Study Guide: Smith v. Desert Isle Homeowners Association, Inc.

This guide provides a detailed review of the administrative case No. 18F-H1817020-REL between Petitioner Lewis Smith and Respondent Desert Isle Homeowners Association, Inc. It includes a short-answer quiz, an answer key, suggested essay questions, and a comprehensive glossary of key terms and entities involved in the matter.

Short-Answer Quiz

Answer the following questions in 2-3 sentences based on the information provided in the case documents.

1. Who are the primary parties in case No. 18F-H1817020-REL, and who represented them legally?

2. What was the three-part purpose of the special meeting requested by Lewis Smith and other homeowners on October 23, 2017?

3. A second petition was submitted on October 31, 2017. What was its purpose and who were the petitioners?

4. What key actions were taken regarding officers and a special meeting during the Board of Directors meeting on November 8, 2017?

5. What did the Desert Isle HOA Board demand from Lewis Smith in its email on November 10, 2017, to proceed with the special meeting?

6. What was the central allegation Lewis Smith made in his petition to the Arizona Department of Real Estate on December 5, 2017?

7. What was the outcome of the vote on the proposed amendment to prohibit short-term rentals at the December 16, 2017 special meeting?

8. Which specific section of the Arizona Revised Statutes did the Administrative Law Judge find the Board had violated?

9. According to the case documents, what is the definition of “preponderance of the evidence”?

10. What was the final ruling issued by Administrative Law Judge Velva Moses-Thompson on May 29, 2018?

Answer Key

1. The primary parties were the Petitioner, Lewis Smith, and the Respondent, Desert Isle Homeowners Association, Inc. Lewis Smith was represented by Mark J. Bainbridge, Esq., and the Desert Isle HOA was represented by William D. Condray, Esq.

2. The purpose of the meeting was threefold: to select and fund an attorney to update the HOA’s bylaws and CC&Rs to comply with current Arizona law; to discuss obtaining a reserve study for the association’s capital needs; and to discuss an attorney letter regarding HOA governance.

3. Greg Yacoubian, Doug Robinson, Curt Carlson, and Mike Andrews submitted a request to amend the CC&Rs by adding a section to prohibit “Short Term Rentals.” They requested this subject be added to the agenda of the special meeting already requested by Lewis Smith’s group to save time and money.

4. At the November 8, 2017 meeting, a motion passed unanimously to remove the existing VP, treasurer, and secretary. New officers and assistants were elected, and another motion passed to call the special meeting requested by the two groups of owners before November 23, 2017.

5. The Board requested a “narrative explanation” from Lewis Smith for each of his proposed subjects. The Board stated it would expect four narratives plus any referenced attorney engagement letters and needed the materials by November 17, 2017, to prepare the special meeting package.

6. Lewis Smith alleged that the Desert Isle HOA Board members met to discuss and add an amendment prohibiting short-term rentals without conducting the meetings openly. He stated that no proper notice or agenda was provided to inform members of the matters to be discussed before the issue became a ballot vote.

7. At the December 16, 2017 meeting, the proposed amendment to prohibit short-term rentals was voted on by homeowners. Nine homeowners voted in favor of the amendment, and six homeowners voted against it.

8. The Judge found that the Board violated ARIZ. REV. STAT. section 33-1804(F). The violation occurred when the Board failed to provide an agenda with information reasonably necessary to inform members that an amendment to the CC&Rs prohibiting short-term rentals would be discussed at the board meetings on November 8 and November 20, 2017.

9. The documents provide two definitions. The first is “such proof as convinces the trier of fact that the contention is more probably true than not.” The second, from Black’s Law Dictionary, is “The greater weight of the evidence… sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

10. The Administrative Law Judge granted the Petitioner’s petition. The Judge’s order required the Respondent (Desert Isle HOA) to pay the Petitioner the filing fee required by statute.

Essay Questions

1. Construct a detailed timeline of events from the initial petition by Lewis Smith on October 23, 2017, to the final Administrative Law Judge Decision on May 29, 2018. Include all key meetings, communications, and legal filings mentioned in the documents.

2. Analyze the ways in which the Desert Isle Homeowners Association Board failed to comply with the open meeting policies outlined in ARIZ. REV. STAT. section 33-1804. Use specific examples from the meeting agendas and communications to support the analysis.

3. Discuss the concept of “burden of proof” as it applies to this case. Explain who held the burden of proof for the violation and any affirmative defenses, and how the “preponderance of the evidence” standard was met by the Petitioner.

4. Compare and contrast the two petitions submitted by homeowners in October 2017. Evaluate how the Board handled each request and the procedural steps it took that ultimately led to the legal dispute.

5. Based on the findings of fact, evaluate the communication between the Desert Isle HOA Board and its members. Discuss the effectiveness and legality of the Board’s notices, agendas, and email correspondence regarding the special meeting and the proposed CC&R amendment.

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official who presides over administrative hearings, in this case, Velva Moses-Thompson. The ALJ hears evidence and issues a decision based on findings of fact and conclusions of law.

ARIZ. REV. STAT. section 33-1804

An Arizona state statute governing meetings in planned communities. It requires open meetings, proper notice to members (between 10 and 50 days prior), and agendas that are reasonably necessary to inform members of matters to be discussed or decided.

ARIZ. REV. STAT. section 41-2198.01

An Arizona state statute that permits an owner or planned community organization to file a petition with the Department of Real Estate for a hearing concerning violations of community documents or relevant statutes.

Board of Directors (Board)

The governing body of the Desert Isle Homeowners Association, Inc. At the time of the events, key members included Doug Robinson (President), Curt Carlson, and Mike Andrews.

Burden of Proof

The obligation to prove one’s assertion. In this case, the Petitioner bore the burden of proof to establish the violation, and the Respondent bore the burden for any affirmative defenses.

CC&Rs (Covenants, Conditions, and Restrictions)

The governing documents of the Desert Isle planned community. The petitions submitted by homeowners sought to amend these documents.

Desert Isle Homeowners Association, Inc.

The Respondent in the case; the planned community organization and non-profit corporation responsible for managing the Desert Isle community.

Lewis Smith

The Petitioner in the case; a homeowner in the Desert Isle community who filed a petition against the HOA.

Notice of Hearing

A formal notification issued by the Department of Real Estate setting the date and location for an administrative hearing. In this case, it was issued on January 22, 2018.

Office of Administrative Hearings

The state tribunal where the hearing for this case was conducted.

Petitioner

The party who files a petition initiating a legal action. In this case, Lewis Smith.

Post-hearing Briefs

Written legal arguments submitted by parties after a hearing has concluded. The record in this case was held open until May 9, 2018, to receive these briefs.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It is defined as evidence that is sufficient to convince the trier of fact that a contention is more probably true than not.

Reserve Study

A study to determine an association’s long-term capital needs for its common areas. Lewis Smith’s petition requested a discussion about obtaining one.

Respondent

The party against whom a petition is filed. In this case, Desert Isle Homeowners Association, Inc.

Special Meeting

A meeting of association members called for a specific purpose outside of regularly scheduled meetings. Both petitions in this case requested a special meeting.