ruling rested on statutory interpretation:
◦ The petitioners’ definition of “regular assessment” as a process was rejected because it would render the word “regular” in the statute “trivial or void,” as all assessments are presumed to follow a regular process.
◦ The only “fair and sensible result” that gives meaning to every word in the statute is to interpret “regular” and “special” as distinct types of assessments.
• On the Late Fees: The ALJ found that Mr. Brown successfully proved a violation.
◦ The statutory text on late fees applies to “assessments” generally, without the qualifier “regular.”
◦ Mogollon’s argument required adding the word “regular” where the legislature did not use it, which violates principles of statutory construction.
◦ Order: Mogollon was ordered to rescind the $25 fee assessed against Mr. Brown and reimburse his $500 filing fee.
Rationale for Rehearing Decision (March 1, 2019)
Mr. Stevens’s request for a rehearing on his dismissed petition was granted but ultimately denied again.
• Mr. Stevens’s Rehearing Arguments: He argued the ALJ erred by not applying a definition of “special assessment” from the case Northwest Fire District v. U.S. Home of Arizona and reasserted that an assessment unauthorized by the HOA’s documents must logically be a regular one.
• ALJ’s Rejection:
◦ The reliance on Northwest Fire District was “misplaced” because that case applies to special taxing districts created under a different state title, not private HOAs.
◦ The argument that an unauthorized special assessment becomes a regular one was deemed “nonsensical.” The ALJ noted, “More reasonably, if Mogollon has no authority to issue a special assessment, any such assessment would be void.”
◦ The core statutory interpretation from the initial hearing was affirmed. The petition was dismissed a final time.
Study Guide – 18F-H1818054-REL-RHG
Study Guide: Brown and Stevens v. Mogollon Airpark, Inc.
Short Answer Quiz
Instructions: Answer the following questions in 2-3 sentences each, based on the provided legal documents.
1. Identify the petitioners and the respondent in this consolidated legal matter and describe their relationship.
2. What specific financial changes did Mogollon Airpark, Inc. implement in 2018 that led to the legal dispute?
3. What was the central legal argument presented by petitioners Warren R. Brown and Brad W. Stevens regarding the assessment increase?
4. How did Mogollon Airpark, Inc. justify its total assessment increase of $325 in the face of the legal challenge?
5. Explain the Administrative Law Judge’s primary reason for dismissing the petitions concerning the assessment increase (the 029 and 054 matters).
6. What was the specific subject of the petition in the 045 matter, and what was the final ruling in that case?
7. What was the judge’s legal reasoning for finding Mogollon’s $25 late fee to be in violation of the statute?
8. Why did the hearing not address the petitioners’ underlying allegations of deceptive accounting and financial impropriety?
9. What is the standard of proof required in this matter, and which parties were responsible for meeting it?
10. In the rehearing for the 054 matter, what was Brad Stevens’s argument regarding the definition of “special assessment,” and why did the judge find his reliance on the Northwest Fire District case to be misplaced?
——————————————————————————–
Quiz Answer Key
1. The petitioners were Warren R. Brown and Brad W. Stevens, who were members of the homeowners’ association (HOA). The respondent was Mogollon Airpark, Inc., the HOA itself. The dispute arose from actions taken by the HOA board that the petitioners, as members, believed to be unlawful.
2. In 2018, Mogollon Airpark, Inc. raised its total annual assessment by $325 over the previous year’s $825. Additionally, the HOA instituted a new late payment fee of $25 and began charging 18% interest on past-due accounts.
3. The petitioners’ central argument was that the total $325 assessment increase, representing a 39.4% hike over the prior year, violated ARIZ. REV. STAT. section 33-1803(A). This statute prohibits an HOA from imposing a “regular assessment” that is more than 20% greater than the previous year’s assessment without member approval.
4. Mogollon Airpark, Inc. argued that the $325 increase was composed of two separate parts: a $116 increase to the “regular assessment” (14.1%) and a $209 “special assessment.” They contended that the 20% statutory limit in section 33-1803(A) applies only to regular assessments, not special assessments, and therefore their actions were lawful.
5. The judge dismissed the petitions based on principles of statutory construction. He concluded that “regular assessment” is a specific type of assessment, distinct from a “special assessment,” and that if “regular” merely referred to the process of passing an assessment (motion, second, vote), the word would be redundant and meaningless in the statute. Since the regular assessment portion of the increase was below the 20% threshold, no violation occurred.
6. The 045 matter, filed by Warren R. Brown, specifically challenged Mogollon’s new $25 late fee and 18% interest charge. The judge ruled in favor of Mr. Brown, deeming him the prevailing party, and ordered Mogollon to rescind the $25 late fee and refund his $500 filing fee.
