Case Summary
| Case ID | 23F-H040-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2023-06-13 |
| Administrative Law Judge | Tammy L. Eigenheer |
| Outcome | The Administrative Law Judge granted the petition, finding that the SunBird Golf Resort Homeowners Association violated its governing documents by allocating funds from the HOA Contingency funding stream (general assessments) for drainage issues benefitting the SunBird Golf Club, as the 2015 CC&Rs, as amended in 2021, restricted such expenditures exclusively to funds collected under Section 6.7(C). |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Lisa Kittredge | Counsel | — |
|---|---|---|---|
| Respondent | SunBird Golf Resort Homeowners Association | Counsel | Lori N Brown |
Alleged Violations
ARIZ. REV. STAT. § 32-2199 et seq.
Outcome Summary
The Administrative Law Judge granted the petition, finding that the SunBird Golf Resort Homeowners Association violated its governing documents by allocating funds from the HOA Contingency funding stream (general assessments) for drainage issues benefitting the SunBird Golf Club, as the 2015 CC&Rs, as amended in 2021, restricted such expenditures exclusively to funds collected under Section 6.7(C).
Key Issues & Findings
Expenditure of HOA Contingency Funds for Golf Course Drainage Maintenance
Petitioner alleged the HOA improperly used annual assessments (Contingency Fund) to pay $15,968 (capped at $20,000) for cleaning drainage wells on the privately owned SunBird Golf Club property. The ALJ concluded that under the 2015 CC&Rs, as amended in 2021, the HOA was only permitted to expend funds collected specifically pursuant to Section 6.7(C) (Capital Improvement Assessment for Golf Course) for golf course drainage issues, and therefore, using the Contingency fund violated the governing documents.
Orders: Respondent must reimburse Petitioner's filing fee of $500.00 in certified funds and henceforth comply with the provisions of the governing documents.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
- SunBird Golf Resort Homeowners Association Covenants, Conditions, and Restrictions Section 6.3(A) (2015)
- 2021 Amendment to 2015 CC&Rs
- Section 6.7(C) of the 2021 Amendment
- ARIZ. REV. STAT. § 32-2199 et seq.
- Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
Analytics Highlights
- ARIZ. REV. STAT. § 32-2199 et seq.
- SunBird Golf Resort Homeowners Association Covenants, Conditions, and Restrictions Section 6.3(A) (2015)
- 2021 Amendment to 2015 CC&Rs
- Section 6.7(C) of the 2021 Amendment
Video Overview
Audio Overview
Decision Documents
23F-H040-REL Decision – 1039237.pdf
23F-H040-REL Decision – 1053619.pdf
23F-H040-REL Decision – 1064270.pdf
23F-H040-REL Decision – 1039237.pdf
23F-H040-REL Decision – 1053619.pdf
23F-H040-REL Decision – 1064270.pdf
This summary outlines the hearing proceedings, key arguments, and final decision in the matter of *Lisa Kittredge vs. SunBird Golf Resort Homeowners Association* (No. 23F-H040-REL) before the Office of Administrative Hearings (OAH).
Key Facts and Issues
Petitioner Lisa Kittredge filed a petition alleging that the SunBird Golf Resort Homeowners Association (HOA) violated governing documents by accepting financial responsibility to maintain drainage features on the privately owned, for-profit SunBird Golf Club.
The immediate action challenged was the HOA Board's December 2022 decision to allocate up to $20,000 from the HOA Contingency funding stream to open, inspect, and clean out specific drainage wells on the golf course, in response to standing water, odors, and mosquito problems affecting the community.
The main legal issue was whether the current governing documents authorized the HOA to use general homeowner assessment funds for maintenance activities on the Golf Course property.
Arguments and Proceedings
The evidentiary hearing was conducted over two days, May 1 and May 15, 2023.
Petitioner's Argument: The Petitioner argued that the expenditure was improper because the governing documents prohibit the use of general assessments for the golf course. She contended that the 1999 CC&Rs/Transition Documents, which generally exempted the HOA from maintaining the Golf Course land, were still relevant or controlling. Crucially, she argued that the 2021 Amendment to the CC&Rs explicitly restricted funding for golf course activities only to monies collected pursuant to Section 6.7(C) (the newly created $300 Capital Improvement Assessment fund for the Golf Course and Community). The Petitioner conceded that had the HOA used funds from the restricted 6.7(C) account, she would not have filed the petition.
