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
- A.R.S. § 33-1250(C)(2)
- A.R.S. § 32-2199.02
- A.R.S. § 41-1092.08
Analytics Highlights
- 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-RHG Decision – 564851.pdf
17F-H1716002-REL-RHG Decision – 567887.pdf
17F-H1716002-REL-RHG Decision – 575055.pdf
17F-H1716002-REL-RHG Decision – ../17F-H1716002-REL/523915.pdf
Briefing Document: Gounder v. Royal Riviera Condominium Association
Executive Summary
This briefing document synthesizes the legal proceedings and outcomes of the case Paul Gounder v. Royal Riviera Condominium Association. The core issue revolves around the Association’s use of two substantively different ballots during its March 14, 2016, Board of Directors election, a practice the petitioner alleged violated state law and the Association’s governing documents.
The central finding, established after a rehearing, is that the Royal Riviera Condominium Association violated Arizona Revised Statutes (A.R.S.) § 33-1250(C)(2). The violation occurred because an absentee ballot listed six candidates with a write-in option, while a separate ballot distributed at the annual meeting listed seven candidates with no write-in option. This discrepancy deprived members voting by absentee ballot of the opportunity to vote for or against the seventh candidate, thereby denying them their full voting rights.
An initial Administrative Law Judge (ALJ) decision on October 18, 2016, had dismissed the petition, finding no explicit rule against the Association’s actions. However, this ruling was overturned following a rehearing. The second ALJ decision, issued on June 2, 2017, concluded that while ballots need not be identical, any substantive changes must be presented to all members to ensure a fair election. The Respondent’s argument that the issue was moot due to a subsequent election was explicitly rejected.
The Arizona Department of Real Estate adopted the second ALJ’s decision in a Final Order on June 12, 2017. The Association was ordered to reimburse the petitioner’s $500 filing fee, and the ruling was declared a final, binding administrative action.
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1. Case Overview
• Parties:
◦ Petitioner: Paul Gounder
◦ Respondent: Royal Riviera Condominium Association
• Jurisdiction: Arizona Department of Real Estate, Office of Administrative Hearings
• Case Numbers: 17F-H1716002-REL, 17F-H1716002-REL-RHG, HO-17-16/002
• Core Allegation: On June 23, 2016, Paul Gounder filed a petition alleging that the Royal Riviera Condominium Association violated A.R.S. § 33-1250(C)(2) and its Covenants, Conditions, and Restrictions (CC&Rs) by using two substantively different ballots to elect Board members at its annual meeting on March 14, 2016.
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2. Factual Background of the Disputed Election
The facts surrounding the March 14, 2016 election were described as “essentially undisputed” in the initial hearing.
• Election Context: The Royal Riviera development consists of approximately 32 condominiums. The Association has a seven-member Board of Directors. All seven positions were up for election at the March 14, 2016, annual meeting.
• Nomination Process:
◦ In December 2015, the Association notified members of the upcoming election and requested nominating forms.
◦ Three members submitted forms.
◦ Three incumbent board members indicated via email or phone their willingness to continue serving.
• Creation of the Absentee Ballot:
◦ The Association prepared an “absentee/write-in ballot” (also referred to as the “Mail Ballot”) containing the names of the six members who had indicated a willingness to serve.
◦ The ballot included a blank line for a write-in candidate and stipulated that it must be received by 12:00 p.m. on March 14, 2016, to be counted.
• Emergence of a Seventh Candidate:
◦ Prior to the meeting, the Association received absentee ballots with three write-in candidates.
◦ One write-in candidate indicated they were unwilling to serve.
◦ The other two write-in candidates shared a unit and requested that only one of their names, Eric Thompson, be considered.
• Creation of the Meeting Ballot:
◦ To accommodate the seven willing candidates for the seven open positions, the Association prepared a second ballot for members attending the meeting in person.
◦ This “Ballot” listed the original six candidates plus Eric Thompson.
◦ Crucially, this second ballot did not contain a space for write-in candidates.
• Election Results:
◦ Approximately seventeen members attended the annual meeting.
◦ A member, Al DeFalco, was nominated from the floor.
◦ Despite the floor nomination, the seven candidates listed on the meeting ballot received the most votes and were elected to the Board.
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3. Procedural History and Rulings
The case proceeded through an initial hearing, a dismissal, a rehearing, a reversal, and a final administrative order.
