Tag Archives: 2016

Jerry and Patricia Gravelle vs. Village Parc Homeowners Assoc. of

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Case Summary

Case ID 17F-H1716008-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-01-03
Administrative Law Judge Diane Mihalsky
Outcome The Department adopted the ALJ's recommendation to dismiss the petition. The ALJ found that the HOA's insurance policy and CC&Rs did not require coverage for damage to the Petitioners' individual unit (finished surfaces and personal property) resulting from a sewer backup. The HOA was only responsible for common elements.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Jerry and Patricia Gravelle Counsel —
Respondent Village Parc Homeowners Assoc. of Havasu Counsel Kenneth E. Moyer

Alleged Violations

CC&Rs Article 11, Section 11.7.3 and 11.7.6

Outcome Summary

The Department adopted the ALJ's recommendation to dismiss the petition. The ALJ found that the HOA's insurance policy and CC&Rs did not require coverage for damage to the Petitioners' individual unit (finished surfaces and personal property) resulting from a sewer backup. The HOA was only responsible for common elements.

Why this result: The CC&Rs explicitly state that the Association is not required to insure personal property within an individual unit and that owners are responsible for their own unit coverage. The ALJ found that past minor payments by the Board for similar damages did not amend the governing documents.

Key Issues & Findings

Failure to provide insurance coverage for unit damages

Petitioners alleged the HOA violated CC&Rs by failing to provide insurance coverage for damages to their unit (interior/personal property) caused by a sewer backup, requesting $6,697.70 reimbursement.

Orders: The petition is dismissed; no action is required of Respondent.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1247(A)
  • CC&Rs Article 11 Section 11.7.3
  • CC&Rs Article 11 Section 11.7.6

Video Overview

Audio Overview

Decision Documents

17F-H1716008-REL Decision – 528194.pdf

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17F-H1716008-REL Decision – 528432.pdf

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17F-H1716008-REL Decision – 535933.pdf

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17F-H1716008-REL Decision – 539997.pdf

Uploaded 2026-04-24T11:01:18 (1010.1 KB)

17F-H1716008-REL Decision – 528194.pdf

Uploaded 2026-01-23T17:18:03 (58.8 KB)

17F-H1716008-REL Decision – 528432.pdf

Uploaded 2026-01-23T17:18:10 (63.1 KB)

17F-H1716008-REL Decision – 535933.pdf

Uploaded 2026-01-23T17:18:15 (131.6 KB)

17F-H1716008-REL Decision – 539997.pdf

Uploaded 2026-01-23T17:18:22 (1010.1 KB)

Briefing: Gravelle v. Village Parc Homeowners Association

Executive Summary

This briefing synthesizes the key findings and legal determinations from an administrative case between homeowners Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu (HOA). The dispute centered on liability for damages within the Gravelles’ condominium unit caused by a sewer backup.

The petition, filed with the Arizona Department of Real Estate, was ultimately dismissed. The Administrative Law Judge (ALJ) concluded, and the Department Commissioner affirmed, that the HOA’s governing documents—the Covenants, Conditions, and Restrictions (CC&Rs)—unambiguously place the responsibility for insuring the interior of an individual unit on the unit owner, not the HOA.

The ruling established that the HOA’s master insurance policy, provided by Travelers, was only obligated to cover what the CC&Rs required. Arguments based on the HOA’s past payments for minor damages in other units, an erroneous initial statement by an insurance adjuster on a prior claim, and the HOA Board’s own mistaken interpretation of its duties were all found to be insufficient to override the plain written language of the governing documents. The final decision reinforces the principle that unit owners are responsible for understanding their CC&Rs and securing adequate personal insurance for their property.

I. Case Overview and Final Disposition

• Case Identification: No. 17F-H1716008-REL

• Parties:

◦ Petitioners: Jerry and Patricia Gravelle, owners of Unit 14 in the Village Parc development.

◦ Respondent: Village Parc Homeowners Assoc. of Havasu (“the Association”).

• Adjudicating Body: The case was heard in the Arizona Office of Administrative Hearings before Administrative Law Judge (ALJ) Diane Mihalsky. The final order was issued by the Commissioner of the Arizona Department of Real Estate.

• Key Dates:

◦ Hearing Date: November 10, 2016

◦ ALJ Decision: December 22, 2016

◦ Final Order: January 3, 2017

• Final Disposition: The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s recommendation and ordered that the petition be dismissed. This constituted a final administrative action, effective immediately. Parties were advised of their right to file for rehearing or appeal for judicial review.

II. The Core Dispute: Insurance for Sewer Backup Damage

On or about October 23, 2015, the Petitioners’ condominium (Unit 14), along with two other units, suffered damage from a sewer backup. The central conflict arose from determining which party was financially responsible for the repairs inside the Petitioners’ unit.

• Petitioners’ Claim: The Gravelles filed a petition on August 31, 2016, alleging the Association violated Articles 11.7.3 and 11.7.6 of the CC&Rs by failing to provide insurance coverage for the full extent of the damages. Their personal insurance policy did not cover sewer backups. They requested the Association pay $6,697.70 to reimburse them for the loss that the Association’s insurer, Travelers, declined to cover.