7. The judge found the $25 late fee violated the statute because the section of ARIZ. REV. STAT. section 33-1803(A) limiting late charges applies to “assessments” generally, not just “regular assessments.” Unlike the clause on assessment increases, the legislature did not use the limiting word “regular,” so applying that limitation would violate principles of statutory construction.
8. The hearing did not address the allegations of deceptive accounting because the petitions filed by Mr. Brown (029) and Mr. Stevens (054) were “single-issue petitions.” This limited the scope of the hearing strictly to the question of whether Mogollon violated the specific statute, section 33-1803(A). The judge noted that civil courts may be a more suitable venue for the financial allegations.
9. The standard of proof required was a “preponderance of the evidence.” The burden of proof was on the petitioners, Messrs. Brown and Stevens, to prove their respective allegations against the respondent, Mogollon Airpark, Inc.
10. Mr. Stevens argued that the definition of “special assessment” from the case Northwest Fire District v. U.S. Home of Arizona should be applied, which it failed to meet. The judge found this reliance misplaced because that case applies to special taxing districts created under ARIZ. REV. STAT. Title 48, and Mogollon Airpark, Inc. is an HOA, not such a taxing district.
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Essay Questions
Instructions: The following questions are designed for a more in-depth, essay-format response. Do not provide answers.
1. Analyze the competing interpretations of the term “regular assessment” as presented by the petitioners and the respondent. Discuss the Administrative Law Judge’s final interpretation and the principles of statutory construction used to arrive at that conclusion.
2. The Administrative Law Judge’s decision distinguishes between the legality of the assessment increase and the legality of the late fee. Explain the legal reasoning behind this split decision, focusing on the specific wording of ARIZ. REV. STAT. section 33-1803(A) and the different statutory construction applied to each clause.
3. Discuss the procedural limitations of the hearings as described in the legal decision, specifically referencing the concept of a “single-issue petition.” How did this limitation affect the scope of the case and prevent the judge from ruling on certain serious allegations made by Brown and Stevens?
4. Based on the “Findings of Fact,” describe the background allegations of financial misconduct made by the petitioners against Mogollon’s treasurer and board. Although not ruled upon, explain how these allegations served as the primary motivation for their legal challenges regarding the assessment and fee increases.
5. Trace the procedural history of the “029 matter,” from its original petition and dismissal to the eventual rehearing and final order. What does this process reveal about the requirements for filing a successful petition with the Office of Administrative Hearings?
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Glossary of Key Terms
Definition
Administrative Law Judge (ALJ)
An official who presides over administrative hearings, weighs evidence, and makes legal rulings and decisions, in this case, Judge Thomas Shedden.
ARIZ. REV. STAT. section 33-1803(A)
The specific Arizona statute at the heart of the dispute. It limits HOA regular assessment increases to 20% over the prior year and caps late payment charges to the greater of $15 or 10% of the unpaid assessment.
Assessment
A fee or charge levied by a homeowners’ association on its members to cover operating expenses, reserve funds, and other costs.
Bylaws
A set of rules adopted by an organization, like an HOA, to govern its internal management and operations. Part of the governing documents.
Covenants, Conditions & Restrictions. These are legal obligations recorded in the deed of a property, governing its use and maintenance. Part of the governing documents.
Consolidated Matter
A legal procedure where multiple separate cases or petitions involving common questions of law or fact are combined into a single hearing to promote efficiency.
Docket Number
A unique number assigned by a court or administrative office to identify a specific case. The matters in this case were identified as 029, 045, and 054.
Governing Documents
The collection of legal documents, including CC&Rs and Bylaws, that establish the rules and authority of a homeowners’ association.
Petitioner
The party who files a petition initiating a legal action in an administrative or court proceeding. In this case, Warren R. Brown and Brad W. Stevens.
Preponderance of the Evidence
The standard of proof in this case. It means the greater weight of the evidence shows that a fact is more likely than not to be true.
Regular Assessment
As interpreted by the ALJ, a specific type of recurring annual assessment for an HOA’s general operating budget, subject to the 20% increase limit in section 33-1803(A).
Respondent
The party against whom a petition is filed. In this case, Mogollon Airpark, Inc.
Single-Issue Petition
A petition that limits the scope of the administrative hearing to a single, specific legal question or alleged violation, as was the case for the 029 and 054 matters.
Special Assessment
As interpreted by the ALJ, a one-time or non-recurring assessment levied for a specific purpose (e.g., replenishing a reserve fund). The ALJ found it is not subject to the 20% annual increase cap that applies to regular assessments.
Statutory Construction
The process and principles used by judges to interpret and apply legislation. The judge used these principles to determine the meaning of “regular” and “assessment” in the statute.
Blog Post – 18F-H1818054-REL-RHG
How One Word Let an HOA Raise Dues by 40%—And 4 Surprising Lessons for Every Homeowner
Imagine opening your annual bill from your Homeowner’s Association (HOA) and discovering your dues have skyrocketed by nearly 40% overnight. This isn’t a hypothetical scenario. It’s precisely what happened to homeowners in the Mogollon Airpark community in Arizona when their HOA board raised the annual assessment by $325, from $825 to $1,150—a staggering 39.4% increase.