3.1. Initial Hearing and Decision (October 2016)
• Hearing Date: October 17, 2016
• Presiding ALJ: Diane Mihalsky
• Petitioner’s Argument: The use of a second, different ballot at the meeting violated A.R.S. § 33-1250(C)(2)’s requirement that ballots “provide an opportunity to vote for or against each proposed action.”
• ALJ Mihalsky’s Conclusion (October 18, 2016): The petition was recommended for dismissal. The judge reasoned that “no statute, CC&R, or bylaw by its plain language prevents Respondent from adding to the ballot that will used at the annual election that names of all members who have indicated a willingness to serve on the Board.” The decision noted that Board members are uncompensated volunteers and found no requirement for the Association to re-contact members who had not submitted nomination forms.
3.2. Rehearing and Second Decision (May-June 2017)
The initial decision was certified by the OAH, and the Petitioner successfully requested a rehearing from the Department of Real Estate.
• Hearing Date: May 17, 2017
• Presiding ALJ: Suzanne Marwil
• Key Arguments at Rehearing:
◦ Petitioner: The addition of a seventh candidate to the meeting ballot deprived absentee voters of their right to vote for or against all proposed actions. The meeting ballot also violated A.R.S. § 33-1250(C)(4) as it was not mailed seven days in advance.
◦ Respondent: No violation occurred, as statutes do not require identical ballots. It is common practice for HOAs to use different absentee and meeting ballots. The matter was moot because a new election was held in 2017.
• ALJ Marwil’s Conclusions of Law (June 2, 2017): The second decision granted the Petitioner’s petition, finding a statutory violation.
◦ Violation of A.R.S. § 33-1250(C)(2) Found: The use of two substantively different ballots was a violation. The decision stated: “Because the members who did not attend the meeting in person were not told of Mr. Thompson’s wiliness to run for the board, 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 on “Identical Ballots”: The ruling explicitly noted that it “does not impose a requirement that ballots be identical; it simply states that substantive changes to ballots must be presented to all members.”
◦ Mootness Argument Rejected: The ALJ found that the subsequent 2017 election did not render the matter moot, stating that the Judge “can and does find that Respondent committed a statutory violation in the course of holding its 2016 election.”
◦ No Violation of A.R.S. § 33-1250(C)(4): The absentee ballot complied with this subsection’s mailing and deadline requirements. A meeting ballot would not need to meet these requirements if it were “substantively the same as the absentee ballot.” The problem arose specifically because the ballots were different.
3.3. Final Order (June 12, 2017)
• Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order accepting and adopting the ALJ decision of June 2, 2017.
• The order was declared final and effective immediately.
• Mandate: The Respondent, Royal Riviera Condominium Association, was ordered to “reimburse Petitioner’s filing fee of $500.00 within thirty (30) days.”
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4. Key Statutes and Governing Documents
A.R.S. § 33-1250(C) – Voting and Ballots
This Arizona statute provides procedures for voting in condominium associations. Key subsections cited in the case are:
• General Provision: “The association shall provide for votes to be cast in person and by absentee ballot…”
• 1. The ballot shall set forth each proposed action.
• 2. The ballot shall provide an opportunity to vote for or against each proposed action. (This was the basis for the final ruling).
• 3. The ballot is valid for only one specified election or meeting…
• 4. The ballot specifies the time and date by which the ballot must be delivered… which shall be at least seven days after the date that the board delivers the unvoted ballot to the member.
Royal Riviera CC&Rs, Article VII – Membership and Voting
• Section 2: The Association has one class of voting membership, with all owners entitled to one vote per apartment owned.
• Section 4: Every owner has the right to cumulate votes in an election for the Board. The number of votes equals the number of apartments owned multiplied by the number of directors to be elected.
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5. Notable Testimony and Quotes
Witness/Party
Affiliation
Key Testimony or Statement
Marlys Kleck
Petitioner’s Witness
Testified that after being given the new ballot at the meeting, she “hurriedly completed” it, then realized it was more appropriate to use her absentee ballot. She asked for the new ballot back and submitted her original. She stated she “believed that the March 14, 2016 election was a fraud.”
Dan Peterson
Respondent’s Witness
Testified that it was “hard to find seven members to accept Board positions” and that “most elections of Board members were not contested.” Explained the process for verifying candidate eligibility.