• Insurance Claim Outcome:

◦ The Association submitted a claim for the sewer backup damages to its insurer, Travelers.

◦ Travelers determined that its policy covered damages to the common elements associated with the unit and issued a check to the Petitioners for $338.64.

◦ Travelers concluded there was no coverage under the policy for damage to the interior of the Petitioners’ unit. This denial was based on the CC&Rs, which establish that the unit owner is responsible for the finished surfaces and personal property within their unit.

III. Analysis of Governing Documents and Legal Framework

The ALJ’s decision was grounded in a strict interpretation of the Association’s CC&Rs, its insurance contract, and the Arizona Condominium Act.

Document / Statute

Key Provisions and Implications

Village Parc CC&Rs

Unit Definition (Sec. 2.2.1): A unit is defined as the space “bounded by and contained within the interior finished surfaces of the perimeter walls, floors and ceilings.”

Insurance Responsibility (Sec. 11.7.3): The Association’s master policy is explicitly “not be required to insure the personal property within any individual Unit, which insurance shall be the responsibility and risk of the Unit Owners.”

Liability Limitation (Sec. 11.7.5): The Association is not liable to any owner “if any risk or hazard is not covered by insurance or the amount is inadequate.” It places the burden on each owner to ascertain the Association’s coverage and procure their own additional insurance.

Travelers Insurance Policy

Conditional Coverage Endorsement: The policy covers certain property (fixtures, alterations, appliances) contained within a unit, but only “if your Condominium Association Agreement requires you to insure it.” Since the CC&Rs do not require the Association to insure unit interiors, this coverage was not triggered.

Primary Insurance: The policy states it is “intended to be primary, and not to contribute with such other insurance” a unit-owner may have.

Arizona Condominium Act

Unit Definition (A.R.S. § 33-1212(1)): Reinforces the CC&Rs by defining finished surfaces—”lath, furring, wallboard… tiles, wallpaper, paint, finished flooring”—as part of the unit. All other portions of walls, floors, or ceilings are common elements.

Maintenance Responsibility (A.R.S. § 33-1247(A)): The law specifies that “the association is responsible for maintenance, repair and replacement of the common elements and each unit owner is responsible for maintenance, repair and replacement of the unit.”

IV. Petitioners’ Arguments and the ALJ’s Rejection

The Petitioners presented evidence of past practices by both the Association and Travelers, arguing these created an expectation of coverage. The ALJ systematically rejected these arguments.

• Argument 1: The Association’s Past Payments for Unit Repairs

◦ Petitioners’ Evidence: The Association had authorized payments for repairs inside other units on prior occasions:

▪ June 2011: $153.74, $75.00, and $296.11 for damage to Units 3 and 5 from a broken shower drain.

▪ January 2012: $449.45 to repair kitchen cabinets in Unit 6 damaged by a broken roof vent.

◦ ALJ’s Conclusion: The fact that the Association’s Board made “actual payments of small amounts for damages to individually owned units” does not legally amend the plain language of the CC&Rs. Notably, the Association did not submit these prior incidents to its insurer.

• Argument 2: Travelers’ Prior Actions

◦ Petitioners’ Evidence: In a 2014 claim, a Travelers adjuster initially determined that the policy did provide coverage for damage done to a unit, not just limited common elements.

◦ ALJ’s Conclusion: Travelers later stated the adjuster had erred and confirmed no claim for unit damage was ultimately paid. The ALJ found that the “adjuster’s initial error in the 2014 claim does not estop Travelers from denying the claim for damages to Petitioners’ unit” in 2015.

• Argument 3: The Association Board’s Own Interpretation

◦ Petitioners’ Evidence: At a November 2015 board meeting, where Mr. Gravelle served as secretary/treasurer, the Board itself determined that the CC&Rs did require the Association to provide insurance coverage for all damages to Unit 14.

◦ ALJ’s Conclusion: The Board’s “erroneous opinion” does not have the legal power to amend the CC&Rs or the binding terms of the Travelers insurance policy.

V. Core Legal Principles and Final Decision

The dismissal of the petition was based on several foundational legal principles.

• Primacy of Written Documents: The decision gave superior weight to the “plain language” of the CC&Rs and the insurance contract over inconsistent past practices or mistaken interpretations.

• Burden of Proof: As the filing party, the Petitioners had the burden to prove by a “preponderance of the evidence” that the Association violated the CC&Rs. The ALJ determined they failed to meet this standard.

• Clear Delineation of Responsibility: Both the CC&Rs and Arizona state law create a clear separation of financial and maintenance responsibilities: the Association is responsible for common elements, while individual owners are responsible for their units.

• Presumption of Knowledge: The decision cited the legal principle that “Everyone is presumed to know the law.” The CC&Rs put the Petitioners on constructive notice that they were responsible for insuring their individual unit against risks like a sewer backup. Their failure to procure such coverage was their own responsibility.

Study Guide: Gravelle v. Village Parc Homeowners Association

This guide provides a detailed review of the administrative case No. 17F-H1716008-REL, involving Jerry and Patricia Gravelle and the Village Parc Homeowners Association of Havasu. It is designed to test and deepen understanding of the facts, legal arguments, and final decision presented in the case documents.

