Case Summary
| Case ID |
07F-H067029-BFS |
| Agency |
Department of Fire, Building and Life Safety |
| Tribunal |
Office of Administrative Hearings |
| Decision Date |
2007-08-13 |
| Administrative Law Judge |
Michael K. Carroll |
| Outcome |
partial |
| Filing Fees Refunded |
$2,000.00 |
| Civil Penalties |
$0.00 |
Parties & Counsel
| Petitioner |
Nancy Waugaman |
Counsel |
— |
| Respondent |
Troon Village Master Association |
Counsel |
Carrie Smith and Jason Smith |
Alleged Violations
A.R.S. §33-1804(C)
A.R.S. §33-1804(A)
Declaration Section 11.02; Section 14.01
A.R.S. §33-1805
Outcome Summary
The ALJ vacated the Board's Resolution which interpreted the Declaration's amendment provision (Section 11.02) to require only 80% of voting members present rather than 80% of total membership. Consequently, amendments passed under this new interpretation were vacated. Claims regarding open meeting notice and records formats were denied, but Petitioner was awarded full reimbursement of filing fees.
Key Issues & Findings
Failure to provide notice of executive session
Petitioner argued the Board failed to notice an executive session held prior to a regular meeting.
Orders: ALJ found no statutory or governing document requirement to notice executive sessions.
Filing fee: $500.00, Fee refunded: Yes
Disposition: respondent_win
Improper subject matter for executive session
Petitioner alleged the Resolution regarding voting interpretation should have been discussed in an open meeting.
Orders: ALJ found the discussion involved legal advice regarding pending litigation, which is permitted in closed session.
Filing fee: $500.00, Fee refunded: Yes
Disposition: respondent_win
Invalid interpretation of voting requirements
Board passed a resolution interpreting '80% of total voting power' to mean 80% of votes cast at a meeting, then passed amendments under this lower threshold.
Orders: The Board's Resolution and all subsequent Declaration amendments were vacated.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Denial of records in workable format
Petitioner requested mailing list in label format; Respondent initially provided spreadsheet.
Orders: ALJ found no violation as records were made available.
Filing fee: $500.00, Fee refunded: Yes
Disposition: respondent_win
Decision Documents
07F-H067029-BFS Decision – 173903.pdf
Uploaded 2026-01-25T15:20:25 (120.2 KB)
Briefing Doc – 07F-H067029-BFS
Administrative Law Judge Decision: Waugaman v. Troon Village Master Association
Executive Summary
This briefing document summarizes the findings and legal conclusions from the Office of Administrative Hearings (Case No. 07F-H067029-BFS) regarding a dispute between Nancy Waugaman (Petitioner) and the Troon Village Master Association (Respondent).
The core of the dispute involved a Board resolution passed in October 2006 that fundamentally altered the voting requirements for amending the Association’s Declaration of Covenants, Conditions and Restrictions (CC&Rs). By “interpreting” the Declaration’s requirement for an 80% affirmative vote of the total voting power to mean 80% of those voting at a meeting where a quorum is present, the Board lowered the threshold for amendments from 1,058 votes to as few as 106 votes.
The Administrative Law Judge (ALJ) ultimately ruled that the Board exceeded its authority. The decision concluded that the Declaration was not ambiguous and that the Board’s “interpretation” was an invalid attempt to circumvent clear contractual language. Consequently, the Board’s resolution and all subsequent amendments passed under the new interpretation were vacated.
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Case Overview and Factual Background
Parties and Governance
• Petitioner: Nancy Waugaman, a member of the Association.
• Respondent: Troon Village Master Association, a planned community consisting of 1,322 members.
• Governing Documents: The Association is governed by a Declaration of Covenants, Conditions and Restrictions (Declaration), Articles of Incorporation, and Bylaws.
The Disputed Board Resolution
On October 16, 2006, the Board met in an executive session with legal counsel. During this session, the Board passed a resolution to “interpret” Section 11.02 of the Declaration.
Provision
Original Requirement (Section 11.02)
Board’s New Interpretation
Voting Threshold
80% of the total voting power in the Association.
80% of the members voting (in person or by absentee ballot) at a meeting.
Practical Impact
Required a minimum of 1,058 affirmative votes (80% of 1,322).
Required as few as 106 affirmative votes (80% of a 10% quorum).
