Peter Biondi, Jr. vs. Lakeshore at Andersen Springs Homeowners

Case Summary

Case ID 18F-H1818048-REL
Agency ADRE
Tribunal OAH
Decision Date 2018-08-21
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the homeowner's petition, finding that the HOA's remaining Director acted permissibly and reasonably upon legal advice in refusing to defend a previous legal action, as the initial Board decision to remove fellow directors was contrary to mandatory statutory procedures outlined in A.R.S. § 33-1243, which requires removal by unit owners, not by the board.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Peter Biondi, Jr. Counsel
Respondent Lakeshore at Andersen Springs Homeowners Association Counsel Maria R. Kupillas

Alleged Violations

A.R.S. §§ 33-1242, 33-1243, Respondent’s Bylaw Article II, Section 3 and Article III, Sections 2 and 3, and Respondent’s CC&Rs Section 8.13

Outcome Summary

The Administrative Law Judge denied the homeowner's petition, finding that the HOA's remaining Director acted permissibly and reasonably upon legal advice in refusing to defend a previous legal action, as the initial Board decision to remove fellow directors was contrary to mandatory statutory procedures outlined in A.R.S. § 33-1243, which requires removal by unit owners, not by the board.

Why this result: The Board's previous action of removing directors was illegal under A.R.S. § 33-1243 because director removal must be performed by a member vote. Because the HOA lacked a legal defense to the directors' challenge, the current petition failed to prove a violation when the sole remaining Director chose not to incur unnecessary fees contesting an unwinnable case, which was permissive under A.R.S. § 33-1242.

Key Issues & Findings

Alleged failure of the sole remaining Director to defend a prior petition challenging the board's removal of two directors.

Petitioner alleged the HOA violated governing documents and statutes when the remaining Director chose not to contest a prior Department petition filed by two removed Directors, resulting in their reinstatement. The ALJ found that the initial removal of the Directors by fellow Directors was illegal under A.R.S. § 33-1243(B) and (H), which reserves removal power to members. Because the HOA lacked a good legal defense, the remaining Director's decision not to defend the prior petition, based on legal advice, was permissive under A.R.S. § 33-1242 and not a violation.

Orders: Petitioner’s petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1243
  • A.R.S. § 33-1242
  • A.R.S. § 32-2199(1)
  • A.R.S. § 33-1803

Analytics Highlights

Topics: Condominium, HOA Director Removal, Board Authority, Condo Bylaws
Additional Citations:

  • A.R.S. § 33-1243
  • A.R.S. § 33-1242
  • A.R.S. § 32-2199
  • A.R.S. § 33-1248
  • A.R.S. § 33-1803
  • A.A.C. R2-19-119

Video Overview

Audio Overview

Decision Documents

18F-H1818048-REL Decision – 654904.pdf

Uploaded 2026-04-24T11:13:38 (155.5 KB)

18F-H1818048-REL Decision – 654904.pdf

Uploaded 2026-01-23T17:24:48 (155.5 KB)

Briefing Document: Analysis of Administrative Law Judge Decision in Biondi v. Lakeshore at Andersen Springs HOA

Executive Summary

This document synthesizes the findings of the Administrative Law Judge (ALJ) decision in Case No. 18F-H1818048-REL, where a petition filed by homeowner Peter Biondi, Jr. against the Lakeshore at Andersen Springs Homeowners Association (HOA) was denied. The central conflict revolved around the HOA Board’s removal of two directors, Jim Luzzis and Jerry Dubasquier, for alleged violations of the association’s leasing restrictions.

The ALJ’s decision rested on a critical point of law: the HOA Board acted improperly and in violation of Arizona state statute when it removed two of its own members. According to A.R.S. § 33-1243, the power to remove a board director is reserved exclusively for the association’s members (the unit owners) through a formal petition and vote, not for the Board of Directors itself.

Because the initial removal was legally invalid, the subsequent actions of the sole remaining director, Bonnie Henden, were deemed reasonable and permissible. Her decision not to defend the HOA against a petition from the improperly removed directors, a choice made upon the advice of three separate attorneys, was not a violation of her duties. The governing statute (A.R.S. § 33-1242) uses the permissive term “may” regarding the defense of litigation, and the ALJ concluded that no entity is required to mount a defense that is ill-advised and likely to fail. Consequently, Henden’s reinstatement of the directors was a logical correction of the Board’s unlawful action. The factual question of whether the directors had violated the leasing rules was considered secondary to this overriding procedural and statutory failure by the Board.

Case Background and Procedural History

The dispute originated from complaints by HOA members that two serving directors, Jim Luzzis and Jerry Dubasquier, were violating Section 8.13 of the Covenants, Conditions, and Restrictions (CC&Rs) by renting their units as short-term Vacation Rental By Owner (“VRBOs”).

1. Initial Board Action: The Board of Directors met to consider the complaints, concluded that Luzzis and Dubasquier had violated the CC&Rs, and gave them 14 days to remedy the violation by presenting compliant long-term rental agreements.

2. Removal of Directors: At a contentious executive session on January 4, 2018, the five other directors voted to remove or disqualify Luzzis and Dubasquier from the Board. Board member Bonnie Henden testified that she felt this action was a “vendetta” against the two directors for taking opposing positions on other issues.

3. Board Collapse: Following the removal, the Board structure disintegrated. The petitioner, Peter Biondi, Jr., and another director, Jeffrey Washburn, “decided to resign in order to restore calm in the community.” A third director was removed or resigned due to non-payment of assessments. By March or April 2018, this left Bonnie Henden as the sole remaining director.