Short Answer Quiz

Instructions: Answer the following questions in 2-3 complete sentences, drawing exclusively from the information provided in the case documents.

1. Who were the primary parties in case No. 17F-H1716008-REL, and what were their official roles?

2. What specific event on October 23, 2015, initiated the dispute between the parties?

3. What was the total monetary amount the Petitioners requested, and for what purpose?

4. According to the Travelers insurance policy held by the Association, what property inside a unit could be covered, and under what specific condition?

5. How did the Arizona Condominium Act (A.R.S. § 33-1212(1)) and the CC&Rs define the boundaries and components of an individual “Unit”?

6. What was the key reasoning provided by Travelers for denying coverage for the interior damage to the Petitioners’ unit?

7. The Petitioners cited past instances where the Respondent paid for repairs in other units. Why did the Administrative Law Judge rule that these “past practices” did not legally bind the Respondent in this case?

8. What is the definition of “preponderance of the evidence” as cited in the legal decision?

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

10. According to Section 11.7.5 of the CC&Rs, who is ultimately responsible for procuring additional insurance coverage if the Association’s policy is deemed inadequate?

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Quiz Answer Key

1. The primary parties were Jerry and Patricia Gravelle, who were designated as the “Petitioners,” and the Village Parc Homeowners Assoc. of Havasu, which was the “Respondent.” The Petitioners owned a condominium unit and were members of the Respondent homeowners’ association.

2. On or about October 23, 2015, the Petitioners’ Unit 14, as well as Units 15 and 16, suffered damage from a sewer backup. The Petitioners discovered that their personal insurance policy did not provide coverage for this type of damage, leading them to seek coverage under the Respondent’s policy.

3. The Petitioners requested that the Respondent pay $6,697.70. This amount was to reimburse them for the loss that the insurance company, Travelers, refused to cover for the damages inside their unit caused by the sewer backup.

4. The Travelers policy endorsement stated it could cover property contained within a unit, regardless of ownership, under one specific condition: if the “Condominium Association Agreement requires you to insure it.” This included fixtures, improvements, alterations, and certain appliances.

5. The CC&Rs (Section 2.2.1) and the Arizona Condominium Act defined a unit as being bounded by the interior finished surfaces of its perimeter walls, floors, and ceilings. The Act specifies that materials like tiles, paint, finished flooring, and wallpaper are part of the unit, while other portions of the walls, floors, or ceilings are part of the common elements.

6. Travelers concluded there was no coverage for the interior damage because the CC&Rs make the unit owner responsible for damages within a unit. The policy was intended to cover common elements and structural damage, not the finished surfaces and personal property that constitute the interior of the unit.

7. The judge ruled that the Board’s past payments for small damages and its erroneous opinion that the policy should cover the damage did not amend the plain language of the CC&Rs. The legally binding CC&Rs put Petitioners on notice about insurance requirements, and these past actions were not sufficient to override the written documents.

8. “A preponderance of the evidence” is defined as “such proof as convinces the trier of fact that the contention is more probably true than not.” It is also described as “The greater weight of the evidence… sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

9. The Administrative Law Judge issued a Recommended Order that the petition be dismissed and that no action was required of the Respondent. This recommendation was accepted and adopted by the Commissioner of the Department of Real Estate in a Final Order dated January 3, 2017.

10. Section 11.7.5 of the CC&Rs explicitly states that “Each Owner is responsible for ascertaining the Association’s coverage and for procuring such additional coverage as such owner deems necessary.” It also shields the Association from liability if a risk is not covered or the insurance amount is inadequate.

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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 question based on the provided source materials.

1. Analyze the role of the Covenants, Conditions, and Restrictions (CC&Rs) in this case. How did specific sections of the CC&Rs support the Respondent’s position and ultimately lead to the dismissal of the petition?

2. The Petitioners argued that the Respondent’s “past practices” and an initial, erroneous determination by a Travelers adjuster should have set a precedent. Explain what the legal concept of “estoppel” means in this context and detail the judge’s reasoning for why it did not apply to the Gravelles’ situation.

3. Discuss the division of responsibility for maintenance and insurance as defined by the Arizona Condominium Act and the Village Parc CC&Rs. How does this case illustrate the critical distinction between “Common Elements,” “Limited Common Elements,” and the “Unit” itself?

4. Trace the procedural path of this dispute, from the initial petition filing to the Final Order. Identify the key government bodies involved (e.g., Department of Real Estate, Office of Administrative Hearings) and the roles they played in adjudicating the case.

5. Imagine you are advising a new condominium owner at Village Parc. Based on the outcome and reasoning of this case, what advice would you give them regarding insurance policies and understanding their responsibilities versus those of the Homeowners Association?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official (Diane Mihalsky) from the Office of Administrative Hearings who conducted the hearing, analyzed the evidence and legal arguments, and issued a recommended decision in the case.

Arizona Condominium Act

A set of Arizona state statutes that define legal terms and responsibilities related to condominiums. In this case, it was used to define the boundaries of a “unit” versus “common elements” (A.R.S. § 33-1212(1)) and to assign responsibility for their maintenance (A.R.S. § 33-1247(A)).