But the homeowners weren’t just angry about the amount; they alleged the increase was justified by a “fabricated shortfall” created through “deceptive and nonstandard accounting methods.” At first glance, the hike also seemed legally impossible. Arizona state law, specifically ARIZ. REV. STAT. section 33-1803(A), clearly states that an HOA cannot impose a regular assessment that is more than 20% greater than the previous year’s. So how did the Mogollon Airpark board legally circumvent this cap? The answer, found in the fine print of an administrative law judge’s decision, reveals critical lessons for every homeowner about the power of language, legal strategy, and reading the fine print.
1. The Power of a Name: The “Special Assessment” Loophole
The HOA’s strategy was deceptively simple. Instead of raising the annual assessment by the full $325, the Mogollon Airpark board split the increase into two distinct parts. First, it raised the “regular assessment” by $116. This amounted to a 14.1% increase over the previous year’s $825, keeping it well within the 20% legal limit. The remaining $209 was then levied as a separate fee, which the board classified as a “special assessment.”
When homeowners challenged this, the Administrative Law Judge sided with the HOA. The judge’s ruling was based on a strict reading of the statute: the 20% cap applies only to “regular assessments,” not “special assessments.” By simply calling a portion of the increase a “special assessment,” the HOA legally circumvented the very law designed to protect homeowners from massive, sudden fee hikes.
Lesson 1 for Homeowners: The name of a fee is everything. State-mandated caps on “regular” assessments offer zero protection if your HOA can simply reclassify an increase as a “special” assessment.
2. Every Word Is a Battlefield: “Regular” Doesn’t Mean What You Think
The homeowners, petitioners Warren Brown and Brad Stevens, built their case on a common-sense interpretation of the law. They argued that the term “regular assessment” in the statute referred to the process by which an assessment is created—that is, any fee approved through a regular motion, second, and vote by the board. By this logic, the entire $325 increase was a single “regular assessment” and therefore violated the 20% cap. They also argued that the HOA had no authority under its own governing documents to impose a special assessment in the first place.
The judge, however, rejected this definition. The judge reasoned that lawmakers don’t add words to statutes for no reason. If “regular” simply meant “voted on normally,” the word would be redundant, as all assessments are assumed to be passed this way. To give the word meaning, it must refer to a specific type of assessment. To support this interpretation, the judge pointed to another Arizona statute, 33-1806, which explicitly uses the distinct terms “regular assessments” and “special assessment[s].” This proved that the state legislature intended for them to be entirely different categories of fees, cementing the HOA’s victory on the main issue.
Lesson 2 for Homeowners: Every word in a statute has a purpose. Courts assume lawmakers don’t use words accidentally, and a layperson’s “common-sense” definition of a term can be easily defeated by established principles of legal interpretation.
3. A Small Victory on a Technicality: Why You Should Still Read the Fine Print
While the homeowners lost the battle over the 39.4% dues increase, one petitioner, Mr. Brown, secured a small but significant win on a separate issue: late fees. The Mogollon Airpark board had instituted a new $25 late fee, which Mr. Brown challenged.
Arizona law limits late fees to “the greater of fifteen dollars or ten percent of the amount of the unpaid assessment.” The HOA argued that this limit, like the 20% cap, only applied to regular assessments. This time, the judge disagreed. The judge’s logic was a textbook example of statutory interpretation: when lawmakers include a specific word in one part of a law but omit it from another, courts assume the omission was deliberate. In the section of the law governing late fees, the limit applies to “assessments” in general; the word “regular” is conspicuously absent.
Because the HOA’s $25 fee exceeded the legal limit, the judge ruled in favor of Mr. Brown. The court ordered the HOA to rescind the illegal late fee and, importantly, to reimburse Mr. Brown for his $500 filing fee.
Lesson 3 for Homeowners: The fine print cuts both ways. While one word can create a loophole for an HOA, the absence of that same word elsewhere can be your most powerful weapon.
4. Fighting the Right Battle in the Right Place: The Allegations a Judge Couldn’t Hear
Underlying the dispute over the 20% cap were much more serious allegations. The homeowners’ petitions claimed the HOA board used “deceptive and nonstandard accounting methods,” including keeping “two sets of books,” to create a “fabricated shortfall” and justify the massive fee increase.
Yet, none of these explosive claims were ever addressed during the hearing. The reason was a crucial matter of legal procedure. The homeowners had filed what are known as “single-issue petitions,” which focused narrowly and exclusively on the violation of the 20% assessment cap in statute 33-1803(A). This strategic choice legally prevented the judge from considering the broader allegations of financial mismanagement, regardless of their merit.