4. Legal Challenge and Reinstatement: Luzzis and Dubasquier filed a petition with the Arizona Department of Real Estate to protest their removal. After consulting with three different attorneys, Henden chose not to file an answer on behalf of the HOA. The Department subsequently issued a decision in favor of Luzzis and Dubasquier. Following this outcome, Henden reinstated them to the Board to complete their elected terms and cancelled the planned election for their replacements.

5. Petitioner’s Complaint: On May 9, 2018, Peter Biondi, Jr. filed the current petition, alleging that Henden’s refusal to defend the HOA and her decision to reinstate the two directors constituted a violation of Arizona statutes (§§ 33-1242 and 33-1243), HOA Bylaws, and CC&Rs.

Central Legal Issues and Findings

The ALJ determined that the petitioner, Biondi, bore the burden of proof but that the operative facts of the case were not in dispute. The core of the case was not a factual determination but a legal one.

The Dispositive Question: Legality of Director Removal

The judge identified the central legal question as the primary determinant of the case’s outcome:

“…the dispositive issue is not the factual issue of whether Messrs. Luzzis and Dubasquier violated CC&R Section 8.13 by using their units as short-term VRBOs, but the legal issue of whether the other directors on Respondent’s Board properly removed them from the Board…”

The ruling established that the Board’s method of removal was the critical point of failure, rendering the underlying CC&R violation secondary.

Analysis of Arizona Revised Statutes (A.R.S.)

The decision was grounded in a de novo review of A.R.S. § 33-1243, which governs the powers and removal of a condominium association’s board of directors.

A.R.S. § 33-1243(B): This subsection explicitly prohibits a board from acting on behalf of the association to “determine the qualifications, powers and duties or terms of office of board of directors members.” The ALJ found that the Board’s vote to disqualify Luzzis and Dubasquier was in direct violation of this provision.

A.R.S. § 33-1243(H): This subsection establishes the exclusive procedure for removing a director, stating that its provisions apply “notwithstanding any provision of the declaration or bylaws to the contrary.” The statute mandates that removal can only be accomplished by:

1. A petition signed by a specified percentage or number of eligible unit owners (e.g., 25% or 100 votes, whichever is less, for an association of 1,000 or fewer members).

2. A majority vote of the unit owners at a special meeting called for this purpose within 30 days of receiving the petition.

The ALJ’s conclusion was unequivocal: “The referenced provisions of A.R.S. § 33-1243 specifically and unequivocally require that the members who elected a director must remove the director.” Because the Board failed to follow this statutory procedure, its removal of Luzzis and Dubasquier was legally invalid, and the HOA “lacked any good legal defense” to their subsequent petition.

The Legality of the Sole Director’s Actions

Based on the finding that the initial removal was unlawful, the ALJ assessed the actions taken by the sole remaining director, Bonnie Henden.

Decision Not to Defend the HOA

The petitioner argued Henden had a duty to defend the HOA against the petition from Luzzis and Dubasquier. The ALJ rejected this argument by citing A.R.S. § 33-1242(A)(4), which states an association “may… defend or intervene in litigation or administrative proceedings.”

The judge’s legal interpretation was that the word “may” indicates permissive intent, not a mandatory requirement. Henden was not statutorily obligated to contest the petition. Her decision was further supported by the legal advice she received from three attorneys, who advised that a defense would likely fail and result in unnecessary legal fees for the association. The ALJ affirmed this prudence, stating, “No statute requires a condominium association or a director to take an ill-advised act or to mount a defense of a previously taken ill-advised act that likely will fail on its merits.”

Reinstatement of Removed Directors

Henden’s decision to reinstate Luzzis and Dubasquier to the Board was found to be a direct and logical consequence of the legally improper removal. By reinstating them, she was correcting the Board’s previous unlawful action.

Relevant Governing Documents and Testimony

Document/Testimony

Key Provisions or Content

Relevance to Decision

A.R.S. § 33-1243

Prohibits boards from determining member qualifications and mandates that only unit owners can remove directors via a petition and vote.

This was the controlling statute that rendered the Board’s initial removal of Luzzis and Dubasquier unlawful.

A.R.S. § 33-1242

States an association “may” defend itself in litigation.

Provided the legal basis for Henden’s discretionary and permissible decision not to defend the HOA.

HOA CC&Rs Section 8.13

Prohibits leasing for “transient, hotel, club, timeshare or similar purposes” and requires all leases to be for a minimum of six months.

This section was the basis for the original complaint but was deemed not the dispositive issue in the case.

HOA Bylaws Article III

Governs director qualifications, number, and the filling of vacancies.

While relevant to Board governance, these bylaws were superseded by the conflicting and more specific state statute (A.R.S. § 33-1243).

Bonnie Henden Testimony

Stated the removal felt like a “vendetta” and that she consulted three attorneys before deciding not to defend the HOA.

Provided context for the internal Board conflict and established that her actions were taken after seeking extensive legal counsel.

Peter Biondi, Jr. Evidence

Submitted exhibits showing Luzzis and Dubasquier were continuing to advertise their units as VRBOs.

The evidence was acknowledged but deemed irrelevant to the central legal question of whether the Board had the authority to remove them.

Final Order and Conclusion

The Administrative Law Judge ordered that the petitioner’s petition be denied.

The final decision establishes a clear legal principle: a homeowners association’s Board of Directors does not have the authority to remove its own members in Arizona. That power is reserved for the unit owners through a specific statutory process. Any action taken by a board in contravention of this statute is legally invalid. Consequently, a director’s decision not to defend such an invalid action, especially when based on legal advice, is not a breach of duty but a prudent measure to avoid wasting association resources on a defense with no legal merit.

Study Guide: Biondi v. Lakeshore at Andersen Springs Homeowners Association

This guide provides a comprehensive review of the Administrative Law Judge Decision in case No. 18F-H1818048-REL, concerning a dispute between a condominium owner and a homeowners association. It includes a quiz with an answer key, essay questions for deeper analysis, and a glossary of key terms found within the legal document.