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents for the Village Parc development. These documents define the rights and obligations of the unit owners and the homeowners’ association, including insurance requirements.

Common Elements

Portions of the condominium project designated for common ownership by all unit owners. Under the Arizona Condominium Act, portions of walls, floors, or ceilings that are not part of the finished surfaces of a unit are considered common elements.

Estoppel

A legal principle defined in the case as meaning “that a party is prevented by his own acts from claiming a right to detriment of other party who was entitled to rely on such conduct and has acted accordingly.” The judge ruled it did not apply because the plain language of the CC&Rs prevented the Petitioners from claiming they reasonably relied on the Board’s or Travelers’ past practices.

Limited Common Elements

A portion of the Common Elements allocated for the exclusive use of one or more, but fewer than all, of the Units. An example given is a “chute, flue, duct, wire, conduit… [that] serve only that Unit.”

Petitioner

The party that filed the petition initiating the legal action. In this case, Jerry and Patricia Gravelle, owners of Unit 14.

Preponderance of the Evidence

The standard of proof required for the Petitioners to win their 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.”

Project

As defined in Section 1.27 of the CC&Rs, this refers to “the entire Property… portions of which are designated for separate ownership and the remainder of which are designated for common ownership solely by the owners of the Units therein.”

Respondent

The party against whom the petition was filed. In this case, the Village Parc Homeowners Assoc. of Havasu (“the Association”).

As defined in the CC&Rs, “the elements of an individual unit… which are not owned in common with the Owners of other Condominium Units.” Its physical boundaries are defined as the interior finished surfaces of the perimeter walls, floors, and ceilings.

Case

Docket No
17F-H1716008-REL
Case Title
Jerry and Patricia Gravelle v. Village Parc Homeowners Assoc. of Havasu
Decision Date
2017-01-03
Tribunal
OAH
Agency
ADRE

Individuals

Name
Jerry Gravelle
Role
petitioner
Side
petitioner
Affiliation
Village Parc Homeowners Assoc. of Havasu
Notes
Homeowner; also served as Secretary/Treasurer on the Board in Nov 2015
Name
Patricia Gravelle
Role
petitioner
Side
petitioner
Affiliation
Village Parc Homeowners Assoc. of Havasu
Notes
Homeowner
Name
Kenneth E. Moyer
Role
attorney
Side
respondent
Affiliation
Law Offices of Kenneth E. Moyer, PLLC
Notes
Attorney for Respondent
Name
Gary Himango
Role
affiant
Side
respondent
Affiliation
Village Parc Homeowners Assoc. of Havasu
Notes
Submitted affidavit for Respondent
Name
Diane Mihalsky
Role
ALJ
Side
neutral
Affiliation
Office of Administrative Hearings
Notes
Administrative Law Judge
Name
Judy Lowe
Role
Commissioner
Side
neutral
Affiliation
Arizona Department of Real Estate
Name
Abby Hansen
Role
HOA Coordinator
Side
neutral
Affiliation
Arizona Department of Real Estate
Name
M. Aguirre
Role
clerk
Side
neutral
Affiliation
Office of Administrative Hearings
Notes
Transmitted documents
Name
L. Dettorre
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])
Name
D. Jones
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])
Name
J. Marshall
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])
Name
N. Cano
Role
ADRE staff
Side
neutral
Affiliation
Arizona Department of Real Estate
Notes
Email recipient ([email protected])

Case Participants

Petitioner Side

  • Jerry Gravelle (petitioner)
    Village Parc Homeowners Assoc. of Havasu
    Homeowner; also served as Secretary/Treasurer on the Board in Nov 2015
  • Patricia Gravelle (petitioner)
    Village Parc Homeowners Assoc. of Havasu
    Homeowner

Respondent Side

  • Kenneth E. Moyer (attorney)
    Law Offices of Kenneth E. Moyer, PLLC
    Attorney for Respondent
  • Gary Himango (affiant)
    Village Parc Homeowners Assoc. of Havasu
    Submitted affidavit for Respondent

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
  • M. Aguirre (clerk)
    Office of Administrative Hearings
    Transmitted documents
  • L. Dettorre (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • D. Jones (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • J. Marshall (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])
  • N. Cano (ADRE staff)
    Arizona Department of Real Estate
    Email recipient ([email protected])

Brian Sopatk vs. The Lakeshore Village Condo. Assoc., Inc.

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Case Summary

Case ID 17F-H1716004-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-08-10
Administrative Law Judge Thomas Shedden
Outcome The Administrative Law Judge dismissed the petition because the Petitioner failed to prove the HOA violated A.R.S. § 33-1260. The contested $660 fee was determined to be a working capital contribution authorized by the Association's CC&Rs (section 8.13), which is distinct from the resale disclosure fees limited by statute.
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Sopatyk Counsel Nathan Andrews, Esq. and Jill Kennedy, Esq.
Respondent The Lakeshore Village Condo. Association, Inc. Counsel Bradley R. Jardine, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1260

Outcome Summary

The Administrative Law Judge dismissed the petition because the Petitioner failed to prove the HOA violated A.R.S. § 33-1260. The contested $660 fee was determined to be a working capital contribution authorized by the Association's CC&Rs (section 8.13), which is distinct from the resale disclosure fees limited by statute.

