Tag Archives: A.R.S. § 41-2198.01

William M. Brown vs. Terravita Country Club, Inc.

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Case Summary

Case ID 17F-H1716005-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-07-10
Administrative Law Judge Velva Moses-Thompson
Outcome The Petitioner was deemed the prevailing party after the Tribunal concluded that the Respondent, Terravita Country Club, Inc., violated A.R.S. § 33-1805 by failing to timely provide access to records within the mandated 10 business days. The Respondent was ordered to comply with the statute and refund the Petitioner's $500.00 filing fee. No civil penalty was imposed.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner William M. Brown Counsel —
Respondent Terravita Country Club, Inc. Counsel Joshua Bolen

Alleged Violations

A.R.S. § 33-1805

Outcome Summary

The Petitioner was deemed the prevailing party after the Tribunal concluded that the Respondent, Terravita Country Club, Inc., violated A.R.S. § 33-1805 by failing to timely provide access to records within the mandated 10 business days. The Respondent was ordered to comply with the statute and refund the Petitioner's $500.00 filing fee. No civil penalty was imposed.

Key Issues & Findings

Failure to timely respond to records request

Petitioner alleged Respondent failed to timely respond to his July 30, 2016 records request, pursuant to A.R.S. § 33-1805(A). The Tribunal found that Petitioner established by a preponderance of the evidence that Respondent failed to fulfill the request for examination of records within 10 business days, violating A.R.S. § 33-1805.

Orders: Respondent is ordered to comply with A.R.S. § 33-1805 regarding Petitioner’s request for records within 10 days of the Order. Respondent is ordered to pay Petitioner his filing fee of $500.00 within thirty (30) days.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1805
  • A.R.S. § 33-1805(A)

Analytics Highlights

Topics: HOA Records Request, Failure to Respond, Statutory Violation, Filing Fee Refund
Additional Citations:

  • A.R.S. § 33-1805
  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.01

Video Overview

Audio Overview

Decision Documents

17F-H1716005-REL Decision – 574630.pdf

Uploaded 2026-04-26T09:42:37 (87.9 KB)

17F-H1716005-REL Decision – 575115.pdf

Uploaded 2026-04-26T09:42:43 (789.4 KB)

17F-H1716005-REL Decision – 574630.pdf

Uploaded 2026-01-23T17:17:51 (87.9 KB)

17F-H1716005-REL Decision – 575115.pdf

Uploaded 2026-01-23T17:17:55 (789.4 KB)

Briefing Document: Brown v. Terravita Country Club, Inc.

Executive Summary

This document summarizes the administrative hearing and final order in the case of William M. Brown (Petitioner) versus Terravita Country Club, Inc. (Respondent), Case No. 17F-H1716005-REL. The central issue was Terravita’s failure to respond to a member’s request for records within the 10-business-day timeframe mandated by Arizona Revised Statutes (A.R.S.) § 33-1805.

The Administrative Law Judge (ALJ) found the Petitioner’s testimony and evidence to be credible, establishing that Mr. Brown submitted a valid records request via e-mail on July 30, 2016, to which Terravita did not timely respond. The ALJ found the testimony of Terravita’s key witness to be unreliable and rejected Terravita’s defenses, which included claims of non-receipt, improper submission procedure, and falsified evidence.

Ultimately, the ALJ ruled in favor of the Petitioner, concluding that Terravita violated A.R.S. § 33-1805. The recommended order, which was subsequently adopted as a Final Order by the Commissioner of the Department of Real Estate, mandated that Terravita comply with the records request, reimburse the Petitioner’s $500 filing fee, and deemed the Petitioner the prevailing party. No civil penalty was assessed.

Case Overview

Case Detail

Information

Case Number

17F-H1716005-REL (OAH) / HO 17-16/005 (DRE)

Petitioner

William M. Brown (Appeared on behalf of himself)

Respondent

Terravita Country Club, Inc. (Represented by Joshua Bolen, Esq.)

Adjudicating Body

Arizona Office of Administrative Hearings

Adopting Authority

Arizona Department of Real Estate

Administrative Law Judge

Velva Moses-Thompson

Commissioner

Judy Lowe

Hearing Date

June 19, 2017

ALJ Decision Date

July 10, 2017

Final Order Date

July 11, 2017

Chronology of Events

• February 12, 2016: Anita Bell requests records from Terravita via Mr. Brown’s e-mail account. The request is forwarded to General Manager Tom Forbes.

• February 19, 2016: Mr. Forbes informs Ms. Bell that the records will be ready on February 22.

• March 14, 2016: Ms. Bell submits another records request from Mr. Brown’s e-mail account.

• March 18, 2016: Cici Rausch, Terravita’s Director of Administration, informs Ms. Bell when the records can be retrieved.

• July 29, 2016: Date of the records request at the center of the legal dispute.

• July 30, 2016: Mr. Brown e-mails the records request to Terravita’s Secretary, Fran Wiley. On the same day, he separately requests records from the Terravita Community Association, Inc. (TCA).

• August 6, 2016: Mr. Brown sends another records request to Ms. Wiley.

• August 8, 2016: TCA responds to Mr. Brown’s July 30 request.

• August 12, 2016: Terravita responds to Mr. Brown’s August 6 request.

• August 18, 2016: Mr. Brown files a Petition for Hearing with the Arizona Department of Real Estate, alleging Terravita’s failure to timely respond to his July 30 request.

• September 9, 2016: Terravita files a response, alleging it did not receive the July 30 records request.

• June 19, 2017: The administrative hearing is held.

• July 10, 2017: The ALJ issues a decision finding in favor of Mr. Brown.

• July 11, 2017: The Commissioner of the Department of Real Estate accepts the ALJ’s decision and issues a Final Order.

Analysis of the Central Dispute

The core of the case revolved around whether Terravita violated its statutory duty to respond to Mr. Brown’s records request dated July 29, 2016, which he e-mailed on July 30, 2016.

Petitioner’s Position and Evidence

• Core Allegation: Mr. Brown testified that he sent the records request via e-mail to Terravita’s Secretary, Fran Wiley, on July 30, 2016, and that Terravita failed to respond within the 10-business-day period mandated by law.

• Evidence: Mr. Brown submitted an August 12, 2016 forwarded e-mail (Exhibit P2) that contained the original July 30, 2016 e-mail sent to Ms. Wiley.

• Judicial Finding: The ALJ found Mr. Brown’s testimony to be “credible.”

Respondent’s Defenses and the Court’s Findings

Terravita presented several arguments to contest the allegation, all of which were ultimately unpersuasive to the court.

1. Claim of Non-Receipt: Terravita contended it never received the July 30, 2016 request. Ms. Wiley testified she did not receive a request from Mr. Brown on July 29 or July 30.

◦ Court’s Finding: The ALJ found Ms. Wiley’s testimony to be “unreliable.” The decision noted that Ms. Wiley testified that Terravita was “indirectly” informed around August 5 that “perhaps Mr. Brown had made the request,” which undermined the claim of complete non-awareness.

2. Use of an Incorrect E-mail Address: Ms. Wiley testified that she did not use the e-mail address to which Mr. Brown sent the request for Terravita affairs, claiming she used a different one in her official capacity as Secretary.

◦ Court’s Finding: This argument was implicitly rejected, as the ALJ concluded that Mr. Brown had successfully proven he submitted the request “to its Secretary, Ms. Wiley.”

3. Allegation of Falsified Evidence: Terravita contended that the forwarded e-mail evidence offered by Mr. Brown was falsified.

◦ Court’s Finding: The ALJ noted an inconsistency in Terravita’s position, stating, “Terravita did not contend that the written evidence of Mr. Brown’s August 5, 2016 records request, sent by e-mail to Ms. Wiley, was falsified.” This weakened the credibility of the falsification claim against the July 30 e-mail.

4. Non-Compliance with Internal Policy: Terravita argued that its own Rules, Policies, and Procedures required members to submit records requests to the General Manager and/or Director of Administration, not the Secretary.

◦ Court’s Finding: The decision focused entirely on the violation of the state statute, A.R.S. § 33-1805, indicating that the statutory obligation superseded the association’s internal procedural preferences.

Legal Framework and Conclusions of Law

• Governing Statute: A.R.S. § 33-1805(A) mandates that a homeowners’ association “shall have ten business days to fulfill a request for examination” of its financial and other records by a member.

• Burden of Proof: The Petitioner was required to prove the violation by a “preponderance of the evidence,” defined as “such proof as convinces the trier of fact that the contention is more probably true than not.”

• Conclusion of Law: The ALJ determined that Mr. Brown successfully established by a preponderance of the evidence that:

1. He submitted a request for records to Terravita’s Secretary via e-mail on July 30, 2016.

2. Terravita failed to fulfill this request within the statutory 10-business-day deadline.

• Final Judgment: The Tribunal concluded that “Terravita violated the charged provision of A.R.S. § 33-1805.” It was also noted that Terravita did not contend that any of the statutory exceptions to disclosure, such as privileged communication or pending litigation, applied.

Final Order and Directives

The ALJ’s decision was formally adopted by the Commissioner of the Department of Real Estate on July 11, 2017, making it a Final Order with the following mandates:

• Prevailing Party: Petitioner William M. Brown was deemed the prevailing party.

• Compliance with Request: Terravita was ordered to “comply with the applicable provisions of A.R.S. § 33-1805 regarding Petitioner’s request of Terravita’s records” within 10 days of the Order.

• Reimbursement of Filing Fee: Terravita was ordered to pay the Petitioner his filing fee of $500.00 directly to him within thirty (30) days.

• Civil Penalty: The court determined that “No Civil Penalty is found to be appropriate in this matter.”

• Effective Date: The Order was made effective five (5) days from the date of its certification. The Final Order itself is effective immediately from the date of service, July 11, 2017.

Study Guide: Brown v. Terravita Country Club, Inc. (Case No. 17F-H1716005-REL)

This study guide provides a comprehensive review of the administrative hearing decision concerning William M. Brown’s records request to the Terravita Country Club. The case centers on the interpretation and application of Arizona Revised Statute § 33-1805, which governs a member’s right to access association records. The guide includes a short-answer quiz, essay questions for deeper analysis, and a glossary of key terms as defined and used within the legal documents.

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Short-Answer Quiz

Instructions: Answer the following questions in two to three complete sentences, drawing information exclusively from the provided case documents.

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

2. What specific failure by Terravita Country Club, Inc. led Mr. Brown to file his Petition for Hearing with the Arizona Department of Real Estate?

3. According to A.R.S. § 33-1805, what is the required timeframe for an association to fulfill a member’s request to examine its records?

4. What were the primary arguments Terravita presented to defend its failure to provide the requested records?

5. How did the Administrative Law Judge assess the credibility of the testimony provided by Mr. Brown and Terravita’s witness, Ms. Fran Wiley?

6. What piece of documentary evidence did Mr. Brown submit to prove he had sent the records request on July 30, 2016?

7. What is the standard of proof required in this hearing, and how is that standard defined in the decision?

8. What two specific actions did the final Recommended Order compel Terravita to take as a result of the ruling?

9. Why was Terravita’s argument that Mr. Brown failed to follow its internal rules for submitting records requests ultimately unsuccessful?

10. What was the role of the Commissioner of the Department of Real Estate after the Administrative Law Judge issued her decision?

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Answer Key

1. The Petitioner was William M. Brown, and the Respondent was Terravita Country Club, Inc. At all times relevant to the matter, Mr. Brown was a member of the Terravita Country Club.

2. Mr. Brown filed the petition because Terravita failed to respond to his July 30, 2016, request for records within the 10-business-day timeframe mandated by A.R.S. § 33-1805(A). This failure to provide timely access to the records was the central violation alleged.

3. A.R.S. § 33-1805(A) states that the association must fulfill a request for examination of its records within ten business days. If copies are requested, the association has ten business days to provide them and may charge up to fifteen cents per page.

4. Terravita argued that it never received the July 30, 2016, request from Mr. Brown. They also contended that his email evidence was falsified and that he failed to comply with their internal policy requiring such requests be sent to the General Manager or Director of Administration.

5. The Administrative Law Judge found Mr. Brown’s testimony to be credible. Conversely, the Judge found the testimony of Ms. Wiley, who testified on behalf of Terravita, to be unreliable.

6. Mr. Brown submitted an August 12, 2016, forwarded email that contained his original July 30, 2016, email to Ms. Wiley. This original email contained the records request dated July 29, 2016.

7. The standard of proof was a “preponderance of the evidence.” The decision defines this as “such proof as convinces the trier of fact that the contention is more probably true than not” and as having “the most convincing force” or “superior evidentiary weight.”

8. The Recommended Order compelled Terravita to pay Mr. Brown’s $500 filing fee within thirty days of the order. It also ordered Terravita to comply with the records request and provide the documents within ten days of the order.

9. The argument was unsuccessful because the Judge concluded that Terravita violated the plain meaning of the state statute, A.R.S. § 33-1805. The ruling focused on this statutory violation, noting that Terravita did not contend that any of the law’s specific exceptions for withholding records applied.

10. The Commissioner of the Department of Real Estate, Judy Lowe, was responsible for reviewing the Administrative Law Judge’s decision. The Commissioner accepted the decision and issued a Final Order, which made the Judge’s recommendations legally binding and enforceable.

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Essay Questions

Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate comprehensive responses based solely on the provided source documents.

1. Analyze Terravita’s defense strategy. Discuss the strengths and weaknesses of their arguments regarding not receiving the email, the alleged falsification of evidence, and the club’s internal policies for records requests.

2. Explain the concept of “preponderance of the evidence” as defined in the case documents. How did the Administrative Law Judge apply this standard to the conflicting testimonies of William Brown and Fran Wiley to reach her conclusion?

3. Discuss the significance of A.R.S. § 33-1805 in the context of planned communities. Based on the details in the case, why is a member’s right to access association records important, and what protections does this statute provide?

4. Trace the procedural path of this dispute from Mr. Brown’s initial records request to the Final Order. What roles did the Petitioner, the Respondent, the Office of Administrative Hearings, and the Department of Real Estate play in this process?

5. The Administrative Law Judge’s decision rested heavily on findings of credibility. Explore the factors detailed in the case documents that might have led the judge to find Mr. Brown’s testimony “credible” and Ms. Wiley’s “unreliable.”

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official (Velva Moses-Thompson) who presides over hearings at the Office of Administrative Hearings, evaluates evidence and testimony, and issues a recommended decision based on the law.

A.R.S. § 33-1805

The Arizona Revised Statute at the heart of the case. It mandates that a planned community association must make all financial and other records reasonably available for a member’s examination within ten business days of a request.

Burden of Proof

The obligation to prove an assertion. The Petitioner (Mr. Brown) bore the burden of proving that the Respondent (Terravita) violated the statute.

Department of Real Estate

The Arizona state agency where Mr. Brown filed his Petition for Hearing. Its Commissioner (Judy Lowe) has the authority to accept an ALJ’s decision and issue a final, binding order.

Office of Administrative Hearings (OAH)

An independent agency that conducts formal hearings for disputes concerning violations of planned community statutes, as authorized by A.R.S. § 41-1092.01.

Petitioner

The party who initiates a legal action by filing a petition. In this matter, the Petitioner was William M. Brown.

Preponderance of the Evidence

The evidentiary standard required for the Petitioner to prove his case. It is defined as “such proof as convinces the trier of fact that the contention is more probably true than not” and as evidence with “the most convincing force.”

Prevailing Party

The party who is successful and wins the legal dispute. The Administrative Law Judge’s order deemed the Petitioner, William M. Brown, to be the prevailing party.

Respondent

The party against whom a petition is filed and who must respond to the allegations. In this matter, the Respondent was Terravita Country Club, Inc.

He Sued His HOA Over an Unanswered Email—And Won. Here Are 4 Lessons from the Judge’s Ruling.

1. Introduction: The Black Hole of Bureaucracy

We’ve all been there. You draft a clear, important request, send it to a large organization, and wait. And wait. The silence that follows can feel like your message was sent into a black hole. This frustration is especially common for homeowners dealing with their Homeowners’ Association (HOA), where getting a straight answer or a timely response can seem impossible.

But what if being ignored is more than just frustrating? What if it’s a violation of the law? The case of William M. Brown versus the Terravita Country Club provides a powerful real-world example of one member who fought back against being ignored—and won. His persistence offers crucial lessons for any homeowner who has ever felt powerless against their association’s bureaucracy.

2. Takeaway 1: The “We Never Got the Email” Defense Isn’t Bulletproof

When faced with Mr. Brown’s petition, Terravita’s primary defense was simple: they claimed they never received his July 30, 2016, email requesting association records. They went even further, contending that the email evidence he provided was falsified.

This defense crumbled under scrutiny. Mr. Brown presented a forwarded email as evidence of his original request. In the end, the case came down to witness testimony, and the Administrative Law Judge’s conclusion was direct and unambiguous. The judge made two critical findings on the credibility of the parties involved:

I find Mr. Brown’s testimony to be credible.

And regarding the testimony from Terravita’s representative, the Secretary Ms. Wiley:

I find Ms. Wiley’s testimony to be unreliable.

The judge’s conclusion was not arbitrary; it was based on a clear contradiction in the evidence. Ms. Wiley testified that she did not use the specific email address where Mr. Brown sent the request for association business. However, evidence presented to the court showed that just a few months prior, she had successfully received and processed two separate records requests sent to that very same email address, proving it was a valid and functioning channel for communication. This detail demonstrates how an individual’s careful documentation can expose an organization’s flawed defense.

3. Takeaway 2: State Law Overrules Internal Red Tape

Terravita offered a second line of defense: even if they had received the email, Mr. Brown hadn’t followed their internal “Rules, Policies and Procedures.” The association argued that members were required to submit records requests to the General Manager or Director of Administration, not the association’s Secretary, whom Mr. Brown had emailed.

This argument was deemed irrelevant by the judge. The decision hinged not on Terravita’s internal rules, but on the plain language of Arizona state law, A.R.S. § 33-1805. The statute simply requires the association to make records available within ten business days of a request; it does not specify which officer or employee must receive that request.

By failing to respond, Terravita violated the statute, regardless of its own procedural preferences. This is a critical reminder for all homeowners: your rights are often enshrined in state law, and those rights cannot be diminished or negated by an HOA’s internal bylaws or policies.

4. Takeaway 3: A Simple Request Has a Firm Deadline

The core violation in this case was a failure to meet a specific, legally mandated deadline. Under Arizona law A.R.S. § 33-1805, an association has ten business days to fulfill a member’s request for the examination of records.

The timeline of events was clear:

• Mr. Brown sent his records request via email on July 30, 2016.

• The judge found that “Terravita did not respond to Mr. Brown’s records request within 10 business days.”

Adding weight to this was the fact that the association had previously proven itself more than capable of handling requests sent from Mr. Brown’s email account. Earlier that year, another individual had successfully requested records through the same channel. In those instances, Terravita had been prompt, often acknowledging requests within a day or two and making records available well within the legal deadline. This history undermined any claim of inability to respond. The law’s ten-day deadline is not a vague guideline; it is a specific and enforceable protection for members’ right to information.

5. Takeaway 4: Persistence Can Literally Pay Off

After reviewing the evidence, the judge ruled that Mr. Brown was the “prevailing party.” This victory was not just symbolic; it came with concrete orders that held the association accountable.

The judge’s final decision included the following orders:

• Terravita was ordered to comply with the records request within 10 days.

• Terravita was ordered to pay Mr. Brown his filing fee of $500.00.

Mr. Brown’s persistence didn’t just get him the documents he was legally entitled to; it also resulted in the full reimbursement of his filing costs. This outcome serves as a powerful example that standing up for your rights as a homeowner is not always a futile or expensive endeavor. With proper documentation and an understanding of the law, a single member can hold their association accountable.

6. Conclusion: Your Rights Are Written in Law

While homeowners are obligated to follow their HOA’s rules, the association is equally obligated to follow state law. These laws provide clear rights and protections designed to ensure transparency and fairness. The case of William M. Brown is a testament to the power of a single, well-documented request and the importance of understanding the laws that govern your association.

The next time you feel ignored by a large organization, what’s the one simple step you can take to ensure your request is not only heard, but documented?

Case Participants

Petitioner Side

  • William M. Brown (petitioner)
    Appeared on behalf of himself
  • Anita Bell (records requester)
    Requested records via Mr. Brown's e-mail account

Respondent Side

  • Joshua Bolen (attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Appeared for Respondent Terravita Country Club, Inc.
  • Fran Wiley (secretary/witness)
    Terravita Country Club, Inc.
    Terravita Secretary; testified on behalf of Terravita
  • Tom Forbes (general manager)
    Terravita Country Club, Inc.
  • Cici Rausch (director of administration)
    Terravita Country Club, Inc.

Neutral Parties

  • Velva Moses-Thompson (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (commissioner)
    Arizona Department of Real Estate
    Signed the Final Order
  • Abby Hansen (HOA coordinator)
    Arizona Department of Real Estate
    Addressed for rehearing requests and signed mailing notice

Jason West vs. Desert Sage Two Homeowners Association

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Case Summary

Case ID 17F-H1716031-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-28
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jason West Counsel —
Respondent Desert Sage Two Homeowners Association Counsel Stewart F. Salwin, Esq.

Alleged Violations

Bylaw § 3.6

Outcome Summary

The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.

Why this result: Respondent established that the Board performed all reasonable actions to fill vacancies, but no eligible members were willing to serve, in part due to Petitioner's obstructionist tactics, rendering enforcement of the Bylaw impossible as it would lead to an absurdity.

Key Issues & Findings

Refusing to fill vacancies on Respondent’s Board of Directors

Petitioner alleged Respondent violated Bylaw § 3.6 by refusing to fill vacancies on the Board of Directors. The Administrative Law Judge determined that the Board had done all it could to fill vacancies, but no eligible members were willing to serve, and Bylaw § 3.6 does not empower the Board to conscript unwilling members.

Orders: Petitioner's petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
  • A.A.C. R2-19-119(B)(2)
  • MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
  • BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
  • Mail Boxes v. Industrial Comm’n of Arizona, 181 Ariz. 119, 122, 888 P.2d 777, 780 (1995)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04

Analytics Highlights

Topics: HOA Board Vacancies, Bylaw 3.6, Obstructionist Tactics, Refusal to Serve
Additional Citations:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • Vazanno v. Superior Court
  • A.A.C. R2-19-119(B)(2)
  • MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
  • BLACK’S LAW DICTIONARY
  • Mail Boxes v. Industrial Comm’n of Arizona
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04

Video Overview

Audio Overview

Decision Documents

17F-H1716031-REL Decision – 572314.pdf

Uploaded 2026-04-24T11:04:00 (137.9 KB)

17F-H1716031-REL Decision – 576049.pdf

Uploaded 2026-04-24T11:04:04 (1160.4 KB)

17F-H1716031-REL Decision – 572314.pdf

Uploaded 2026-01-23T17:19:29 (137.9 KB)

17F-H1716031-REL Decision – 576049.pdf

Uploaded 2026-01-23T17:19:32 (1160.4 KB)

Briefing Document: West v. Desert Sage Two Homeowners Association (Case No. 17F-H1716031-REL)

Executive Summary

This briefing document analyzes the administrative hearing and final order concerning a petition filed by homeowner Jason West (“Petitioner”) against the Desert Sage Two Homeowners Association (“Respondent”). The Petitioner alleged that the HOA’s Board of Directors violated its own Bylaw § 3.6 by failing to fill vacant board positions.

The Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted as a Final Order by the Commissioner of the Arizona Department of Real Estate. The central finding was that the Respondent had made repeated and reasonable efforts to fill the vacancies but was unsuccessful due to a lack of willing and eligible candidates. The ALJ concluded that the governing bylaw mandates the appointment of willing members but does not grant the power to conscript individuals to serve against their will. Furthermore, the decision determined that the shortage of volunteers was attributable, in part, to the Petitioner’s own “obstructionist tactics,” which created a hostile and dysfunctional environment, leading to a series of board member resignations and deterring potential candidates.

Case Overview

• Case Number: 17F-H1716031-REL

• Petitioner: Jason West, a homeowner and member of the Desert Sage Two Homeowners Association.

• Respondent: Desert Sage Two Homeowners Association, representing a small community of approximately 40 homes.

• Core Allegation: On April 10, 2017, the Petitioner filed a single-issue petition alleging the Respondent violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

• Hearing Date: June 21, 2017, before Administrative Law Judge Diane Mihalsky.

• Final Disposition: The Petitioner’s petition was denied in a decision dated June 28, 2017. This decision was adopted as a Final Order by the Arizona Department of Real Estate on July 12, 2017, making it binding on the parties.

Governing Bylaw in Dispute

The central issue revolved around the interpretation of Section 3.6 of the HOA’s Bylaws, which states:

Vacancies. Vacancies on the Board caused by any reason other than the removal of a director in accordance with the provisions of Section 3.3 of these Bylaws shall be filled by a majority vote of the remaining directors at the first regular or special meeting of the Board held after the occurrence of such vacancy, even though the directors present at such meeting may constitute less than a quorum. Each person so elected shall serve the unexpired portion of the prior director’s term.

Key Parties and Witnesses

Role / Affiliation

Key Testimony / Actions

Jason West

Petitioner, Homeowner, Former Board President

Filed the petition alleging bylaw violation. Previously filed recall petitions against other board members, resigned from the board himself, and proposed a bylaw amendment that disqualified newly elected members.

Eugenia (“Gina”) Murray

Respondent’s Board President

Testified that the board made repeated efforts to find volunteers, but no one was willing to serve, citing the Petitioner’s behavior as a major cause for resignations and lack of interest.

Edward (“Eddie”) Padilla

Community Manager, National Property Service (NPS)

Testified about sending multiple email requests for board candidates on behalf of the board, which yielded no interested parties other than those who would later be disqualified.

Christina Van Soest

Former Board Member

Resigned on Feb. 8, 2017, stating, “I have found the direction of some of the board does not appear to be in the best interest of the community as a whole.” Testified she was uncomfortable with the Petitioner.

Elizabeth Mayhew

Former Board Member

Resigned on Apr. 4, 2017, citing stress directly related to the Petitioner: “I have enough stress daily with my job and cannot handle this or him. It is making me physically ill and he is not worth that.”

Myron (“Ray”) Elmer

Former Board Member

Resigned on Apr. 5, 2017, with the stated reason: “[d]ue to continued problems Jason etc.”

Korey Hjelmeir & Debra Epstein

Former Board Members

Testified for the Petitioner’s rebuttal. Both had previously resigned in June 2016 in response to the Petitioner’s recall petitions and were later disqualified from serving by a bylaw amendment he proposed.

Chronology of Board Destabilization and Resignations

The hearing evidence established a pattern of significant board turnover and dysfunction between June 2016 and June 2017.

• June 23, 2016: Board members Adrian Justiniano, Debra Epstein, and Korey Hjelmeir resigned after the Petitioner filed recall petitions against them.

• August 3, 2016: The Petitioner, June Thompson, and Christina Van Soest were elected to the Board. The Petitioner served as president.

• August 18, 2016: The Board expanded from 3 to 5 members, appointing Gina Murray and Ray Elmer.

• August 29, 2016: June Thompson resigned.

• February 8, 2017: Christina Van Soest resigned, citing the board’s direction and her discomfort with the Petitioner’s “research into members’ backgrounds and history, and the way he was making Board decisions.”

• February 18, 2017: The Petitioner resigned from the Board because he had “more important things to worry about than the management of this dysfunctional community.”

• April 4, 2017: Elizabeth Mayhew resigned, stating she could not handle the stress caused by the Petitioner and his “verbal assaults, constant lashing out, and personal attacks.”

• April 5, 2017: Ray Elmer resigned, attributing his departure to “continued problems Jason etc.” This left Gina Murray as the sole remaining board member.

Respondent’s Efforts to Fill Vacancies

The Respondent provided evidence of multiple, documented attempts to recruit new board members.

• February 23, 2017: Following the resignations of Ms. Van Soest and the Petitioner, Community Manager Eddie Padilla sent an email requesting “motivated and dedicated individuals” to serve on the Board. No one responded.

• March 31, 2017: At an open Board Meeting with “Board appointments” on the agenda, Gina Murray asked for volunteers and nominations from the floor. No one responded.

• April 4 & 18, 2017: Mr. Padilla sent two further emails requesting members interested in serving on the board to submit biographies for an upcoming annual meeting. The only individuals to respond and submit biographies were Mr. Justiniano and Ms. Hjelmeir.

• May 15, 2017: At the annual meeting, Ms. Murray again accepted nominations from the floor. Debra Epstein was nominated.

• June 5, 2017: After the newly elected board was disqualified, Mr. Padilla sent another email asking for volunteers.

Petitioner’s Actions and Their Consequences

The Administrative Law Judge’s decision identified the Petitioner’s own actions as a primary cause for the board’s inability to fill vacancies.

• Instigation of Resignations: The Petitioner’s recall petitions in June 2016 and behavior cited in the 2017 resignation letters from Van Soest, Mayhew, and Elmer directly contributed to the board vacancies.

• Contradictory Claims: The Petitioner testified that four individuals (Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti) were interested in serving. However, the sign-in sheet for the March 31, 2017 meeting, where appointments were to be made, showed none of these individuals were present.

• Disqualifying Bylaw Amendment: The Petitioner proposed a new bylaw, § 3.12, which was passed at the May 15, 2017 meeting. It stated:

• Attempted Removal of Remaining Director: On June 12, 2017, the Petitioner submitted a petition to remove Gina Murray, the last remaining original board member, which would have left the board entirely vacant.

Administrative Law Judge’s Findings and Decision

The ALJ’s conclusions of law were decisive in denying the petition.

1. Burden of Proof: The Petitioner bore the burden of proving by a preponderance of the evidence that the Respondent had violated its bylaws.

2. Interpretation of Bylaw § 3.6: The Judge ruled that while the bylaw requires the Board to appoint members to fill vacancies, “it does not empower the Board to conscript members who are not willing to serve on the Board.”

3. Principle of Absurdity: Citing legal precedent, the decision stated that bylaws must be construed to avoid an absurd result. Forcing an HOA to operate without a board because no eligible members are willing to serve, especially when the situation is exacerbated by the Petitioner, would be such an absurdity.

4. Respondent’s Due Diligence: The Judge found that “Respondent established that the Board has done all it could to fill vacancies.”

5. Petitioner’s Culpability: The final conclusion explicitly states that “at this time, no eligible members are willing to serve, in part due to Petitioner’s obstructionist tactics, including Petitioner and his claimed supporters.”

Based on these findings, the ALJ ordered that the Petitioner’s petition be denied. The order became final and binding upon adoption by the Arizona Department of Real Estate on July 12, 2017.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

——————————————————————————–

Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

An independent state agency that conducts evidentiary hearings for cases referred by other state agencies, such as the Department of Real Estate.

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

——————————————————————————–

Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

An independent state agency that conducts evidentiary hearings for cases referred by other state agencies, such as the Department of Real Estate.

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Case Participants

Petitioner Side

  • Jason West (petitioner)
    Appeared on his own behalf; testified on his own behalf
  • Linda Siedler (witness, member)
    Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
  • Teresa Price (witness, member)
    Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
  • Bret Morse (witness, member)
    Allegedly interested in serving on the Board; submitted absentee ballot; signed petition to remove Ms. Murray
  • Bryan Brunatti (witness, member)
    Allegedly interested in serving on the Board; attended meeting and counted ballots; signed petition to remove Ms. Murray

Respondent Side

  • Stewart F. Salwin (HOA attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Represented the Respondent
  • Eugenia Murray (board president, witness)
    Only current Board member at the time of hearing; testified for Respondent
  • Edward Padilla (property manager, witness)
    National Property Service (NPC)
    Community Manager; testified for Respondent

Neutral Parties

  • Diane Mihalsky (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
    ADRE Commissioner who adopted the ALJ Decision

Other Participants

  • Korey Hjelmeir (witness, former board member)
    Testified for Petitioner as former Board member; resigned and later sought re-election
  • Debra Epstein (witness, former board member)
    Testified for Petitioner as former Board member; resigned and later sought re-election; appeared via Skype at a meeting
  • Adrian Justiniano (former board member)
    Resigned and later sought re-election
  • June Thompson (former board member)
    Elected and resigned in 2016
  • Christina Van Soest (former board member)
    Elected and resigned in 2017
  • Myron Elmer (former board member)
    Appointed and resigned in 2017
  • Elizabeth Mayhew (former board member)
    Appointed and resigned in 2017
  • David Epstein (member)
    Appeared via Skype at a meeting; expressed interest in serving on Board
  • Abby Hansen (HOA coordinator)
    Individual to whom requests for rehearing should be addressed

Tom Pyron vs Cliffs at North Mountain Condominium Association, Inc.

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Case Summary

Case ID 17F-H1717026-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-19
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the petition, concluding that the HOA correctly identified only one Board position (the one-year term) was up for election in 2017 based on the Bylaws' staggered term provisions.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Tom Pyron Counsel —
Respondent Cliffs at North Mountain Condominium Association, Inc. Counsel B. Austin Baillio

Alleged Violations

Bylaws, Article III, §§ 3.02 and 3.06, and Article IV, § 4.06

Outcome Summary

The Administrative Law Judge denied the petition, concluding that the HOA correctly identified only one Board position (the one-year term) was up for election in 2017 based on the Bylaws' staggered term provisions.

Why this result: The Petitioner failed to establish by a preponderance of the evidence that the Respondent violated its Bylaws.

Key Issues & Findings

Dispute over the number of Board of Director positions available for the 2017 election.

Petitioner alleged Respondent HOA violated Bylaws by stating only one Board position was up for election for a one-year term in 2017, when Petitioner contended two positions (one-year and two-year terms) were open.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04
  • A.R.S. § 41-1092.08
  • R4-28-1310

Analytics Highlights

Topics: HOA Election, Bylaw Violation, Board Term, Staggered Terms, Condominium Association
Additional Citations:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04
  • A.R.S. § 41-1092.08
  • R4-28-1310

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Video Overview

Audio Overview

Decision Documents

17F-H1717026-REL Decision – 570560.pdf

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17F-H1717026-REL Decision – 570560.pdf

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17F-H1717026-REL Decision – 576045.pdf

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  • 2016

Study Guide: Pyron v. Cliffs at North Mountain Condominium Association, Inc.

This study guide provides a review of the administrative hearing case No. 17F-H1717026-REL between Tom Pyron (Petitioner) and the Cliffs at North Mountain Condominium Association, Inc. (Respondent). It covers the central arguments, key evidence, relevant bylaws, and the final legal decision.

Short Answer Quiz

Instructions: Answer the following questions in 2-3 complete sentences based on the provided source documents.

1. What was the single issue at the heart of Tom Pyron’s petition filed on March 16, 2017?

2. According to the Association’s bylaws, how are Board of Director terms structured when the board consists of three members?

3. What was the Petitioner’s argument regarding Jeff Oursland’s term on the Board of Directors?

4. What was the Respondent’s counter-argument regarding Barbara Ahlstrand’s 2015 election and, subsequently, Jeff Oursland’s term?

5. What actions did the Respondent take in an attempt to resolve the dispute with the Petitioner before the hearing?

6. Who was the key witness for the Respondent, and what was their role?

7. Explain the legal standard “preponderance of the evidence” as it is defined in the case documents.

8. What was the Administrative Law Judge’s core legal reasoning for concluding that only one board position was open in 2017?

9. What was the final outcome of the case as stated in the Recommended Order and adopted by the Commissioner of the Department of Real Estate?

10. Following the Final Order issued on July 12, 2017, what legal recourse was available to a party dissatisfied with the decision?

——————————————————————————–

Answer Key

1. Tom Pyron’s petition alleged that the Respondent violated its bylaws by announcing only one Board position was open for a one-year term in the 2017 election. Pyron contended that two positions—one for a one-year term and another for a two-year term—should have been up for election.

2. Bylaw Article III, § 3.02 specifies that for a three-person board, the directors hold staggered terms of one year, two years, and three years. The bylaw further dictates which terms end at which annual meetings (e.g., the two-year term ends at the second, fourth, sixth, etc., annual meetings).

3. The Petitioner argued that Barbara Ahlstrand was elected to a two-year term in 2015. Therefore, when Jeff Oursland was appointed to fill her vacancy, his term should have expired in 2017, meaning his two-year position should have been on the 2017 ballot.

4. The Respondent argued that under the plain language of Bylaw § 3.02, only the one-year and three-year terms were up for election in 2015. Since Sandra Singer received the most votes and secured the three-year term, Ms. Ahlstrand must have been elected to the one-year term, meaning Mr. Oursland’s appointed term expired in 2016.

5. In response to the petition, the Respondent twice rescheduled the 2017 annual meeting and re-issued ballots to include all candidates who had submitted an application. The Association also offered to pay the Petitioner’s $500 single-issue filing fee if he was satisfied with this resolution.

6. The key witness for the Respondent was Cynthia Quillen. She served as the Community Manager for the Association’s management company, Associated Property Management, and testified about the Board’s composition and her interpretation of the bylaws.

7. “A 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, which is sufficient to incline a fair and impartial mind to one side of an issue over the other.

8. The Judge’s decision was based on the “plain language” of Bylaw § 3.02. This bylaw dictated that only the one-year and three-year terms were up for election in 2015. Since the parties agreed Ms. Singer won the three-year term, the Judge concluded Ms. Ahlstrand must have been elected to the one-year term, making the Respondent’s subsequent actions and election notices correct.

9. The Administrative Law Judge’s Recommended Order was that the Petitioner’s petition be denied. This order was adopted by the Commissioner of the Department of Real Estate in a Final Order, making it binding on the parties.

10. According to the Final Order, a dissatisfied party could request a rehearing within thirty days by filing a petition setting forth the reasons. The document lists eight specific causes for a rehearing. A party could also appeal the final administrative decision by filing a complaint for judicial review.

——————————————————————————–

Essay Questions

Instructions: The following questions are designed to test a deeper understanding of the case. Formulate a comprehensive essay-style response for each.

1. Analyze the conflicting interpretations of the 2015 election presented by the Petitioner and the Respondent. How did the Administrative Law Judge use the “plain language” of Bylaw § 3.02 to resolve this conflict, and what does this reveal about the interpretation of governing documents in legal disputes?

2. Trace the chain of events from the 2012 election to the 2017 dispute. Explain how the board composition, terms of office, and specific actions (like Ms. Ahlstrand’s resignation) compounded to create the disagreement at the heart of this case.

3. Discuss the burden of proof in this administrative hearing. Define “preponderance of the evidence” and explain why the Petitioner, Tom Pyron, failed to meet this standard in the view of the Administrative Law Judge.

4. Examine the roles and authorities of the different entities involved: the homeowners’ association Board, the Arizona Department of Real Estate, the Office of Administrative Hearings, and the Administrative Law Judge. How do these bodies interact to resolve disputes within a planned community?

5. Based on the Final Order, outline the legal recourse available to Tom Pyron following the denial of his petition. What specific grounds for a rehearing are mentioned, and what is the process for further appeal?

——————————————————————————–

Glossary of Key Terms

Definition

Acclamation

A form of election where a candidate is declared elected without opposition, as when Sandra Singer’s election was “unanimously passed by acclamation” in 2014.

Administrative Law Judge (ALJ)

An independent judge who presides over administrative hearings, makes findings of fact, draws conclusions of law, and issues a recommended decision. In this case, the ALJ was Diane Mihalsky.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations. The Commissioner of the Department, Judy Lowe, issued the Final Order in this case.

Bylaws

The governing documents of the homeowners’ association that outline its rules and procedures, including the number of directors, terms of office, and process for filling vacancies.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which accepts and adopts the Administrative Law Judge’s decision. This order becomes effective and can only be changed by a successful rehearing or judicial appeal.

Office of Administrative Hearings (OAH)

An independent state agency to which the Department of Real Estate refers petitions for an evidentiary hearing.

Petitioner

The party who files a petition initiating a legal action. In this case, the Petitioner was Tom Pyron, a homeowner in the association.

Preponderance of the Evidence

The standard of proof required in this hearing, defined as “proof as convinces the trier of fact that the contention is more probably true than not.” The Petitioner bore this burden to prove the Respondent violated its bylaws.

Recommended Order

The decision and order issued by the Administrative Law Judge following a hearing. In this case, it recommended that the Petitioner’s petition be denied.

Rehearing

A formal request to have a case heard again. The Final Order specifies that a petition for rehearing must be filed within thirty days and may be granted for specific causes, such as newly discovered evidence or an arbitrary decision.

Respondent

The party against whom a petition is filed. In this case, the Respondent was the Cliffs at North Mountain Condominium Association, Inc.

Staggered Terms

A system where not all board members are elected at the same time. As defined in Bylaw § 3.02, the three-person board had terms of one, two, and three years to ensure continuity.

Unexpired Portion of the Prior Director’s Term

The remainder of a board member’s term that an appointee serves after the original member resigns or is removed, as specified in Bylaw § 3.6.

We Read an HOA Lawsuit So You Don’t Have To: 3 Shocking Lessons Hidden in the Bylaws

1. Introduction: The Hidden Drama in Your Community’s Fine Print

If you live in a condominium association or a planned community, you’re familiar with the thick packet of governing documents you received at closing—the Covenants, Conditions & Restrictions (CC&Rs) and the Bylaws. For many, these documents are filed away and forgotten, seen as a collection of mundane rules about trash cans and paint colors. But hidden within that legalese is the complete operating manual for your community, and a simple misunderstanding of its contents can have significant consequences.

What happens when a homeowner’s interpretation of the rules clashes with the association’s? In a case from Arizona involving homeowner Tom Pyron and the Cliffs at North Mountain Condominium Association, the dispute escalated into a formal administrative hearing. The central question was simple: how many board seats were open for election in 2017? But this wasn’t just a procedural disagreement. Court documents reveal that before the hearing, the association offered to re-issue ballots to include all candidates and even “offered to pay Petitioner’s $500 single-issue filing fee if he was satisfied with the proposed resolution.” The homeowner refused.

This decision transforms the case from a simple rules dispute into a cautionary tale about how a deeply held belief can override a pragmatic, no-cost compromise. The official court documents offer a fascinating look at how community governance can go awry, revealing powerful, practical lessons for any homeowner or board member who believes they know what the rules should say.

2. Takeaway 1: Your Beliefs Don’t Overrule the Bylaws

What You Think the Rules Say Doesn’t Matter—Only What They Actually Say

The core of the dispute rested on a belief held by a former board member, Ms. Ahlstrand, who was elected in 2015. She testified that she believed she had been elected to a two-year term. Based on this belief, the petitioner argued that the director appointed to replace her after her resignation should have served until 2017, meaning a two-year position was open for election that year.

The Administrative Law Judge, however, looked not at what anyone believed, but at the “plain language” of the community’s governing documents. The judge’s conclusion was a matter of inescapable logic derived directly from the bylaws:

1. First, Bylaw § 3.02 clearly states that in an election with multiple open seats, “the person receiving the most votes will become the Director with the longest term.”

2. Next, the court record shows that “the parties agreed that… because she got the most votes, Ms. Singer was elected to a three-year term” in the 2015 election.

3. Finally, the judge determined that according to the same bylaw, only the one-year and three-year terms were available in 2015. Since Ms. Singer secured the three-year term, Ms. Ahlstrand, by definition, must have been elected to the only other available position: the one-year term.

The lesson is stark and unambiguous: an individual’s interpretation or assumption, however sincere, cannot change the written rules. The bylaws are the ultimate authority. As the judge stated in the final decision, the documents speak for themselves.

The Bylaws do not allow their plain language to be modified or amended by a member’s understanding.

3. Takeaway 2: The Domino Effect of a Single Resignation

A Single Resignation Can Create Years of Confusion

This entire legal conflict was set in motion by a single, routine event: a board member’s resignation. The timeline of events shows how one small action, when combined with a misunderstanding of the rules, can create a ripple effect with long-lasting consequences.

1. On August 3, 2015, the newly elected board member, Ms. Ahlstrand, resigned.

2. The Board then appointed another member, Jeff Oursland, to serve the remainder of her term, as permitted by the bylaws.

3. The critical point of contention became the length of that “remainder.” Was it the rest of a one-year term ending in 2016, or a two-year term ending in 2017?

4. The judge’s determination that Ahlstrand’s original term was only one year (as explained above) meant that Mr. Oursland’s appointed term correctly expired in 2016. He was then properly elected to a new two-year term at the 2016 meeting.

5. This sequence confirmed that the association was correct all along: only one board position (a one-year term) was actually open for election in 2017.

A single resignation created two years of confusion that ultimately required an administrative hearing to resolve. It’s a powerful reminder of how crucial it is for boards to precisely follow their own procedures, especially when handling vacancies and appointments, as one small error can cascade into years of conflict.

4. Takeaway 3: The Hidden Complexity of “Staggered Terms”

“Staggered Terms” Are Designed for Stability, But Can Cause Chaos

Many associations use staggered terms for their board of directors. The concept, outlined in Bylaw § 3.02 for the Cliffs at North Mountain, is simple: instead of all directors being elected at once, they serve terms of varying lengths (in this case, one, two, and three years). This is a common and effective practice designed to ensure leadership continuity and prevent the entire board from turning over in a single election.

However, this case reveals the hidden downside of that system: complexity. The staggered terms created an election cycle where the available term lengths changed every single year. The court documents show that in 2014, the one-year and two-year positions were on the ballot. In 2015, the one-year and three-year terms were available. This rotating schedule was difficult for members—and apparently even some board members—to track accurately.

This built-in complexity was the root cause of the entire disagreement. The system’s lack of intuitive clarity created the exact conditions necessary for a personal belief, like Ms. Ahlstrand’s, to seem plausible even when it was contrary to the bylaws. The very governance structure intended to create stability inadvertently created the fertile ground for confusion, allowing a misunderstanding to grow into a lawsuit.