Post-Resolution Actions
Following this resolution, the Board held a Special Meeting and passed several amendments to the Declaration, including:
• Elimination of “tract” voting.
• Elimination of fee assessments for “tracts.”
• Creation of staggered terms for Board members.
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Legal Analysis of Key Issues
1. Validity of the Executive Session
The Petitioner challenged the Board’s decision to pass the resolution during a closed executive session, alleging improper notice and an improper subject for a closed meeting.
• Notice Requirements: The ALJ found that neither A.R.S. § 33-1804(C) nor the Association’s Bylaws specifically require notice of an executive session held in conjunction with a properly noticed regular meeting. Furthermore, failure to provide notice does not inherently invalidate Board actions.
• Subject Matter: A.R.S. § 33-1804(A)(1) allows executive sessions for “legal advice from an attorney.” The Board argued the session was intended to discuss pending litigation and future legal strategies. The ALJ ruled there was insufficient evidence to prove the Board acted outside its authority by discussing the resolution in this context, as it was reasonably related to avoiding future legal entanglements.
2. Authority to Interpret the Declaration
The Board relied on Section 14.01 of the Declaration, which grants it the “exclusive right to construe and interpret” the provisions of the Declaration.
• The “Interpretation” vs. “Nullification” Standard: The ALJ determined that the authority to “interpret” (to clarify meaning) or “construe” (to analyze grammatical structure) implies that the text is not already self-explanatory.
• Implicit Limits: The ALJ ruled that if the Board could assign any meaning to any provision, they could essentially nullify any part of the Declaration. This was deemed contrary to the intent of the drafters. The decision noted that the Board cannot use Section 14.01 to “ascribe a different meaning” to clear, self-evident provisions.
3. Ambiguity of Section 11.02
The Association argued that Section 11.02 was ambiguous because it included the phrase “at a meeting,” suggesting the 80% threshold applied only to those present.
• The “Cardinal Rule” of Construction: The ALJ applied the principle that every part of a contract must be given effect.
• The Phrase “In the Association”: The ALJ found that the Association’s interpretation rendered the phrase “in the Association” superfluous. If the 80% requirement only applied to those at a meeting, there would have been no need for the qualifying language “in the Association.”
• Conclusion on Clarity: The ALJ found Section 11.02 to be “not ambiguous on its face.” Its meaning was clear to all parties, including the Board, prior to the 2006 resolution.
4. Practical Necessity vs. Contractual Reliance
The Association argued that the high voting threshold (80% of all members) made it virtually impossible to update the Declaration to reflect modern laws and circumstances, citing four failed attempts since 2005.
• ALJ Finding: While acknowledging that associations should be wary of overly strenuous amendment requirements, the ALJ emphasized that the Declaration is a contract upon which all 1,322 members have a right to rely. The Board’s interpretation was a “dramatic change” that allowed a tiny fraction of the membership (8.01%) to alter the contract governing the entire community.
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Secondary Issue: Mailing List Formats
The Petitioner also alleged a violation of A.R.S. § 33-1805 because the Association initially provided the membership mailing list in a “spreadsheet” format rather than the “label” format requested.
• Ruling: The ALJ found no violation. Neither state law nor community documents require the Association to provide records in a specific format, only that they be made “reasonably available.”
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Final Order and Conclusions
The Administrative Law Judge issued the following orders:
1. Vacation of Resolution: The Board’s Resolution of October 16, 2006, interpreting Section 11.02, is vacated.
2. Vacation of Amendments: All amendments to the Declaration passed after the October 2006 resolution that were based on the 80%-of-voters threshold (rather than 80% of total membership) are vacated.
3. Financial Restitution: The Respondent is ordered to reimburse the Petitioner for the filing fee in the amount of $2,000.00.
Decision Status: This order is the final administrative decision and is not subject to a request for rehearing under A.R.S. § 41-2198.04(A).
Study Guide – 07F-H067029-BFS
Study Guide: Nancy Waugaman v. Troon Village Master Association
This study guide provides a comprehensive review of the administrative hearing between Nancy Waugaman and the Troon Village Master Association (No. 07F-H067029-BFS). It examines the legal disputes regarding community governance, the interpretation of association declarations, and the limits of a Board of Directors’ authority under Arizona law.
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Short-Answer Quiz
Instructions: Answer the following ten questions in two to three sentences based on the source context provided.