Why this result: The Petitioner did not meet the burden of proof to show a statutory violation because the fee in question was a valid working capital fee collected under the CC&Rs, not an illegal transfer fee under A.R.S. § 33-1260.

Key Issues & Findings

Alleged violation of statutory maximum fee for resale disclosure/transfer documents.

Petitioner alleged the Association charged a $660 transfer fee, plus a $30 statement fee, violating A.R.S. § 33-1260, which limits aggregate fees for resale disclosure and transfer services to $400. The ALJ found the $660 fee was a working capital fee authorized by CC&R section 8.13, not a statutory disclosure fee, despite being mislabeled by the Association.

Orders: Petitioner Brian D. Sopatyk's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119

Analytics Highlights

Topics: HOA fees, transfer fee, working capital fund, statutory compliance, burden of proof, condominium association, resale disclosure
Additional Citations:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • A.R.S. § 41-1092.08
  • A.R.S. § 41-1092.09
  • A.R.S. § 1-243

Video Overview

Audio Overview

Decision Documents

17f-H1716004-REL Decision – 531040.pdf

Uploaded 2026-04-26T09:44:10 (67.9 KB)

17f-H1716004-REL Decision – 540004.pdf

Uploaded 2026-04-26T09:44:12 (154.0 KB)

17f-H1716004-REL Decision – 531040.pdf

Uploaded 2026-04-24T11:06:02 (67.9 KB)

17f-H1716004-REL Decision – 540004.pdf

Uploaded 2026-04-24T11:06:07 (154.0 KB)

Briefing Document: Sopatyk v. The Lakeshore Village Condominium Association, Inc.

Executive Summary

This document synthesizes the legal proceedings and outcomes of the case Brian Sopatyk v. The Lakeshore Village Condominium Association, Inc. (Case No. 17F-H1716004-REL), adjudicated by the Arizona Office of Administrative Hearings. The core of the dispute was Petitioner Brian Sopatyk’s allegation that the Respondent Condominium Association violated Arizona Revised Statute (A.R.S.) § 33-1260 by charging a $660 “transfer fee” upon the sale of a condominium unit, which exceeded the statutory maximum of $400 for resale disclosure services.

The Association’s defense centered on the argument that the $660 charge was not a disclosure fee but a separate “working capital fee” authorized by its Covenants, Conditions, and Restrictions (CC&Rs). The Association contended that this fee had been erroneously mislabeled as a “transfer fee” due to a clerical error inherited by its current manager. The actual statutory fee for disclosure documents, the Association argued, was a separate $30 charge paid by the seller.

After an initial hearing in November 2016 and a subsequent re-hearing in June 2017, the Administrative Law Judge consistently found that Mr. Sopatyk failed to prove the alleged violation by a preponderance of the evidence. The court concluded that the evidence supported the Association’s claim of a mislabeled working capital fee. Consequently, Mr. Sopatyk’s petition was dismissed on both occasions, and the Association was deemed the prevailing party.

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Case Overview

Parties and Jurisdiction

Representation

Petitioner

Brian Sopatyk

On his own behalf (Initial Hearing); Nathan Andrews, Esq. & Jill Kennedy, Esq. (Re-Hearing)

Respondent

The Lakeshore Village Condominium Association, Inc.

Bradley R. Jardine, Esq. (Both Hearings)

Jurisdiction

Arizona Department of Real Estate (ADRE)

Authority under A.R.S. Title 32, Ch. 20, Art. 11.

Adjudicator

Administrative Law Judge (ALJ) Thomas Shedden

Office of Administrative Hearings, Phoenix, AZ

Core Allegation and Governing Statute

• Allegation: Brian Sopatyk alleged that The Lakeshore Village Condominium Association violated A.R.S. § 33-1260 by charging fees exceeding the statutory maximum for resale disclosure services. Specifically, a $660 fee labeled as a “transfer fee” was charged when he purchased his unit.

• Petitioner’s Request: Mr. Sopatyk sought an order for the Association to comply with the statute, issue refunds to all who paid fees in excess of the maximum, and for a civil penalty to be imposed.

• Governing Statute: A.R.S. § 33-1260 stipulates that a condominium association “may charge the unit owner a fee of no more than an aggregate of four hundred dollars to compensate the association for the costs incurred in the preparation of a statement or other documents furnished… for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of the property.” The statute explicitly forbids charging any other fees for these services except as authorized.

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Chronology of Legal Proceedings

March 2, 2015

The Association issues a “Disclosure Form” for Mr. Sopatyk’s purchase, listing a $660 transfer fee and a $30 statement fee.

May 18, 2016

The Association’s Board of Directors meets to address Mr. Sopatyk’s claim. They conclude the $660 fee was a mislabeled working capital fee and direct corrective accounting.

August 9, 2016

Mr. Sopatyk files a petition with the Arizona Department of Real Estate.