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Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information provided in the source document.

1. Who were the Petitioner and the Respondent in this case, and what was their relationship?

2. What specific event prompted the Petitioner, Peter Biondi, Jr., to file a petition with the Arizona Department of Real Estate?

3. According to the Respondent’s CC&Rs (Section 8.13), what were the rules regarding the leasing of condominium units?

4. Why were Board Directors Jim Luzzis and Jerry Dubasquier initially removed from their positions by the other directors?

5. How did Bonnie Henden become the sole remaining member of the Respondent’s Board of Directors?

6. What was the “dispositive issue” that the Administrative Law Judge identified as central to the case?

7. According to Arizona Revised Statute (A.R.S.) § 33-1243(H), what is the proper procedure for removing a member of a condominium association’s board of directors?

8. Why did Ms. Henden choose not to defend the association against the petition filed by Messrs. Luzzis and Dubasquier?

9. What does the legal standard “preponderance of the evidence” mean, as defined in the decision?

10. What was the final order issued by the Administrative Law Judge in this case?

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Answer Key

1. The Petitioner was Peter Biondi, Jr., who is a condominium owner and a member of the Lakeshore at Andersen Springs Homeowners Association. The Respondent was the Lakeshore at Andersen Springs Homeowners Association itself.

2. The Petitioner filed the petition because the Board’s sole remaining member, Bonnie Henden, refused to defend the association against a petition filed by two former directors. Instead of defending the board’s prior action, Ms. Henden reinstated the two directors who had been removed.

3. Section 8.13 of the CC&Rs stipulated that all leases must be for a minimum of six months and that units could not be leased for transient, hotel, or similar purposes. Owners were also limited to leasing their unit no more than two separate times in any 12-month period and had to provide a signed copy of the lease to the association.

4. Messrs. Luzzis and Dubasquier were removed after other Board members concluded they had violated CC&R Section 8.13 by renting their units as short-term Vacation Rentals By Owner (VRBOs). The removal occurred after they were given 14 days to remedy the violation and failed to do so to the Board’s satisfaction.

5. After the removal of Luzzis and Dubasquier, the Petitioner and another director resigned to “restore calm.” A third director was removed or resigned for failing to pay an assessment, which left Ms. Henden as the only director on the Board.

6. The dispositive issue was not the factual question of whether Luzzis and Dubasquier had violated the CC&Rs. Rather, it was the legal issue of whether the other directors had the authority to properly remove them from the Board in the first place.

7. A.R.S. § 33-1243(H) states that unit owners may remove a board member by a majority vote at a meeting. This process must be initiated by a petition signed by a specific percentage or number of the association’s members who are eligible to vote.

8. Ms. Henden consulted three different attorneys who advised her that the association would likely lose the case. Their legal advice was based on A.R.S. § 33-1243, which states that board members cannot remove other board members, and defending the improper removal would incur unnecessary legal fees.

9. “Preponderance of the evidence” is defined as proof that convinces the trier of fact that a contention is more probably true than not. It is described as the greater weight of evidence that is sufficient to incline a fair and impartial mind to one side of an issue over the other.

10. The Administrative Law Judge ordered that the Petitioner’s petition be denied. The judge concluded that the Board’s initial removal of the two directors was improper under state law and that Ms. Henden was not required to defend that ill-advised act.

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Essay Questions

The following questions are designed for longer-form analysis and synthesis of the case details. Answers are not provided.

1. Analyze the conflict between the authority granted to the Board in the Lakeshore at Andersen Springs Bylaws (Article III, Sections 2 & 3) and the limitations placed upon it by Arizona Revised Statute § 33-1243. Explain which document takes precedence in the matter of director removal and why, citing the reasoning used by the Administrative Law Judge.

2. Discuss the role and actions of Bonnie Henden after she became the sole remaining director. Evaluate her decision to reinstate Messrs. Luzzis and Dubasquier, considering the legal advice she received, her powers as the sole director, and the potential consequences for the homeowners association.

3. Trace the procedural history of this dispute, beginning with the initial complaints about VRBOs and culminating in the final Administrative Law Judge Decision. Identify the key actions, legal filings, and turning points for each party involved (Luzzis/Dubasquier, the Board, Peter Biondi, and Bonnie Henden).

4. The judge states that the case hinges on a legal issue, not a factual one. Explain the difference between the factual issue (the VRBO rentals) and the legal issue (the removal process) and detail how this distinction was fundamental to the case’s outcome.

5. Based on the statutes cited in the decision, outline the correct, legally compliant process that the members of the Lakeshore at Andersen Springs Homeowners Association should have followed if they wished to remove Messrs. Luzzis and Dubasquier from the Board of Directors. Contrast this with the actions the Board actually took.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An independent judge who presides over administrative hearings, in this case Diane Mihalsky from the Office of Administrative Hearings.

A.R.S.

Abbreviation for Arizona Revised Statutes, which are the codified laws of the state of Arizona. The decision references several statutes from Title 33 concerning property and condominiums.

Bylaws

The rules and regulations adopted by an organization, such as a homeowners association, for its internal governance. In this case, they govern matters like annual meetings and the composition of the Board of Directors.

Abbreviation for Covenants, Conditions and Restrictions. These are legally binding rules recorded with the property deed that govern what homeowners can and cannot do with their property. Section 8.13 on leasing was a key CC&R in this case.

De Novo Review

A type of legal review where a court or administrative body decides the issues without reference to any legal conclusions or assumptions made by the previous party that heard the case. It is used for determining the construction and application of statutes.

Department

Refers to the Arizona Department of Real Estate, the state agency authorized to receive and decide on petitions for hearings from members of condominium associations.