1. What was the central dispute regarding the amendment of the Troon Village Declaration?
2. How did the Board’s Resolution on October 16, 2006, change the voting threshold for amendments?
3. What was the numerical impact of the Board’s new interpretation of the voting requirements?
4. Under what legal justification did the Board claim they could meet in an executive session?
5. What was the Petitioner’s argument regarding the notice of the executive session?
6. How did the Administrative Law Judge (ALJ) rule on the legality of the Board’s executive session?
7. What authority did Article 14, Section 14.01 of the Declaration grant to the Board?
8. How did the ALJ use the principle from Aldous v. Intermountain Building and Loan Association of Arizona to evaluate Section 11.02?
9. What was the Petitioner’s complaint regarding the Association’s mailing list, and how did the ALJ respond?
10. What were the three primary components of the ALJ’s final Order?
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Answer Key
1. What was the central dispute regarding the amendment of the Troon Village Declaration? The dispute centered on whether the Board of Directors had the legal authority to unilaterally reinterpret the Declaration’s voting requirements. The Board attempted to lower the threshold for passing amendments, which Nancy Waugaman challenged as a violation of state statutes and community documents.
2. How did the Board’s Resolution on October 16, 2006, change the voting threshold for amendments? The Resolution interpreted Section 11.02 to mean that amendments only required an affirmative vote of 80% of members voting at a meeting, rather than 80% of the entire membership. This interpretation allowed amendments to pass based on a much smaller pool of participating members.
3. What was the numerical impact of the Board’s new interpretation of the voting requirements? The interpretation effectively reduced the number of affirmative votes required to change the Declaration from a minimum of 1,058 votes (80% of all 1,322 members) to a minimum of 106 votes. This lower number represented 80% of the 132 members needed to constitute a 10% quorum.
4. Under what legal justification did the Board claim they could meet in an executive session? The Board claimed the executive session was convened to discuss pending litigation with its attorneys and to obtain legal advice on how to avoid future legal problems. A.R.S. §33-1804A(1) allows for closed sessions specifically for “legal advice from an attorney for the board or the association.”
5. What was the Petitioner’s argument regarding the notice of the executive session? Petitioner Nancy Waugaman argued that the meeting was not properly noticed under A.R.S. §33-1804(C) because the public notice for the regular meeting failed to mention the executive session occurring immediately prior. She contended that the lack of notice and opportunity for membership discussion invalidated the Resolution passed during that session.
6. How did the Administrative Law Judge (ALJ) rule on the legality of the Board’s executive session? The ALJ ruled that there was no specific requirement in the governing documents or A.R.S. Title 33 to provide notice of an executive session. Furthermore, the judge found that the discussion was reasonably related to pending litigation and legal advice, falling within the scope of authority granted by A.R.S. §33-1804A(1).
7. What authority did Article 14, Section 14.01 of the Declaration grant to the Board? This section granted the Board the “exclusive right to construe and interpret the provisions of this Declaration.” It specified that, absent a court adjudication to the contrary, the Board’s interpretation would be final, conclusive, and binding on all persons and property bound by the Declaration.
8. How did the ALJ use the principle from Aldous v. Intermountain Building and Loan Association of Arizona to evaluate Section 11.02? The ALJ applied the “cardinal rule” that every part of a contract must be given effect, noting that the phrase “in the Association” would be rendered superfluous under the Board’s interpretation. To give the phrase meaning, the judge concluded the drafters intended that 80% of the entire membership must vote affirmatively for an amendment.
9. What was the Petitioner’s complaint regarding the Association’s mailing list, and how did the ALJ respond? The Petitioner alleged the Association violated A.R.S. §33-1805 by providing the mailing list in a spreadsheet format rather than a “label” format. The ALJ dismissed this, stating that the law only requires records to be “reasonably available” for examination and does not mandate that the Association provide information in a specific format requested by a member.
10. What were the three primary components of the ALJ’s final Order? The ALJ ordered the vacation of the Board’s October 16, 2006, Resolution and any subsequent amendments to the Declaration based on that Resolution. Additionally, the Respondent was ordered to reimburse the Petitioner for her $2,000.00 filing fee.
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Essay Questions
Instructions: These questions are designed for in-depth analysis. Use the facts and legal reasoning provided in the case to develop your arguments.
1. The Limits of Interpretation: Analyze the ALJ’s reasoning regarding the definitions of “construe” and “interpret.” How does the judge distinguish between a legitimate interpretation of an ambiguous provision and an unauthorized “nullification” of a clear provision?