November 14, 2016

The initial hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

ALJ Shedden issues a decision dismissing Mr. Sopatyk’s petition.

December 13, 2016

The ADRE Commissioner, Judy Lowe, adopts the ALJ’s decision, issuing a Final Order dismissing the case.

February 7, 2017

A Notice of Re-Hearing is issued after Mr. Sopatyk requests one.

June 9, 2017

A re-hearing is conducted before ALJ Thomas Shedden.

June 26, 2017

ALJ Shedden issues a new decision, again dismissing Mr. Sopatyk’s petition.

August 1, 2017

The deadline passes for the ADRE to accept, reject, or modify the ALJ’s re-hearing decision. No action is taken.

August 10, 2017

The Office of Administrative Hearings certifies the ALJ’s decision from the re-hearing as the final administrative decision in the matter.

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Analysis of Arguments and Evidence

Petitioner’s Position (Brian Sopatyk)

• Primary Argument: The Association’s own documents, specifically the Disclosure Form and the HUD-1 settlement statement, explicitly labeled the $660 charge as a “Transfer Fee.” This amount is a prima facie violation of the $400 statutory cap in A.R.S. § 33-1260.

• Evidence Presented:

◦ March 2, 2015 Disclosure Form: Showed a required payment of a $660 “transfer fee” and a $30 “statement fee.”

◦ HUD-1 Settlement Statement: Documented that the $660 Transfer Fee was paid to the Association, with $330 paid from the Borrower’s (Sopatyk’s) funds and $330 from the Seller’s funds. It also showed the Seller paid a separate $30 Resale Statement Fee.

• Contradictory Testimony: In his sworn petition, Mr. Sopatyk stated the $660 fee was “split between the seller and the buyer.” However, during the re-hearing, he testified that he had “in fact paid the entire $660 as part of the negotiated price of the unit.” The ALJ noted this discrepancy, stating “either Mr. Sopatyk’s sworn statement or his testimony must be false.”

Respondent’s Position (The Lakeshore Village Condo. Association)

• Primary Argument: The $660 fee was not for resale disclosure services but was a working capital fee authorized by the Association’s CC&Rs. The “transfer fee” label was a historical clerical error that the Board had since identified and corrected.

• Evidence and Testimony:

◦ CC&R Section 8.13 (“Transfer Fee and Working Capital Fund”): This provision authorizes the Association to assess each new owner a fee of “at least twice the average monthly assessment” to be deposited into the working capital fund (referred to as the Reserve Fund). The monthly assessment was $328.83, making the $660 fee consistent with this rule.

◦ Testimony of Amy Telnes (Association Manager): Ms. Telnes testified that when she became manager, she was incorrectly informed that the working capital fee was the transfer fee. She affirmed that the $660 fee was deposited into the Association’s reserve fund and that the separate $30 fee was the one charged pursuant to A.R.S. § 33-1260.

◦ May 18, 2016 Board Meeting Minutes: These minutes, entered into evidence, documented the Board’s conclusion that it was collecting a working capital contribution but “erroneously calling it a transfer fee.” The Board directed Ms. Telnes to perform an accounting and transfer all such fees collected after October 1, 2013, to the Reserve Account. The minutes also show the Board voted to change its fee structure moving forward to a single $400 fee to avoid future confusion.

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Judicial Findings and Final Disposition

Standard and Burden of Proof

Across both hearings, the ALJ established that the standard of proof was a preponderance of the evidence, defined as evidence with “the most convincing force” that is “sufficient to incline a fair and impartial mind to one side of the issue rather than the other.” The burden of proof rested entirely on the petitioner, Mr. Sopatyk, to demonstrate that a violation had occurred.

Initial Hearing Decision (November 29, 2016)

• Findings of Fact: The ALJ found that the Association was charging a $660 working capital fee in accordance with its CC&Rs but had been mislabeling it. It was also charging a separate $30 document preparation fee.

• Conclusion of Law: Mr. Sopatyk did not show by a preponderance of the evidence that the Association violated A.R.S. § 33-1260.

• Order: The petition was dismissed, and the decision was adopted as final by the ADRE Commissioner on December 13, 2016.

Re-Hearing Decision (June 26, 2017)

• Findings of Fact: The re-hearing produced more detailed findings but led to the same conclusion. The ALJ found that the Association had authority under its CC&Rs to collect the $660 working capital fee and that the statutory disclosure statute did not apply to this charge. The fee applicable to the statute was the $30 charge paid by the seller.

• Conclusion of Law: The ALJ reiterated that Mr. Sopatyk failed to meet his burden of proof. The Association’s argument that the claim should fail because Sopatyk did not personally pay over $400 was deemed “not persuasive,” as the statute applies to all violations regardless of particularized harm.

• Order: The petition was again ordered to be dismissed.

Final Administrative Disposition

The ADRE took no action to modify or reject the ALJ’s re-hearing decision by the statutory deadline of August 1, 2017. As a result, the Office of Administrative Hearings certified the June 26, 2017 decision as the final administrative decision on August 10, 2017, concluding the matter in favor of the Respondent Association.