Petitioner

The party who files a petition or brings an action in a legal proceeding. In this case, the Petitioner was Peter Biondi, Jr.

Preponderance of the Evidence

The standard of proof in most civil cases. It requires the party with the burden of proof (the Petitioner in this matter) to present evidence that is more convincing and more likely to be true than not.

Respondent

The party against whom a petition is filed or an appeal is brought. In this case, the Respondent was the Lakeshore at Andersen Springs Homeowners Association.

Abbreviation for Vacation Rental By Owner, referring to the practice of renting out properties on a short-term basis, similar to a hotel. This practice was alleged to be in violation of the association’s CC&Rs.

Study Guide: Biondi v. Lakeshore at Andersen Springs Homeowners Association

This guide provides a comprehensive review of the Administrative Law Judge Decision in case No. 18F-H1818048-REL, concerning a dispute between a condominium owner and a homeowners association. It includes a quiz with an answer key, essay questions for deeper analysis, and a glossary of key terms found within the legal document.

——————————————————————————–

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information provided in the source document.

1. Who were the Petitioner and the Respondent in this case, and what was their relationship?

2. What specific event prompted the Petitioner, Peter Biondi, Jr., to file a petition with the Arizona Department of Real Estate?

3. According to the Respondent’s CC&Rs (Section 8.13), what were the rules regarding the leasing of condominium units?

4. Why were Board Directors Jim Luzzis and Jerry Dubasquier initially removed from their positions by the other directors?

5. How did Bonnie Henden become the sole remaining member of the Respondent’s Board of Directors?

6. What was the “dispositive issue” that the Administrative Law Judge identified as central to the case?

7. According to Arizona Revised Statute (A.R.S.) § 33-1243(H), what is the proper procedure for removing a member of a condominium association’s board of directors?

8. Why did Ms. Henden choose not to defend the association against the petition filed by Messrs. Luzzis and Dubasquier?

9. What does the legal standard “preponderance of the evidence” mean, as defined in the decision?

10. What was the final order issued by the Administrative Law Judge in this case?

——————————————————————————–

Answer Key

1. The Petitioner was Peter Biondi, Jr., who is a condominium owner and a member of the Lakeshore at Andersen Springs Homeowners Association. The Respondent was the Lakeshore at Andersen Springs Homeowners Association itself.

2. The Petitioner filed the petition because the Board’s sole remaining member, Bonnie Henden, refused to defend the association against a petition filed by two former directors. Instead of defending the board’s prior action, Ms. Henden reinstated the two directors who had been removed.

3. Section 8.13 of the CC&Rs stipulated that all leases must be for a minimum of six months and that units could not be leased for transient, hotel, or similar purposes. Owners were also limited to leasing their unit no more than two separate times in any 12-month period and had to provide a signed copy of the lease to the association.

4. Messrs. Luzzis and Dubasquier were removed after other Board members concluded they had violated CC&R Section 8.13 by renting their units as short-term Vacation Rentals By Owner (VRBOs). The removal occurred after they were given 14 days to remedy the violation and failed to do so to the Board’s satisfaction.

5. After the removal of Luzzis and Dubasquier, the Petitioner and another director resigned to “restore calm.” A third director was removed or resigned for failing to pay an assessment, which left Ms. Henden as the only director on the Board.

6. The dispositive issue was not the factual question of whether Luzzis and Dubasquier had violated the CC&Rs. Rather, it was the legal issue of whether the other directors had the authority to properly remove them from the Board in the first place.

7. A.R.S. § 33-1243(H) states that unit owners may remove a board member by a majority vote at a meeting. This process must be initiated by a petition signed by a specific percentage or number of the association’s members who are eligible to vote.

8. Ms. Henden consulted three different attorneys who advised her that the association would likely lose the case. Their legal advice was based on A.R.S. § 33-1243, which states that board members cannot remove other board members, and defending the improper removal would incur unnecessary legal fees.

9. “Preponderance of the evidence” is defined as proof that convinces the trier of fact that a contention is more probably true than not. It is described as the greater weight of evidence that is sufficient to incline a fair and impartial mind to one side of an issue over the other.

10. The Administrative Law Judge ordered that the Petitioner’s petition be denied. The judge concluded that the Board’s initial removal of the two directors was improper under state law and that Ms. Henden was not required to defend that ill-advised act.

——————————————————————————–

Essay Questions

The following questions are designed for longer-form analysis and synthesis of the case details. Answers are not provided.

1. Analyze the conflict between the authority granted to the Board in the Lakeshore at Andersen Springs Bylaws (Article III, Sections 2 & 3) and the limitations placed upon it by Arizona Revised Statute § 33-1243. Explain which document takes precedence in the matter of director removal and why, citing the reasoning used by the Administrative Law Judge.

2. Discuss the role and actions of Bonnie Henden after she became the sole remaining director. Evaluate her decision to reinstate Messrs. Luzzis and Dubasquier, considering the legal advice she received, her powers as the sole director, and the potential consequences for the homeowners association.

3. Trace the procedural history of this dispute, beginning with the initial complaints about VRBOs and culminating in the final Administrative Law Judge Decision. Identify the key actions, legal filings, and turning points for each party involved (Luzzis/Dubasquier, the Board, Peter Biondi, and Bonnie Henden).

4. The judge states that the case hinges on a legal issue, not a factual one. Explain the difference between the factual issue (the VRBO rentals) and the legal issue (the removal process) and detail how this distinction was fundamental to the case’s outcome.

5. Based on the statutes cited in the decision, outline the correct, legally compliant process that the members of the Lakeshore at Andersen Springs Homeowners Association should have followed if they wished to remove Messrs. Luzzis and Dubasquier from the Board of Directors. Contrast this with the actions the Board actually took.

