Case Summary
| Case ID | 21F-H2120005-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2020-11-20 |
| Administrative Law Judge | Thomas Shedden |
| Outcome | partial |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Donald S Fern & Judith A. Hedges | Counsel | Lance Leslie |
|---|---|---|---|
| Respondent | San Ignacio Heights, Inc. | Counsel | Michael S. Shupe |
Alleged Violations
CC&R Article VI(D)
Outcome Summary
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Orders: Respondent acknowledged the violation, rescinded the pergola approval prior to the Notice of Hearing, and was ordered to pay Petitioners the $500.00 filing fee.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.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
- ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
- ARIZ. REV. STAT. § 32-2199.02(A)
Analytics Highlights
- ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
- ARIZ. ADMIN. CODE § R2-19-119
- ARIZ. REV. STAT. § 32-2199.02(A)
- BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
Video Overview
Audio Overview
Decision Documents
21F-H2120005-REL Decision – 838563.pdf
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but, after the Petitioners filed a formal complaint, reversed its position, admitted the approval was an error, and rescinded it.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: 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.