Study Guide: Sopatyk v. The Lakeshore Village Condo. Association, Inc.

Quiz: Short-Answer Questions

Instructions: Answer the following ten questions based on the provided case documents. Each answer should be two to three sentences in length.

1. What specific Arizona Revised Statute did petitioner Brian Sopatyk allege that The Lakeshore Village Condominium Association violated, and what is the core requirement of that statute?

2. Identify the two fees charged in connection with Mr. Sopatyk’s unit purchase, the amount of each fee, and how they were documented on the HUD-1 disclosure statement.

3. What was the Association’s central argument for why the $660 fee did not violate the statute in question?

4. Who was the Association’s manager, and what explanation did she provide for the labeling of the $660 fee?

5. According to the Association’s Declaration of Covenants, Conditions and Restrictions (CC&Rs), what is the purpose of the fee outlined in section 8.13?

6. What was the outcome of the initial administrative hearing held on November 14, 2016?

7. During the rehearing, a discrepancy was noted between Mr. Sopatyk’s sworn petition and his testimony regarding the payment of the $660 fee. What was this discrepancy?

8. What corrective actions did the Association’s Board vote to take during its meeting on May 18, 2016, after Mr. Sopatyk raised the issue?

9. What is the standard of proof the petitioner was required to meet in this case, and did the Administrative Law Judge find that he met it?

10. What was the final, certified administrative decision in this matter after the rehearing on June 9, 2017?

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Answer Key

1. Brian Sopatyk alleged a violation of ARIZ. REV. STAT. section 33-1260. This statute requires a condominium association to provide specific disclosure documents to a prospective purchaser and limits the aggregate fee for preparing these documents and other related services to no more than four hundred dollars.

2. The two fees were a $660 “Transfer Fee” and a $30 “Resale Statement Fee.” The HUD-1 disclosure statement shows the $660 fee was split, with $330 paid by the borrower (Sopatyk) and $330 paid by the seller, while the seller alone paid the $30 fee.

3. The Association’s central argument was that the $660 fee was not a transfer fee for disclosure services but was actually a “working capital fee” collected pursuant to section 8.13 of its CC&Rs. They contended that the fee had been incorrectly labeled as a “transfer fee” due to a clerical error.

4. The Association’s manager was Amy Telnes. She testified that when she became manager, she was incorrectly told the working capital fee was the transfer fee, and these fees had been mislabeled since that time.

5. According to CC&R section 8.13 (“Transfer Fee and Working Capital Fund”), each new unit owner is to be assessed a fee of at least twice the average monthly assessment. These fees are to be deposited into the working capital fund, which the Association refers to as its Reserve Fund.

6. Following the initial hearing, Administrative Law Judge Thomas Shedden found that Mr. Sopatyk had not shown by a preponderance of the evidence that the Association violated the statute. The Judge’s decision was to dismiss Mr. Sopatyk’s petition, and this decision was adopted by the Commissioner of the Department of Real Estate.

7. In his sworn petition, Mr. Sopatyk stated that the $660 fee was split between him and the seller. However, at the hearing, he testified that he had in fact paid the entire $660 as part of the negotiated price of the unit, meaning one of his statements had to be false.

8. The Board directed Ms. Telnes to account for all working capital fees and transfer them to the Reserve Account to correct the error. The Board also determined its system was confusing and voted to assess a single transfer fee of $400 (and no other fees) on all future transactions.

9. The petitioner, Mr. Sopatyk, bore the burden of proof and was required to meet the standard of a “preponderance of the evidence.” The Administrative Law Judge concluded in both hearings that Mr. Sopatyk did not meet this burden.

10. The final decision was that Mr. Sopatyk’s petition was dismissed again. On August 10, 2017, the Administrative Law Judge’s decision from the rehearing was certified as the final administrative decision of the Department of Real Estate because the Department took no action to reject or modify it.

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Suggested Essay Questions

1. Analyze the legal concept of “preponderance of the evidence” as it is defined and applied in this case. Explain in detail why the evidence presented by the Association was deemed to have greater convincing force than the evidence presented by the Petitioner, leading to the dismissal of his petition.

2. Discuss the critical role of the Association’s governing documents, specifically CC&R section 8.13, in its successful defense. How did the language of this section allow the Association to re-characterize the disputed $660 fee and differentiate it from the fees regulated by ARIZ. REV. STAT. § 33-1260?

3. Trace the procedural history of case No. 17F-H1716004-REL, from the filing of the petition to the final certified order. Identify the key dates, participants (judges, legal counsel, witnesses), and the function of the Office of Administrative Hearings and the Department of Real Estate in the process.

4. Examine the actions taken by the Association’s Board during its May 18, 2016, meeting. Evaluate whether these actions demonstrated good-faith governance and a proactive attempt to correct a procedural error, and discuss how the minutes from this meeting were used as evidence in the hearing.

5. Despite losing the case, Mr. Sopatyk’s petition prompted significant changes in the Association’s fee structure. Argue whether the petitioner’s actions ultimately served the public interest for future condominium purchasers in the Lakeshore Village community, even though he did not prevail in his specific legal claim.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official, in this case Thomas Shedden, who presides over hearings at the Office of Administrative Hearings and issues a decision based on the evidence presented.