——————————————————————————–

Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An independent judge who presides over administrative hearings, in this case Diane Mihalsky from the Office of Administrative Hearings.

A.R.S.

Abbreviation for Arizona Revised Statutes, which are the codified laws of the state of Arizona. The decision references several statutes from Title 33 concerning property and condominiums.

Bylaws

The rules and regulations adopted by an organization, such as a homeowners association, for its internal governance. In this case, they govern matters like annual meetings and the composition of the Board of Directors.

Abbreviation for Covenants, Conditions and Restrictions. These are legally binding rules recorded with the property deed that govern what homeowners can and cannot do with their property. Section 8.13 on leasing was a key CC&R in this case.

De Novo Review

A type of legal review where a court or administrative body decides the issues without reference to any legal conclusions or assumptions made by the previous party that heard the case. It is used for determining the construction and application of statutes.

Department

Refers to the Arizona Department of Real Estate, the state agency authorized to receive and decide on petitions for hearings from members of condominium associations.

Petitioner

The party who files a petition or brings an action in a legal proceeding. In this case, the Petitioner was Peter Biondi, Jr.

Preponderance of the Evidence

The standard of proof in most civil cases. It requires the party with the burden of proof (the Petitioner in this matter) to present evidence that is more convincing and more likely to be true than not.

Respondent

The party against whom a petition is filed or an appeal is brought. In this case, the Respondent was the Lakeshore at Andersen Springs Homeowners Association.

Abbreviation for Vacation Rental By Owner, referring to the practice of renting out properties on a short-term basis, similar to a hotel. This practice was alleged to be in violation of the association’s CC&Rs.

Case Participants

Petitioner Side

  • Peter Biondi, Jr. (petitioner)
    Appeared on his own behalf; also a unit owner and HOA member
  • Jeffrey Washburn (witness)
    Former Board member; presented testimony by Petitioner

Respondent Side

  • Maria R. Kupillas (HOA attorney)
    Law offices of Farley, Choate & Bergin
    Represented Respondent
  • Bonnie Henden (board member)
    Lakeshore at Andersen Springs Homeowners Association
    Sole remaining Director; presented testimony
  • Jim Luzzis (board member)
    Lakeshore at Andersen Springs Homeowners Association
    Director whose removal was overturned/reinstated
  • Jerry Dubasquier (board member)
    Lakeshore at Andersen Springs Homeowners Association
    Director whose removal was overturned/reinstated

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (ADRE Commissioner)
    Arizona Department of Real Estate
    Recipient of transmission
  • Felicia Del Sol (Clerk)
    Transmitting agent
  • LDettorre (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission
  • AHansen (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission
  • djones (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission
  • DGardner (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission
  • ncano (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission

Maxine Fairbanks vs. Santa Bird Condominium Association

Case Summary

Case ID 15F-H1516012-BFS
Agency DFBLS
Tribunal OAH
Decision Date 2016-03-28
Administrative Law Judge M. Douglas
Outcome Respondent admitted to all allegations regarding misuse of surplus monies, failure to adhere to budget, refusal to provide financial records, and unilateral board member decisions. The new Board committed to future compliance. Respondent was ordered to comply with statutes and CC&Rs and reimburse Petitioner's $2,000 filing fee. No civil penalty was imposed due to mitigating testimony from the new Board chairman.
Filing Fees Refunded $2,000.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Maxine Fairbanks Counsel
Respondent Santa Bird Condominium Association Counsel Julianne C. Wheeler

Alleged Violations

A.R.S. § 33-1254
A.R.S. § 33-1243
A.R.S. § 33-1258
Declaration Paragraph 9E

Outcome Summary

Respondent admitted to all allegations regarding misuse of surplus monies, failure to adhere to budget, refusal to provide financial records, and unilateral board member decisions. The new Board committed to future compliance. Respondent was ordered to comply with statutes and CC&Rs and reimburse Petitioner's $2,000 filing fee. No civil penalty was imposed due to mitigating testimony from the new Board chairman.

Key Issues & Findings

Surplus monies

Allegation that the Board used surplus monies without an approved budget.

Orders: Respondent admitted violation; ordered to comply.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Budget adherence

Allegation that the Board failed to adhere to the approved budget.

Orders: Respondent admitted violation; ordered to comply.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Financial records

Allegation that the Board refused to provide a financial report.

Orders: Respondent admitted violation; ordered to comply.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Board voting

Allegation that an individual board member made decisions without a Board vote.

Orders: Respondent admitted violation; ordered to comply.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

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Decision Documents

15F-H1516012-BFS Decision – 487946.pdf

Uploaded 2026-04-24T10:56:41 (113.1 KB)

15F-H1516012-BFS Decision – 495139.pdf

Uploaded 2026-04-24T10:56:47 (61.2 KB)

15F-H1516012-BFS Decision – 487946.pdf

Uploaded 2026-01-28T11:12:46 (113.1 KB)

15F-H1516012-BFS Decision – 495139.pdf

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Briefing: Fairbanks v. Santa Bird Condominium Association (Case No. 15F-H1516012-BFS)

Executive Summary

In early 2016, the Arizona Office of Administrative Hearings adjudicated a dispute between Maxine Fairbanks (Petitioner) and the Santa Bird Condominium Association (Respondent or SBCA) regarding several violations of state statutes and the association’s Covenants, Conditions, and Restrictions (CC&Rs). The Petitioner alleged that the association had mismanaged surplus funds, failed to adhere to budgets, refused to provide financial records, and allowed individual board members to make unilateral decisions.