2. Contractual Reliance vs. Community Efficiency: The Board argued that without their Resolution, amending the Declaration was “virtually impossible,” hindering the community’s ability to adapt. Contrast this argument with the ALJ’s focus on the Declaration as a contract upon which “each of those individual owners had a right to rely.”
3. Statutory Compliance in Executive Sessions: Discuss the tension between A.R.S. §33-1804A (which allows for private legal advice) and the general requirement for open meetings in planned communities. At what point does a board’s use of an executive session become an invalid “guise” to shield business from membership scrutiny?
4. Grammatical Construction in Legal Documents: Detail the linguistic analysis the ALJ used to determine that Section 11.02 was not ambiguous. Specifically, explain why the inclusion of the phrase “in the Association” was the deciding factor against the Board’s interpretation of “total voting power.”
5. The Role of the Administrative Law Judge: Based on this decision, evaluate the extent of an ALJ’s power to intervene in the internal governance of a homeowners association. What specific actions was the ALJ able to take, and what legal standards (such as “preponderance of the evidence”) guided these decisions?
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Glossary of Key Terms
Definition
A.R.S. §33-1804
The Arizona Revised Statute governing board meetings in planned communities, including notice requirements and the criteria for executive sessions.
A.R.S. §33-1805
The Arizona Revised Statute requiring that financial and other records of an association be made reasonably available for examination by members.
Articles of Incorporation
One of the primary governing documents of the Association, establishing it as a legal entity.
Bylaws
The rules adopted by an association to govern its internal administration and management.
Construe
To analyze the grammatical structure of a clause or sentence to determine the use and function of each word; to explain or interpret meaning.
Declaration (CC&Rs)
The Declaration of Covenants, Conditions, and Restrictions; the foundational contract governing a planned community.
Executive Session
A closed-door meeting of a Board of Directors, permitted under specific circumstances such as discussing legal advice or pending litigation.
Interpret
To give or make clear the meaning of something that is not self-explanatory or self-evident.
Petitioner
The party who initiates a petition or legal action; in this case, Nancy Waugaman.
Quorum
The minimum number of members (in this case, 10% of total voting power) required to be present at a meeting to legally conduct business.
Respondent
The party against whom a legal action is brought; in this case, Troon Village Master Association.
Tract Voting
A voting system (later challenged) where votes and fees were allotted to associations based on specific tracts of land rather than individual improved lots.
Vacate
To cancel or render a previous legal action, resolution, or amendment null and void.
Blog Post – 07F-H067029-BFS
When “Interpretation” Becomes Rewriting: 5 Crucial Lessons from the Troon Village Legal Battle
For most homeowners, the governing documents of a Homeowners Association (HOA) are the “fine print” of neighborhood life—a thick stack of papers signed at closing and rarely revisited. However, these documents are the legal bedrock of the community, acting as a binding contract between the association and its members.
A recent masterclass in board overreach involving the Troon Village Master Association and homeowner Nancy Waugaman serves as a stark cautionary tale. When the Troon Village Board attempted to “interpret” its way around strict voting requirements, the resulting legal battle exposed a critical tension: the Board’s desire for administrative efficiency versus the homeowners’ vested contractual rights. As an HOA governance specialist, I see this frequently—boards treating their Declarations as living documents they can mold at will. The Administrative Law Judge (ALJ), however, recently dismantled that logic in a ruling that every homeowner should keep in their back pocket.
Here are five crucial lessons from this landmark dispute.
1. The 90% Math Trick: How 1,058 Votes Became 106
The core of this dispute centered on a bold piece of mathematical sleight of hand. Section 11.02 of the Troon Village Declaration required an affirmative vote of “at least eighty percent (80%) of the total voting power in the Association” to pass an amendment. In a community of 1,322 members, that threshold is high: 1,058 homeowners must agree to any change.
Claiming this was too difficult to achieve, the Board passed a resolution to “interpret” the math differently. They argued that the 80% threshold should apply only to those who actually cast a ballot at a meeting, provided a quorum was met. Since the bylaws defined a quorum as just 10% of the membership (132 people), the Board’s new math meant that as few as 106 people could change the rules for everyone. As the Board’s resolution stated:
This interpretation effectively stripped away 90% of the required voting power, allowing a tiny fraction of the community—approximately 8%—to alter the governing documents for the other 92%.