In a pointed footnote, the judge highlighted the procedural constraints and suggested the homeowners had chosen the wrong legal venue for their most serious claims:
Considering the nature of Messrs. Brown and Stevens’s allegations, the civil courts may be better suited than an administrative tribunal to address the issues they raise.
Lesson 4 for Homeowners: Your legal strategy is as important as your evidence. Choosing the right claims to file and the right venue to file them in can determine whether a judge is even allowed to hear your most compelling arguments.
Conclusion: Your Most Powerful Tool
The case of Mogollon Airpark is a powerful illustration of how legal battles are won and lost not on broad principles of fairness, but on the precise definitions of individual words. The presence of the word “regular” in one clause of the law cost the homeowners their central fight, allowing the HOA to circumvent the 20% cap. In a stunning contrast, the absence of that very same word in another clause handed them a clear victory on late fees.
This case is a stark reminder of the power hidden in legal definitions and fine print. It leaves every homeowner with a critical question: Do you really know what your governing documents—and the state laws that bind them—truly allow?
Case Participants
Petitioner Side
Warren R. Brown(petitioner) Appeared pro se
Brad W. Stevens(petitioner) Appeared pro se; presented testimony/evidence
Respondent Side
Gregory A. Stein(respondent attorney) CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP
Mark K. Sahl(respondent attorney) CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP Spelled Mark K. Saul in some transmissions
Neutral Parties
Thomas Shedden(ALJ) OAH
Judy Lowe(Commissioner) Arizona Department of Real Estate
Petitioner was deemed the prevailing party on Issues 2 (retention of election materials) and 3 (open meetings violation). Issue 1 (Bylaw 2.4 objection rule) was dismissed. Respondent was ordered to pay Petitioner $1,000.00, representing the filing fee.
Why this result: Petitioner failed to establish a violation of Bylaw 2.4 as the evidence did not show that a Director was restricted by the Member waiver clause from raising concerns about election validity after the meeting adjourned.
Key Issues & Findings
Respondent violated Bylaw 2.4 when it acted on Mr. Schoeffler’s objection to the election results raised the day after the Annual Meeting.
Petitioner alleged the HOA violated Bylaw 2.4 by investigating or acting upon an objection to election results that was raised by a Director after the Annual Meeting adjourned, thereby waiving the claim according to the bylaw.
Orders: Petition dismissed as to Issue 1.
Filing fee: $0.00, Fee refunded: No
Disposition: respondent_win
Cited:
Desert Ranch Bylaw 2.4
Respondent violated A.R.S. § 33-1812(A)(7) when it discarded the ballot envelopes at or about the time of the election.
The HOA discarded the ballot envelopes at or about the time of the election, which violated the statutory mandate to retain ballots, envelopes, and related materials for at least one year.
Orders: Petitioner established violation and was deemed the prevailing party regarding this issue. No Civil Penalty was found appropriate. The initial order included an order for Respondent to pay Petitioner the $1,000.00 filing fee.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
A.R.S. § 33-1812(A)(7)
Respondent violated A.R.S. § 33-1804 when it held meetings that were closed and/or without proper notice.
The HOA Board members met with an attorney following the Annual Meeting without providing any notice of the upcoming meeting and/or failing to provide notice that the meeting was closed because it involved legal advice from an attorney.
Orders: Petitioner established violation and was deemed the prevailing party regarding this issue. No Civil Penalty was found appropriate. The initial order included an order for Respondent to pay Petitioner the $1,000.00 filing fee.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
A.R.S. § 33-1804
Analytics Highlights
Topics: HOA Election Dispute, Records Retention, Open Meeting Violation, Filing Fee Refund
This document synthesizes the findings and rulings from an administrative legal dispute between homeowner Tom Barrs (Petitioner) and the Desert Ranch Homeowners Association (Respondent) concerning the HOA’s board election of March 18, 2017. The core of the dispute involved the HOA board’s decision to investigate and ultimately overturn the initially announced election results, leading to a run-off election.
The Administrative Law Judge (ALJ) overseeing the case and a subsequent rehearing issued a mixed final decision. The Petitioner, Mr. Barrs, successfully proved that the Desert Ranch HOA committed two statutory violations:
1. Destruction of Election Materials: The HOA violated Arizona statute A.R.S. § 33-1812(A)(7) by destroying ballot envelopes shortly after the election, materials which are required to be retained for at least one year.
2. Improper Closed Meeting: The HOA violated Arizona statute A.R.S. § 33-1804 by holding a board meeting with its attorney at a private residence without providing the required notice to its members.
However, the Petitioner’s primary challenge—that the board violated its own Bylaw 2.4 by acting on an objection raised after the annual meeting had adjourned—was dismissed. The ALJ ruled that the bylaw’s waiver of claims applied to general “Members” but not to “Directors” acting in their official capacity. This ruling effectively upheld the board’s authority to investigate the election, which led to the discovery of invalid ballots and the eventual run-off election won by Brian Schoeffler.