Respondent's Argument (HOA): The HOA countered that the 1999 documents were superseded by subsequent documents, including the 2015 CC&Rs and 2021 Amendment, which were approved by residents. The HOA asserted that Section 6.3(A) of the 2015 CC&Rs authorized using assessments for "drainage areas within SunBird," arguing that fixing the drainage was necessary for the "common good" of SunBird residents, whose property values and quality of life were negatively impacted by flooding caused in part by community runoff. The HOA classified the allocation as an unbudgeted emergency expense appropriate for the Contingency Fund.
Legal Focus: The Administrative Law Judge (ALJ) focused strictly on the HOA's governing documents (CC&Rs, Bylaws, Articles of Incorporation, and Rules), excluding the 1999 leases and transition agreements as enforceable governing documents in this venue. The ALJ also found that the Petitioner did not establish that the 1999 CC&Rs were still in effect by a preponderance of the evidence, citing the clear intent of the 2008 and 2015 restatements to be the sole current CC&Rs.
Outcome and Final Decision
The ALJ determined that the Petitioner sustained her burden of proof that the Respondent violated the Association’s governing documents.
Key Legal Finding: The ALJ concluded that the 2021 Amendment was controlling regarding the funding mechanism for the Golf Course. While the 2015 CC&Rs allowed assessments for "drainage areas within SunBird," the 2021 Amendment clearly restricted the use of assessments for the golf course (including recreational facilities) to "only from funds collected pursuant to Section 6.7(C)". Since the HOA decision specified the use of the general HOA Contingency funding stream for the $20,000 project, the expenditure violated the governing documents.
Order: The Petitioner's petition was granted. The Respondent was ordered to reimburse the Petitioner’s filing fee of $500.00 and was further ordered to henceforth comply with the provisions of the governing documents. (3,803 characters)
Questions
Question
If my HOA adopts new CC&Rs, are the old ones still valid if they weren't explicitly listed as replaced?
Short Answer
Likely not. The ALJ determined that a community is not expected to have multiple operative sets of CC&Rs at the same time, implying the new ones supersede the old ones.
Detailed Answer
Even if an older set of CC&Rs is not explicitly listed as being replaced by a newer set, the Tribunal may find that the older set is no longer in effect. The ALJ reasoned that the clear intention of adopting amended and restated CC&Rs is to serve as the current governing documents, and it is unreasonable to expect a community to operate under multiple conflicting sets.
Alj Quote
One would not expect a community to have more than one operative set of CC&Rs at any given time.
Legal Basis
Contract Interpretation / Superseding Documents
Topic Tags
- CC&Rs
- Governing Documents
- Amendments
Question
Can my HOA spend general assessment funds on property it doesn't own, like a private golf course?
Short Answer
No, unless the governing documents explicitly define that property as being 'served by the Association' or allow such spending.
Detailed Answer
The ALJ ruled that the HOA could not spend general funds on the golf course because there was no evidence the golf course was 'served by the Association' as defined in the CC&Rs. Furthermore, because a specific amendment created a dedicated fund for golf course costs, the HOA was restricted to using only that specific fund.
Alj Quote
No evidence was submitted to establish that the SunBird Golf Course was 'served by the Association.'… Accordingly, the Association was not permitted to expend funds collected as assessments to any drainage issues for the SunBird Golf Course other than those assessments collected pursuant to Section 6.7(C) of the 2021 Amendment.
Legal Basis
CC&R Restrictions on Expenditures
Topic Tags
- Financials
- Common Expenses
- Private Property
Question
If the HOA creates a specific fund for a specific project, can they use general contingency funds for it instead?
Short Answer
No. If an amendment restricts spending for a specific purpose to a specific fund, the HOA cannot use general funds.
Detailed Answer
In this case, the HOA passed an amendment allowing expenses for the golf course 'but only from funds collected' via a specific capital improvement assessment. The ALJ ruled that using general contingency funds violated this restriction.