5. Conclusion: The Power Is in the Paperwork

The overarching theme from this case is that in the world of community associations, the governing documents are the ultimate source of truth. They are not merely suggestions; they are the binding legal framework that dictates how the community must operate. A board’s actions and a homeowner’s rights are all defined within that paperwork.

In the end, the homeowner’s petition was denied, and the judge’s order affirmed the association’s position. The written rules, as found in the bylaws, prevailed over individual beliefs and interpretations. The case stands as a powerful testament to the importance of reading, understanding, and strictly adhering to your community’s foundational documents.

This entire conflict stemmed from a few lines in a legal document—when was the last time you read yours?

Case Participants

Petitioner Side

  • Tom Pyron (petitioner)

Respondent Side

  • B. Austin Baillio (HOA attorney)
    Maxwell & Morgan, P.C.
  • Cynthia Quillen (property manager)
    Associated Property Management
    Community Manager

Neutral Parties

  • Diane Mihalsky (ALJ)
  • Judy Lowe (ADRE commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (coordinator)
    HOA Coordinator/Admin Official listed for rehearing requests and transmission

Other Participants

  • Anne Fugate (witness)
    Elected to the Board in 2012
  • Barbara Ahlstrand (witness)
    Elected to the Board in 2015
  • Kevin Downey (witness)
    Candidate for 2017 election
  • John Haunschild (board member)
    Elected to the Board in 2012
  • Ron Cadaret (board member)
    Elected to the Board in 2012, re-elected 2013
  • Sandra Singer (board member)
    Elected to the Board in 2014 and 2015
  • Jeff Oursland (board member)
    Appointed to the Board in 2015, elected 2016
  • Steve Molever (board member)
    Elected to the Board in 2016

John Sellers vs. Rancho Madera Condominium Association

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Case Summary

Case ID 17F-H1716021-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-03-30
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John Sellers Counsel —
Respondent Rancho Madera Condominium Association Counsel Lydia Peirce Linsmeier, Esq.

Alleged Violations

A.R.S. § 33-1258

Outcome Summary

The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.

Why this result: Petitioner failed to meet the burden of proof that Respondent violated A.R.S. § 33-1258 because the statute does not require the association to provide records (like signature cards or usernames/passwords) which are not financial records showing actual expenditures and are often held by the financial institution.

Key Issues & Findings

Association financial and other records; applicability

Petitioner, a member of the HOA, alleged the HOA violated A.R.S. § 33-1258 by refusing access to bank account signature cards and read-only user names/passwords. The ALJ found that these items were not 'financial and other records' that the association was statutorily required to provide, as they related to mechanisms for disbursement rather than actual expenditure, and would be maintained by the bank, not the association.

Orders: Petitioner's petition was denied and dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01

Analytics Highlights

Topics: Records Request, Condominium Act, Access to Records, Financial Records, Bank Records
Additional Citations:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.08

Video Overview

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

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17F-H1716021-REL Decision – 554490.pdf

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17F-H1716021-REL Decision – 558591.pdf

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17F-H1716021-REL Decision – 549566.pdf

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17F-H1716021-REL Decision – 554490.pdf

Uploaded 2026-01-23T17:19:02 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

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Administrative Hearing Briefing: Sellers v. Rancho Madera Condominium Association

Executive Summary

This document synthesizes the proceedings and outcome of the administrative case John Sellers v. Rancho Madera Condominium Association. The core of the dispute was Petitioner John Sellers’s allegation that the Respondent, Rancho Madera Condominium Association, violated Arizona Revised Statute (A.R.S.) § 33-1258 by refusing to produce specific records: bank account signature cards and read-only online banking credentials for the association’s account with Mutual of Omaha.

The Administrative Law Judge (ALJ) ultimately recommended the petition be denied, a decision that was formally adopted by the Commissioner of the Arizona Department of Real Estate. The ruling hinged on a narrow interpretation of the statute. The ALJ concluded that the requested items were not “financial and other records of the association” as required by law. Key findings supporting this conclusion were:

• Custody: The signature cards, if they exist, are records held by the bank (Mutual of Omaha), not the association.

• Nature of Request: Online user names and passwords constitute “information,” not a “document” or “record” in the statutory sense.

• Sufficient Disclosure: The association had already provided a comprehensive set of financial documents (bank statements, contracts, resolutions, etc.) sufficient for a member to ascertain whether the association was prudently managing its funds, thereby satisfying the plain-meaning purpose of A.R.S. § 33-1258.

The petitioner’s arguments that such records must exist under federal banking regulations and that electronic access is superior to paper records were deemed policy arguments to be addressed to the legislature, not grounds for finding a statutory violation.

Case Overview

Case Name

John Sellers, Petitioner, vs. Rancho Madera Condominium Association, Respondent

Case Number

No. 17F-H1716021-REL (also listed as DOCKET NO. 17F-H1716021-REL and CASE NO. HO 17-16/021)

Petitioner

John Sellers (Appeared on his own behalf)

Respondent

Rancho Madera Condominium Association

Respondent’s Counsel

Lydia Peirce Linsmeier, Esq., Carpenter, Hazlewood, Delgado & Bolen, PLC

Adjudicating Body

Arizona Office of Administrative Hearings

Reviewing Body

Arizona Department of Real Estate

Administrative Law Judge

Diane Mihalsky

Commissioner

Judy Lowe, Arizona Department of Real Estate

Core Allegation and Legal Framework

Petitioner’s Claim

On or about December 20, 2016, John Sellers, a condominium owner and member of the Rancho Madera Condominium Association, filed a petition with the Arizona Department of Real Estate. The petition alleged that the association had violated A.R.S. § 33-1258 by refusing to provide two specific items related to its bank account at Mutual of Omaha:

1. Bank account signature cards.

2. Read-only user names and passwords for online access to the account.

Sellers argued that these documents must exist, citing federal banking statutes and regulations intended to combat terrorism.

Governing Statute: A.R.S. § 33-1258

The case revolved around the interpretation of A.R.S. § 33-1258, “Association financial and other records.” The key provisions of this statute state:

• A. Right to Examine: “Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member…”

• Timeline: An association has ten business days to fulfill a request for examination and ten business days to provide copies upon request.

• Fees: An association may charge a fee of not more than fifteen cents per page for copies.

• B. Withholdable Records: The statute allows an association to withhold records related to:

1. Privileged attorney-client communication.

2. Pending litigation.

3. Records of board meetings not required to be open to all members.

4. Personal, health, or financial records of individual members or employees.

5. Records related to job performance or complaints against employees.

• C. Legal Prohibitions: An association is not required to disclose records if doing so would violate state or federal law.

The Uniform Condominium Act, of which this statute is a part, does not provide a more specific definition of “financial and other records.”

Factual Findings and Evidence Presented

Records Provided by the Association

Prior to the hearing, the Respondent had already provided the Petitioner with a substantial volume of financial records. Emails attached to the initial petition indicated that the following documents were furnished:

• All bank statements

• Account opening documentation

• Forms for members’ direct debit authorizations

• The Board’s resolution authorizing the opening of the bank account

• Agreements between the property management company, Trestle Management Group, and Mutual of Omaha regarding fees, indemnities, and netting

• The association’s insurance certificate

• The association’s management contract with Trestle Management Group

Witness Testimony

A hearing was held on March 7, 2017, where testimony was presented by both parties.

• Petitioner’s Testimony: John Sellers testified on his own behalf and submitted ten exhibits.

• Respondent’s Witnesses:

◦ Marc Vasquez (Vice President of Trestle Management Group): Testified that all signature cards for the association’s bank accounts were held by the bank at which the accounts were opened. He stated that Mutual of Omaha was the custodian of those cards.

◦ Alan Simpson (Vice President of Respondent’s Board) & Marc Kaplan (President of Respondent’s Board): Both testified that they did not have user names and passwords for the association’s Mutual of Omaha account. They believed, however, that the association’s treasurer may have had such credentials to access the account online.

Administrative Law Judge’s Decision and Rationale

The ALJ’s decision, issued on March 29, 2017, denied the Petitioner’s petition. The reasoning was based on a direct interpretation of A.R.S. § 33-1258 and the evidence presented.

• Burden of Proof: The decision established that the Petitioner bore the burden of proving by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is defined as proof that “convinces the trier of fact that the contention is more probably true than not.”

• Statutory Interpretation: The ALJ determined that the “plain meaning” of A.R.S. § 33-1258 is to provide members with access to documents that allow them to “ascertain whether the association is prudently managing its members’ assessments.” The decision explicitly states that the numerous documents already provided by the Respondent fulfilled this purpose.

• Custody and Control: A central finding was that the requested items were not “records of the association.” The signature cards were records held and maintained by a third party, Mutual of Omaha. The statute does not compel an association to produce records that are not in its possession or under its control.

• Information vs. Documents: The decision drew a distinction between records and information, stating, “The user names and passwords are information, not a document.” Furthermore, it noted that these items “do not relate to Respondent’s actual expenditure of members’ assessments” but rather to the mechanisms for disbursing funds.

• Scope of the Statute: The ALJ concluded that A.R.S. § 33-1258 does not require an association to “create, maintain, or provide this information or documentation to Petitioner, either to serve his convenience or to allow him to ascertain Respondent’s or Mutual of Omaha’s compliance with federal banking statutes that are not incorporated in the Uniform Condominium Act.”

• Policy Arguments: The Petitioner’s contention that “paper access to the account information is inferior to electronic access” was dismissed as “a policy argument that should be addressed to the Legislature.” The statute only requires that records be made “reasonably available,” which the Respondent had done.

Procedural History and Final Outcome

c. Dec. 20, 2016

John Sellers files a petition with the Arizona Department of Real Estate.

Mar. 7, 2017

An evidentiary hearing is held before ALJ Diane Mihalsky. An order is issued holding the record open for the parties to submit legal memoranda regarding the scope of A.R.S. § 33-1258.

Mar. 21, 2017

The deadline for submitting legal memoranda passes, and the record on the matter is closed.

Mar. 29, 2017

ALJ Diane Mihalsky issues the “Administrative Law Judge Decision,” which includes Findings of Fact, Conclusions of Law, and a Recommended Order to deny the Petitioner’s petition.

Mar. 30, 2017

Judy Lowe, Commissioner of the Department of Real Estate, issues a “Final Order.” This order formally accepts and adopts the ALJ’s decision, and the petition is denied.

The Final Order, effective immediately upon service, represented the final administrative action in the matter. The order noted that parties could file a motion for rehearing within 30 days or appeal the final administrative decision through judicial review.

Study Guide:Sellers v. Rancho Madera Condominium Association

This study guide provides a comprehensive review of the administrative case John Sellers v. Rancho Madera Condominium Association, Case No. 17F-H1716021-REL. It covers the key parties, legal arguments, statutory interpretations, and the ultimate decision rendered by the Office of Administrative Hearings and the Arizona Department of Real Estate.

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Short-Answer Quiz

Instructions: Answer the following questions in 2-3 sentences each, based on the information provided in the case documents.

1. What was the central allegation made by the Petitioner, John Sellers, against the Rancho Madera Condominium Association?

2. Identify the specific Arizona Revised Statute (A.R.S.) that formed the basis of the legal dispute and summarize its primary requirement for homeowners’ associations.

3. What specific documents or information did John Sellers request that the association refused to provide?

4. In its defense, what was the association’s stated reason for not producing the requested items?

5. List the documents that the association did provide to the Petitioner prior to the hearing.

6. Who testified on behalf of the Respondent association at the March 7, 2017 hearing?

7. How did the Administrative Law Judge (ALJ) distinguish between “information” and “documents” in her legal conclusions?

8. What is the “burden of proof” in this case, and which party was responsible for meeting it?

9. What was the final outcome of the petition as determined by the Administrative Law Judge and subsequently adopted by the Commissioner of the Department of Real Estate?

10. According to the ALJ’s decision, what is the plain meaning and purpose of A.R.S. § 33-1258?

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Answer Key

1. The Petitioner, John Sellers, alleged that the Respondent, Rancho Madera Condominium Association, had violated A.R.S. § 33-1258. The specific violation was the association’s refusal to provide him with certain records related to its bank account at Mutual of Omaha.

2. The statute at the center of the dispute was A.R.S. § 33-1258, titled “Association financial and other records.” This statute generally requires that all financial and other records of a homeowners’ association be made reasonably available for examination by any member within ten business days of a request.

3. John Sellers requested bank account signature cards for the association’s Mutual of Omaha account. He also requested read-only user names and passwords for online access to that same account.

4. The association denied the request because it asserted that the requested documents and information either did not exist or were not included in the association’s records. It was testified that the signature cards were held by the bank, Mutual of Omaha, as their custodian.

5. The association provided copies of all bank statements, account opening documentation, direct debit authorization forms, the Board’s resolution to open the account, agreements between its management company (Trestle) and the bank, its insurance certificate, and its management contract with Trestle.

6. Three witnesses testified for the Respondent: Alan Simpson (Vice President of the Board), Marc Kaplan (President of the Board), and Marc Vasquez (Vice President of Trestle Management Group).

7. The ALJ concluded that the requested user names and passwords constituted “information,” not a “document” as covered by the statute. She further reasoned that neither the signature cards nor the online credentials related to the actual expenditure of funds, but rather to the mechanisms for disbursement, and were maintained by the bank, not the association.

8. The burden of proof rested on the Petitioner, John Sellers, to establish by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is proof that convinces the trier of fact that a contention is more probably true than not.

9. The Administrative Law Judge issued a recommended order denying the Petitioner’s petition. This decision was then adopted by the Commissioner of the Department of Real Estate in a Final Order, formally denying the petition and making the decision binding on the parties.

10. The ALJ determined the plain meaning of A.R.S. § 33-1258 is that associations must provide members with access to documents that allow them to ascertain whether the association is prudently managing its members’ assessments. The judge noted that arguments for different types of access (e.g., electronic vs. paper) are policy arguments that should be addressed to the Legislature.

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Essay Questions

Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate comprehensive responses based on the facts, legal reasoning, and conclusions presented in the source documents.

1. Analyze the Administrative Law Judge’s interpretation of “financial and other records” under A.R.S. § 33-1258. How did this interpretation, particularly the distinction between disbursement mechanisms and actual expenditures, lead to the denial of John Sellers’ petition?

2. Discuss the concept of “burden of proof” as it applied in this case. Explain what “preponderance of the evidence” means and detail why the Petitioner, according to the ALJ’s findings, failed to meet this standard.

3. Trace the procedural timeline of the case from the initial petition filed around December 20, 2016, to the Final Order dated March 30, 2017. Identify the key legal bodies involved (Office of Administrative Hearings, Department of Real Estate) and their respective roles in the process.

4. Evaluate the Petitioner’s argument that federal banking statutes and regulations intended to fight terrorism necessitated the existence and disclosure of the requested records. Why was this argument ultimately unpersuasive to the court?

5. Examine the exceptions to disclosure outlined in A.R.S. § 33-1258(B). Although not the central issue in the final decision, explain how these exceptions frame the limits of a homeowner’s right to association records.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, makes findings of fact and conclusions of law, and issues decisions or recommended orders. In this case, Diane Mihalsky served as the ALJ.

A.R.S. § 33-1258

The specific Arizona Revised Statute at the heart of the case, part of the Uniform Condominium Act. It governs a homeowner association’s duty to make its “financial and other records” available for examination by members.

Burden of Proof

The obligation on a party in a legal case to prove their allegations. In this matter, the Petitioner bore the burden of proof.

Commissioner

The head of a government department. In this case, Judy Lowe, the Commissioner of the Arizona Department of Real Estate, adopted the ALJ’s decision and issued the Final Order.

Evidentiary Hearing

A formal proceeding where parties present evidence (such as documents and testimony) before a judge or hearing officer. The hearing in this case was held on March 7, 2017.

Final Order

A binding decision issued by an administrative agency that concludes a case. In this matter, the Final Order was issued by the Commissioner of the Department of Real Estate on March 30, 2017, denying the petition.

Homeowners’ Association

An organization in a subdivision, planned community, or condominium development that makes and enforces rules for the properties and its residents. In this case, the Rancho Madera Condominium Association.

Petitioner

The party who files a petition initiating a legal or administrative action. In this case, John Sellers.

Preponderance of the Evidence

The standard of proof in most civil and administrative cases. It means that the evidence presented is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, establishing that a claim is “more probably true than not.”

Respondent

The party against whom a petition is filed. In this case, the Rancho Madera Condominium Association.

Trestle Management Group (“Trestle”)

The property management company for the Rancho Madera Condominium Association. The Vice President of Trestle, Marc Vasquez, testified at the hearing.

Uniform Condominium Act

The section of Arizona law (Chapter 9 of Title 33, Arizona Revised Statutes) that governs condominiums. A.R.S. § 33-1258 is part of this act.

⚖️

17F-H1716021-REL

3 sources

These sources document the administrative legal proceedings of a dispute between John Sellers (Petitioner) and the Rancho Madera Condominium Association (Respondent) before the Arizona Office of Administrative Hearings. The core issue of the case, No. 17F-H1716021-REL, was the Association’s alleged violation of A.R.S. § 33-1258 by refusing to provide bank account signature cards and read-only user credentials for online access to their bank account. The initial order, dated March 7, 2017, held the record open to allow both parties to submit legal memoranda concerning the scope of corporate records required under the statute. The subsequent Administrative Law Judge Decision, dated March 29, 2017, denied the Petitioner’s petition, concluding that the requested items were not considered financial records the association was legally required to create, maintain, or disclose. Finally, the Commissioner of the Department of Real Estate adopted the ALJ Decision as a Final Order on March 30, 2017.

Case Participants

Petitioner Side

  • John Sellers (petitioner)

Respondent Side

  • Lydia Peirce Linsmeier (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
  • Alan Simpson (board member/witness)
    Rancho Madera Condominium Association
    Vice President of Respondent's board
  • Marc Kaplan (board member/witness)
    Rancho Madera Condominium Association
    President of Respondent's Board
  • Marc Vasquez (property manager/witness)
    Trestle Management Group
    Vice President of Trestle
  • Annette Graham (attorney staff)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Derived from email address (Annette.graham)

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
    Also listed as AHansen

Other Participants

  • M. Johnson (clerical staff)
    Signatory on document transmission
  • LDettorre (ADRE Staff)
    ADRE
    Email recipient
  • djones (ADRE Staff)
    ADRE
    Email recipient
  • jmarshall (ADRE Staff)
    ADRE
    Email recipient
  • ncano (ADRE Staff)
    ADRE
    Email recipient

Paul Gounder vs. Royal Riviera Condominium Association

Posted on by

Case Summary

Case ID 17F-H1716002-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-06-12
Administrative Law Judge Suzanne Marwil
Outcome partial
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Paul Gounder Counsel —
Respondent Royal Riviera Condominium Association Counsel Mark Kristopher Sahl

Alleged Violations

A.R.S. § 33-1250(C)(2)

Outcome Summary

The Administrative Law Judge found Respondent violated A.R.S. § 33-1250(C)(2) by using two substantively different ballots during the 2016 board election,. Respondent was ordered to reimburse the Petitioner’s $500.00 filing fee,. The Administrative Law Judge concluded Respondent did not violate A.R.S. § 33-1250(C)(4),.

Why this result: Petitioner failed to prove violation of A.R.S. § 33-1250(C)(4), which specifies timing requirements for ballots; the ALJ noted that a meeting ballot did not need to contain a received-by date or be mailed seven days in advance if it had been substantively the same as the compliant absentee ballot,,,.

Key Issues & Findings

Ballot must provide an opportunity to vote for or against each proposed action.

The use of two substantively different ballots in the March 2016 election violated A.R.S. § 33-1250(C)(2) because members who did not attend the meeting were unaware of an additional candidate (Eric Thompson) listed on the meeting ballot, thereby denying those members the opportunity to vote for or against each proposed action contained in the meeting ballot,. This finding does not require ballots to be identical, but substantive changes must be presented to all members,,.

Orders: Petitioner's Petition was granted, and Respondent was ordered to reimburse Petitioner's filing fee of $500.00,. No other relief was available.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1250(C)(2)
  • A.R.S. § 32-2199.02
  • A.R.S. § 41-1092.08

Analytics Highlights

Topics: HOA, Condominium, Board Election, Absentee Ballot, Statutory Violation, Filing Fee Reimbursement
Additional Citations:

  • A.R.S. § 33-1250(C)(2)
  • A.R.S. § 33-1250(C)(4)
  • A.R.S. § 33-1250(C)
  • A.R.S. § 41-2198.01
  • Article VII CC&Rs

Video Overview

Audio Overview

Decision Documents

17F-H1716002-REL Decision – 564851.pdf

Uploaded 2026-04-24T10:59:29 (44.2 KB)

17F-H1716002-REL Decision – 567887.pdf

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Briefing Document: Gounder v. Royal Riviera Condominium Association

Executive Summary

This briefing document synthesizes the key events, arguments, and legal conclusions from the administrative case of Paul Gounder versus the Royal Riviera Condominium Association (Case No. 17F-H1716002-REL-RHG). The central issue revolved around the Association’s use of two substantively different ballots for its March 14, 2016, board member election.

The Petitioner, Paul Gounder, alleged that the use of a separate mail-in ballot and an in-person meeting ballot, which contained different candidate lists, violated Arizona statute A.R.S. § 33-1250(C)(2). Specifically, the ballot distributed at the meeting included the name of a seventh candidate, Eric Thompson, who was not listed on the mail-in ballot, thereby denying absentee voters the opportunity to vote for all candidates.

After an initial hearing resulted in a recommended dismissal, a rehearing was granted. Administrative Law Judge (ALJ) Suzanne Marwil ultimately concluded that the Association’s actions constituted a statutory violation. The Judge found that because members voting by mail were not informed of Mr. Thompson’s candidacy, they were denied their right to vote “for or against each proposed action.” The Respondent’s argument that the matter was moot due to a subsequent election was rejected.

The Department of Real Estate adopted the ALJ’s decision, issuing a Final Order on June 12, 2017. The Order granted the petition and required the Royal Riviera Condominium Association to reimburse Mr. Gounder’s $500.00 filing fee. The ruling establishes that while election ballots are not required to be identical, any substantive changes must be presented to all members to ensure an equal opportunity to vote.

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I. Case Overview and Background

This matter was brought before the Arizona Department of Real Estate and the Office of Administrative Hearings.

• Petitioner: Paul Gounder, a condominium owner and member of the Association.

• Respondent: Royal Riviera Condominium Association, a homeowners’ association for a development of approximately 32 condominiums.

• Initial Petition: Filed on or about June 23, 2016.

• Core Allegation: The Association violated A.R.S. § 33-1250(C)(2) and its own CC&Rs by using two substantively different ballots to elect Board members at its March 14, 2016, annual meeting.