As the prevailing party on two of the three issues, Mr. Barrs was awarded a reimbursement of his $1,000.00 filing fee. The judge, however, found that no civil penalty against the HOA was appropriate.
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I. Case Overview
• Parties:
◦ Petitioner: Tom Barrs
◦ Respondent: Desert Ranch HOA, represented by Catherine Overby (President) and Brian Schoeffler (Vice President)
• Case Number: 18F-H1818035-REL
• Adjudicating Body: Arizona Office of Administrative Hearings
• Presiding Judge: Administrative Law Judge Tammy L. Eigenheer
• Subject of Dispute: Alleged violations of Arizona statutes and HOA bylaws related to the handling and outcome of the March 18, 2017, annual board election.
II. Chronology of the Contested Election
The dispute originated from the following sequence of events surrounding the 2017 election for two vacant seats on the Desert Ranch HOA Board of Directors.
1. Pre-Election: Absentee ballots were distributed to members, listing Catherine Overby and Brian Schoeffler as candidates and providing a space for a write-in candidate.
2. March 18, 2017 (Annual Meeting): Ballots were submitted and counted. Catherine Overby and Jerome Klinger (a write-in) were announced as the winning candidates. No members present objected to the results before the meeting was adjourned.
3. Immediately Following the Meeting: Board member Patrick Rice gathered the ballots and “expressed his concerns with the election results.”
4. Circa March 18, 2017: All ballot envelopes from the election were destroyed.
5. March 19, 2017: Candidate Brian Schoeffler sent an email regarding the election, stating, “I’m asking you to review the situation and make a decision if there is enough concern that there should be a revote.”
6. March 20, 2017: Board President Catherine Overby emailed the members, announcing that the election had been “contested.” In the email, she asserted that the bylaws did not permit write-in candidates and declared that she and Mr. Schoeffler were the new directors.
7. March 29, 2017: Certain board members, including Ms. Overby and Mr. Rice, held an unannounced meeting with an attorney at Ms. Overby’s home. During this meeting, it was discovered that “duplicate ballots and a proxy ballot” had been improperly counted.
8. Post-March 29, 2017: After consulting the attorney, the board determined that the valid vote count resulted in a tie between Mr. Schoeffler and Mr. Klinger. The board decided to hold a run-off election.
9. April 29, 2017: The run-off election was held, and Brian Schoeffler was announced as the winner.
10. May 10, 2017: The newly constituted Board of Directors held its organizational meeting.
III. Adjudicated Issues and Rulings
The petition, originally filed as a single issue, was converted to a multiple-issue case. At the hearing, the dispute was clarified into three distinct issues, each with a specific ruling from the ALJ.
Petitioner’s Allegation
Legal Basis
Final Ruling
The HOA improperly overturned the election results based on an objection raised after the annual meeting had adjourned.
Bylaw 2.4
Dismissed
The HOA unlawfully discarded ballot envelopes and related election materials.
A.R.S. § 33-1812(A)(7)
Violation Found
The HOA held closed board meetings without providing proper notice to the membership.
A.R.S. § 33-1804
Violation Found
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A. Issue 1: Violation of Bylaw 2.4 (Improperly Overturning Election)
• Petitioner’s Argument: Mr. Barrs contended that the board was barred from investigating or acting on any concerns about the election after the meeting had concluded. His argument was based on Bylaw 2.4, which states:
• ALJ Finding: The petition on this issue was dismissed. The judge’s finding was affirmed after a rehearing requested by the Petitioner.
• ALJ Rationale:
1. Initiation of Investigation: Testimony established that Board member Patrick Rice expressed concerns “immediately after the Annual Meeting adjourned.” Therefore, Mr. Schoeffler’s email the following day did not initiate the board’s investigation.
2. Distinction Between “Member” and “Director”: The judge noted that throughout the bylaws, the terms “Member,” “Directors,” and “Board of Directors” were used with specific and non-interchangeable meanings. The waiver in Bylaw 2.4 applies specifically to a “Member,” and the Petitioner failed to prove that a “Director” was prohibited from raising questions about the validity of an election after a meeting.
B. Issue 2: Violation of A.R.S. § 33-1812(A)(7) (Destruction of Election Materials)
• Statutory Requirement: Arizona law mandates that “Ballots, envelopes and related materials… shall be retained… for at least one year after completion of the election.”
• Respondent’s Action: The HOA destroyed the ballot envelopes at or around the time of the election.
• ALJ Finding: The Petitioner established that the HOA violated the statute.
• ALJ Rationale: The ruling was based on “uncontroverted evidence” presented at the hearing that established the destruction of the materials.