Paul Gounder
Petitioner
Argued that the Respondent “had arbitrarily selected the members whom it contacted about serving on the Board and that to be fair, Respondent should have called all of its members about whether they were willing to serve.”
ALJ Diane Mihalsky
First ALJ Decision
“No statute, CC&R, or bylaw by its plain language prevents Respondent from adding to the ballot… the names of all members who have indicated a willingness to serve on the Board.”
ALJ Suzanne Marwil
Second ALJ Decision
“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.”
Gounder v. Royal Riviera Condominium Association: A Study Guide
Short-Answer Quiz
Instructions: Answer the following questions in 2-3 sentences based on the information provided in the case documents.
1. What was the central violation alleged by the Petitioner, Paul Gounder, in his petition filed on June 23, 2016?
2. Describe the key differences between the “Mail Ballot” and the “Ballot” used for the March 14, 2016 election.
3. How did Eric Thompson’s name come to be added to the ballot used at the annual meeting?
4. What was the initial ruling issued by Administrative Law Judge Diane Mihalsky on October 18, 2016?
5. What was the Respondent’s argument that the case should be considered “moot,” and how did the Administrative Law Judge in the rehearing address this claim?
6. According to the rehearing decision by Administrative Law Judge Suzanne Marwil, which specific Arizona statute did the Respondent violate?
7. What was the testimony of witness Marlys Kleck regarding her experience with the two ballots at the annual meeting?
8. According to Article VII, Section 4 of the Respondent’s CC&Rs, what is “cumulative voting”?
9. Did the final ruling require that the absentee ballot and the meeting ballot be identical in all future elections?
10. What was the final, binding order issued by the Commissioner of the Department of Real Estate on June 12, 2017?
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Answer Key
1. Paul Gounder alleged that the Royal Riviera Condominium Association violated A.R.S. § 33-1250(C)(2) and Article VII of its CC&Rs. The core of the allegation was that the association improperly used two substantively different ballots to elect Board members at the March 14, 2016 annual meeting.
2. The “Mail Ballot” (absentee ballot) listed six candidates and included a blank line for write-in candidates. The “Ballot” provided at the meeting was different in that it listed seven candidates (adding Eric Thompson) and had no space for write-in candidates.
3. Eric Thompson was initially a write-in candidate on absentee ballots. After the association received these ballots, its management company contacted the write-in candidates to confirm their willingness to serve; Mr. Thompson was the only one who agreed and was subsequently added to the ballot used at the meeting.
4. The initial ruling by Judge Mihalsky recommended dismissing the petition. She concluded that no statute, CC&R, or bylaw prevented the association from adding the names of all members who had indicated a willingness to serve to the ballot used at the annual election.
5. The Respondent argued the matter was moot because it had already held another election in 2017 and had a new board. Judge Marwil rejected this, stating that the fact a new board was seated did not render the matter moot, as she could still find that the Respondent committed a statutory violation during its 2016 election.
6. Judge Marwil found that the Respondent violated A.R.S. § 33-1250(C)(2). She reasoned that because members who did not attend the meeting were not told of Mr. Thompson’s candidacy, they were denied their right to vote for or against each proposed action, specifically the action of electing him.
7. Marlys Kleck testified that she brought her completed absentee ballot to the meeting but was given the new ballot with seven names. She hurriedly filled out the new ballot but then realized it would have been more appropriate to submit her original one, leading her to ask for the new ballot back and submit her absentee ballot instead.
8. Cumulative voting gives every owner the right to a number of votes equal to the number of apartments they own multiplied by the number of directors to be elected. The owner can then give all their votes to one candidate or divide them among any number of candidates.
9. No, the ruling did not impose a requirement that ballots be identical. Judge Marwil’s decision explicitly stated that finding a violation “simply states that substantive changes to ballots must be presented to all members.”
10. The final order, issued by Commissioner Judy Lowe, accepted the Administrative Law Judge’s decision. It ordered that the Petitioner’s petition be granted and that the Respondent must reimburse the Petitioner’s filing fee of $500.00 within thirty (30) days.
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Essay Questions
Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate a comprehensive response for each, drawing upon the facts, legal arguments, and rulings presented in the source documents.
1. Analyze and contrast the legal reasoning of Administrative Law Judge Diane Mihalsky’s initial decision with Judge Suzanne Marwil’s final decision. What specific interpretation of A.R.S. § 33-1250 was central to the reversal of the outcome?