Alj Quote
The 2021 Amendment allowed the Association to use assessments for the golf course, 'but only from funds collected' under the newly created Capital Improvement Assessment for Golf Course.
Legal Basis
Adherence to Specific Amendments
Topic Tags
- Financials
- Assessments
- Contingency Funds
Question
Who has to prove that the HOA violated the rules in an administrative hearing?
Short Answer
The homeowner (Petitioner) bears the burden of proof.
Detailed Answer
The homeowner filing the petition is responsible for proving that the HOA violated the statutes or governing documents. They must prove this by a 'preponderance of the evidence,' meaning it is more likely true than not.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated ARIZ. REV. STAT. § 33-33-1804(A), (C) and (E) and the CC&Rs.
Legal Basis
Burden of Proof
Topic Tags
- Procedure
- Legal Standards
Question
If I win my case against the HOA, can I get my $500 filing fee back?
Short Answer
Yes, the ALJ has the authority to order the HOA to reimburse the filing fee.
Detailed Answer
Upon finding that the HOA violated the governing documents, the ALJ ordered the HOA to reimburse the homeowner's filing fee in certified funds.
Alj Quote
IT IS FURTHER ORDERED that Respondent reimburse Petitioner’s filing fee of $500.00 in certified funds.
Legal Basis
A.R.S. § 32-2199 et seq.
Topic Tags
- Remedies
- Filing Fees
Question
What is the 'preponderance of the evidence' standard used in these hearings?
Short Answer
It means the claim is 'more probably true than not.'
Detailed Answer
The ALJ defines this standard as evidence that has the most convincing force and is sufficient to incline a fair and impartial mind to one side of the issue, even if it doesn't wholly free the mind from doubt.
Alj Quote
A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.
Legal Basis
Standard of Evidence
Topic Tags
- Legal Standards
- Evidence
Case
- Docket No
- 23F-H040-REL
- Case Title
- Lisa Kittredge vs SunBird Golf Resort Homeowners Association
- Decision Date
- 2023-06-13
- Alj Name
- Tammy L. Eigenheer
- Tribunal
- OAH
- Agency
- ADRE
Questions
Question
If my HOA adopts new CC&Rs, are the old ones still valid if they weren't explicitly listed as replaced?
Short Answer
Likely not. The ALJ determined that a community is not expected to have multiple operative sets of CC&Rs at the same time, implying the new ones supersede the old ones.
Detailed Answer
Even if an older set of CC&Rs is not explicitly listed as being replaced by a newer set, the Tribunal may find that the older set is no longer in effect. The ALJ reasoned that the clear intention of adopting amended and restated CC&Rs is to serve as the current governing documents, and it is unreasonable to expect a community to operate under multiple conflicting sets.
Alj Quote
One would not expect a community to have more than one operative set of CC&Rs at any given time.
Legal Basis
Contract Interpretation / Superseding Documents
Topic Tags
- CC&Rs
- Governing Documents
- Amendments
Question
Can my HOA spend general assessment funds on property it doesn't own, like a private golf course?
Short Answer
No, unless the governing documents explicitly define that property as being 'served by the Association' or allow such spending.
Detailed Answer
The ALJ ruled that the HOA could not spend general funds on the golf course because there was no evidence the golf course was 'served by the Association' as defined in the CC&Rs. Furthermore, because a specific amendment created a dedicated fund for golf course costs, the HOA was restricted to using only that specific fund.
Alj Quote
No evidence was submitted to establish that the SunBird Golf Course was 'served by the Association.'… Accordingly, the Association was not permitted to expend funds collected as assessments to any drainage issues for the SunBird Golf Course other than those assessments collected pursuant to Section 6.7(C) of the 2021 Amendment.
Legal Basis
CC&R Restrictions on Expenditures
Topic Tags
- Financials
- Common Expenses
- Private Property
Question
If the HOA creates a specific fund for a specific project, can they use general contingency funds for it instead?
Short Answer
No. If an amendment restricts spending for a specific purpose to a specific fund, the HOA cannot use general funds.