C. Issue 3: Violation of A.R.S. § 33-1804 (Improper Closed Meetings)
• Statutory Requirement: Arizona law requires all HOA board meetings to be open to all members. A meeting can only be closed for specific reasons, such as receiving legal advice, and the board must provide notice and cite the legal authority for entering a closed session.
• Respondent’s Action: Certain board members met with an attorney at a private residence on March 29, 2017, to discuss the election. No notice was provided to the membership regarding this meeting.
• ALJ Finding: The Petitioner established that the HOA violated the statute.
• ALJ Rationale: The ruling was based on “uncontroverted evidence” that the meeting occurred and that the board “did not provide any notice of the upcoming meeting and/or provide notice that the meeting would be closed because it involved legal advice from an attorney.”
IV. Final Order and Disposition
The final decision, issued on August 23, 2018, and upheld after a rehearing decision on December 26, 2018, ordered the following:
• Dismissal: The petition regarding Issue 1 (violation of Bylaw 2.4) was dismissed.
• Prevailing Party: The Petitioner, Tom Barrs, was deemed the prevailing party as to Issue 2 and Issue 3.
• Monetary Award: The Respondent, Desert Ranch HOA, was ordered to pay the Petitioner his filing fee of $1,000.00.
• Civil Penalty: The judge determined that “No Civil Penalty is found to be appropriate in this matter.”
• Finality: The decision after rehearing was binding on the parties, with any further appeal requiring judicial review in the superior court.
Study Guide – 18F-H1818035-REL-RHG
Study Guide:Barrs v. Desert Ranch HOA
This guide provides a detailed review of the administrative case Tom Barrs v. Desert Ranch HOA, based on the Administrative Law Judge Decisions issued on August 23, 2018, and December 26, 2018.
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Quiz: Short-Answer Questions
Instructions: Answer the following questions in two to three complete sentences, using only information provided in the case documents.
1. Who were the primary parties involved in this case, and what were their roles?
2. What were the initially announced results of the Desert Ranch HOA Board of Directors election on March 18, 2017?
3. What were the two primary procedural violations that the Desert Ranch HOA Board committed following the March 18, 2017 election?
4. What was the Petitioner’s central argument regarding the violation of Desert Ranch Bylaw 2.4?
5. On what grounds did the Administrative Law Judge (ALJ) dismiss the Petitioner’s claim regarding Bylaw 2.4?
6. Explain the violation related to Arizona Revised Statute (A.R.S.) § 33-1812(A)(7) that the ALJ found the Respondent had committed.
7. Describe the violation of A.R.S. § 33-1804 concerning open meetings.
8. What was the final order from the initial hearing on August 23, 2018?
9. What was the specific focus of the rehearing held on December 6, 2018?
10. What was the ultimate outcome of the rehearing, and what legal recourse was available to the parties afterward?
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Answer Key
1. The primary parties were Petitioner Tom Barrs, who filed the dispute, and Respondent Desert Ranch HOA. The HOA was represented by its President, Catherine Overby, and Vice President, Brian Schoeffler. The case was heard by Administrative Law Judge Tammy L. Eigenheer.
2. At the Annual Board Meeting on March 18, 2017, the ballots were counted and Catherine Overby and Jerome Klinger were announced as the winning candidates for the two vacant seats on the Board of Directors. No members present raised an objection before the meeting was adjourned.
3. The HOA Board committed two primary procedural violations. First, they destroyed the ballot envelopes at or around the time of the election, and second, certain Board members met with an attorney without providing notice to the association members that a meeting was being held or that it would be a closed session.
4. The Petitioner argued that candidate Brian Schoeffler’s challenge to the election was invalid because it was raised the day after the meeting adjourned. According to Bylaw 2.4, any “Member” who fails to object to an irregularity at the meeting waives their claim, and the Petitioner argued this rule should also apply to Board members.
5. The ALJ dismissed the claim because the investigation was initiated by Board member Patrick Rice, who expressed concerns immediately after the meeting, not by Mr. Schoeffler’s later email. The judge also determined that throughout the bylaws, the terms “Member,” “Directors,” and “Board of Directors” were used with specific, non-interchangeable meanings, and the Petitioner failed to show that a Director was barred from raising concerns after a meeting.
6. The ALJ found that the Respondent violated A.R.S. § 33-1812(A)(7) based on uncontroverted evidence presented at the hearing. This statute requires that ballots, envelopes, and related election materials be retained for at least one year after an election, but the HOA discarded the ballot envelopes around the time of the election.
7. The Respondent violated A.R.S. § 33-1804 when certain Board members met with an attorney at Ms. Overby’s house on March 29, 2017. The HOA failed to provide any notice of this meeting to the members and did not announce that the meeting would be closed to discuss legal advice, as required by the statute.
8. In the initial order, the ALJ dismissed the petition as to Issue 1 (the Bylaw 2.4 violation) but found the Petitioner to be the prevailing party on Issues 2 and 3 (the statutory violations). The judge ordered the Respondent HOA to pay the Petitioner his filing fee of $1,000.00 but found that no civil penalty was appropriate.