II. Procedural History

1. Initial Hearing (October 17, 2016): A hearing was held before Administrative Law Judge Diane Mihalsky.

2. Recommended Dismissal (October 18, 2016): Judge Mihalsky recommended the petition be dismissed, concluding:

3. Rehearing Granted (February 17, 2017): The Petitioner requested a rehearing, which the Department of Real Estate granted. The Department’s order specifically requested a review of A.R.S. § 33-1250, with a focus on subsection (C)(4).

4. Rehearing (May 17, 2017): A rehearing was held before Administrative Law Judge Suzanne Marwil. At this hearing, the Respondent raised a procedural question regarding the correct statutory subsection for review, leading to a temporary order holding the record open until May 24, 2017, for clarification.

5. ALJ Decision (June 2, 2017): Judge Marwil issued a decision finding that the Respondent had committed a statutory violation.

6. Final Order (June 12, 2017): The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s decision and issued a Final Order making the decision binding.

III. The Core Dispute: The Two-Ballot System

The parties stipulated that two different ballots were used for the March 14, 2016, board election, which had seven open positions. The key differences are outlined below.

Feature

Mail Ballot (Absentee)

Meeting Ballot (In-Person)

“Mail Ballot”

“Ballot”

Candidates Listed

Six names

Seven names (added Eric Thompson)

Write-in Option

Included a blank line for a write-in candidate

No space provided for write-in candidates

Distribution

Distributed at least seven days before the meeting

Handed out to members attending the meeting

Return Deadline

Specified the date by which it had to be returned

Did not specify when it needed to be returned

IV. Arguments of the Parties

A. Petitioner’s Position (Paul Gounder)

• Violation of A.R.S. § 33-1250(C)(2): The addition of Eric Thompson’s name to the meeting ballot deprived members who voted by mail of their right “to vote for or against each proposed action,” as they had no opportunity to vote for Mr. Thompson.

• Violation of A.R.S. § 33-1250(C)(4): The meeting ballot violated this subsection because it was not mailed to all members at least seven days in advance of the meeting and did not provide a date by which it had to be received to be counted.

B. Respondent’s Position (Royal Riviera Condominium Association)

• No Violation: The statutes do not explicitly require the use of identical ballots for an election.

• Common Practice: It is a common practice for homeowners’ associations to use a different absentee ballot and meeting ballot.

• Mootness: The issue is moot because the Association had already held another election in 2017 and seated a new board, which included the Petitioner’s wife as a member.

V. Administrative Law Judge’s Findings and Conclusions

In her June 2, 2017 decision, ALJ Suzanne Marwil made the following key legal conclusions:

The ALJ found that the Association’s use of two substantively different ballots did violate this statute.

• Reasoning: Members who did not attend the meeting in person were not notified of Mr. Thompson’s willingness to run for the board. As a result, “these members did not have the opportunity to vote for him and hence were denied their right to vote for or against each proposed action contained in the meeting ballot.”

• Clarification: The ruling explicitly states that this finding does not impose a requirement that all ballots must be identical; however, it establishes that “substantive changes to ballots must be presented to all members.”

The ALJ concluded that no violation of this subsection occurred.

• Reasoning: The Petitioner conceded that the absentee ballot itself complied with the statutory requirements (e.g., being mailed seven days in advance with a return-by date). The judge reasoned that a meeting ballot handed out in person would not need to contain this information if it were “substantively the same as the absentee ballot.” The legal problem arose not from a failure to mail the second ballot, but from the substantive difference between the two.

The ALJ determined that the matter was not rendered moot by the 2017 election and the seating of a new board. The Judge affirmed that the tribunal “can and does find that Respondent committed a statutory violation in the course of holding its 2016 election.”

VI. Final Order and Outcome

• ALJ Recommended Order (June 2, 2017):

◦ The Petitioner’s petition should be granted.

◦ The Respondent must reimburse the Petitioner’s filing fee.

◦ No other relief was available to the Petitioner.

• Department of Real Estate Final Order (June 12, 2017):

◦ The Commissioner of the Department of Real Estate accepted and adopted the ALJ’s decision.

◦ The Order is a final administrative action, effective immediately.

◦ The Royal Riviera Condominium Association was ordered to reimburse the Petitioner’s filing fee of $500.00 within thirty (30) days.

◦ The parties were notified that the Order could be appealed via a complaint for judicial review.

Study Guide: Gounder v. Royal Riviera Condominium Association

This study guide provides a comprehensive review of the administrative case Paul Gounder v. Royal Riviera Condominium Association, Case No. 17F-H1716002-REL-RHG. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

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Short-Answer Quiz

Instructions: Answer the following ten questions in 2-3 sentences each, based on the information in the case documents.

1. What was the central allegation made by the Petitioner, Paul Gounder, in his initial petition?

2. Describe the two different ballots used by the Royal Riviera Condominium Association for its March 14, 2016, board election.

3. What were the two primary legal arguments made by the Respondent, Royal Riviera Condominium Association, to defend its actions?

4. What was the initial outcome of the hearing held on October 17, 2016, before Administrative Law Judge Diane Mihalsky?

5. What was Administrative Law Judge Suzanne Marwil’s final conclusion regarding the alleged violation of A.R.S. § 33-1250(C)(2)?

6. How did Judge Marwil explain her finding that A.R.S. § 33-1250(C)(4), which deals with ballot delivery timelines, was not violated?

7. How did the Respondent argue that the case was moot, and why did Judge Marwil reject this argument?

8. According to the Final Order issued by the Commissioner of the Department of Real Estate, what specific relief was granted to the Petitioner?

9. What is the standard of proof in this matter, and which party has the burden of proof?

10. What specific action did the Department of Real Estate request be reviewed when it granted the request for a rehearing?

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Answer Key

1. The Petitioner, Paul Gounder, alleged that the Respondent violated A.R.S. § 33-1250(C)(2) and its own CC&Rs. The violation occurred by using two substantively different ballots for the election of Board members at the annual meeting on March 14, 2016.

2. The first ballot was an absentee “Mail Ballot” with six candidate names and a blank line for a write-in. The second ballot, handed out at the meeting, was titled “Ballot” and included the names of seven candidates (adding Eric Thompson) but had no space for a write-in candidate.

3. The Respondent argued that it committed no violation because the statutes do not explicitly require the use of identical ballots and that using different absentee and meeting ballots is common practice. It also maintained that the matter was moot because a new election had already occurred in 2017.

4. Following the initial hearing, Judge Diane Mihalsky recommended the dismissal of the Petition on October 18, 2016. She concluded that no statute or bylaw prevented the Respondent from adding the names of willing members to the ballot used at the annual election.

5. Judge Suzanne Marwil found that the use of two substantively different ballots did violate A.R.S. § 33-1250(C)(2). Because members voting by mail were not informed of Eric Thompson’s candidacy, they were denied their right to vote for or against each proposed action.

6. Judge Marwil concluded A.R.S. § 33-1250(C)(4) was not violated because the absentee ballot itself complied with the statute’s requirements for delivery timelines. She reasoned that a meeting ballot would not need to meet these requirements if it were substantively the same as the compliant absentee ballot; the problem arose only because the ballots were different.

7. The Respondent argued the case was moot because a new board had been seated in a 2017 election. Judge Marwil rejected this, stating that the fact a new board is seated does not prevent an Administrative Law Judge from finding that a statutory violation occurred in a past election.

8. The Final Order, issued by Commissioner Judy Lowe on June 12, 2017, granted the Petitioner’s petition. It ordered the Respondent to reimburse the Petitioner’s filing fee of $500.00 within thirty (30) days.

9. The standard of proof is a “preponderance of the evidence,” as stated in A.A.C. R2-19-119(A). Pursuant to A.A.C. R2-19-119(B), the Petitioner has the burden of proof in the matter.

10. In its February 17, 2017, Order Granting Request for Rehearing, the Department of Real Estate specifically requested a review of A.R.S. § 33-1250, and in particular, A.R.S. § 33-1250(C)(4).

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Suggested Essay Questions

Instructions: The following questions are designed for longer, essay-style responses to test a deeper understanding of the case. Answers are not provided.

1. Analyze the legal distinction Judge Marwil makes between ballots being “identical” versus “substantively different.” How did this distinction become the central point upon which her decision on A.R.S. § 33-1250(C)(2) turned?

2. Trace the procedural history of this case, from the filing of the initial petition to the issuance of the Final Order. Discuss the role and decisions of each key actor, including Petitioner Gounder, Respondent Royal Riviera, ALJ Mihalsky, ALJ Marwil, and Commissioner Lowe.

3. Evaluate the legal arguments presented by the Respondent. Why was the argument about “common practice” for homeowners’ associations ultimately unpersuasive, and why did the “mootness” doctrine not apply?

4. Discuss the significance of the specific provisions within A.R.S. § 33-1250(C). How do subsections (C)(2) and (C)(4) work together to ensure fair voting rights for all members of a condominium association, including those who vote by absentee ballot?

5. Examine the relationship between the Arizona Department of Real Estate and the Office of Administrative Hearings as demonstrated in this case. How do they interact to adjudicate disputes between homeowners and their associations?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, hears evidence, and makes legal findings and recommendations. In this case, Diane Mihalsky and Suzanne Marwil served as ALJs.

A.R.S. (Arizona Revised Statutes)

The codified collection of laws for the state of Arizona. This case centered on the interpretation of A.R.S. § 33-1250.

Arizona Department of Real Estate (the Department)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations in Arizona. It granted the rehearing and accepted the final ALJ decision.

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents that set up the rules for a planned community or condominium. The Petitioner alleged the Respondent violated Article VII of its CC&Rs.

Final Order

The concluding and binding decision in an administrative case. In this matter, the Final Order was issued by the Commissioner of the Department of Real Estate on June 12, 2017, accepting the ALJ’s decision.

A legal term for a matter that is no longer in controversy or has become irrelevant. The Respondent unsuccessfully argued the case was moot because a subsequent election had been held.

Office of Administrative Hearings (OAH)

An independent state agency that conducts administrative hearings for other state agencies. The Department of Real Estate referred this case to the OAH for a hearing.

Petitioner

The party who files a petition initiating a legal or administrative action. In this case, the Petitioner was Paul Gounder.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It means the party with the burden of proof must convince the judge that there is a greater than 50% chance that their claim is true.

Rehearing

A second hearing of a case to review the decision made in the first hearing. The Petitioner requested and was granted a rehearing after the initial recommendation to dismiss his petition.

Respondent

The party against whom a petition is filed. In this case, the Respondent was the Royal Riviera Condominium Association.

Your HOA’s Election Rules Might Be Unfair. This Court Case Explains Why.

Introduction: The Devil in the Details

Living in a community governed by a Homeowners’ Association (HOA) often means navigating a complex web of rules, regulations, and procedures. While most are designed to maintain property values and community standards, the enforcement of these rules can sometimes feel arbitrary. But what happens when the very process for electing the board that enforces those rules is flawed?

A fascinating legal challenge demonstrates that even a single, seemingly minor discrepancy in an HOA election can have significant consequences. But the victory was anything but certain. In the case of Paul Gounder versus the Royal Riviera Condominium Association, the homeowner’s initial petition was actually recommended for dismissal by the first judge. It was only through persistence—requesting a rehearing—that the homeowner ultimately prevailed. This case serves as a powerful real-world example of why procedural fairness in community governance is not just important—it’s legally required—and reveals several surprising lessons for any homeowner who values a fair and transparent election process.

Takeaway 1: “Common Practice” Isn’t a Legal Defense

When challenged on its election procedures, the Royal Riviera Condominium Association’s defense was simple: it was merely following “common practice.” The board argued that many HOAs use a different absentee and in-person ballot, so they had done nothing wrong. However, the Administrative Law Judge disregarded this argument entirely, focusing instead on the explicit requirements of Arizona statute A.R.S. § 33-1250(C)(2). This decision provides a crucial lesson for all homeowners: an association’s internal habits or traditions do not override clear legal statutes. If a state law or the community’s own governing documents dictate a specific procedure, the HOA must follow it, regardless of what other associations might be doing. This empowers homeowners by showing that the law, not just internal tradition, is the ultimate authority governing their association’s actions.

Takeaway 2: A “Small” Change Can Invalidate an Election

The dispute in the March 14, 2016 election centered on two different ballots used for the same board election. The mail-in ballot, sent to members voting absentee, listed six names and included a blank line for a write-in candidate. The in-person ballot, distributed to members at the meeting, listed seven names—adding candidate Eric Thompson—and provided no space for write-ins. This difference was not seen as a minor error but as a “substantive” change that fundamentally altered the election. The judge reasoned that members who voted by mail “did not have the opportunity to vote for him and hence were denied their right to vote for or against each proposed action contained in the meeting ballot.”

The judge made a critical distinction about what constitutes a fair process, clarifying that the issue wasn’t about perfection, but equality of opportunity.

Finding this violation does not impose a requirement that ballots be identical; it simply states that substantive changes to ballots must be presented to all members.

This point is not about minor cosmetic differences like fonts or paper color. It’s about ensuring every single voting member has the exact same set of choices. Adding or removing a candidate on one version of a ballot creates two different elections, disenfranchising one group of voters. This ruling affirms that a fair election requires that all members have an equal opportunity to vote on all candidates and measures.

Takeaway 3: Accountability Matters, Even After the Fact

The association attempted to have the case dismissed by arguing that the issue was “moot.” Because a new election had already been held in 2017 and a new board was in place, the HOA claimed the flawed 2016 election no longer mattered. The Administrative Law Judge explicitly rejected this argument. The decision stated that “the fact that a new board is currently seated does not render the matter moot as the Administrative Law Judge can and does find that Respondent committed a statutory violation in the course of holding its 2016 election.” The final order granted the homeowner’s petition and required the Royal Riviera Condominium Association to reimburse his $500.00 filing fee. This is an impactful takeaway for any homeowner who feels it’s too late to act. It demonstrates that an HOA can be held legally accountable for past procedural violations, establishing an important precedent for the community and putting the board on notice for future conduct.

Conclusion: Knowledge is Power

The case of Gounder v. Royal Riviera Condominium Association is a powerful reminder that procedural fairness, strict adherence to legal statutes, and the vigilance of individual homeowners are essential checks on the power of an HOA board. The core lesson is clear: seemingly small details in an election process can have major legal consequences. Homeowners who take the time to understand the specific laws and bylaws governing their community can successfully challenge their associations. But this case also teaches a deeper lesson about perseverance. Faced with an initial recommendation for dismissal, the homeowner could have given up. Instead, he challenged the ruling and won on rehearing, proving that knowledge combined with conviction is a powerful force for ensuring the principles of fairness and equality are upheld.

Does your own community’s voting process ensure every member has an equal voice, and would it stand up to this kind of scrutiny?

Case Participants

Petitioner Side

  • Paul Gounder (petitioner)
  • Frederick C. Zehm (witness)
    Royal Riviera Condominium Association member
    Testified for Petitioner
  • Marlys Kleck (witness)
    Royal Riviera Condominium Association member
    Testified for Petitioner

Respondent Side

  • Mark Kristopher Sahl (HOA attorney)
    Carpenter Hazlewood Delgado & Bolen PLC
  • Dan Peterson (property manager)
    Owner of Respondent's management company

Neutral Parties

  • Diane Mihalsky (ALJ)
    Presided over initial hearing
  • Suzanne Marwil (ALJ)
    Presided over rehearing
  • Judy Lowe (ADRE Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (ADRE staff/HOA Coordinator)
    Arizona Department of Real Estate
    Also listed as AHansen
  • LDettorre (ADRE staff)
    Arizona Department of Real Estate
  • djones (ADRE staff)
    Arizona Department of Real Estate
  • jmarshall (ADRE staff)
    Arizona Department of Real Estate
  • ncano (ADRE staff)
    Arizona Department of Real Estate
  • M. Aguirre (staff)
    Transmitted order

Other Participants

  • Eric Thompson (member/candidate)
    Candidate added to meeting ballot
  • Al DeFalco (member/candidate)
    Nominated from the floor

John W. Griggs v. Executive Towers HOS

Posted on by

Case Summary

Case ID 15F-H1516004-BFS
Agency Department of Fire, Building and Life Safety
Tribunal Office of Administrative Hearings
Decision Date 2016-01-20
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge dismissed the petition, ruling that the Association's conversion of a suite into a fitness center was not a structural alteration requiring a vote under the CC&Rs. Additionally, the $4,000 refurbishment cost did not trigger the Bylaws' $5,000 capital expenditure vote requirement, and the equipment lease payments were not considered capital expenditures.
Filing Fees Refunded $550.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John W. Griggs Counsel —
Respondent Executive Towers Homeowners Association Counsel Christina N. Morgan

Alleged Violations

CC&Rs Paragraph 13; Bylaws Article 4, Section 6

Outcome Summary

The Administrative Law Judge dismissed the petition, ruling that the Association's conversion of a suite into a fitness center was not a structural alteration requiring a vote under the CC&Rs. Additionally, the $4,000 refurbishment cost did not trigger the Bylaws' $5,000 capital expenditure vote requirement, and the equipment lease payments were not considered capital expenditures.

Why this result: Petitioner failed to meet the burden of proof to establish that the renovation was a structural alteration or that the costs constituted a capital expenditure exceeding the limit requiring a vote.

Key Issues & Findings

Unauthorized Structural Alteration and Capital Expenditure

Petitioner alleged the Association violated the CC&Rs and Bylaws by converting a commercial suite into a fitness center without a majority vote of the membership required for structural alterations and capital expenditures exceeding $5,000.

Orders: The petition is dismissed.

Filing fee: $550.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 41-2198.01
  • A.R.S. § 33-1202
  • A.R.S. § 41-1202
  • A.R.S. § 33-1242(A)(7)

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Decision Documents

15F-H1516004-BFS Decision – 477049.pdf

Uploaded 2026-04-24T10:55:26 (183.8 KB)

15F-H1516004-BFS Decision – 486638.pdf

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15F-H1516004-BFS Decision – 486698.pdf

Uploaded 2026-04-24T10:55:33 (60.8 KB)

15F-H1516004-BFS Decision – 477049.pdf

Uploaded 2026-01-27T21:12:19 (183.8 KB)

15F-H1516004-BFS Decision – 486638.pdf

Uploaded 2026-01-27T21:12:19 (174.6 KB)

15F-H1516004-BFS Decision – 486698.pdf

Uploaded 2026-01-27T21:12:19 (60.8 KB)

Briefing Document: Griggs v. Executive Towers Homeowners Association

Executive Summary

This briefing document analyzes the administrative hearing and subsequent decision regarding a dispute between John W. Griggs (Petitioner) and the Executive Towers Homeowners Association (Respondent). The core of the dispute centered on whether the Association's Board of Directors violated its Covenants, Conditions, and Restrictions (CC&Rs) and Bylaws by converting a revenue-generating common element (Suite 7) into a resident fitness center without a formal majority vote of the membership.

The Petitioner argued that the conversion constituted a "structural alteration" and a "capital expenditure" exceeding $5,000, both of which would require specific levels of membership approval. The Respondent contended that the Board acted within its authority to repurpose existing common elements to maintain property values and that the project costs did not hit the thresholds requiring a membership vote.

On January 20, 2016, Administrative Law Judge (ALJ) Diane Mihalsky recommended the dismissal of the petition, finding that the Petitioner failed to prove the Board violated governing documents. The decision was certified as the final administrative action on March 18, 2016.

Detailed Analysis of Key Themes

1. Definition and Threshold of "Structural Alterations"

A primary legal contention was the interpretation of Paragraph 13 of the CC&Rs, which requires a majority vote for "structural alterations or additions."

  • Petitioner's Interpretation: Mr. Griggs argued that "structural" could be interpreted mentally or monetarily, and specifically noted that repairing a subfloor constituted a structural modification.
  • Legal Determination: The ALJ applied a strict legal definition, defining a structural alteration as a "significant change… essentially creating a different building or structure." Because the work involved removing non-load-bearing walls, installing rubber flooring over existing concrete, and upgrading electrical systems without requiring permits, it did not meet the "structural" threshold.
2. Capital Expenditure vs. Operational Expense

The dispute highlighted the financial strategy used by the Board to stay within its autonomous spending limits. Article 4, § 6 of the Bylaws prohibits capital expenditures over $5,000 without two-thirds membership approval.

  • Refurbishment Costs: The Board limited physical refurbishment costs to approximately $4,000, funded by an operating budget surplus.
  • Equipment Acquisition: Rather than purchasing fitness equipment—which would have exceeded the $5,000 limit—the Board entered into a two-year lease-to-own agreement.
  • Legal Determination: The ALJ ruled that because the equipment was leased, it did not constitute a "fixed asset" and therefore the aggregate lease payments did not count as a single capital expenditure under the Bylaws.
3. Board Authority and Fiduciary Responsibility

The Respondent argued that the Board has a fiduciary duty to protect and enhance property values.

  • Market Competitiveness: Testimony established that Executive Towers was the only high-rise in the area without a fitness center, which negatively impacted real estate interest.
  • Economic Strategy: The Board argued that repurposing the space was more beneficial than leaving it vacant, especially following a history of commercial tenants failing to pay rent.
  • Historical Precedent: Evidence showed a long history of the Board repurposing common elements (e.g., converting a "kiddie pool" to a social pool, creating a mailroom, and converting a gym to storage) without seeking membership votes.
4. Membership Participation and Survey Validity

The Board conducted an informal survey rather than a formal vote, leading to disputes over the legitimacy of member "approval."

  • Participation Rates: While 61.8% of owners returned the survey, only 47.8% of the total possible votes (weighted by unit size) were in favor.
  • Petitioner’s Challenge: The Petitioner argued that 47.8% did not constitute a majority.
  • Respondent’s Defense: The Board maintained they were not legally required to hold a vote at all; the survey was a courtesy to "respect the Owners' wishes" rather than a legal requirement for the change in use.

Key Data Points

Survey and Voting Results
Metric Value
Survey Return Rate 61.8315% of possible votes
Votes in Favor 47.8365% of possible votes
Votes Opposed 13.3375% of possible votes
Survey Margin 3-to-1 in favor among respondents
Project Financials
Item Estimated Cost / Impact
Refurbishment (Construction) ~$4,000.00
Monthly Equipment Lease ~$702.63
End-of-Lease Purchase Option ~$2,270.04
Total Equipment Lease Cost ~$16,900.00 (over 2 years)
Potential Lost Rental Revenue ~$800.00/month
Estimated Cost Per Unit $10/month (Years 1-2); $5/month (thereafter)
Property Value Increase $16 per sq. ft. (average since opening)

Important Quotes with Context

On Structural Alterations

"A 'structural alteration' is '[a] significant change to a building or other structure, essentially creating a different building or structure.' … Petitioner did not bear his burden to establish that paragraph 13 of the CC&Rs required Respondent to obtain the approval of a majority of its members…"

— ALJ Decision, Conclusions of Law ¶ 5. (Context: This clarifies why the Board did not need a majority vote for the physical changes made to Suite 7.)

On Fiduciary Duty and Property Value

"The Board believes that the fitness center improves the value off the property at Executive Towers. The fitness center has been well received by the Owners, residents, and realtors touring the building."

— Respondent’s Answer to Petition. (Context: The Board’s justification for bypassing a formal vote, focusing on the outcome of improved marketability.)