The Respondent, represented by a newly elected Board of Directors, admitted to the allegations. While the Administrative Law Judge (ALJ) found the association in violation of four distinct legal and governing provisions, the testimony regarding corrective measures taken by the new board served as a mitigating factor. On May 9, 2016, the ALJ's decision was certified as the final agency action. The association was ordered to comply with all applicable laws and reimburse the Petitioner’s $2,000 filing fee, though no additional civil penalties were imposed.


Analysis of Key Themes

1. Financial Transparency and Management

The core of the dispute centered on the association’s failure to manage funds and records according to Arizona Revised Statutes. Specifically, the association admitted to violating:

  • A.R.S. § 33-1254 (Surplus Monies): The board used surplus funds without an approved budget. Under the law, surplus funds must generally be returned to unit owners or credited toward future assessments.
  • A.R.S. § 33-1243 (Budget Adherence): The board failed to adhere to an approved budget and failed to follow the statutory process for budget ratification by unit owners.
  • A.R.S. § 33-1258 (Financial Records): The board refused to provide financial reports to members. The statute requires that financial and other records be made "reasonably available" within ten business days of a request.
2. Governance and Individual Authority

A significant procedural violation involved Declaration Paragraph 9E of the association's CC&Rs. The Petitioner alleged, and the Respondent admitted, that an individual board member was making decisions without a formal vote of the Board. Per the CC&Rs, only a "majority vote of the Managers" entitles the Board to carry out actions on behalf of the unit owners. This highlights a theme of unilateral governance that bypassed the collective decision-making process required by law.

3. Institutional Correction and Mitigation

A secondary theme is the transition of power and the "clean-up" efforts of the successor board. Patricia Benner, the new Board Chairman, provided credible testimony regarding the "disarray" of the records inherited from the previous administration. The new board's commitment to compliance was demonstrated through:

  • Formal admission of past wrongdoings.
  • The hiring of a professional management company.
  • Active steps to reconcile and organize association records.

The ALJ noted this proactive stance as a reason to forgo civil penalties, signaling that while the association as an entity is responsible for past errors, current efforts toward compliance carry weight in administrative rulings.


Statutory and Governing Framework

The following table outlines the specific provisions the SBCA was found to have violated:

Authority Provision Title Core Requirement
A.R.S. § 33-1254 Surplus Monies Surplus must be paid to owners or credited to future assessments unless the declaration states otherwise.
A.R.S. § 33-1243 Board Duties/Budgets Requires the board to provide budget summaries to owners and sets strict timelines for ratification meetings.
A.R.S. § 33-1258 Financial Records All records must be available for examination by members within ten business days; copies may be charged at max $0.15/page.
Declaration 9E Board Voting Action on behalf of owners requires a majority vote of the managers (Board).

Important Quotes with Context

On the Board’s Admission of Guilt

"We the newly elected Members of the Board of Directors of the Santa Bird Condominium Association admit to the following allegations made by Ms. Maxine Fairbanks… We are aware of our responsibility to always comply with the law established by Legislation."

  • Context: This excerpt from the Respondent’s December 17, 2015, response effectively settled the factual dispute regarding the violations, shifting the hearing's focus to mitigation and the necessary remedies.
On the Petitioner’s Objective

"Ms. Fairbanks stated that she wanted an Order from the Department to ensure that Respondent would comply with all applicable statutory provisions and CC&Rs in the future."

  • Context: This clarifies that the Petitioner was seeking a formal legal mandate for future compliance rather than just an acknowledgment of past mistakes.
On the Mitigation of Penalties

"Ms. Benner detailed the extensive steps that Respondent has taken to comply with all applicable statutes and CC&Rs… In view of Ms. Benner’s credible mitigating testimony, no civil penalty is found to be appropriate in this matter."

  • Context: This highlights the ALJ's reasoning for ordering the reimbursement of the filing fee without adding punitive civil fines, based on the new board's good-faith efforts to rectify the previous board’s failures.

Actionable Insights

For Association Boards
  • Adhere to Ratification Timelines: Under A.R.S. § 33-1243, boards must provide budget summaries within 30 days of adoption and hold a ratification meeting between 14 and 30 days after mailing that summary.
  • Maintain Collective Authority: No single board member has the authority to make unilateral decisions. All actions must be backed by a majority vote as defined in the association's governing documents.
  • Record Accessibility is Mandatory: Associations have a strict ten-business-day window to fulfill requests for record examinations. Failure to provide these—even if records are in "disarray"—constitutes a statutory violation.
For Association Members
  • Petitions for Hearing: Members have a statutory right (A.R.S. § 41-2198.01) to file petitions with the Department of Fire, Building and Life Safety regarding violations of community documents or state law.
  • Recovery of Costs: If a member prevails in an administrative hearing, the Respondent may be ordered to reimburse the filing fee (in this case, $2,000).
For Administrative Compliance
  • Professional Management: The transition to a management company was viewed by the ALJ as a significant step toward future compliance. Associations struggling with record-keeping or statutory adherence should consider professional oversight to mitigate legal risks.

Study Guide: Fairbanks v. Santa Bird Condominium Association

This study guide provides a comprehensive overview of the administrative law case Maxine Fairbanks vs. Santa Bird Condominium Association (SBCA), No. 15F-H1516012-BFS. It explores the legal obligations of condominium associations under Arizona law, the rights of individual homeowners, and the administrative procedures involved in dispute resolution.


I. Key Concepts and Legal Framework

The following statutes and regulations formed the basis of the legal dispute and the Administrative Law Judge’s (ALJ) decision.