2. Discuss the Respondent’s argument that using two different ballots is “common practice” for homeowners’ associations. Based on the final ruling, evaluate the validity of relying on common practice when it appears to conflict with specific statutory requirements.
3. Examine the rights of absentee voters within a homeowners’ association election, using the events of this case as a primary example. How did the association’s actions and procedures during the 2016 election impact these rights, and what principle did the final ruling establish to protect them?
4. The Respondent argued the case was moot because a new election had already occurred and a new board was seated. Explain the legal concept of mootness and discuss why the Administrative Law Judge rejected this argument, finding that a statutory violation could still be identified and ruled upon.
5. Evaluate the association’s process for identifying and finalizing its slate of candidates for the board election. Based on the testimony and events described, what procedural weaknesses were exposed, and how did they directly contribute to the legal dispute over the two ballots?
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Glossary of Key Terms
Definition
A.R.S.
Abbreviation for Arizona Revised Statutes, the collection of laws for the state of Arizona.
Absentee Ballot
A ballot that allows a member to vote without being physically present at the election meeting. In this case, it was also referred to as a “Mail Ballot.”
Administrative Law Judge (ALJ)
An official who presides over hearings at administrative agencies. In this case, Diane Mihalsky and Suzanne Marwil served as ALJs for the Office of Administrative Hearings.
Covenants, Conditions, and Restrictions. These are rules that govern a planned community or condominium development, which are legally binding on the property owners.
Cumulative Voting
As defined in the Respondent’s CC&Rs, a voting method where an owner has a number of votes equal to their apartments multiplied by the number of board seats open. The owner can cast all votes for one candidate or distribute them among multiple candidates.
Final Order
A legally binding decision issued at the conclusion of an administrative legal process. In this case, it was issued by the Commissioner of the Department of Real Estate, accepting the ALJ’s decision and making it enforceable.
Homeowners’ Association (HOA)
An organization in a subdivision, planned community, or condominium development that makes and enforces rules for the properties and its residents. The Royal Riviera Condominium Association is the HOA in this case.
A legal term for a matter that is no longer in controversy or has become irrelevant. The Respondent argued the case was moot because a new election had already taken place.
Petitioner
The party who files a petition initiating a legal action. In this case, Paul Gounder is the Petitioner.
Preponderance of the Evidence
The standard of proof in this civil administrative case. It is defined as “such proof as convinces the trier of fact that the contention is more probably true than not” and is considered the “greater weight of the evidence.”
Rehearing
A second hearing of a case to review the decision of the first hearing. A rehearing was granted to the Petitioner after the initial dismissal of his petition.
Respondent
The party against whom a petition is filed. In this case, the Royal Riviera Condominium Association is the Respondent.
He Sued His HOA Over One Name on a Ballot—And Won. Here’s What Every Homeowner Needs to Know.
1.0 Introduction: The David vs. Goliath of Community Living
Every homeowner in a managed community knows the feeling: a letter from the HOA arrives, and a sense of powerlessness follows. But one Arizona owner proved the rules are not just a one-way street. The board, often backed by management companies and law firms, can seem unchallengeable, but a surprising case demonstrates that the system can be held accountable, sometimes because of the smallest details.
This is the story of Paul Gounder, a condominium owner who single-handedly challenged his HOA’s election process and won. Without a lawyer, he filed a petition that resulted in a state-level ruling against his association. This article unpacks the key takeaways from the legal battle of Gounder v. Royal Riviera Condominium Association—lessons that are essential for any homeowner living in a managed community.
2.0Takeaway 1: One Person Can Successfully Challenge the System
On June 23, 2016, Paul Gounder, an owner in the 32-unit Royal Riviera Condominium Association, filed a petition with the Arizona Department of Real Estate. His core allegation was straightforward: the association had violated state law (A.R.S. § 33-1250(C)(2)) by using two different ballots for its board member election held on March 14, 2016.
Throughout the proceedings, the HOA was represented by a law firm. Mr. Gounder represented himself. Despite this imbalance, he ultimately prevailed. The final order not only found the association in violation but required it to reimburse Mr. Gounder for his $500.00 filing fee, proving that a well-founded challenge from a single member can succeed.