On Capital Expenditures

"Because Respondent leased the fitness equipment, it was not a fixed asset. … Because aggregate lease payments over time is not a capital expenditure, Petitioner did not bear his burden to establish that Respondent made a capital expenditure over $5,000…"

— ALJ Decision, Conclusions of Law ¶ 7. (Context: The legal rationale for why the Board’s financial arrangement for equipment did not violate the $5,000 spending limit.)

On Board Autonomy

"Requiring a formal vote of the Owners is form over substance."

— Respondent’s Answer to Petition. (Context: The Association's argument that the clear preference shown in the survey should override the technicality of a formal meeting and vote.)

Actionable Insights

  • Leasing vs. Purchasing Assets: For HOAs governed by strict capital expenditure limits, leasing equipment rather than purchasing it outright can be a valid strategy to manage common elements without triggering requirements for membership votes, as long as the equipment does not qualify as a "fixed asset."
  • Defining "Structural": Minor internal renovations—such as removing non-load-bearing walls, replacing flooring, or updating electrical—generally do not constitute "structural alterations" under Arizona law unless they essentially create a "different building."
  • Board Authority in "Change of Use": Governing documents that grant boards power over "maintenance, repair, and operation" typically allow boards to repurpose existing common areas (e.g., commercial space to a fitness center) without a vote, provided the expenditure limits are respected.
  • Evidence of Value: In disputes regarding Board decisions, demonstrating a tangible increase in property value (e.g., the $16 per sq. ft. increase cited in this case) serves as strong evidence that the Board fulfilled its fiduciary duty.
  • Clarity in CC&Rs: The "final and binding" nature of Board interpretations of CC&Rs (as per Paragraph 4.2 of the Executive Towers CC&Rs) provides the Board with significant legal deference in administrative hearings.

Study Guide: Griggs v. Executive Towers Homeowners Association

This study guide provides a comprehensive overview of the administrative legal dispute between John W. Griggs and the Executive Towers Homeowners Association (Case No. 15F-H1516004-BFS). It covers the core legal issues, governing documents, evidentiary findings, and the final judicial determination.

I. Case Overview and Core Themes

The Dispute

The case centers on a petition filed by John W. Griggs (Petitioner) against the Executive Towers Homeowners Association (Respondent). The Petitioner alleged that the HOA Board violated the association’s governing documents when it converted "Suite 7," a revenue-generating commercial space, into a resident fitness center without obtaining a formal majority vote from the membership or approval from mortgage holders.

Central Legal Questions
  • Structural Alterations: Did the conversion of Suite 7 constitute a "structural alteration" under Paragraph 13 of the CC&Rs, requiring a majority vote?
  • Capital Expenditures: Did the cost of the project exceed the $5,000 threshold established in the Bylaws for unapproved capital expenditures?
  • Board Authority: To what extent does the Board have the discretion to repurpose "Common Elements" to serve the needs of the community and protect property values?

II. Key Concepts and Governing Provisions

Covenants, Conditions, and Restrictions (CC&Rs)
  • Paragraph 1.7 (Common Elements): Defines common elements as all portions of the property except individual apartments, specifically including store spaces, the building office, laundry, parking, and recreation rooms.
  • Paragraph 1.10 (Majority): Defines a "Majority" as owners of more than 50% of the undivided ownership of the Common Elements. Votes are weighted based on the size of the condominium units.
  • Paragraph 4.2 (Board Determination): States that the Board’s determination in disputes relating to the interpretation or application of CC&Rs or Bylaws is final and binding.
  • Paragraph 13 (Structural Alterations): Prohibits structural alterations or additions to the building without prior approval from a Majority of Owners and all mortgage holders/beneficiaries.
  • Paragraph 17 (Use of Common Elements): Specifies that special areas like the garage, laundry, and hospitality rooms shall be used for purposes approved by the Board.
Association Bylaws
  • Article 4, § 6: Prohibits the Board from approving any capital expenditure in excess of $5,000 (unless for emergencies or essential operations) or entering contracts longer than two years without approval from two-thirds of the total ownership.
Statutory Context (Arizona Revised Statutes)
  • A.R.S. § 33-1202: Defines "common elements" in a condominium.
  • A.R.S. § 33-1242(A)(7): Grants associations the power to cause additional improvements to be made as part of the common elements, subject to the CC&Rs.
  • A.R.S. § 41-2198.01: Authorizes the Department of Fire, Building and Life Safety to hear petitions regarding violations of homeowners' association documents.

III. Summary of Evidence and Findings

Project Justification

The Board argued that Executive Towers was the only high-rise in Phoenix without a fitness center, which negatively impacted property values. Efforts to lease Suite 7 to commercial tenants had failed for over six months, and previous tenants had been evicted for non-payment of rent.

Financials and Voting
  • Refurbishment Cost: Credible testimony established the physical refurbishment cost at approximately $4,000 (funded by an operating budget surplus).
  • Equipment Lease: The fitness equipment was leased for approximately $800/month for two years, with a $2,600 purchase option at the end of the term.
  • Member Survey: While not a formal vote, a survey was sent to 160 apartments. 61.8% of ownership responded; of those, owners favored the fitness center by a 3-1 margin. However, the total "yes" votes represented only 47.8% of total undivided ownership, falling short of a 50% absolute majority.
Historical Precedent

Witness testimony revealed a history of the Board repurposing common elements without membership votes, including:

  • Converting a basement gym to storage units.
  • Converting a parking garage roof to a tennis court.
  • Converting a "kiddie pool" into a social pool.
  • Relocating the mailroom.

IV. Short-Answer Practice Questions

  1. Who bears the burden of proof in this administrative hearing?
  • Answer: The Petitioner (Mr. Griggs) bears the burden of proof to establish violations by a preponderance of the evidence.
  1. How is a "Majority" calculated according to the Executive Towers CC&Rs?
  • Answer: It is defined as owners of more than 50% of the undivided ownership of the Common Elements, with votes weighted by the square footage/size of the units.
  1. What was the specific legal definition of a "structural alteration" used by the Judge to reach a decision?
  • Answer: A significant change to a building or structure that essentially creates a different building or structure.
  1. Why did the Judge rule that the $5,000 capital expenditure limit was not violated?
  • Answer: The physical refurbishment cost was $4,000, and the fitness equipment was leased rather than purchased outright. Under the law, aggregate lease payments over time do not constitute a "capital expenditure" for a fixed asset.
  1. What was the final outcome of the petition?
  • Answer: The petition was dismissed, and no action was required of the Respondent.

V. Essay Prompts for Deeper Exploration

  1. Board Discretion vs. Member Oversight: Analyze the tension between a Board’s fiduciary duty to maintain property values (as argued by Respondent) and the procedural requirements for member approval (as argued by Petitioner). Does the "Board's Determination Binding" clause (Paragraph 4.2) effectively grant the Board total immunity in interpreting the CC&Rs?
  2. The Definition of Structural vs. Cosmetic: The Petitioner argued that repairing a subfloor or "monetary/mental" changes could be considered "structural." Critique this argument based on the Judge’s application of Black’s Law Dictionary and the facts regarding the removal of non-load-bearing walls and the absence of required building permits.
  3. The Impact of Leasing on Capital Expenditure Limits: Discuss the legal and financial implications of the Board’s decision to lease equipment rather than purchase it. Does this strategy represent a legitimate management tool or a loophole used to bypass membership voting requirements for large expenditures?

VI. Glossary of Important Terms

Term Definition from Source Context
Capital Expenditure An outlay of funds to acquire or improve a fixed asset.
Common Elements Portions of a condominium other than the units, including lobbies, storage, parking, and recreation areas.
Council of Co-owners The governing body (Association) of the owners for the maintenance and operation of the property.
Fixed Asset A long-term tangible piece of property or equipment that a firm owns and uses in its operations.
Preponderance of the Evidence Proof that convinces the trier of fact that a contention is more probably true than not; evidence with the most convincing force.
Structural Alteration A significant change to a building or other structure, essentially creating a different building or structure.
Undivided Ownership The percentage of interest each owner holds in the common elements, usually determined by unit size.

The Fitness Center Friction: Key Lessons from the Executive Towers HOA Dispute

1. Introduction: A High-Rise Conflict

The Executive Towers, a mid-century landmark in central Phoenix built in 1964, recently served as the staging ground for a pivotal legal test of Homeowners Association (HOA) governance. The dispute centered on a familiar tension in high-density living: the Board’s desire to modernize and maintain property competitiveness versus an individual owner’s right to enforce the strict letter of the community's governing documents.

The conflict erupted when the Board moved to convert "Suite 7"—a vacant 600-square-foot commercial unit in the west wing lobby—into a fitness center. This decision was met with a formal legal challenge from homeowner John W. Griggs in Griggs v. Executive Towers. At the heart of the case were two fundamental questions for any HOA: What constitutes a "structural alteration," and how should a board navigate the "capital expenditure" thresholds that trigger a mandatory membership vote?

2. The Catalyst: Why the Board Acted

As a Real Estate & HOA Legal Analyst, it is essential to view the Board's actions through the lens of Fiduciary Duty. The Board argued that the Executive Towers was the only high-rise in the Phoenix market without a fitness center, a deficit that significantly hampered marketability. Suite 7 had sat vacant for six months despite being advertised on platforms like Craigslist and through on-site signage.

The Board justified the conversion as a strategic move to protect and enhance property values, citing several key drivers:

  • Market Competitive Disadvantage: High-rise units without modern amenities like gyms were increasingly overlooked by realtors and prospective buyers.
  • Inefficient Use of Common Elements: Repurposing non-revenue-generating "dead space" into a desirable amenity.
  • Proven Economic Impact: Subsequent market data indicated that unit values increased by an average of $16 per square foot following the center's opening.
  • High Resident Utilization: Usage metrics showed over 100 residents utilized the facility weekly, with a laundry volume of 30 towels per day.

Crucially, the Board relied on a history of repurposing to establish precedent. Under the implied "Business Judgment Rule," the Board had previously converted the parking garage roof into a tennis court, turned a "kiddie pool" into a social pool, and established a mailroom and trash pickup areas—all without seeking a formal membership vote.

3. The Legal Challenge: Griggs vs. Executive Towers

Petitioner John W. Griggs alleged that the Board violated Paragraph 13 of the CC&Rs and Article 4, § 6 of the Bylaws. The following table contrasts the legal positions of both parties:

Petitioner’s Allegations (John W. Griggs) HOA Board's Defense
Violation of CC&R Paragraph 13: The conversion was a "structural alteration" requiring a majority vote of all Owners and the prior approval of all mortgage holders. Broad Discretion: The changes were cosmetic and non-structural. Under CC&R Paragraph 17, "special areas" like the lobby can be used for purposes approved by the Board.
Violation of Bylaws Article 4, § 6: The project was a capital expenditure exceeding the $5,000 limit, requiring a two-thirds vote of total ownership. Budgetary Compliance: The immediate refurbishment cost was only $4,000, and equipment was acquired through a lease, not an immediate capital outlay.
Incorrect Voting Threshold: Argued that "Majority of Owners" required 50% of the membership, and the survey failed this mark. Management Authority: The Board possessed the authority to manage common elements under Paragraphs 4.2 and 5; the survey was a non-binding courtesy.
4. Defining the Terms: Structural vs. Cosmetic

The Administrative Law Judge (ALJ) leaned heavily on Black’s Law Dictionary to settle the "structural alteration" debate, defining it as a "significant change to a building… essentially creating a different building or structure."

The ALJ rejected the Petitioner’s novel argument that "structural" could be interpreted in "mental or monetary" terms. In a win for literal legal interpretation, the court ruled that the project was non-structural based on the physical realities of the work:

  • Non-Load-Bearing Walls: The removal involved only temporary walls.
  • Superficial Flooring: A floating floor was replaced with rubber matting over existing concrete.
  • ADA Compliance: While a new door was installed for the bathroom and minor asbestos remediation occurred, no building permits were required for the repurposing.

Since these changes did not affect the essential "structure" of the Apartments or the building, the majority approval requirement of Paragraph 13 was never triggered.

5. The $5,000 Threshold: Capital Expenditure Analysis

The most nuanced legal takeaway involves the definition of a "capital expenditure." Article 4, § 6 of the Bylaws prohibits capital expenditures over $5,000 without a two-thirds vote. The Petitioner claimed the "total contract value" of the project—including 24 months of lease payments and a payoff—exceeded $27,000.

However, the ALJ applied a strict accounting definition: a capital expenditure is an immediate outlay of funds to acquire a fixed asset. The Board navigated this through a strategic financial structure:

  1. Direct Refurbishment: $4,000 was spent on physical renovations, pulled from a surplus in the Operating Budget.
  2. Equipment Lease: The Board entered a two-year lease for cardio and strength equipment at exactly $702.63 per month.
  3. End-of-Lease Purchase: The contract included an option to purchase the equipment for approximately $2,600.

The ALJ concluded that aggregate lease payments are not capital expenditures because the Association does not own the equipment during the lease term; thus, it is not a "fixed asset" at the time of the agreement. This "ongoing expense" vs. "immediate outlay" distinction allowed the Board to bypass the $5,000 voting trigger.

6. The Role of Resident Feedback

While not legally required to vote, the Board conducted a survey of the 160 Apartments in June 2015. A critical detail here is weighted voting: per Paragraph 1.10 of the CC&Rs, votes are counted based on the size of the unit (undivided ownership interest), not a "one unit, one vote" system.

The survey results were as follows:

  • Total Returns: 61.8315% of the total ownership interest.
  • In Favor: 75 Apartments, representing 47.8365% of the total possible votes.
  • Opposed: 21 Apartments, representing 13.3375% of the total possible votes.

The Petitioner argued that 47.8365% fell short of a "majority." However, the ALJ ruled the survey was a "gauge" of support rather than a formal election. Because the Board already possessed "broad discretion" under CC&R Paragraph 17 to approve the use of "special areas," the lack of a 50%+ majority was legally irrelevant.

7. Conclusion: The Verdict and Community Takeaways

The ALJ dismissed the petition, affirming the Board’s broad management authority. This case serves as a powerful reminder that while governing documents provide a framework, the Board’s fiduciary duty to protect property values often grants them significant latitude in the "maintenance, administration, and operation" of the community.

Essential Takeaways for Homeowners and Boards:

  • Broad Management Authority over Common Elements: Boards typically have the right to repurpose "special areas" (like lobbies or storage) for incidental residential use without a vote, provided the change is not "structural."
  • The Technicality of Capital Expenditures: Leasing vs. purchasing is a legitimate management strategy. By opting for a lease, a Board can acquire significant amenities as an "operating expense" rather than a "capital expenditure," potentially avoiding the need for a membership-wide vote.
  • The Strategic Utility of Non-Binding Surveys: Surveys are an effective tool for gauging community sentiment. As seen here, they do not carry the same legal weight as a formal vote mandated by CC&Rs, allowing Boards to maintain the "Business Judgment" to proceed with unpopular but value-additive projects.

Case Participants

Petitioner Side

  • John W. Griggs (petitioner)
    Appeared on own behalf; owner of a residence in Executive Towers
  • Linda Pollack (witness)
    Resident/owner; testified for Petitioner
  • Helen Jerzy (witness)
    Executive Towers Homeowners Association
    Board Member; testified for Petitioner

Respondent Side

  • Christina N. Morgan (HOA attorney)
    VialFotheringham LLP
  • William B. Early (witness)
    Former board member; testified for Respondent
  • Wayne Peter Parente (board president)
    Executive Towers Homeowners Association
    Testified for Respondent
  • Jay Russett (property manager)
    Executive Towers Homeowners Association
    Executive Director; testified for Respondent

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
  • Debra Blake (agency director)
    Department of Fire Building and Life Safety
    Interim Director
  • Greg Hanchett (agency director)
    Office of Administrative Hearings
    Interim Director; certified the decision
  • Joni Cage (agency staff)
    Department of Fire Building and Life Safety
    c/o for Debra Blake
  • Rosella J. Rodriguez (administrative staff)
    Office of Administrative Hearings
    Signed copy certification

SHARON OBERRITTER v. SCOTTSDALE TRAILS

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Case Summary

Case ID 15F-H1516003-BFS
Agency Department of Fire, Building and Life Safety
Tribunal Office of Administrative Hearings
Decision Date 2015-12-23
Administrative Law Judge M. Douglas
Outcome The Administrative Law Judge determined that the Board's modification of the Rules and Regulations regarding patio storage was not a violation of the CC&Rs and did not require a vote by the owners. The Petitioner failed to meet the burden of proof.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Unknown Counsel —
Respondent Unknown Counsel —

Alleged Violations

CC&Rs Article 16, Section 16.2

Outcome Summary

The Administrative Law Judge determined that the Board's modification of the Rules and Regulations regarding patio storage was not a violation of the CC&Rs and did not require a vote by the owners. The Petitioner failed to meet the burden of proof.

Why this result: Petitioner failed to satisfy the burden of proof to establish that the rule change was invalid or required membership approval.

Key Issues & Findings

Unauthorized Rule Change

Petitioner alleged that the Board violated the CC&Rs by modifying a rule regarding patio storage without obtaining approval from two-thirds of the owners.

Orders: The petition is dismissed.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • CC&Rs Article 16, Section 16.2
  • A.R.S. § 41-2198.01

Video Overview

Audio Overview

Decision Documents

15F-H1516003-BFS Decision – 472974.pdf

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15F-H1516003-BFS Decision – 486288.pdf

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15F-H1516003-BFS Decision – 472974.pdf

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15F-H1516003-BFS Decision – 486288.pdf

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Briefing Document: Sharon Oberritter vs. Scottsdale Trails Association

Executive Summary

This briefing document summarizes the administrative legal proceedings and final agency action in the matter of Sharon Oberritter vs. Scottsdale Trails Association (No. 15F-H1516003-BFS). The case originated from a petition filed by Sharon Oberritter, a member of the Scottsdale Trails homeowners’ association, alleging that the association’s Board of Directors violated its Covenants, Conditions, and Restrictions (CC&Rs) and Arizona statutes.

The core of the dispute involved a June 2014 Board vote that modified rules regarding patio and balcony usage. The Petitioner contended that this change required a two-thirds vote of the community members, while the Board maintained it was a semantic adjustment to align internal rules with existing CC&Rs. Following a hearing on December 9, 2015, Administrative Law Judge (ALJ) M. Douglas determined that the Petitioner failed to satisfy the burden of proof. The petition was dismissed, and the decision was certified as the final administrative action of the Department of Fire, Building and Life Safety on March 17, 2016.

Case Background and Procedure

Parties Involved
  • Petitioner: Sharon Oberritter, a homeowner and member of Scottsdale Trails. She was a Board member for ten years.
  • Respondent: Scottsdale Trails Association, a homeowners' association located in Scottsdale, Arizona, represented by attorney Mark Sahl.
Procedural History
  1. Petition Filing: Ms. Oberritter filed a petition with the Department of Fire, Building and Life Safety, which is authorized by statute to hear disputes between homeowners and associations.
  2. Allegation: The Petitioner alleged the Board violated Article 16, Section 16.2 of the CC&Rs by voting to change Rule Section 4, #3 without a membership vote and against legal advice.
  3. Motion in Limine: At the onset of the hearing, the Respondent moved to exclude testimony regarding privileged communications between the Board and its legal counsel. The ALJ granted this motion, citing that attorney-client privilege belongs to the client and can only be waived by them.
  4. Final Decision: The ALJ issued a recommended order of dismissal on December 23, 2015. With no further action from the Department by January 27, 2016, the decision was certified as final on March 17, 2016.

Analysis of Key Themes

1. Board Authority vs. Membership Approval

The primary conflict centered on the limits of Board authority. The Petitioner and her husband, John Oberritter (also a Board member), argued that any changes to the CC&Rs or rules governing property appearance require approval from two-thirds of the owners. They expressed concern that unauthorized rule changes would lead to property deterioration and lower values.

Conversely, Board member Michael J. Vukson testified that the Board’s June 2014 action was merely a modification of the language in the "Rules and Regulations" to ensure compliance with the existing CC&Rs. The ALJ found no credible evidence that this specific linguistic change constituted a violation of the CC&Rs or required a general membership vote.

2. Burden of Proof in Administrative Hearings

As the party asserting the claim, the Petitioner bore the burden of proof. Under A.R.S. § 41-2198.01 and A.A.C. R2-19-119, the standard is a "preponderance of the evidence." This requires the Petitioner to prove that their claim is "more likely true than not." The ALJ concluded that Ms. Oberritter failed to meet this standard, as she did not provide sufficient evidence to demonstrate that the Board's vote exceeded its legal or contractual authority.

3. Consistency Between CC&Rs and Rules

The hearing highlighted the hierarchy of association documents. The 2014 rule change was presented by the Respondent as an effort to align the "General Rules and Regulations" with the language of the CC&Rs.

Document Source Language Regarding Patios/Exteriors
CC&Rs Article 16, Section 16.2 Prohibits items on patios/balconies except customary furniture/plants; requires prior written Board approval for exterior painting or decorating.
2012 Rules (Section 2) Prohibits items on patios without prior written approval of the board.
2014 Amended Rules (Section 4) Updated to explicitly reference Section 16.2 of the CC&Rs and list specific prohibited areas (parking spaces, roofs, common elements).

Important Quotes and Context

Regarding the Rule Change

"The majority of the Board voted to change Rule-Section 4, #3 against both the CC&Rs and the advice of the attorney who had reviewed their addition to the previous rule before the vote."

— Petitioner’s Allegation (Finding of Fact #4)

Context: This was the primary basis for the petition, suggesting the Board ignored both governing documents and legal counsel.

Regarding the Nature of the Modification

"Mr. Vukson opined that the change was essentially a semantic change that hardly changed the wording of Section 4, paragraph 2."

— Testimony of Michael J. Vukson (Finding of Fact #10)

Context: This testimony supported the Respondent's position that the Board was not creating new restrictions but clarifying existing ones to match the CC&Rs.

Regarding the Legal Ruling

"This Tribunal concludes that there was no credible evidence presented to establish that the change in language was in violation of Section 16.2 of Respondent’s CC&Rs or that the change in rules required a vote by the owners."

— Administrative Law Judge (Conclusion of Law #4)

Context: This is the pivotal legal conclusion that led to the dismissal of the case, indicating that the Petitioner's arguments regarding the necessity of a two-thirds vote were not legally supported in this instance.

Actionable Insights

  • Clarification of Governance Hierarchy: Association boards may modify "Rules and Regulations" to align with "CC&Rs" without a membership vote, provided the changes are semantic or clarify existing restrictions rather than creating new ones that contradict the CC&Rs.
  • Documentation and Proof: In administrative disputes, petitioners must provide concrete evidence that a board's action specifically violates a statute or a provision of the association's documents. Opinion-based testimony regarding potential property value deterioration is insufficient to meet the "preponderance of the evidence" standard.
  • Privileged Communications: Associations can successfully protect communications with legal counsel during administrative hearings. Unless the board waives attorney-client privilege, members cannot compel the disclosure of legal advice to prove a board acted "against advice."
  • Finality of ALJ Decisions: Under A.R.S. § 41-1092.08(D), if the relevant Department director does not act to accept, reject, or modify an ALJ decision within a specific timeframe (in this case, approximately 35 days), the decision automatically becomes the final administrative action.

