Administrative Law Judge Decision: MacLeod v. Mogollon Airpark, Inc.

Executive Summary

This briefing document outlines the findings and decision of an Administrative Law Judge (ALJ) in the cross-petitions between Magnus L.D. MacLeod and Mogollon Airpark, Inc. (MAP). The central dispute revolves around the validity of a 2018 Amendment to the community’s Declaration and MacLeod’s alleged violation of this Amendment by residing full-time in an aircraft hangar.

MacLeod (Petition #19) contended that the Amendment was invalid because it was not unanimously approved by all lot owners, as he argued was required by Arizona statute A.R.S. § 33-1817(A)(2) since it applied to fewer than all properties. MAP (Petition #34) argued the Amendment was properly adopted with the required 75% approval and that MacLeod was in violation by living in his Tract G hangar, which also allegedly failed to meet the minimum living space requirement.

The ALJ ruled decisively in favor of Mogollon Airpark, Inc., deeming it the prevailing party. The judge concluded that the Amendment was properly adopted under the 75% approval threshold outlined in the community’s Declaration and A.R.S. § 33-1817(A)(1), thereby dismissing MacLeod’s petition. On MAP’s petition, the ALJ found that MacLeod had indeed violated the Amendment by living full-time in the hangar, affirming that part of the petition. However, the ALJ dismissed MAP’s claim regarding the hangar’s living space size due to insufficient evidence. The final order dismisses Petition #19, partially affirms and partially dismisses Petition #34, and orders each party to bear their own filing fees.

Case Overview

Case Numbers

No. 20F-H2019019-REL (Root), No. 20F-H2019034-REL

Parties

Petitioner: Magnus L.D. MacLeod
Respondent: Mogollon Airpark, Inc. (MAP)

Jurisdiction

Arizona Department of Real Estate, Office of Administrative Hearings

Administrative Law Judge

Kay Abramsohn

Hearing Date

June 19, 2020

Decision Date

July 28, 2020

The Cross-Petitions

The legal conflict originated from two separate petitions filed with the Arizona Department of Real Estate.

Petition #19: Filed by Magnus L.D. MacLeod

• Filing Date: On or about October 15, 2019.

• Core Allegation: MAP violated Arizona statute A.R.S. § 33-1817(A)(1), (A)(2)(a), and (A)(2)(b) in its adoption of the October 18, 2018 “Amendment to Declaration of Establishment of Conditions, Reservations and Restrictions…”

• MacLeod’s Argument: The Amendment could not be enforced because it lacked the affirmative vote or written consent of all owners of the property to which it applied. He specifically noted that three of the nine Real Property Tracts (Tract G, Tract H, and Tract M) did not provide an affirmative vote and that he personally did not sign it. He argued the amendment required unanimous approval.

Petition #34: Filed by Mogollon Airpark, Inc. (MAP)

• Filing Date: On or about December 16, 2019.

• Core Allegations:

1. Violation of the Amendment: MacLeod was in continued violation of the properly adopted Amendment by living full-time in his Tract G aircraft storage hangar.

2. Violation of Square Footage Requirement: MAP alleged, upon information and belief, that the living space in the hangar was “only 549 square feet,” which violated the Declaration’s requirement that structures for living purposes contain no less than 1,200 square feet.

• Requested Relief: MAP sought enforcement of the Declaration and Amendment, including injunctive relief to compel MacLeod’s compliance, and an award of its attorney’s fees and costs.

Analysis of the Disputed Amendment

The conflict centers on an amendment recorded on October 18, 2018. This amendment introduced several significant changes to the community’s governing documents.

Key Provisions of the Amendment

• Creates Two Lot Categories: The Amendment establishes “Residential lots” (lots #178 through #213) and “Hangar Tracts” (Tracts E through M).

• Regulates Hangar Use: It designates Tracts E through M for the purpose of “aircraft storage only.”

• Restricts Occupancy: While guest quarters may be constructed within a hangar, they are for “temporary living only.” “Temporary” is explicitly defined as “not longer than four months per calendar year.” An owner can request an extension in special circumstances.

• Maintains Living Space Requirement: It affirms that any single-family structure or combination hangar/house must have a living area of “not less than 1,200 square feet.”

• Adds Taxiway Access: The Amendment adds Lot 213 to the list of properties authorized to use the aircraft taxiway. This change was necessitated by a fence MacLeod had erected that blocked the Lot 213 owner’s access.

MacLeod’s Objections to the Amendment

In his petition, MacLeod argued the Amendment fundamentally and unreasonably altered the original covenants:

• It “substantially alters” the covenants for Tract Hangar/Homes by imposing the new four-month temporary living limit where unrestricted usage was previously allowed.