Detailed Answer
In this case, the HOA passed an amendment allowing expenses for the golf course 'but only from funds collected' via a specific capital improvement assessment. The ALJ ruled that using general contingency funds violated this restriction.
Alj Quote
The 2021 Amendment allowed the Association to use assessments for the golf course, 'but only from funds collected' under the newly created Capital Improvement Assessment for Golf Course.
Legal Basis
Adherence to Specific Amendments
Topic Tags
- Financials
- Assessments
- Contingency Funds
Question
Who has to prove that the HOA violated the rules in an administrative hearing?
Short Answer
The homeowner (Petitioner) bears the burden of proof.
Detailed Answer
The homeowner filing the petition is responsible for proving that the HOA violated the statutes or governing documents. They must prove this by a 'preponderance of the evidence,' meaning it is more likely true than not.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated ARIZ. REV. STAT. § 33-33-1804(A), (C) and (E) and the CC&Rs.
Legal Basis
Burden of Proof
Topic Tags
- Procedure
- Legal Standards
Question
If I win my case against the HOA, can I get my $500 filing fee back?
Short Answer
Yes, the ALJ has the authority to order the HOA to reimburse the filing fee.
Detailed Answer
Upon finding that the HOA violated the governing documents, the ALJ ordered the HOA to reimburse the homeowner's filing fee in certified funds.
Alj Quote
IT IS FURTHER ORDERED that Respondent reimburse Petitioner’s filing fee of $500.00 in certified funds.
Legal Basis
A.R.S. § 32-2199 et seq.
Topic Tags
- Remedies
- Filing Fees
Question
What is the 'preponderance of the evidence' standard used in these hearings?
Short Answer
It means the claim is 'more probably true than not.'
Detailed Answer
The ALJ defines this standard as evidence that has the most convincing force and is sufficient to incline a fair and impartial mind to one side of the issue, even if it doesn't wholly free the mind from doubt.
Alj Quote
A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.
Legal Basis
Standard of Evidence
Topic Tags
- Legal Standards
- Evidence
Case
- Docket No
- 23F-H040-REL
- Case Title
- Lisa Kittredge vs SunBird Golf Resort Homeowners Association
- Decision Date
- 2023-06-13
- Alj Name
- Tammy L. Eigenheer
- Tribunal
- OAH
- Agency
- ADRE
Case Participants
Petitioner Side
- Lisa Kittredge (petitioner)
Property owner, appeared on her own behalf. - Beth Lockwood (witness)
Testified for Petitioner.
Respondent Side
- Lori N. Brown (HOA attorney)
Gordon Rees Scully Mansukhani LLP - Ben Bednarek (HOA attorney)
Also referred to as Benjamin Dinard and Mr. Venorf/Benark. - Layne Barney (General Manager)
SunBird Golf Resort Homeowners Association
Also referred to as Layne Varney. - Charles Brian Heitbrink (board member)
SunBird Golf Resort Homeowners Association
Secretary of the Board of Directors. Also referred to as Charles Height. - Dirk (board member)
SunBird Golf Resort Homeowners Association
Moved motion regarding drainage in Dec 2022 meeting. - Jim (board member)
SunBird Golf Resort Homeowners Association
Seconded motion regarding drainage in Dec 2022 meeting. - Nancy (board member)
SunBird Golf Resort Homeowners Association
Made motion regarding golf purchases in Dec 2022 meeting.
Neutral Parties
- Tammy L. Eigenheer (ALJ)
Also referred to as Tammy Igener. - Susan Nicolson (Commissioner)
Arizona Department of Real Estate - AHansen (ADRE Staff)
Arizona Department of Real Estate
Recipient of official correspondence. - vnunez (ADRE Staff)
Arizona Department of Real Estate
Recipient of official correspondence. - djones (ADRE Staff)
Arizona Department of Real Estate
Recipient of official correspondence. - labril (ADRE Staff)
Arizona Department of Real Estate
Recipient of official correspondence.
Other Participants
- Lewis Ne (Expert (City Engineer))
City of Chandler
Consulted regarding storm water drainage. - Thomas (Former HOA President)
Signed 1999 declaration.