Case Study Guide: Oberritter v. Scottsdale Trails Association

This study guide provides a comprehensive overview of the administrative legal proceedings in the matter of Sharon Oberritter v. Scottsdale Trails Association (No. 15F-H1516003-BFS). It outlines the key facts, legal standards, and procedural outcomes of the case.

I. Key Concepts and Case Background

The Parties
  • Petitioner: Sharon Oberritter, a homeowner in Scottsdale Trails and a member of the Board of Directors for ten years.
  • Respondent: Scottsdale Trails Association, a homeowners’ association (HOA) located in Scottsdale, Arizona.
  • Witnesses: John Oberritter (Petitioner’s husband and Board member) and Michael J. Vukson (Board member since 2012).
The Core Dispute

The Petitioner alleged that the Scottsdale Trails Board of Directors violated Association CC&Rs (Covenants, Conditions, and Restrictions) and Arizona statutes. Specifically, the Petitioner contested a June 2014 Board vote (4 to 3) that modified the rules concerning patio and balcony usage.

The Petitioner argued that according to Article 16, Section 16.2 of the CC&Rs, any such change required an affirmative vote from two-thirds of the homeowners, rather than a simple majority vote by the Board.

Rule Evolution

The case centered on the linguistic and legal differences between the Association’s governing documents:

Document Provision Key Language
CC&Rs Section 16.2 Original Authority Limits patio/balcony items to "customary patio furniture and reasonably sized potted plants" unless prior written approval is granted by the Board.
2012 Rules & Regulations Section 2 Reiterated that nothing except furniture and plants could be stored on patios without prior Board approval.
2014 Rules & Regulations Section 4, Para 2 Updated the language to align with Section 16.2 of the CC&Rs, explicitly listing balconies, parking spaces, and common elements as restricted areas unless approved by the Board.

II. Legal Framework and Standards

Administrative Jurisdiction

Under A.R.S. § 41-2198.01, the Department of Fire, Building and Life Safety is authorized to receive petitions from homeowners regarding violations of planned community documents or statutes. These hearings are conducted by the Office of Administrative Hearings.

Burden of Proof
  • Standard: The standard of proof is a preponderance of the evidence.
  • Definition: The party asserting the claim must persuade the finder of fact that the proposition is "more likely true than not."
  • Responsibility: The burden of proof in this matter rested with the Petitioner, Sharon Oberritter.
Attorney-Client Privilege

During the proceedings, the Respondent filed a Motion in Limine to exclude communications between the Board and its legal counsel. The Administrative Law Judge (ALJ) granted this motion, noting that:

  1. Privilege protects communications intended to facilitate legal services.
  2. The privilege belongs to the client (the Association).
  3. The privilege can only be waived by the client.

III. Short-Answer Practice Questions

  1. What specific fraction of homeowner approval did the Petitioner claim was necessary to change the CC&Rs?
  • Answer: Two-thirds of the owners.
  1. How many members were on the Scottsdale Trails Board of Directors at the time of the 2014 vote?
  • Answer: Seven members (increased from five in 2012).
  1. What was the Respondent’s primary defense regarding the 2014 rule change?
  • Answer: The Board (via witness Mr. Vukson) argued the change was essentially "semantic" and was intended to bring the Rules and Regulations into compliance with the existing CC&Rs.
  1. Why did the ALJ dismiss the petition?
  • Answer: The ALJ concluded there was no credible evidence that the language change violated the CC&Rs or required a vote by the homeowners. The Petitioner failed to meet the burden of proof.
  1. What happens if the Department of Fire, Building and Life Safety fails to act on an ALJ decision within the statutory timeframe?
  • Answer: If the Department does not accept, reject, or modify the decision by the deadline (in this case, January 27, 2016), the ALJ decision is certified as the final administrative decision.

IV. Essay Prompts for Deeper Exploration

  1. Board Authority vs. Homeowner Rights: Analyze the Petitioner’s argument that the Board exceeded its authority. In what circumstances does a Board’s power to "interpret" or "align" rules cross the line into "amending" governing documents? Use the definitions of Section 16.2 to support your argument.
  2. The Role of Evidence in Administrative Hearings: The ALJ noted that the Petitioner failed to satisfy the "preponderance of the evidence" standard. Discuss the types of evidence that might have been necessary for the Petitioner to prove that a semantic change to the Rules and Regulations constituted a functional amendment to the CC&Rs.
  3. Procedural Finality in Arizona Law: Describe the timeline and steps required for an ALJ decision to become a final agency action. Include the roles of the Office of Administrative Hearings, the Department of Fire, Building and Life Safety, and the rights of the parties to seek judicial review in Superior Court.

V. Glossary of Important Terms

Term Definition
A.R.S. § 41-2198.01 The Arizona Revised Statute that permits homeowners to file petitions regarding violations of planned community regulations.
Administrative Law Judge (ALJ) A presiding officer who hears evidence and makes recommended orders in disputes involving state agencies.
CC&Rs Covenants, Conditions, and Restrictions; the governing documents that dictate the rules for a planned community or HOA.
Certification of Decision The process by which an ALJ's recommended order becomes a final, binding administrative action.
Common Elements Areas within a development (such as roofs or exteriors) controlled by the Association rather than individual owners.
Motion in Limine A legal motion requested at the start of a hearing to exclude certain evidence or testimony (in this case, privileged legal advice).
Petitioner The party who initiates the legal action or petition (Sharon Oberritter).
Preponderance of the Evidence The legal standard requiring that a claim is more likely to be true than not true.
Respondent The party against whom a petition is filed (Scottsdale Trails Association).

Understanding HOA Governance: Lessons from the Scottsdale Trails Dispute

1. Introduction: The Power Struggle in Community Living

The dream of quiet community living often collides with the messy reality of governance. In many Homeowners’ Associations (HOAs), a "cold war" exists between the elected Board of Directors and the residents they represent. But what happens when the conflict isn't just between the "us" and the "them," but within the Board itself?

In the case of Sharon Oberritter vs. Scottsdale Trails (Case No. 15F-H1516003-BFS), heard at the Arizona Office of Administrative Hearings, we see a fascinating example of internal political intrigue. The case centers on a 4-3 split within the Board, raising a fundamental question for every homeowner: When can a Board unilaterally update community standards, and when must they seek a two-thirds mandate from the entire community? This dispute serves as a masterclass in the distinction between clarifying existing rules and amending governing documents.

2. The Case Background: A Disputed Rule Change

The Petitioner, Sharon Oberritter, was no ordinary resident; she was a ten-year veteran of the Scottsdale Trails Board of Directors. Supported by her husband, John Oberritter—also a Board member—Sharon alleged that the Association had overstepped its legal boundaries.

The "smoking gun" in this dispute was a June 2014 decision where the Board, by a narrow one-vote margin (4 to 3), updated Section 4, Paragraph 2 of the Association’s Rules and Regulations. This section governed patio aesthetics—a common flashpoint in HOA living. The Oberritters argued that this change was not a simple administrative update, but a de facto amendment to Article 16, Section 16.2 of the CC&Rs. Because the change impacted community appearance and property values, the Petitioners insisted it required the approval of two-thirds of the membership, rather than a simple majority of the directors.

3. The Legal Battleground: Rules vs. CC&Rs

The crux of the legal battle rested on linguistic nuance. The Board’s strategy was tactical: they sought to "align" the Rules and Regulations with the CC&Rs, which hold higher legal authority.

Version Language and Context
2012 Rules and Regulations (Section 2) "Except for customary patio furniture and reasonably sized potted plants, nothing shall be stored, placed, erected or hung on any patio area without prior written approval of the board."
2014 Board Update (Section 4, Paragraph 2) "Pursuant to Section 16.2 of the CC&Rs, Except for customary patio furniture and reasonably sized potted plants on patios or balconies, nothing shall be stored, placed, erected, hung or permitted on any patio, balcony, parking space, fenced yard area, roof, the Association controlled Common Elements or exteriors of any Unit, unless approved by the Board of Directors."

The Clash of Perspectives:

  • The Oberritters' Position: They argued that the 2014 language was an unauthorized expansion of power. They viewed the inclusion of balconies, parking spaces, and unit exteriors as a significant change to the fundamental rights established in Section 16.2 of the CC&Rs.
  • The Board’s Position: Michael J. Vukson, another Board member, testified that the update was "essentially a semantic change." The Board’s defense was that they were simply importing verbatim language from the existing CC&Rs into the Rules and Regulations to ensure consistency across documents.

The "Evidentiary Exclusion" Maneuver: In an investigative twist, the Petitioner attempted to introduce legal advice the Board had received prior to the vote, presumably to show the Board ignored their own counsel. However, the Association successfully filed a Motion in Limine. The Administrative Law Judge (ALJ) ruled that the attorney-client privilege belongs to the "Client"—the Association as a corporate entity—and cannot be waived or exposed by individual dissenting directors. This blocked a major part of the Petitioner's narrative.

4. The Administrative Law Judge’s Findings

In administrative law, the "Burden of Persuasion" lies with the person bringing the claim. The ALJ applied the "preponderance of the evidence" standard, requiring the Petitioner to prove it was "more likely true than not" that a violation occurred.

On December 23, 2015, the ALJ issued a decisive ruling. The Judge found that the Petitioner failed to provide "credible evidence" that the language change violated the CC&Rs. Crucially, the ALJ noted that the Petitioner did not establish that this specific alignment of language legally mandated a community-wide vote. Because the 2014 language was already effectively a part of the higher-ranking CC&Rs, the Board was merely clarifying the rules, not creating new law. The petition was dismissed.

5. The Path to Finality: Certification and Agency Action

The conclusion of a hearing is not the end of the legal road. In Arizona, the ALJ’s decision must navigate the state’s administrative machinery to become final:

  • December 23, 2015: The ALJ Decision was issued and transmitted to the Department of Fire, Building and Life Safety.
  • January 27, 2016: This marked the statutory deadline under A.R.S. § 41-1092.08(D). Within this window, the Department has the power to accept, reject, or modify the decision.
  • March 17, 2016: Because the Department took no action by the January deadline, the ALJ decision was officially certified as the final administrative decision of the agency.

This process ensures that unless the Department finds a glaring error, the expertise of the ALJ remains the final word on the dispute.

6. Conclusion: Key Takeaways for Homeowners

The Scottsdale Trails dispute is a reminder that HOAs operate as small-scale governments where procedural knowledge is power.

Lessons Learned:

  • The Burden of Proof is High: If you challenge a Board’s decision, you must bring more than "opinion" or "concern" regarding property values. You need expert testimony or documentary evidence showing a direct contradiction between the Board’s action and the CC&Rs.
  • Alignment is Not Amendment: Boards have the authority to update Rules and Regulations to mirror the CC&Rs. If the Board is simply "copy-pasting" from a higher authority (the CC&Rs) into a lower one (the Rules), a community vote is rarely required.
  • Privilege Protects the Board, Not the Member: Even if you are a Board member, you do not "own" the legal advice given to the Association. You cannot use the Association's attorney's words to sue the Association itself.
  • Procedural Finality: Pay attention to dates. Under A.R.S. § 41-1092.08(D), silence from a state agency equals approval. Once that clock runs out, the decision is binding.

Ultimately, this case reinforces that HOA governance must remain efficient. If every clarification of existing language required a community-wide vote, the Association would be paralyzed. For homeowners, the best defense is a deep, technical understanding of their CC&Rs before a dispute arises.

Case Participants

Petitioner Side

  • Sharon Oberritter (Petitioner)
    Scottsdale Trails Board of Directors
    Appeared on her own behalf; Board member for ten years
  • John Oberritter (Witness)
    Scottsdale Trails Board of Directors
    Petitioner's husband; Board member for three years

Respondent Side

  • Mark Sahl (Attorney)
    Attorney for Respondent; Mark K. Sahl, Esq.
  • Michael J. Vukson (Witness)
    Scottsdale Trails Board of Directors
    Elected to Board in 2012
  • Benjamin A. Riedel (Attorney)
    Listed in mailing distribution with Mark Sahl

Neutral Parties

  • M. Douglas (Administrative Law Judge)
    Office of Administrative Hearings
  • Debra Blake (Interim Director)
    Department of Fire, Building and Life Safety
    Agency head receiving decision
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Signed Certification of Decision
  • Joni Cage (Administrative Staff)
    Department of Fire, Building and Life Safety
    Care of for Debra Blake
  • Rosella J. Rodriguez (Administrative Staff)
    Office of Administrative Hearings
    Mailed/faxed copy of decision

Janusz, David & Loree vs. Cresta Norte HOA

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Case Summary

Case ID 13F-H1314002-BFS
Agency DFBLS
Tribunal OAH
Decision Date 2014-02-27
Administrative Law Judge M. Douglas
Outcome The ALJ dismissed the petition, ruling that the HOA did not violate its CC&Rs or Design Guidelines by denying the homeowners' request to install exterior shutters. The guidelines required committee approval, which was properly denied.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner David & Loree Janusz Counsel —
Respondent Cresta Norte HOA Counsel Curtis S. Ekmark, Esq.; Molly J. Streiff, Esq.

Alleged Violations

Cresta Norte Guidelines Section N Miscellaneous (7)

Outcome Summary

The ALJ dismissed the petition, ruling that the HOA did not violate its CC&Rs or Design Guidelines by denying the homeowners' request to install exterior shutters. The guidelines required committee approval, which was properly denied.

Why this result: The petitioners failed to meet the burden of proof to show the HOA violated governing documents; the ALJ found the guidelines granted the HOA authority to approve or deny architectural changes.

Key Issues & Findings

Denial of architectural request for exterior shutters

Petitioners alleged the HOA violated design guidelines by denying their request to install exterior shutters. Petitioners argued the guidelines explicitly list 'shutters' as an example of exterior changes, implying they are permitted.

Orders: Petition dismissed; Cresta Norte deemed prevailing party.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • Cresta Norte Guidelines Section N Miscellaneous (7)
  • A.R.S. § 41-2198.01

Video Overview

Audio Overview

Decision Documents

13F-H1314002-BFS Decision – 384508.pdf

Uploaded 2026-04-24T10:46:57 (103.9 KB)

13F-H1314002-BFS Decision – 389432.pdf

Uploaded 2026-04-24T10:47:00 (60.8 KB)

13F-H1314002-BFS Decision – 384508.pdf

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13F-H1314002-BFS Decision – 389432.pdf

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Briefing Document: David & Loree Janusz vs. Cresta Norte HOA (Case No. 13F-H1314002-BFS)

Executive Summary

This briefing document details the administrative hearing and subsequent final decision regarding a dispute between homeowners David and Loree Janusz (Petitioners) and the Cresta Norte Homeowners Association (Respondent). The core of the conflict involved the Petitioners' request to install exterior shutters on their residence, which was denied by the association’s Architectural Committee and Board of Directors.

The Petitioners alleged that the denial violated the association's design guidelines and CC&Rs, arguing that the guidelines were intended to foster creativity and specifically listed shutters as an example of acceptable changes. The Respondent maintained that the guidelines require written approval for any exterior modifications and that shutters were not a desirable architectural feature for the community. Administrative Law Judge M. Douglas ruled in favor of Cresta Norte HOA, finding no evidence of a violation of community documents or state statutes. The decision was certified as the final agency action on April 7, 2014.

Detailed Analysis of Key Themes

1. Interpretation of Design Guidelines

A central theme of the hearing was the interpretation of Section N Miscellaneous (7) of the Cresta Norte Guidelines. Both parties relied on the same text but reached different conclusions:

  • Petitioners’ Perspective: David Janusz, a former Board President and Architectural Committee chairman, argued that the inclusion of the word "shutters" in the guidelines was an intentional collaboration to provide homeowners with flexibility and a method for improving their residences. He asserted that the guidelines should encourage "individuality and creativity."
  • Respondent’s Perspective: Current board and committee members James Wooley and Brian McNamara testified that the mention of "shutters" was merely an example of an exterior change, not an express approval or entitlement. They emphasized that the guidelines require all changes to be "consistent with the design and color palette of the community" and necessitated written approval from the Architectural Committee.
2. Architectural Committee Discretion and Authority

The case highlights the broad discretionary power held by an HOA's Architectural Committee. While the Petitioners argued that they had neighbor support and that the shutters fit the community's color palette, the Board and Committee exercised their authority to determine that exterior shutters were "not a desirable architectural feature" for Cresta Norte. The Administrative Law Judge (ALJ) upheld this exercise of discretion, noting that the denial of an application does not inherently violate the guidelines if the process follows the established rules (i.e., requiring prior written approval).

3. Community Consistency vs. Innovation

The hearing established that no other residences in Cresta Norte currently have exterior shutters. Mr. Janusz admitted this was likely the first request of its kind. While the Petitioners sought to introduce a new element to promote diversity, the Respondent focused on maintaining the existing community image. Interestingly, evidence was presented that the committee had approved other exterior modifications, such as stonework on houses that did not previously have it, suggesting that while some diversity is permitted, the committee retains the final say on which specific features are acceptable.

4. Burden of Proof in Administrative Hearings

The legal conclusion of the case rested on the burden of proof. Under A.A.C. R2-19-119, the burden falls on the party asserting the claim—in this case, the Petitioners. The ALJ concluded that the Petitioners failed to provide "credible evidence" that the HOA violated its CC&Rs, design guidelines, or any applicable state statutes.

Important Quotes with Context

Quote Context
"The purpose of the Guidelines is to encourage creativity and diversity while maintaining a balance with the natural desert environment…" Found in the Cresta Norte Design Guidelines (May 1, 2011 Edition). This served as the basis for the Petitioners' argument for flexibility.
"Any change to the exterior appearance of the house (garage door, stone work, shutters, etc.) must be consistent with the design and color [palette] of the community." Section N Miscellaneous (7) of the Guidelines. This specific language was the focal point of the dispute regarding whether shutters were pre-approved or merely listed as an example.
"The use of the word 'shutters' in the guidelines was an example, not an express approval for the installation of shutters in the community." Testimony from James A. Wooley, Board Member, explaining the Respondent's interpretation of the governing documents.
"The Board of Directors determined that the installation of exterior shutters was not a desirable architectural feature for Cresta Norte." Testimony from Brian McNamara, Board Member, explaining the subjective reasoning behind the denial of the Petitioners' request.
"There was no credible evidence that the architectural committee violated Cresta Norte’s CC&Rs or design guidelines when it denied Petitioners’ request…" Conclusion of Law #4 by ALJ M. Douglas, which led to the dismissal of the petition.

Procedural Timeline

Date Event
May 1, 2011 Implementation of the revised Cresta Norte Design Guidelines.
February 18, 2014 Administrative hearing held in Phoenix, Arizona.
February 27, 2014 ALJ M. Douglas issues the Recommended Order to dismiss the petition.
February 28, 2014 Decision transmitted to the Department of Fire, Building and Life Safety.
April 4, 2014 Deadline for the Department to accept, reject, or modify the decision.
April 7, 2014 ALJ decision certified as the final administrative decision due to no agency action by the deadline.

Actionable Insights

  • Written Approval is Absolute: Homeowners must recognize that even if a feature is listed as an example in design guidelines, the requirement for "prior written approval" remains the controlling factor. An inclusion in a list of examples does not constitute a waiver of the committee's right to deny a specific application.
  • Consistency over Creativity: In a planned community, "architectural consistency" often outweighs "creativity and diversity" in legal challenges, provided the association follows its own procedures. The absence of a specific feature in the community (e.g., no other shutters) is a strong basis for an HOA to deny a request for that feature.
  • Documentation of Intent: For association boards, this case underscores the importance of clear drafting. While the HOA prevailed, the ambiguity of including specific examples like "shutters" in the guidelines provided the basis for the lawsuit. Clearer language distinguishing between "permitted items" and "items requiring review" could prevent similar disputes.
  • Preponderance of Evidence: Petitioners in administrative hearings must demonstrate that a violation is "more likely true than not." Simply showing that a committee was restrictive or that a homeowner's interpretation is plausible is insufficient; they must prove an actual breach of a rule or statute.

Study Guide: Janusz vs. Cresta Norte HOA (No. 13F-H1314002-BFS)

This study guide provides a comprehensive overview of the administrative hearing and subsequent certification regarding the dispute between David and Loree Janusz and the Cresta Norte Homeowners Association (HOA). It examines the legal framework, the arguments presented by both parties, and the final administrative decision.

Case Overview and Key Concepts

1. The Core Dispute

The case originated from a petition filed by David and Loree Janusz (Petitioners) against the Cresta Norte HOA (Respondent). The Petitioners alleged that the HOA violated its own design guidelines and Covenants, Conditions, and Restrictions (CC&Rs) by denying their Architectural Change Request to install exterior shutters on their residence.

2. Legal Authority and Jurisdiction
  • A.R.S. § 41-2198.01: This statute authorizes the Arizona Department of Fire, Building and Life Safety to receive petitions from homeowners or associations regarding violations of community documents or state statutes.
  • Office of Administrative Hearings (OAH): The venue where these disputes are heard before an Administrative Law Judge (ALJ).
  • Burden of Proof: Under A.A.C. R2-19-119, the party asserting the claim (the Petitioners) carries the burden of proof.
  • Standard of Proof: The standard is a preponderance of the evidence, meaning the evidence must persuade the fact-finder that the claim is "more likely true than not."
3. Governing Guidelines: Section N Miscellaneous (7)

The central text of the dispute was found in the Cresta Norte Design Guidelines (May 1, 2011 Edition):

"Any change to the exterior appearance of the house (garage door, stone work, shutters, etc.) must be consistent with the design and color palette of the community. Architectural Committee written approval is required prior to commencement of any work."

Summary of Testimony

Petitioner Testimony (David Janusz)
  • Involvement: Mr. Janusz served on the Board of Directors (2006–2010) and the architectural committee (2007–2009).
  • Intent: He argued that the design guidelines were written to encourage "creativity and diversity." He claimed he was involved in the initial collaboration that included the word "shutters" in the guidelines specifically to allow them as an option for homeowners.
  • Compliance: He asserted that the requested shutters were consistent with the community's design and color palette and that no neighbors opposed the installation.
Respondent Testimony (James A. Wooley and Brian McNamara)
  • James A. Wooley: A board and architectural committee member since 2007/2008. He testified that the 2011 amendment was primarily focused on landscaping. He denied that there was any intent to make shutters an "approved architectural feature" and stated the word "shutters" in the guidelines was merely an example, not an express approval.
  • Brian McNamara: A board and architectural committee member since 2011. He testified that the Board determined exterior shutters were not a "desirable architectural feature" for Cresta Norte. He noted that while stonework had been approved for some homes, no applications for shutters had ever been approved or even submitted prior to the Januszes' request.