9. The rehearing focused exclusively on the first issue from the initial hearing: whether the Respondent violated Bylaw 2.4 when it acted on objections to the election results after the Annual Meeting had adjourned. The Petitioner did not seek reconsideration of the lack of penalties for the other two violations.
10. The rehearing upheld the original decision, dismissing the petition as to Issue 1. The decision from the rehearing was final and binding, and any party wishing to appeal the order was required to seek judicial review in the superior court within thirty-five days.
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Essay Questions
Instructions: The following questions are designed to encourage deeper analysis of the case. Formulate a comprehensive response to each, drawing upon specific facts and legal arguments presented in the source documents.
1. Analyze the Administrative Law Judge’s interpretation of Desert Ranch Bylaw 2.4, specifically the distinction between a “Member” and a “Director.” Discuss the strength of the Petitioner’s counter-argument and why the judge’s reasoning ultimately prevailed.
2. Examine the series of actions taken by the Desert Ranch HOA Board of Directors following the March 18, 2017 election announcement. Evaluate whether their actions to investigate irregularities, consult an attorney, and hold a run-off election were ultimately justified, despite the procedural violations they committed.
3. Discuss the concept of “preponderance of the evidence” as the burden of proof in this case. For each of the three issues presented, explain how the Petitioner either met or failed to meet this standard, citing specific evidence mentioned in the decisions.
4. Based on the events described, from the initial election to the final administrative ruling, critique the effectiveness of the HOA’s internal governance and dispute resolution processes. What systemic failures are evident, and how did they lead to a formal administrative hearing?
5. Although the Petitioner was the “prevailing party” on two of the three issues, the remedy was limited to a refund of his filing fee, with no civil penalty imposed. Argue for or against the appropriateness of this remedy, considering the nature of the HOA’s violations and their impact on the integrity of the election process.
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Glossary of Key Terms
Term / Statute
Definition
Administrative Law Judge (ALJ)
The official who presides over the administrative hearing at the Office of Administrative Hearings and issues a decision based on evidence and law. In this case, Tammy L. Eigenheer.
A.R.S. § 33-1804
An Arizona Revised Statute requiring that all meetings of a homeowners’ association and its board of directors be open to all members. A meeting may only be closed for specific reasons, such as receiving legal advice, and the board must state the statutory reason for closing the meeting.
A.R.S. § 33-1812(A)(7)
An Arizona Revised Statute that mandates the retention of election materials, including ballots and envelopes, in either electronic or paper format for at least one year after the completion of an election for member inspection.
A.R.S. § 41-2198.01
An Arizona statute that permits an owner or a planned community organization to file a petition with the Department of Real Estate for a hearing concerning violations of community documents or statutes.
Burden of Proof
The obligation of a party in a trial to produce the evidence that will prove the claims they have made against the other party. In this case, the Petitioner bore the burden of proof.
Desert Ranch Bylaw 2.4
A provision in the HOA’s bylaws stating, “Any Member who fails to object to any perceived or actual irregularity at the meeting… forever waives that claim.”
Homeowners Association (HOA) Dispute Process Petition
The formal document filed with the Arizona Department of Real Estate by a homeowner to initiate a legal proceeding against their HOA for alleged violations.
Petitioner
The party who files a petition initiating a legal action. In this case, Tom Barrs.
Preponderance of the evidence
The standard of proof in this administrative hearing. It is defined as evidence that convinces the trier of fact that a contention is “more probably true than not,” representing the greater weight of the evidence.
Rehearing
A second hearing of a case to consider a decision that has already been made, typically granted if there are perceived errors of law, misconduct, or if the decision was not supported by the evidence.
Respondent
The party against whom a petition is filed. In this case, the Desert Ranch HOA.
Blog Post – 18F-H1818035-REL-RHG
A Homeowner Sued His HOA Over a Botched Election—Here Are 3 Lessons Every Board Should Learn
Friction between homeowners and their Homeowners Association (HOA) board is a common feature of community living, and nowhere is that friction more apparent than in disputes over elections and rule enforcement. But what happens when a board, trying to correct an error, makes the situation exponentially worse?
This article is a deep dive into the real administrative law case of Barrs v. Desert Ranch HOA, a seemingly straightforward dispute that reveals surprising and practical lessons for anyone living in or governing a planned community. It’s a story of a cascade of errors, where initial election confusion led to a panicked and procedurally flawed response, compounded by a pre-existing failure in record-keeping. As we’ll see, the outcome wasn’t what anyone expected, and the board’s biggest mistakes weren’t the ones they thought they were fighting.