• It replaced the allowance for “Guest Homes with Kitchens” with “Guest Quarters without Kitchens,” impacting Tract G.

• It created a “large burden upon me to buy or build an additional home that I do not want and do not need.”

Background and History of the Dispute

• Property Acquisition: MacLeod purchased Tract G from his brother, Pat MacLeod, in February 2017 with the stated expectation of living in the hangar/home full-time.

• Occupancy: After acquiring the property, MacLeod made interior improvements and began living full-time in the aircraft hangar.

• Conflict Origin: The issue of MacLeod’s full-time residency first arose in May 2017 when he requested to build a group home for disabled veterans, a request that drew opposition from other lot owners.

• Initial Violation Notice: On September 18, 2017, MAP’s Architectural Committee sent MacLeod a letter notifying him that living full-time in a hangar intended for aircraft storage was a violation and requested he vacate within 60 days.

• Formal Non-Compliance Notices & Fines:

◦ December 29, 2018: MAP issued a “First Notice of Non-Compliance,” imposing a $100 fine.

◦ April 29, 2019: MAP issued a “Second Notice: Non-Compliance,” imposing an additional $200 fine if the violation was not remedied.

Legal Framework and Adjudicated Issues

The central legal question was the standard of approval required to pass the Amendment. The parties stipulated that the core dispute was whether a 75% approval or a unanimous approval was necessary.

Stipulated Fact #11

The parties agreed to the following crucial point, which narrowed the scope of the legal argument:

“The AMENDMENT contains at least the required minimum signatures and authorizations from the Lot Owners in Unit IVB to adopt the AMENDMENT, provided that unanimous approval of all affected property owners was not required.”

Conflicting Legal Standards

• Declaration Requirement (75% Rule): The original Declaration states it can be amended “by an instrument in writing, executed and acknowledged by the owners of not less than three-fourths of the lots in said subdivision…”

• Arizona Statute (Unanimous Rule): A.R.S. § 33-1817(A)(2) requires unanimous “affirmative vote or written consent of all of the owners of the lots or property to which the amendment applies” if the amendment “apply to fewer than all of the lots or less than all of the property that is bound by the Declaration.”

Parties’ Core Arguments

• MacLeod’s Position: The Amendment required unanimous approval under A.R.S. § 33-1817(A)(2) because it applied to “fewer than all the lots,” specifically pointing out that Tract B (a common area) was not included.

• MAP’s Position: The 75% rule under A.R.S. § 33-1817(A)(1) was the applicable standard. MAP argued that Tract B was a common area not subject to the Declaration’s conditions, so its exclusion from an amendment concerning residential use was irrelevant and did not trigger the unanimity requirement.

Administrative Law Judge’s Decision and Rationale

The ALJ’s conclusions systematically addressed each petition.

Ruling on Petition #19 (Amendment Validity)

• Conclusion: The Amendment was properly adopted.

• Rationale: The ALJ concluded that the 75% approval threshold, as specified in the Declaration and permitted by A.R.S. § 33-1817(A)(1), was the correct standard. Because the parties stipulated that the 75% threshold had been met, MAP was not in violation of the statute.

• Outcome: Petition #19 was dismissed.

Ruling on Petition #34 (MacLeod’s Violations)

• Conclusion on Full-Time Occupancy: MacLeod was in violation of the Amendment by living full-time in the Tract G Hangar/Home.

• Rationale: MacLeod acknowledged living there full-time. His testimony regarding when he ceased this practice was found to be “widely inconsistent,” and the ALJ could not conclude that the violation had stopped by the time MAP filed its petition.

• Outcome: This allegation in Petition #34 was affirmed.

• Conclusion on Living Space Requirement: MAP failed to prove its allegation that the living space was less than the required 1,200 square feet.

• Rationale: MAP did not clearly document or otherwise prove its claim that the living space was only 549 square feet. MacLeod, in contrast, cited a 2007 architectural committee sign-off indicating 1,656 square feet.

• Outcome: This allegation in Petition #34 was dismissed.

• Conclusion on Injunctive Relief: The Tribunal lacked the authority to grant the requested relief.

• Rationale: MAP “cited no statutory authority of this Tribunal with regard to ‘enforcement’ of a homeowner’s association governing documents or with regard to any injunctive relief.”

Final Order

1. Prevailing Party: Mogollon Airpark, Inc. (MAP) is deemed the prevailing party in the cross-petitions.

2. Petition #19 (MacLeod v. MAP): Dismissed.

3. Petition #34 (MAP v. MacLeod):

◦ Partially affirmed as to the allegation of MacLeod living full-time in the Tract G Hangar/Home in violation of the Amendment.

◦ Partially dismissed as to the allegation regarding the amount of living space within the hangar.

4. Filing Fees: Each party shall bear their own filing fee.