2. The “Ambiguity” Trap and the Dictionary Shield
To justify this move, the Board invoked Article 14, Section 14.01 of the Declaration, which gave them the “exclusive right to construe and interpret” the provisions of the document. They argued the phrase “at a meeting” made the voting requirement ambiguous.
The Court was not impressed. The Judge utilized a dictionary-based analysis to remind the Board what “interpret” actually means. Relying on Webster’s Collegiate Dictionary, the Judge noted that to “construe” is “to analyze the grammatical structure of a clause,” and to “interpret” is to “give the meaning” or “make clear.”
The logic is simple: you cannot “clarify” something that is already self-evident. By looking at the plain language, the Judge found that “total voting power in the Association” clearly meant the entire membership. The ruling established a vital safeguard: if a Board can simply “interpret” clear language out of existence, the entire Declaration becomes a meaningless piece of paper. As the Judge reasoned:
3. The Executive Session Shield: A Legal Blind Spot
Perhaps most concerning was how this resolution was passed. The Board met in a closed “executive session” with attorneys, ostensibly to discuss a separate, pending lawsuit. Under the guise of receiving “legal advice” regarding that litigation, they passed the voting resolution behind closed doors.
This highlights a significant “blind spot” for homeowners in state statutes. While A.R.S. §33-1804A allows boards to meet privately for legal advice, the Judge noted that these exceptions should not be used to shield important business from membership scrutiny.
However, there is a catch: under A.R.S. §33-1804C, the failure to provide specific notice of an executive session does not, by itself, invalidate the Board’s action. This means that while the Board’s logic was eventually overturned on its merits, the act of passing major policy shifts in private is often technically shielded from procedural invalidation. It is a reminder that transparency is rarely volunteered; it must be demanded.
4. Governing Documents are Contracts, Not Suggestions
The Board’s primary defense was one of “efficiency.” They argued that the high voting threshold made it “virtually impossible” to update the Declaration, citing four failed attempts to pass amendments despite what they called “overwhelming community support.”
In the world of HOA governance, “efficiency” is often just shorthand for “avoiding accountability.” The Judge’s ruling was a victory for the law of contracts, asserting that the 1,322 members have a “right to rely” on the terms of the Declaration. Because the language of the voting requirement was clear, it created a vested contractual right.
This takeaway is essential: an HOA is not a laboratory for a Board’s social or administrative experiments. When a homeowner buys into a community, they are signing a contract. A board’s preference for a more “workable” format cannot override the bargained-for rights of the individual owners.
5. “Workable Format” Does Not Mean Your Preferred Format
While Petitioner Waugaman won the war, she lost a minor skirmish regarding transparency that serves as a reality check for community activists. She complained that when she requested the Association’s mailing list, she was provided a spreadsheet rather than the “label format” she preferred for her own mailings.
The Judge clarified that under A.R.S. §33-1805, associations must make records “reasonably available” and provide photocopies. However, they are generally not required to perform extra administrative labor to format data for a petitioner’s specific needs. The takeaway? If the Board gives you the data in a standard digital format like a spreadsheet, they have likely met their legal obligation, even if it adds extra steps to your advocacy efforts.
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A Final Thought for the Modern Homeowner
The Troon Village battle ended with a decisive series of “hard wins” for the homeowners. The Judge ordered the Board’s resolution vacated, invalidated every amendment passed under the illegal “106-vote” rule, and ordered the Association to reimburse Waugaman’s $2,000 filing fee.
This case serves as a powerful reminder that while Board members may hold the keys to the meeting room, they do not hold the power to rewrite your contract in the dark.
If your Board claims the “exclusive right to interpret” your community’s laws, how much of your contract is actually set in stone, and how much is merely waiting for the Board’s next “interpretation”?
Case Participants
Petitioner Side
- Nancy Waugaman (Petitioner)
Also listed as Nancy J. Waugaman
Respondent Side
- Carrie Smith (attorney)
Carpenter, Hazelwood, Delgado & Wood, PLC
Also listed as Carrie H. Smith
- Jason Smith (attorney)
Carpenter, Hazelwood, Delgado & Wood, PLC
Neutral Parties
- Michael K. Carroll (ALJ)
Office of Administrative Hearings
- Robert Barger (Agency Official)
Department of Fire Building and Life Safety
Listed as H/C
- Joyce Kesterman (Agency Contact)
Department of Fire Building and Life Safety