Arizona Revised Statutes (A.R.S.) Title 33
  • A.R.S. § 33-1254 (Surplus Monies): Unless otherwise stated in the declaration, any surplus funds remaining after paying common expenses and reserves must be either paid to unit owners or credited to reduce future assessments.
  • A.R.S. § 33-1243 (Board Powers and Budgets):
  • The Board of Directors acts on behalf of the association but cannot amend declarations or terminate the condominium.
  • Board members must declare conflicts of interest in open meetings.
  • Proposed budgets must be summarized and provided to owners within 30 days of adoption and must be ratified by unit owners unless the declaration provides otherwise.
  • Procedures for the removal of board members require specific petition thresholds (e.g., 25% of votes in associations with 1,000 or fewer members).
  • Financial audits, reviews, or compilations must be completed within 180 days of the fiscal year’s end.
  • A.R.S. § 33-1258 (Financial and Other Records): All financial and association records must be made available for examination by members within 10 business days. Associations may charge up to $0.15 per page for copies but cannot charge for the review itself. Certain records (e.g., attorney-client privileged communications, pending litigation, personal employee data) may be withheld.
Association Governance
  • Covenants, Conditions, and Restrictions (CC&Rs): The governing documents of a planned community. In this case, Paragraph 9E specifically required a majority vote of the Managers (Board) to carry out actions on behalf of the owners.
Administrative Procedure
  • A.R.S. § 41-2198.01: Authorizes the Department of Fire, Building and Life Safety to receive petitions regarding homeowners’ association violations and move them to the Office of Administrative Hearings (OAH).
  • Preponderance of the Evidence: The standard of proof required in these administrative hearings, meaning the claim is "more likely true than not."

II. Case Summary: Fairbanks vs. SBCA

Element Details
Petitioner Maxine Fairbanks (Homeowner/Member)
Respondent Santa Bird Condominium Association (SBCA)
Allegations Use of surplus monies without a budget; failure to adhere to approved budgets; refusal to provide financial reports; individual board members making decisions without a board vote.
Respondent's Defense Admitted the violations occurred under the previous Board; claimed the "newly elected" Board was taking corrective action, including hiring a management company.
ALJ Ruling Respondent violated A.R.S. §§ 33-1254, 33-1243, 33-1258, and Paragraph 9E of the CC&Rs.
Final Order Respondent ordered to comply with all laws; Respondent ordered to pay Petitioner’s $2,000 filing fee.
Mitigation No civil penalty was issued because the new Board showed credible effort to correct past errors.

III. Short-Answer Practice Questions

  1. Who bears the burden of proof in an administrative hearing regarding association violations?
  • Answer: The party asserting the claim (in this case, the Petitioner).
  1. According to A.R.S. § 33-1258, how many business days does an association have to fulfill a request for the examination of records?
  • Answer: Ten business days.
  1. What was the primary reason the ALJ chose not to impose a civil penalty against SBCA?
  • Answer: The credible testimony of the new Board chairman, Patricia Benner, regarding the corrective steps taken to bring the association into compliance (mitigation).
  1. Under A.R.S. § 33-1254, what must happen to surplus monies if the declaration does not specify otherwise?
  • Answer: They must be paid to unit owners in proportion to common expense liabilities or credited to reduce future assessments.
  1. What is the maximum fee per page an association can charge for copying records?
  • Answer: Fifteen cents ($0.15) per page.
  1. What happens to a proposed budget if the unit owners reject it during the ratification meeting?
  • Answer: The periodic budget last ratified by the unit owners continues until a subsequent budget is ratified.
  1. What state agency was responsible for certifying the ALJ’s decision as final?
  • Answer: The Department of Fire, Building and Life Safety.

IV. Essay Prompts for Deeper Exploration

  1. The Role of Mitigation in Administrative Law: Discuss how the testimony of Patricia Benner influenced the final order. Should a "newly elected" board be held financially responsible (via civil penalties) for the actions of their predecessors? Support your argument using the findings in the Fairbanks case.
  2. Transparency and Financial Oversight: Evaluate the importance of A.R.S. § 33-1258 and A.R.S. § 33-1243 in protecting homeowners. How do these statutes prevent the "individual board member decision-making" identified in the Fairbanks petition?
  3. The Ratification Process: Analyze the statutory requirements for budget ratification under A.R.S. § 33-1243(D). Why does the law specify that a budget is ratified "whether or not a quorum is present" unless a majority of all owners reject it? What does this suggest about the legislative intent regarding association operations?

V. Glossary of Important Terms

  • Administrative Law Judge (ALJ): An official who presides over hearings and adjudicates disputes involving government agencies.
  • CC&Rs (Covenants, Conditions, and Restrictions): The legal rules and guidelines that govern a planned community or condominium association.
  • Conflict of Interest: A situation where a board member or their close relative might benefit from a contract or decision, requiring the member to declare the interest in an open meeting.
  • Declarant Control: A period during which the developer (declarant) of a condominium has the power to appoint and remove board members and officers.
  • Mitigation: Evidence or testimony presented to reduce the severity of a penalty or sentence, even when a violation is admitted or proven.
  • Preponderance of the Evidence: The evidentiary standard in civil and administrative cases requiring that a fact is more likely to be true than not true.
  • Quorum: The minimum number of members of an assembly that must be present at any of its meetings to make the proceedings of that meeting valid.
  • Ratification: The formal validation or approval of a proposed action, such as a budget, by the members of the association.
  • Surplus Monies: Funds remaining in the association's accounts after all common expenses and reserve prepayments have been settled.

Accountability in the Association: Lessons from the Santa Bird Condominium Case

1. Introduction: A Wake-Up Call for HOA Governance

In the sun-drenched community of Sun City, Arizona, a significant legal victory recently underscored a fundamental truth in community governance: transparency is not optional, and the law does not grant a "grace period" for mismanagement. The case of Maxine Fairbanks vs. Santa Bird Condominium Association (SBCA) serves as a potent warning to every homeowner association in the state.