3.0Takeaway 2: “Common Practice” Is Not a Legal Defense
In its defense, the Royal Riviera Condominium Association argued that it was “common practice for homeowners associations to use one absentee ballot and a different meeting ballot” and that they had not committed any violation. They essentially claimed they were doing what many other HOAs do.
The final judge’s decision, however, was based strictly on the statute. The “common practice” defense was disregarded entirely. The ruling makes it clear that what is customary is irrelevant when it contradicts the explicit requirements of the law. Adherence to governing statutes is paramount. This principle was even acknowledged in the initial judge’s decision, which, despite siding with the HOA at first, noted the high standard boards are held to:
Board members are volunteers who are not compensated for their service to the community. Although Respondent is bound by the unequivocal language of applicable statutes, CC&Rs, and bylaws…
4.0Takeaway 3: A Fair Election Can Hinge on the Smallest Detail
The central issue of the case was a seemingly minor detail in the election materials. The HOA prepared an absentee/mail-in ballot that listed six candidates for seven open board seats and included a blank line for a write-in. However, after some members used the write-in option, the HOA identified a seventh willing candidate, Eric Thompson.
For the in-person meeting, the HOA prepared a different ballot. This new ballot included Mr. Thompson’s name, bringing the total to seven candidates. Critically, this meeting ballot had no space for new write-in candidates. This difference was the fatal flaw. The final Administrative Law Judge explained why this was a violation of the law:
Because the members who did not attend the meeting in person were not told of Mr. Thompson’s willingness [sic] to run for the board, 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. 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 ruling protects the rights of members who vote absentee. It ensures that those who cannot attend a meeting in person have the exact same opportunity to consider and vote for all candidates as those who are physically present.
5.0Takeaway 4: An Initial Loss Isn’t the End of the Road
Mr. Gounder’s victory was not immediate. His case demonstrates the importance of persistence when a member believes a rule has been broken.
• First Hearing (October 17, 2016): The first Administrative Law Judge, Diane Mihalsky, initially ruled in favor of the HOA, recommending that the petition be dismissed.
• Rehearing: Undeterred, the petitioner requested a rehearing, which was granted by the Arizona Department of Real Estate.
• Final Decision (June 2, 2017): A new judge, Suzanne Marwil, reviewed the case. She reversed the initial outcome, finding that the HOA had committed a statutory violation by using two substantively different ballots.
• Final Order (June 12, 2017): The Commissioner of the Department of Real Estate officially accepted Judge Marwil’s decision, making it a binding order.
This sequence highlights that an initial unfavorable ruling is not necessarily the final word. The appeals and review processes exist to correct errors and ensure the law is applied properly.
6.0 Conclusion: Why Procedural Fairness Matters
The case of Gounder v. Royal Riviera Condominium Association serves as a powerful reminder that the rules governing HOA elections are not just formalities. They are essential safeguards designed to ensure fair, transparent, and equal participation for all members of a community, whether they cast their vote by mail or in person.
This case was decided by a single name on a ballot—what small details in your community’s governance might be more important than they appear?
Case Participants
Petitioner Side
- Paul Gounder (petitioner)
- Frederick C. Zehm (witness)
Respondent member
Testified for Petitioner - Marlys Kleck (witness)
Respondent member
Testified for Petitioner
Respondent Side
- Royal Riviera Condominium Association (respondent)
Entity, not a human individual - Mark Kristopher Sahl (respondent attorney)
Carpenter Hazlewood Delgado & Bolen PLC - Dan Peterson (property manager)
Owner of Respondent's management company
Testified for Respondent - Eric Thompson (Board member)
Candidate whose name was added to meeting ballot
Neutral Parties
- Diane Mihalsky (ALJ)
ALJ for initial hearing (Oct 2016) - Suzanne Marwil (ALJ)
ALJ for rehearing (May/June 2017) - Judy Lowe (Commissioner)
Arizona Department of Real Estate - Abby Hansen (HOA Coordinator)
Arizona Department of Real Estate
Also listed as A. Hansen - L. Dettorre (ADRE Staff)
Arizona Department of Real Estate - D. Jones (ADRE Staff)
Arizona Department of Real Estate - J. Marshall (ADRE Staff)
Arizona Department of Real Estate - N. Cano (ADRE Staff)
Arizona Department of Real Estate - M. Aguirre (Admin Staff)
Handled transmission of May 17, 2017 Order
Other Participants
- Al DeFalco (candidate)
Nominated from the floor at the annual meeting