Final Decision and Certification

The Administrative Law Judge ruled in favor of the Cresta Norte HOA. The ALJ found no "credible evidence" that the architectural committee or the Board violated the CC&Rs, design guidelines, or state statutes. The judge concluded that requiring written approval for changes and then denying an application based on community appearance did not constitute a violation of the guidelines.

The Certification Process:

  1. ALJ Decision: Transmitted on February 28, 2014.
  2. Director’s Review: Under A.R.S. § 41-1092.08, the Director of the Department of Fire, Building and Life Safety had until April 4, 2014, to accept, reject, or modify the decision.
  3. Finality: Because no action was taken by the Director by the deadline, the ALJ decision was certified as the final administrative decision on April 7, 2014.

Short-Answer Practice Questions

  1. What specific section of the Cresta Norte Design Guidelines was at the center of the dispute?
  2. According to the HOA board members, why was the word "shutters" included in the guidelines if they were not pre-approved?
  3. What is the legal standard of proof required in an administrative hearing regarding HOA disputes in Arizona?
  4. Why was the ALJ’s decision eventually certified as "final"?
  5. Who bears the burden of proof in this case, and why?
  6. What was David Janusz's primary argument regarding the "purpose and philosophy" of the design guidelines?

Essay Prompts for Deeper Exploration

  1. Discretion vs. Explicit Language: Analyze the conflict between the explicit mention of "shutters" in the Design Guidelines and the Architectural Committee's right to deny them. Does the inclusion of a specific item in a list of "changes to exterior appearance" imply that such an item is inherently consistent with the community's design?
  2. The Role of Legislative History in Private Governance: Mr. Janusz argued that his involvement in drafting the guidelines should inform their interpretation. Discuss the weight an Administrative Law Judge should give to the "original intent" of a drafter versus the literal text and the current Board’s interpretation.
  3. Administrative Finality: Explain the process by which an ALJ recommendation becomes a final agency action. Discuss the implications of a Director's "inaction" (failing to accept, reject, or modify) within the statutory timeframe as seen in this case.

Glossary of Important Terms

Term Definition
A.R.S. § 41-2198.01 The Arizona Revised Statute that allows homeowners or associations to petition for a hearing regarding community document violations.
Architectural Committee A specific group within an HOA responsible for reviewing and approving or denying changes to the exterior of properties.
CC&Rs Covenants, Conditions, and Restrictions; the governing documents that dictate the rules and limitations of a planned community.
Certification of Decision The process by which an ALJ decision is officially recognized as the final action of a state agency, often occurring after a period of director review.
Department of Fire, Building and Life Safety The state agency authorized to oversee and process petitions regarding HOA disputes in this jurisdiction.
Preponderance of the Evidence A legal standard of proof meaning that a claim is "more likely true than not" (greater than 50% probability).
Respondent The party against whom a petition or legal claim is filed (in this case, the Cresta Norte HOA).
Section N Miscellaneous (7) The specific clause in the Cresta Norte guidelines requiring written approval for exterior changes like garage doors, stonework, and shutters.

Shutters, Statutes, and Standards: Lessons from the Janusz v. Cresta Norte HOA Dispute

1. Introduction: When Home Improvement Meets HOA Authority

In the manicured community of Cresta Norte in Scottsdale, Arizona, a dispute over exterior shutters provides a fascinating case study in the limits of homeowner expression and the breadth of association authority. The case of Janusz v. Cresta Norte HOA (No. 13F-H1314002-BFS) offers a particular irony: the petitioner, David Janusz, was no stranger to the rules he was challenging. As a former Board President and Architectural Committee Chairman, Janusz found himself defeated by the very discretionary process he once helped lead.

The conflict began with a simple Architectural Change Request for exterior shutters and ended before an Administrative Law Judge. At its heart, the dispute asks a fundamental question: does the explicit mention of a feature within community guidelines grant a homeowner an absolute right to install it? For homeowners and board members alike, the ruling clarifies how administrative courts interpret the "purpose and philosophy" of community standards versus the letter of the law.

2. The Conflict: A Request for Individual Expression

The petitioners, David and Loree Janusz, possessed an intimate understanding of Cresta Norte’s governance. David Janusz served on the Board of Directors from 2006 to 2010 and chaired the Architectural Committee from 2007 to 2009. Despite this history of service, when the Januszes sought to add exterior shutters to their home, the current Architectural Committee issued a denial.

The Board of Directors subsequently upheld this denial on appeal. The dispute centered on the interpretation of the May 1, 2011 Edition of the Cresta Norte Design Guidelines, which appeared to include the very feature the Januszes desired.

Section N Miscellaneous (7) of the Cresta Norte Guidelines states: "Any change to the exterior appearance of the house (garage door, stone work, shutters, etc.) must be consistent with the design and color [palette] of the community. Architectural Committee written approval is required prior to commencement of any work."

3. The Homeowner’s Perspective: Creativity vs. Consistency

David Janusz’s testimony focused heavily on the "purpose and philosophy" of the community. He argued that the guidelines were designed to foster an environment of "creativity and diversity" rather than rigid uniformity. A key point of contention was the temporal gap in the guidelines' creation; while Janusz testified he was involved in the "initial collaboration" of these rules in 2009, the Association pointed out that the guidelines were not actually implemented until 2011—a period during which Janusz was no longer a member of the committee.

The petitioners’ primary arguments were:

  • Encouraging Diversity: The stated goal of the guidelines is to promote creativity and diversity while maintaining a balance with the natural desert environment.
  • Explicit Language: Since "shutters" are explicitly listed in the text of Section N(7), Janusz argued they were an envisioned and approved architectural feature.
  • Community Acceptance: The petitioners claimed to have contacted all neighbors who could see the residence, and none expressed opposition to the shutters.
  • Individuality: The Januszes maintained that the shutters were consistent with the community’s color palette and allowed for necessary "individuality."
4. The Association’s Defense: Intent and Architectural Integrity

The Association, represented by Board members James A. Wooley and Brian McNamara, argued that the petitioners were misinterpreting the intent of the guidelines. They asserted that the mention of "shutters" was merely illustrative of the types of changes requiring approval, not a blanket endorsement of the feature itself.

HOA Argument Supporting Testimony Precedent/Discretion
Amendment Intent Mr. Wooley testified the 2011 amendments were primarily focused on improving community landscaping, not authorizing new architectural features. The Board argued that "diversity" must be balanced with "architectural consistency."
Interpretive Examples The Association argued "shutters" was used as an example of an exterior change, much like a garage door, which still requires specific written approval. The Board concluded shutters were not a "desirable architectural feature" for the community’s specific aesthetic.
Community Standards Testimony noted that no other residences in Cresta Norte have exterior shutters and no prior applications for them had ever been made. The "Stonework" Precedent: Mr. McNamara admitted the committee had approved new stonework for homes that didn't have it, proving the Board exercises discretion to allow some listed examples while denying others.
5. The Verdict: Why the HOA Prevailed

Administrative Law Judge M. Douglas oversaw the hearing, applying the legal standard of "Preponderance of the Evidence." In community governance disputes, this means the homeowner carries the "burden of proof." It is not enough to show that the HOA's decision was unpopular or debatable; the petitioner must prove it is "more likely true than not" that the HOA actually violated its CC&Rs or state statutes. If the evidence results in a "tie" or the Board's decision is found to be a reasonable exercise of discretion, the homeowner loses.

Judge Douglas concluded that the Januszes failed to meet this burden. The ruling established that:

  • There was no credible evidence that the Committee or Board violated the governing documents.
  • The requirement for "written approval" remains the final word. The list of examples in the guidelines (garage doors, shutters, etc.) does not override the committee's authority to decide if a specific change is "consistent with the design and color palette."
  • The 2009 discussions Janusz recalled did not dictate the 2011 implementation of the rules.
6. Final Takeaways for Homeowners and Boards

This case serves as a cautionary tale for those navigating the architectural review process. The legal takeaways from the April 7, 2014, Certification of Decision by Director Cliff J. Vanell are clear:

  • Guidelines are not Guarantees: Just because a feature is listed as an example in the rules does not mean you have a right to install it. Discretionary committee approval is a separate and necessary hurdle.
  • Past Service Doesn't Grant Present Privilege: David Janusz’s former status as Board President and Architectural Chair provided no legal advantage. The court focuses on the current interpretation and application of the rules by the sitting Board.
  • The Burden of Proof is on the Homeowner: When challenging a denial, the homeowner must prove a violation occurred. The HOA does not have to prove its decision was "perfect," only that it acted within its authorized discretionary power.

Ultimately, Janusz v. Cresta Norte HOA reinforces the principle that "diversity" in a planned community is a controlled concept, and "written approval" is a requirement that no amount of previous board experience can bypass.

Case Participants

Petitioner Side

  • David Janusz (petitioner)
    Cresta Norte HOA (former board member)
    Appeared on own behalf; testified as witness
  • Loree Janusz (petitioner)
    Cresta Norte HOA
    Appeared on own behalf

Respondent Side

  • Curtis S. Ekmark (HOA attorney)
    Ekmark & Ekmark LLC
  • Molly J. Streiff (HOA attorney)
    Ekmark & Ekmark LLC
  • James A. Wooley (witness)
    Cresta Norte HOA Board of Directors
    Board member and Architectural Committee member
  • Brian McNamara (witness)
    Cresta Norte HOA Board of Directors
    Board member and Architectural Committee member

Neutral Parties

  • M. Douglas (ALJ)
    Office of Administrative Hearings
  • Cliff J. Vanell (Director)
    Office of Administrative Hearings
    Certified the ALJ decision
  • Gene Palma (Director)
    Department of Fire, Building and Life Safety
  • Joni Cage (agency staff)
    Department of Fire, Building and Life Safety
    Listed on mailing certificate c/o Gene Palma
  • Rosella J. Rodriguez (administrative staff)
    Office of Administrative Hearings
    Signed mailing certificate

Walter, Margo vs. Kingswood Owners Association

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Case Summary

Case ID 12F-H1213012-BFS
Agency DFBLS
Tribunal OAH
Decision Date 2013-05-10
Administrative Law Judge Brian Brendan Tully
Outcome The petition was dismissed because the HOA does not own any real property (common elements) and therefore does not qualify as a 'planned community' under Arizona law, depriving the agency of jurisdiction.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Margo L. Walter Counsel —
Respondent Kingswood Owners Association Counsel —

Alleged Violations

A.R.S. § 33-1802(4)

Outcome Summary

The petition was dismissed because the HOA does not own any real property (common elements) and therefore does not qualify as a 'planned community' under Arizona law, depriving the agency of jurisdiction.

Why this result: Lack of jurisdiction; Respondent is not a planned community pursuant to A.R.S. § 33-1802(4).

Key Issues & Findings

Maintenance of private property / Jurisdiction

Petitioner alleged the HOA maintained private driveways in violation of CC&Rs despite the streets being annexed by the city. Respondent moved to dismiss on grounds that it does not own real property and is not a planned community.

Orders: Petition dismissed for lack of jurisdiction. Respondent's request for attorney fees denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1802(4)
  • A.R.S. § 41-2198.01

Video Overview

Audio Overview

Decision Documents

12F-H1213012-BFS Decision – 332161.pdf

Uploaded 2026-04-24T10:45:18 (72.1 KB)

12F-H1213012-BFS Decision – 337656.pdf

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12F-H1213012-BFS Decision – 332161.pdf

Uploaded 2026-01-25T15:28:33 (72.1 KB)

12F-H1213012-BFS Decision – 337656.pdf

Uploaded 2026-01-25T15:28:34 (57.5 KB)

Briefing Document: Walter v. Kingswood Owners Association (Case No. 12F-H1213012-BFS)

Executive Summary

The matter of Margo L. Walter v. Kingswood Owners Association centered on a dispute regarding the use of association dues for the maintenance of private driveways. The Petitioner, Margo L. Walter, alleged that the Kingswood Owners Association (the "Respondent") was improperly funding periodic snow removal and crack sealing for six private driveways without a formal agreement and in violation of the association's Articles and CC&Rs.

The case was brought before the Arizona Office of Administrative Hearings to determine if the Department of Fire, Building, and Life Safety ("Department") had jurisdiction to adjudicate the claim. The Administrative Law Judge (ALJ) determined that because the Respondent does not own real estate—having sold its private streets to the City of Prescott in 2000—it does not meet the statutory definition of a "planned community" under Arizona Revised Statutes (A.R.S.) § 33-1802(4). Consequently, the Department lacked jurisdiction, leading to the dismissal of the Petition. This decision was certified as the final agency action on May 10, 2013.

Detailed Analysis of Key Themes

1. Allegations of Misallocated HOA Funds

The core of the Petitioner's complaint was the alleged unauthorized maintenance of private property. Following the annexation of private streets by the City of Prescott on June 9, 2000, the Petitioner argued that the Respondent continued to maintain six private driveways.

  • Maintenance Activities: Activities included periodic snow removal and crack sealing.
  • Legal Basis for Complaint: The Petitioner asserted these actions violated the association's governing documents (Articles and CC&Rs) and that no formal agreement existed to justify the expenditure of membership dues on these specific driveways.
2. Jurisdictional Limits of the Department

The Respondent moved to dismiss the case based on a lack of jurisdiction. Under A.R.S. § 41-2198, the Department's authority to adjudicate disputes is strictly limited to three types of entities:

  1. Mobile home parks (under the Arizona Mobile Home Parks Residential Landlord Tenant Act).
  2. Condominium associations (under Title 33, chapter 9).
  3. Planned community associations (under Title 33, chapter 16).

The Respondent successfully argued that it did not fall into any of these categories, specifically refuting the "planned community" label.

3. The Statutory Definition of a "Planned Community"

The case hinged on the technical definition of a "planned community" found in A.R.S. § 33-1802(4). To be classified as such, a development must include real estate "owned and operated by a nonprofit corporation or unincorporated association of owners."

The evidence showed that the Respondent is a nonprofit corporation but does not own real property. This fact was supported by:

  • The Sale of Assets: The Respondent sold its private streets to the City of Prescott in 2000.
  • Legal Counsel Advice: A letter from the Respondent’s former counsel, Beth Mulcahy, Esq., dated October 31, 2011, explicitly advised the Board that "the Association does not own real property . . . therefore, the Association is not legally considered a planned community."
4. Denial of Costs and Attorney Fees

Despite winning the motion to dismiss, the Respondent’s request for costs and attorney fees under A.R.S. § 41-1092.12 was denied. The ALJ ruled that this specific statute applies exclusively to the Arizona Department of Environmental Quality, rendering it inapplicable to this proceeding.

Important Quotes with Context

Quote Context
"Maintenance of private property funded by HOA membership dues. … Kingswood Owners Association has continued to maintain six private driveways in violation of Articles and CC&R." The original allegation filed by Petitioner Margo L. Walter, initiating the case.
"It is uncontroverted that Respondent, a nonprofit corporation, does not own any real estate since it sold its private streets to the City of Prescott in 2000." The ALJ’s finding of fact that effectively removed the Respondent from the Department's jurisdiction.
"The Association does not own real property . . . therefore, the Association is not legally considered a planned community." Legal advice from Beth Mulcahy, Esq. to the Respondent's Board, used as evidence to support the motion to dismiss.
"Because Respondent is not a planned community pursuant to A.R.S. § 33-1802(4), the Department lacks jurisdiction over Respondent under A.R.S. §§ 41-2198 and 41-2198.01(B)." The primary Conclusion of Law leading to the dismissal of the petition.

Actionable Insights

For Homeowners and Petitioners
  • Verify Association Status: Before filing a petition with the Department of Fire, Building, and Life Safety, it is critical to verify whether the association meets the strict statutory definition of a "planned community" (i.e., it must own and operate common real estate).
  • Identify Appropriate Forums: If an association does not own real property, disputes regarding CC&R violations or mismanagement of funds may need to be pursued in Superior Court rather than through administrative hearings, as the Department lacks jurisdiction in these instances.
For Association Boards
  • Impact of Asset Divestment: Selling common areas (such as streets) to a municipality can change the legal status of an association, potentially removing it from the purview of certain state statutes and administrative oversight.
  • Resource Allocation for Legal Defense: While an association may successfully dismiss a petition based on jurisdictional grounds, they may still be responsible for their own legal fees if they cite inapplicable statutes (e.g., A.R.S. § 41-1092.12) when requesting a recovery of costs.
Procedural Status
  • Finality of Decision: The decision became final on May 6, 2013, due to the Department's inaction within the statutory timeframe.
  • Right to Rehearing/Appeal: Parties have the right to request a rehearing from the Department under A.R.S. § 41-1092.09(A) or seek review by the Superior Court under A.R.S. § 41-1092.08(H).

Study Guide: Walter v. Kingswood Owners Association

This study guide provides a comprehensive overview of the administrative legal proceedings in the case of Margo L. Walter v. Kingswood Owners Association (No. 12F-H1213012-BFS). It covers the core legal arguments regarding jurisdiction, the statutory definition of a planned community, and the administrative procedures of the Arizona Office of Administrative Hearings.

Key Concepts and Case Summary

1. The Core Dispute

The Petitioner, Margo L. Walter, filed a petition against the Kingswood Owners Association (Respondent) with the Arizona Department of Fire, Building, and Life Safety. The primary allegation was the improper use of homeowner association (HOA) dues for the maintenance of private property. Specifically, the Petitioner alleged that the Association continued to fund snow removal and crack sealing for six private driveways despite the City of Prescott annexing the private streets on June 9, 2000. The Petitioner argued this violated the Association’s Articles and CC&Rs (Covenants, Conditions, and Restrictions).

2. The Jurisdictional Challenge

The Respondent moved to dismiss the petition on the grounds that the Department lacked jurisdiction under A.R.S. § 41-2198.01. The Association argued that it did not meet the legal criteria of a mobile home park, a condominium, or a planned community, which are the entities over which the Department has adjudicatory authority.

3. Statutory Definition of a "Planned Community"

Under A.R.S. § 33-1802(4), a planned community is defined by specific criteria:

  • It must be a real estate development.
  • It must include real estate owned and operated by a nonprofit corporation or unincorporated association of owners.
  • The entity must be created to manage, maintain, or improve the property.
  • Owners of separate lots must be mandatory members and required to pay assessments.
  • It specifically excludes timeshare plans or associations.
4. The Administrative Ruling

Administrative Law Judge (ALJ) Brian Brendan Tully determined that the Kingswood Owners Association was not a planned community because it did not own any real estate. The Association had sold its private streets to the City of Prescott in 2000. Based on this finding, the ALJ concluded that the Department lacked jurisdiction, leading to the dismissal of the petition.

5. Final Certification

The ALJ's recommended order was issued on March 29, 2013. Under A.R.S. § 41-1092.08, the Department had until May 6, 2013, to accept, reject, or modify the decision. Because the Department took no action by that deadline, the ALJ decision was certified as the final administrative decision on May 10, 2013.

Short-Answer Practice Questions

  1. Who is the Petitioner and who is the Respondent in this case?
  2. What specific maintenance activities did the Petitioner claim were being improperly funded?
  3. On what date did the City of Prescott annex the private streets relevant to this case?
  4. According to A.R.S. § 33-1802(4), what is the essential requirement regarding real estate ownership for an association to be considered a "planned community"?
  5. Why did the ALJ deny the Respondent’s request for attorneys' fees and costs under A.R.S. § 41-1092.12?
  6. What was the final outcome regarding the Petitioner’s claim?
  7. What action (or lack thereof) by the Department of Fire, Building, and Life Safety led to the ALJ's decision becoming final?
  8. To which court may a party petition for a review of the final administrative decision?

Essay Prompts for Deeper Exploration

  1. The Impact of Property Ownership on Jurisdiction: Analyze how the transfer of real estate from a private association to a municipality (such as the City of Prescott) alters the legal classification of that association. Explain the relationship between property ownership and the Department’s authority to adjudicate disputes under Arizona Revised Statutes.
  1. Administrative Procedure and Timelines: Discuss the significance of the "Certification of Decision" process. Why is it important for an agency to have a specific window (in this case, until May 6, 2013) to act upon an ALJ’s decision, and what are the legal consequences for the parties involved if the agency fails to act?
  1. Statutory Interpretation: Compare the Petitioner's allegations of CC&R violations with the Respondent's jurisdictional defense. Explain why the ALJ had to address the jurisdictional question before considering the merits of the maintenance dispute.

Glossary of Important Terms

Term Definition
A.R.S. § 33-1802(4) The Arizona statute that provides the legal definition for a "planned community."
A.R.S. § 41-2198.01 The statute outlining the Department's jurisdiction to hear petitions concerning violations of planned community documents.
Annexation The legal transition of land (in this case, private streets) from the control of a private entity to the jurisdiction of a city.
CC&R Covenants, Conditions, and Restrictions; the governing documents that outline the rules and maintenance obligations of a property association.
Jurisdiction The legal authority of a court or administrative body to hear a case and make a binding decision.
Planned Community A development where real estate is owned/operated by a nonprofit association, membership is mandatory for lot owners, and assessments are required for maintenance.
Preponderance of the Evidence The standard of proof in this administrative hearing, meaning the party with the burden of proof must show their claim is more likely true than not.
Respondent The party against whom a petition is filed; in this case, the Kingswood Owners Association.
Tribunal A body established to settle disputes; used in the context of the Office of Administrative Hearings.

When an HOA Is Not a "Planned Community": Lessons from Walter v. Kingswood Owners Association

1. Introduction: A Surprising Jurisdictional Twist

In the realm of Arizona homeowners association (HOA) disputes, most owners assume that the state’s administrative system provides a guaranteed path to justice. However, the case of Margo L. Walter vs. Kingswood Owners Association (No. 12F-H1213012-BFS) serves as a stark reminder that without the proper legal foundation, months of litigation and thousands of dollars in effort can result in a total "nullity."

The dispute began with a homeowner challenging how her dues were being allocated, but it ended with a jurisdictional "plot twist": the discovery that the Association did not actually meet the statutory definition of a "planned community." This technicality stripped the state of its power to intervene, rendering the entire administrative process void before it could even reach a hearing on the merits.

2. The Core Dispute: Maintenance and Membership Dues

The Petitioner, Margo L. Walter, filed her petition with the Arizona Department of Fire, Building, and Life Safety, alleging a breach of the community’s governing documents. Her central claim was that the Kingswood Owners Association was improperly using membership assessments to fund the upkeep of private property.

The conflict involved six private driveways within the development. Historically, the City of Prescott had annexed the community's private streets on June 9, 2000. While the streets became public, the driveways remained "private" in the Petitioner’s view. She alleged that the Association continued to perform maintenance on these driveways despite a lack of formal agreements and in direct violation of the Association’s Articles and CC&Rs.

The specific maintenance activities identified in the source documents included:

  • Periodic snow removal
  • Crack sealing
3. The Legal Definition: What Makes a "Planned Community"?

The case hinged on a specific "legal landmine" regarding the Association’s property ownership. Under Arizona law, an association is only subject to the Department’s jurisdiction if it meets the rigid criteria of a "planned community."