This case confirms that even "newly elected" boards are legally tethered to the liabilities and failures of their predecessors. When a board fails to adhere to Arizona Revised Statutes (A.R.S.) and its own CC&Rs, the consequences are both formal and financial. For Ms. Fairbanks, her refusal to accept administrative negligence resulted in a successful recovery of costs and a stern mandate from the state for the Association to change its ways. This article breaks down how a failure to follow simple statutory procedures led to a $2,000 penalty and a judicial order for compliance.

2. The Four Pillars of Mismanagement: What Went Wrong

The legal dispute centered on four specific violations of law and governing documents. On December 17, 2015, the Association provided a formal response that effectively ended their defense by admitting to the following failures:

Legal Reference Requirement The Violation
A.R.S. § 33-1254 Surplus Monies: Unless the declaration states otherwise, surplus funds remaining after common expenses must be returned to owners or credited against future assessments. The Board utilized surplus monies without an approved budget for expenditures.
A.R.S. § 33-1243(D) Budget Ratification: The Board must provide a budget summary to owners within 30 days of adoption and set a meeting for ratification between 14 and 30 days after mailing the summary. The Board failed to provide required summaries or adhere to the approved financial plan.
A.R.S. § 33-1258 Financial Records: All financial and other records must be made available for examination within ten business days of a member’s request. The Board flatly refused to provide a required financial report to the Petitioner.
CC&R Paragraph 9E Board Voting: "A majority vote of the Managers shall entitle said Board to carry out actions on behalf of the owners of the units." Individual board members were making unilateral decisions without a formal collective vote.

When individual board members act without a majority vote, they are engaging in ultra vires actions—acting beyond their legal power. This is a critical failure of collective governance. A board only possesses authority as a body; a single director acting alone is not "the Board." Such rogue decision-making bypasses the checks and balances required to protect the community’s assets and renders the Association legally defenseless.

3. The Price of Non-Compliance: The Judge’s Decision

Administrative Law Judge M. Douglas issued a Recommended Order after determining that the Petitioner met the necessary burden of proof. In these proceedings, the standard is a "preponderance of the evidence," meaning the allegations are more likely true than not. In this instance, the Association’s own December 17 admission was the "nail in the coffin," satisfying the burden of proof through their own confession of guilt.

The Judge’s decision was a total victory for the homeowner:

  • The Petitioner (Fairbanks) was deemed the prevailing party, validating her stand against the Board.
  • The Association was ordered to pay the Petitioner’s $2,000 filing fee directly to her within 30 days. This fee serves as a significant financial "sting," reminding small associations that ignoring a member's rights is far more expensive than following the law.
  • A formal order was issued requiring the Board to "fully comply with the applicable provisions… moving forward" regarding both Arizona statutes and the CC&Rs.

4. Mitigation and Recovery: How the New Board Responded

While the $2,000 penalty was unavoidable, the Association managed to dodge additional civil penalties thanks to the testimony of Board Chairman Patricia Benner. Her credible account of the "mitigating factors" showed that the new leadership was at least attempting to steer the ship back on course.

To remedy the situation, the new board implemented the following:

  • Addressing Administrative Disarray: Admitted that previous records were in significant disorder and took steps to organize the Association's history.
  • Hiring Professional Oversight: Retained a professional management company to ensure future adherence to statutory windows and financial reporting requirements.
  • Formal Accountability: The board’s December 17, 2015, admission of guilt and commitment to future compliance demonstrated a necessary, albeit late, shift toward transparency.

While these steps saved the association from further punitive civil penalties, they did not exempt the community from the $2,000 cost of the homeowner's filing fee—a debt incurred solely because the previous leadership refused to honor a member's statutory rights.

5. Conclusion & Key Takeaways for Homeowners

The Santa Bird case proves that homeowners are not powerless against a non-compliant board. Accountability is a legal mandate, not a board's choice. When boards operate in the dark, they risk the community's financial health and the trust of their neighbors.

Member's Rights Checklist

To protect your interests, use the following statutory guide derived from the Santa Bird ruling:

  • Financial Access (A.R.S. § 33-1258): You have the right to examine records. The board has exactly ten business days to fulfill your request.
  • Surplus Funds (A.R.S. § 33-1254): Excess money cannot be "hidden" or spent without a budget; it must be returned to you or credited against your future assessments.
  • Budget Ratification (A.R.S. § 33-1243(D)): The board must provide a budget summary within 30 days of adoption. They must hold a ratification meeting no fewer than 14 days and no more than 30 days after mailing that summary.

Transparency is the bedrock of a healthy community. As an advocate for homeowner rights, I urge all residents to remain vigilant: the $2,000 "sting" felt by the Santa Bird Association is a clear signal that the law stands on the side of the informed homeowner.

Case Participants

Petitioner Side

  • Maxine Fairbanks (Petitioner)
    Appeared on her own behalf; testified at hearing

Respondent Side

  • Julianne C. Wheeler (attorney)
    Jennings, Haugh & Cunningham, LLP
    Attorney for Respondent
  • Patricia Benner (witness)
    Santa Bird Condominium Association
    Chairman of the new Board; testified at hearing
  • Peggi Hollen (board member)
    Santa Bird Condominium Association
    Chairman (listed on mailing list)

Neutral Parties

  • M. Douglas (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Debra Blake (Agency Director)
    Department of Fire, Building and Life Safety
    Interim Director
  • Greg Hanchett (Agency Director)
    Office of Administrative Hearings
    Interim Director; signed certification
  • Joni Cage (Agency Staff)
    Department of Fire, Building and Life Safety
    c/o for Debra Blake
  • Rosella J. Rodriguez (Agency Staff)
    Office of Administrative Hearings
    Signed mailing/transmission