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1. You Can Lose the Main Argument But Still Win the Case
The dispute began at the Desert Ranch HOA’s annual meeting, where election results were announced. The trouble started immediately after the meeting adjourned when a board Director, Patrick Rice, gathered the ballots and expressed concerns about irregularities. A day later, a losing candidate, Brian Schoeffler, echoed those concerns via email. Citing the Director’s objection, the board overturned the initial results, prompting homeowner Tom Barrs to file a petition arguing this was a violation of the HOA’s own rules.
Barrs’ case hinged on Bylaw 2.4, which stated that any “Member” must object to irregularities during the meeting itself, or else they waive their right to complain. Barrs argued that since no one objected before adjournment, the results should stand. However, the judge disagreed, pointing to two critical distinctions in the evidence. First, the investigation was triggered by the concerns of a “Director,” not the losing candidate’s later email. Second, a close reading of the bylaws showed that the terms “Member” and “Director” were used as distinct categories and were not interchangeable. Since the bylaw only restricted “Members,” it did not prevent a Director from raising concerns after the meeting. Barrs lost his primary argument.
Despite this, in a counter-intuitive twist, the judge declared Barrs the “prevailing party” in the overall case and ordered the HOA to repay his $1,000 filing fee. Why? Because while investigating the petitioner’s main claim, the judge found the board had committed other clear violations of state law while trying to “fix” the election. This outcome underscores a critical principle for all boards: procedural integrity is paramount. The HOA won the battle over its right to review the election but lost the war because of its flawed process.
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2. Your Records (or Lack Thereof) Will Be Your Downfall
One of the board’s most significant errors was a simple but critical failure of administrative duty: they destroyed election materials in direct violation of state law. The HOA was found to have violated A.R.S. § 33-1812(A)(7), which is unambiguous about an HOA’s responsibility.
According to A.R.S. § 33-1812(A)(7), “Ballots, envelopes and related materials…shall be retained…for at least one year after completion of the election.”
The legal decision states the evidence was “uncontroverted” that the HOA discarded the ballot envelopes around the time of the election. Because the HOA could not dispute this fact, it was an easy violation for the petitioner to prove.
This wasn’t just a minor administrative oversight; it was a catastrophic error. By destroying the envelopes, the board not only violated the law but also eliminated any possibility of independently verifying the vote count after their own director discovered irregularities. This single failure trapped them in a procedural corner of their own making. It made a definitive resolution of the election challenge impossible, leading to the messy and expensive situation of declaring a tie and holding a run-off, all of which could have been avoided if the primary evidence had been preserved as required by law.
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3. “Private” Board Business Can Be an Illegal Secret Meeting
In an attempt to resolve the election dispute correctly, the board took what it likely considered a responsible step: seeking legal advice. After the election was contested, certain board members met with an attorney at a board member’s house to figure out how to proceed. However, the way they did it constituted another clear violation of state law.
This private meeting violated Arizona’s open meeting law, A.R.S. § 33-1804. While the statute does allow a board to enter a closed session to receive legal advice, it has strict procedural requirements. The board must first provide notice of the meeting to all members and then, at that public meeting, officially vote to enter the closed session for that specific, legally permissible reason. The evidence was “uncontroverted” that the board failed to provide any notice of this meeting to the association members.
The board’s desire for confidential legal advice was understandable, but their method created an unforced legal error. The correct procedure—notifying members of a meeting and then voting to enter a closed session—protects the board by demonstrating procedural propriety. The shortcut they took exposed them to a clear-cut violation that was impossible to defend. For an HOA board, transparency is the default, and secrecy is a narrow, legally defined exception. The process of going private matters as much as the reason for doing so.
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Conclusion: It’s Not Just What You Do, It’s How You Do It
The Desert Ranch HOA board, in its attempt to correct a perceived election error, committed two clear statutory violations. In their haste, they held an illegal secret meeting and were hamstrung by their prior failure to properly retain election records—the very evidence needed for a clean resolution. These procedural missteps ultimately cost them the case.
The ultimate lesson from Barrs v. Desert Ranch HOA is that for any governing body, procedural correctness is just as important as substantive correctness. This case serves as a stark reminder that good intentions are no defense against procedural law. When a crisis hits, does your board have the discipline to follow procedure, or will the rush to find a solution lead you to commit unforced errors that are far worse than the original problem?
Case Participants
Petitioner Side
Tom Barrs(petitioner) Appeared on his own behalf
Stephen Barrs(witness) Testified for Petitioner
Respondent Side
Catherine Overby(board president, witness) Desert Ranch HOA Appeared on behalf of Respondent
Brian Schoeffler(board vice president, witness) Desert Ranch HOA Appeared on behalf of Respondent
Patrick Rice(board member) Desert Ranch HOA Board member who expressed concerns with election results
Neutral Parties
Tammy L. Eigenheer(ALJ) OAH
Judy Lowe(Commissioner) Arizona Department of Real Estate
Other Participants
Jerome Klinger(board member) Desert Ranch HOA Director elected in disputed election