### The Statutory Definition: A.R.S. § 33-1802(4) "Planned community" means a real estate development which includes real estate owned and operated by a nonprofit corporation or unincorporated association of owners that is created for the purpose of managing, maintaining or improving the property and in which the owners of separately owned lots, parcels or units are mandatory members and are required to pay assessments to the association for these purposes.

The "uncontroverted" fact that derailed the Petitioner’s case was that the Kingswood Owners Association owned no real estate. When the Association sold its private streets to the City of Prescott in 2000, it effectively stripped itself of its "planned community" status. This was not a new discovery; the Petitioner even produced a letter dated October 31, 2011, from former counsel Beth Mulcahy, Esq., who had explicitly warned the Board of Directors that because the Association owned no real property, it was "not legally considered a planned community."

4. The Ruling: Why the Case Was Dismissed

Administrative Law Judge (ALJ) Brian Brendan Tully determined that the Department lacked the authority to adjudicate the dispute. This ruling clarifies the interplay between two key statutes: while A.R.S. § 41-2198.01 grants a homeowner the right to file a petition, the Department’s authority to act on that petition is strictly limited by A.R.S. § 41-2198 to entities defined as mobile home parks, condominiums, or planned communities.

Because Kingswood was neither a condominium nor a mobile home park, and because it failed the ownership test in A.R.S. § 33-1802(4), it sat outside the Department’s reach. The ALJ issued a recommended order for dismissal on March 29, 2013.

The administrative timeline concluded as follows:

  • March 29, 2013: The ALJ issued the decision to dismiss.
  • April 1, 2013: The decision was transmitted to the Department.
  • May 6, 2013: The statutory deadline for the Department to accept, reject, or modify the decision.
  • May 10, 2013: After the Department took no action, the Director of the Office of Administrative Hearings certified the decision as the final administrative action.
5. The Attorney Fees Side-Bar

In a move that highlights the irony often found in legal posturing, the Association (Respondent) moved for the dismissal while simultaneously requesting that the Petitioner pay its costs and attorney fees.

As a legal analyst, it is noteworthy that the Association successfully argued it was not a "planned community" to avoid the Petitioner’s claims, yet it then attempted to claim fees under A.R.S. § 41-1092.12. The ALJ sharply denied this request, pointing out a fundamental error in the Respondent's legal strategy: that specific statute applies exclusively to the Arizona Department of Environmental Quality. The Association’s attempt to use an environmental statute in a housing dispute was as legally misplaced as the original petition.

6. Conclusion: Key Takeaways for Homeowners and Associations

The dismissal of Walter v. Kingswood Owners Association is a cautionary tale for any party entering the administrative hearing process. It underscores that an association’s functional existence—collecting dues and maintaining property—does not always equate to its legal classification.

Key Insights:

  1. Ownership is the Deciding Factor: To be a "planned community" under A.R.S. § 33-1802(4), an association must own and operate real estate. Selling streets or common areas to a city can fundamentally change an HOA's legal standing.
  2. Jurisdiction is Not Universal: The Department’s authority is narrow. If an association does not meet the statutory definition, the administrative process is a dead end.
  3. Statutory Accuracy is Critical: Both petitioners and respondents must cite the correct statutes. Attempting to recover fees under irrelevant environmental laws like A.R.S. § 41-1092.12 is a failed strategy.
  4. Verify Status Before Filing: Homeowners should conduct due diligence on their association’s property ownership before filing a petition to ensure they are in the correct legal forum.

Ultimately, understanding the specific legal classification of an association is the first and most vital step in any real estate dispute. Without it, even a well-intentioned claim can be dismissed before the facts are ever heard.

Case Participants

Petitioner Side

  • Margo L. Walter (Petitioner)
    Also spelled 'Walters' in distribution list

Respondent Side

  • Beth Mulcahy (attorney)
    Mulcahy Law Firm (implied by context of letter)
    Former counsel for Respondent; wrote opinion letter dated Oct 31, 2011

Neutral Parties

  • Brian Brendan Tully (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Gene Palma (Director)
    Department of Fire, Building, and Life Safety
    Agency Director
  • Cliff J. Vanell (Director)
    Office of Administrative Hearings
    Signed Certification of Decision
  • Joni Cage (staff)
    Department of Fire, Building, and Life Safety
    Care of for Gene Palma in distribution list

Jacobson III, Clayton vs. Rio Lindo Shores Homeowners Association

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Case Summary

Case ID 08F-H088016-BFS
Agency Department of Fire, Building and Life Safety
Tribunal OAH
Decision Date 2008-06-12
Administrative Law Judge Brian Brendan Tully
Outcome Respondent failed to appear and was deemed to have admitted to 15 violations by default. Petitioner was awarded a full refund of the $2,000 filing fee and Respondent was assessed $750 in civil penalties. Five other allegations were dismissed because they occurred prior to the enactment of the relevant jurisdictional statutes.
Filing Fees Refunded $2,000.00
Civil Penalties $750.00

Parties & Counsel

Petitioner Clayton Jacobson III Counsel —
Respondent Rio Lindo Shores Homeowners Association, Inc. Counsel —

Alleged Violations

A.R.S. § 41-2198.01
A.R.S. § 33-1812

Outcome Summary

Respondent failed to appear and was deemed to have admitted to 15 violations by default. Petitioner was awarded a full refund of the $2,000 filing fee and Respondent was assessed $750 in civil penalties. Five other allegations were dismissed because they occurred prior to the enactment of the relevant jurisdictional statutes.

Why this result: Five specific allegations were dismissed because the events occurred prior to the enactment of A.R.S. § 41-2198 et seq.

Key Issues & Findings

Multiple Violations (Default Judgment)

Respondent failed to answer the petition and was deemed to have admitted to 15 validly filed violations.

Orders: Respondent ordered to abide by statutes and documents; pay $750 civil penalty ($50 per violation); refund $2,000 filing fee.

Filing fee: $2,000.00, Fee refunded: Yes, Civil penalty: $750.00

Disposition: petitioner_win

Cited:

  • A.R.S. § 41-2198.01
  • A.R.S. § 41.2198.02(A)

Voting and Record Keeping Violations (Pre-Statute)

Petitioner alleged violations regarding voting procedures, assessment recording, and reimbursements dating between 1980 and 2006.

Orders: Dismissed as untimely.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1812
  • CC&R Article 9.3
  • Bylaws Article 6.2.3

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Video Overview

Audio Overview

Decision Documents

08F-H088016-BFS Decision – 192712.pdf

Uploaded 2026-04-24T10:34:38 (78.5 KB)

08F-H088016-BFS Decision – 192712.pdf

Uploaded 2026-01-25T15:23:26 (78.5 KB)

Briefing: Administrative Decision in Jacobson v. Rio Lindo Shores Homeowners Association

Executive Summary

This briefing summarizes the administrative law decision in Case No. 08F-H088016-BFS, involving Petitioner Clayton Jacobson III and Respondent Rio Lindo Shores Homeowners Association, Inc. The matter was adjudicated by the Arizona Office of Administrative Hearings following a petition alleging multiple violations of planned community statutes and governing documents.

The core outcome of the case was a default judgment against the Rio Lindo Shores Homeowners Association due to its failure to respond to official notices. As a result, the Respondent was deemed to have admitted to 15 validly filed violations. The Administrative Law Judge (ALJ) ordered the Respondent to refund the Petitioner’s $2,000.00 filing fee and pay $750.00 in civil penalties. However, five specific allegations were dismissed because they predated the enactment of the relevant enabling legislation (A.R.S. § 41-2198 et seq.).

Procedural History and Default

The administrative process followed a strict statutory timeline, which the Respondent failed to meet at every stage:

• Initial Petition: Filed by Clayton Jacobson III on April 8, 2008, with the Department of Fire, Building and Life Safety (“Department”).

• Addendum: Filed by the Petitioner on April 10, 2008.

• Official Notifications: The Department mailed a Notice of Petition on April 10, 2008, and an Amended Notice of Petition on April 14, 2008.

• Statutory Deadline: Under A.R.S. § 41-2198.01(D), the Respondent was required to submit a written response within 20 days.

• Failure to Respond: The Respondent failed to respond to both the original and the amended notices.

• Notice of Default: Issued by the Department on May 15, 2008.

Consequently, pursuant to A.R.S. § 41-2198.01(F), the Respondent’s failure to file a timely response resulted in the legal admission of the alleged violations, subject to statutory jurisdiction.

Legal Findings and Jurisdictional Limitations

The Department and the Office of Administrative Hearings operate under specific statutory authorities:

• A.R.S. § 41-2198.01: Authorizes the Department to process petitions regarding disputes between owners and planned communities.

• A.R.S. § 41-2198: Authorizes the Office of Administrative Hearings to adjudicate these disputes.

Dismissed Allegations

The ALJ identified five violations that, while admitted by default, were legally unenforceable because they occurred before the enactment of the statutes granting the Office of Administrative Hearings its adjudicative authority. These dismissed allegations included:

Date of Occurrence

Alleged Violation

Legal/Documentary Reference

March 5, 2006

Failure to provide absentee ballots or delivery methods for voting; use of proxies.

A.R.S. § 33-1812

March 4, 2006

Restricted voting rights for members who paid dues up until the annual meeting.

Bylaws Articles 6.1.12 & 9; CC&R Article 4.8

March 7, 2004

Increased annual assessment from $200 to $300 without recording at the recorder’s office.

CC&R Article 9.3

January 24, 1996

Refusal to reimburse Petitioner $125.00 for association business expenses.

Bylaws Article 6.2.3

November 1, 1980

Amended Declaration to add Bylaws without recording at the County Recorder’s Office.

CC&R Article 9.3

Admitted Violations and Penalties

Excluding the five untimely allegations, the Respondent was found liable for 15 validly filed violations. The ALJ issued the following mandates:

1. Compliance: The Respondent must abide by all statutes and community documents cited in the violations.

2. Petitioner Reimbursement: The Respondent was ordered to pay the Petitioner $2,000.00 to cover the multiple violation filing fee within 30 days.

3. Civil Penalties: The ALJ assessed a civil penalty of 50.00perviolation∗∗.With15admittedviolations,thetotalpenaltyof∗∗750.00 was ordered to be paid to the Department within 30 days.

Finality of Decision

The Order, dated June 12, 2008, constitutes the final administrative decision. Under A.R.S. § 41-2198.04(A), it is not subject to a request for rehearing. The Order is legally binding and enforceable through contempt of court proceedings pursuant to A.R.S. § 41-2198.02(B).

Study Guide: Jacobson v. Rio Lindo Shores Homeowners Association

This study guide provides a comprehensive review of the administrative law case Clayton Jacobson III vs. Rio Lindo Shores Homeowners Association (No. 08F-H088016-BFS). It examines the procedural history, findings of fact, legal conclusions, and the final order issued by the Office of Administrative Hearings on June 12, 2008.

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Part I: Short-Answer Quiz

Instructions: Provide a 2–3 sentence answer for each of the following questions based on the case details.

1. Identify the Petitioner and the Respondent in this case and their relationship to one another.

2. What was the initial action taken by Clayton Jacobson III on April 8, 2008, and which state department received it?

3. Describe the procedural failure of the Rio Lindo Shores Homeowners Association following the mailing of the Notice of Petition.

4. Why did the Administrative Law Judge dismiss the allegations regarding the unrecorded assessment increase from March 2004?

5. What was the specific violation alleged regarding the annual meeting held on March 5, 2006?

6. Explain the legal consequence of the Respondent’s failure to file a timely response to the Petition.

7. How many “validly filed violations” were eventually used to calculate the civil penalty, and what was the cost per violation?

8. What specific financial reimbursement did the Petitioner seek regarding a transaction from January 24, 1996, and what was the outcome?

9. Under the final Order, what is the deadline for the Respondent to pay the assessed fees and penalties?

10. What is the status of this Order regarding future appeals or rehearings according to A.R.S. § 41-2198.04(A)?

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Part II: Answer Key

1. Identify the Petitioner and the Respondent: The Petitioner is Clayton Jacobson III, who is a member of the homeowners association. The Respondent is the Rio Lindo Shores Homeowners Association, Inc., a planned community located in Parker, Arizona.

2. Initial Action and Department: On April 8, 2008, the Petitioner submitted a Petition alleging multiple complaints and violations by the Respondent. This was filed with the Department of Fire, Building and Life Safety.

3. Procedural Failure: After being mailed a Notice of Petition and an Amended Notice of Petition, the Respondent was required by A.R.S. § 41-2198.01(D) to submit a written response within 20 days. The Respondent failed to provide a response to either notice, leading to a Notice of Default.

4. Dismissal of 2004 Allegation: The allegation concerning the unrecorded assessment increase was dismissed because it occurred on March 7, 2004. This was prior to the enactment of A.R.S. § 41-2198 et seq., making the complaint untimely for the Department’s jurisdiction.

5. March 2006 Violation: The Petitioner alleged that the Respondent held an annual meeting but failed to provide absentee ballots or other delivery methods for voting. Instead, votes were cast by proxy in violation of A.R.S. § 33-1812.

6. Consequence of Failure to Respond: Under A.R.S. § 41-2198.01(F), a respondent who fails to file a timely response is deemed to have admitted the violations alleged in the Petition. This resulted in the Department issuing a Notice of Default against the association.

7. Calculation of Violations: The Respondent was found to have admitted to 15 validly filed violations. The Administrative Law Judge assessed a civil penalty of $50.00 for each of these violations.

8. 1996 Reimbursement Claim: The Petitioner alleged that on January 24, 1996, the Respondent refused to reimburse him $125.00 for expenses incurred while conducting association business. However, this claim was dismissed because the event occurred before the enactment of the governing statutes.

9. Payment Deadline: The Respondent is ordered to pay both the $2,000.00 filing fee reimbursement to the Petitioner and the $750.00 total civil penalty to the Department. These payments must be made within 30 days of the effective date of the Order.

10. Finality of the Order: Pursuant to A.R.S. § 41-2198.04(A), this Order serves as the final administrative decision. It is not subject to any requests for rehearing and is enforceable through contempt of court proceedings.

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Part III: Essay Questions

Instructions: Use the provided case facts and legal conclusions to draft comprehensive responses to the following prompts.

1. The Impact of Default in Administrative Hearings: Analyze how the Rio Lindo Shores Homeowners Association’s failure to respond to the Department’s notices dictated the legal outcome of the case. Discuss the role of A.R.S. § 41-2198.01(F) in this process.

2. Statutory Temporality and Jurisdiction: Explain why the Administrative Law Judge dismissed five specific violations despite the Respondent’s default. Focus on the significance of the enactment date of A.R.S. § 41-2198 et seq.

3. Financial Restitution and Penalties: Detail the financial obligations imposed on the Respondent. Distinguish between the multiple violation filing fee and the civil penalties, explaining to whom each is paid and why.

4. HOA Governance and Compliance: Based on the dismissed violations (Findings of Fact 8a–e), identify the various governing documents and statutes an HOA must follow, such as CC&Rs, Bylaws, and the Arizona Revised Statutes.

5. Enforcement and Finality: Discuss the finality of the Administrative Law Judge’s decision. What are the implications of the Order being “not subject to a request for rehearing,” and how can the Order be enforced if the Respondent fails to comply?

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Part IV: Glossary of Key Terms

Definition

A.R.S.

Arizona Revised Statutes; the codified laws of the state of Arizona used to regulate planned communities and administrative procedures.

Administrative Law Judge (ALJ)

A presiding official who hears evidence and issues decisions in disputes involving state agency regulations, such as those between homeowners and HOAs.

Bylaws

The internal rules and regulations that govern the daily operations and administration of an organization like a homeowners association.

Covenants, Conditions, and Restrictions; legal obligations and rules tied to the use of land within a planned community or homeowners association.

Civil Penalty

A financial fine imposed by a government agency (in this case, the Department) as a consequence for violating regulations or statutes.

Contempt of Court

A legal mechanism used to enforce an order; being found in contempt can result from failing to obey the directives of the Administrative Law Judge.

Default

A failure to fulfill a legal obligation, such as failing to file a required response to a legal petition within the specified 20-day timeframe.

Department of Fire, Building and Life Safety

The Arizona state department authorized to receive and process petitions regarding disputes in planned communities.

Office of Administrative Hearings (OAH)

The agency authorized to adjudicate petitions and disputes between owners and planned communities.

Petitioner

The party who initiates a legal action or petition (in this case, Clayton Jacobson III).

Respondent

The party against whom a legal action or petition is filed (in this case, Rio Lindo Shores Homeowners Association, Inc.).

Study Guide: Jacobson v. Rio Lindo Shores Homeowners Association

This study guide provides a comprehensive review of the administrative law case Clayton Jacobson III vs. Rio Lindo Shores Homeowners Association (No. 08F-H088016-BFS). It examines the procedural history, findings of fact, legal conclusions, and the final order issued by the Office of Administrative Hearings on June 12, 2008.

——————————————————————————–

Part I: Short-Answer Quiz

Instructions: Provide a 2–3 sentence answer for each of the following questions based on the case details.

1. Identify the Petitioner and the Respondent in this case and their relationship to one another.

2. What was the initial action taken by Clayton Jacobson III on April 8, 2008, and which state department received it?

3. Describe the procedural failure of the Rio Lindo Shores Homeowners Association following the mailing of the Notice of Petition.

4. Why did the Administrative Law Judge dismiss the allegations regarding the unrecorded assessment increase from March 2004?

5. What was the specific violation alleged regarding the annual meeting held on March 5, 2006?

6. Explain the legal consequence of the Respondent’s failure to file a timely response to the Petition.

7. How many “validly filed violations” were eventually used to calculate the civil penalty, and what was the cost per violation?

8. What specific financial reimbursement did the Petitioner seek regarding a transaction from January 24, 1996, and what was the outcome?

9. Under the final Order, what is the deadline for the Respondent to pay the assessed fees and penalties?

10. What is the status of this Order regarding future appeals or rehearings according to A.R.S. § 41-2198.04(A)?

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Part II: Answer Key

1. Identify the Petitioner and the Respondent: The Petitioner is Clayton Jacobson III, who is a member of the homeowners association. The Respondent is the Rio Lindo Shores Homeowners Association, Inc., a planned community located in Parker, Arizona.

2. Initial Action and Department: On April 8, 2008, the Petitioner submitted a Petition alleging multiple complaints and violations by the Respondent. This was filed with the Department of Fire, Building and Life Safety.

3. Procedural Failure: After being mailed a Notice of Petition and an Amended Notice of Petition, the Respondent was required by A.R.S. § 41-2198.01(D) to submit a written response within 20 days. The Respondent failed to provide a response to either notice, leading to a Notice of Default.

4. Dismissal of 2004 Allegation: The allegation concerning the unrecorded assessment increase was dismissed because it occurred on March 7, 2004. This was prior to the enactment of A.R.S. § 41-2198 et seq., making the complaint untimely for the Department’s jurisdiction.

5. March 2006 Violation: The Petitioner alleged that the Respondent held an annual meeting but failed to provide absentee ballots or other delivery methods for voting. Instead, votes were cast by proxy in violation of A.R.S. § 33-1812.

6. Consequence of Failure to Respond: Under A.R.S. § 41-2198.01(F), a respondent who fails to file a timely response is deemed to have admitted the violations alleged in the Petition. This resulted in the Department issuing a Notice of Default against the association.

7. Calculation of Violations: The Respondent was found to have admitted to 15 validly filed violations. The Administrative Law Judge assessed a civil penalty of $50.00 for each of these violations.

8. 1996 Reimbursement Claim: The Petitioner alleged that on January 24, 1996, the Respondent refused to reimburse him $125.00 for expenses incurred while conducting association business. However, this claim was dismissed because the event occurred before the enactment of the governing statutes.

9. Payment Deadline: The Respondent is ordered to pay both the $2,000.00 filing fee reimbursement to the Petitioner and the $750.00 total civil penalty to the Department. These payments must be made within 30 days of the effective date of the Order.

10. Finality of the Order: Pursuant to A.R.S. § 41-2198.04(A), this Order serves as the final administrative decision. It is not subject to any requests for rehearing and is enforceable through contempt of court proceedings.

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Part III: Essay Questions

Instructions: Use the provided case facts and legal conclusions to draft comprehensive responses to the following prompts.

1. The Impact of Default in Administrative Hearings: Analyze how the Rio Lindo Shores Homeowners Association’s failure to respond to the Department’s notices dictated the legal outcome of the case. Discuss the role of A.R.S. § 41-2198.01(F) in this process.

2. Statutory Temporality and Jurisdiction: Explain why the Administrative Law Judge dismissed five specific violations despite the Respondent’s default. Focus on the significance of the enactment date of A.R.S. § 41-2198 et seq.

3. Financial Restitution and Penalties: Detail the financial obligations imposed on the Respondent. Distinguish between the multiple violation filing fee and the civil penalties, explaining to whom each is paid and why.

4. HOA Governance and Compliance: Based on the dismissed violations (Findings of Fact 8a–e), identify the various governing documents and statutes an HOA must follow, such as CC&Rs, Bylaws, and the Arizona Revised Statutes.

5. Enforcement and Finality: Discuss the finality of the Administrative Law Judge’s decision. What are the implications of the Order being “not subject to a request for rehearing,” and how can the Order be enforced if the Respondent fails to comply?

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Part IV: Glossary of Key Terms

Definition

A.R.S.

Arizona Revised Statutes; the codified laws of the state of Arizona used to regulate planned communities and administrative procedures.

Administrative Law Judge (ALJ)

A presiding official who hears evidence and issues decisions in disputes involving state agency regulations, such as those between homeowners and HOAs.

Bylaws

The internal rules and regulations that govern the daily operations and administration of an organization like a homeowners association.

Covenants, Conditions, and Restrictions; legal obligations and rules tied to the use of land within a planned community or homeowners association.

Civil Penalty

A financial fine imposed by a government agency (in this case, the Department) as a consequence for violating regulations or statutes.

Contempt of Court

A legal mechanism used to enforce an order; being found in contempt can result from failing to obey the directives of the Administrative Law Judge.

Default

A failure to fulfill a legal obligation, such as failing to file a required response to a legal petition within the specified 20-day timeframe.

Department of Fire, Building and Life Safety

The Arizona state department authorized to receive and process petitions regarding disputes in planned communities.

Office of Administrative Hearings (OAH)

The agency authorized to adjudicate petitions and disputes between owners and planned communities.

Petitioner

The party who initiates a legal action or petition (in this case, Clayton Jacobson III).

Respondent

The party against whom a legal action or petition is filed (in this case, Rio Lindo Shores Homeowners Association, Inc.).

Case Participants

Petitioner Side

  • Clayton Jacobson, III (Petitioner)
    Rio Lindo Shores Homeowners Association
    Member of Respondent

Neutral Parties

  • Brian Brendan Tully (Administrative Law Judge)
    Office of Administrative Hearings
  • Robert Barger (Director)
    Department of Fire Building and Life Safety
    Recipient of decision copy
  • Debra Blake (Department Staff)
    Department of Fire Building and Life Safety
    Recipient of decision copy