ARIZ. REV. STAT. § 33-1260

The Arizona statute that requires a condominium association to furnish a prospective purchaser with disclosure documents and other information. It explicitly limits the fee an association can charge for these services to “no more than an aggregate of four hundred dollars.”

Burden of Proof

The responsibility of a party in a legal case to prove their claims. In this matter, the burden of proof was on the petitioner, Brian Sopatyk.

The Declaration of Covenants, Conditions and Restrictions, which are the governing documents for the condominium association. Section 8.13 of the Lakeshore Village CC&Rs authorizes the collection of a fee for a working capital fund.

Petitioner

The party who initiates a legal action by filing a petition. In this case, Brian Sopatyk.

Preponderance of the Evidence

The standard of proof required in this case, defined as “The greater weight of the evidence… by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

Respondent

The party defending against a petition. In this case, The Lakeshore Village Condominium Association, Inc.

Reserve Fund

The account into which the Association deposits its working capital fees. It is also referred to as the Working Capital Fund.

Statement Fee / Resale Statement Fee

A $30 fee, separate from the disputed $660, that was paid by the seller to the Association for the preparation of the resale statement. This fee was considered part of the allowable charges under ARIZ. REV. STAT. § 33-1260.

Transfer Fee

The label erroneously applied to the $660 fee on the disclosure statement and HUD-1 form. The central dispute of the case was whether this was a true transfer fee subject to the statutory cap or a mislabeled working capital fee.

Working Capital Fee

A fee authorized by CC&R section 8.13 to be assessed from each new unit owner for the purpose of funding the Association’s working capital fund (Reserve Fund). The Association successfully argued the $660 charge was this type of fee.

How a $660 Fee Sparked a Legal Showdown: 5 Surprising Lessons from a Homeowner vs. HOA Dispute

We sign, we initial, we pay—assuming every line item on our closing documents is gospel. When buying a home in a condominium association, the stack of paperwork and list of fees can feel overwhelming. But what if one of those “standard” fees wasn’t standard at all?

For homeowner Brian Sopatyk, a single $660 charge from The Lakeshore Village Condominium Association wasn’t just a number; it was a thread he pulled that unraveled a surprising story of HOA governance, legal strategy, and the power of asking “why?” This post breaks down the five most impactful takeaways from a seemingly minor dispute that went all the way through a formal hearing and re-hearing.

1. A Simple Label Can Ignite a Legal Firestorm

A clerical error triggers a full-blown legal dispute.

The entire case hinged on a single, crucial mistake: the HOA mislabeled a “working capital fee” as a “transfer fee” on its disclosure forms.

Why was this one word so important? Because Mr. Sopatyk’s formal petition alleged that by charging a “$660 transfer fee,” the HOA violated Arizona statute 33-1260, which caps fees for resale disclosure services at a maximum of $400. On its face, the $660 charge looked like a clear violation of state law.

The Association’s manager, Amy Telnes, testified that when she took over her position, she was given erroneous information that the working capital fee was the transfer fee. As a result, the charge had been incorrectly labeled ever since. This simple administrative error was enough to trigger a formal petition to the Arizona Department of Real Estate, a full administrative hearing, and eventually, a re-hearing, proving how a small clerical mistake can escalate into a significant legal conflict.

2. In the Eyes of the Law, Substance Can Trump Form

Why the fee’s purpose mattered more than its name.

The Association’s core defense was that while the name of the fee was wrong, its purpose and authority were legitimate. The $660 charge, they argued, wasn’t for resale documents (the service capped by state law), but was a “working capital fee” authorized by an entirely different rule: the Association’s own Covenants, Conditions, and Restrictions (CC&Rs).

Specifically, Section 8.13 of the CC&Rs allowed for this assessment, with the funds designated for the Association’s reserve fund. This working capital fee, in contrast, was an assessment on the new owner as mandated by the CC&Rs to ensure the association’s financial health. The actual fee for the statutory disclosure documents was a separate, compliant $30 “Resale Statement Fee,” which was paid by the seller.

The Administrative Law Judge ultimately agreed. The fee’s underlying purpose and the HOA’s authority to collect it (its substance) were deemed more important than its incorrect name on the form (its form). This is a crucial lesson for any homeowner challenging an HOA: it’s not enough to find a mistake on a form. You must be prepared to argue against the underlying authority and purpose of the action itself.

3. You Can Lose the Battle but Win the War

How a dismissed case led to a major policy victory.

Perhaps the most counter-intuitive outcome is that although Mr. Sopatyk’s petition was dismissed, his actions were the direct catalyst for a significant and positive policy change by the HOA.

In a summary of the Association’s May 18, 2016, Board Meeting, which was entered as evidence, the judge noted that the Board reviewed the very issue Mr. Sopatyk had raised. Under the pressure of his legal challenge, they came to a powerful conclusion about their own system, determining it was “confusing and unfair.”

As a direct result of this internal review prompted by the dispute, the Board voted to simplify its process. It resolved to assess a single, clear transfer fee of $400 on all future transactions, eliminating the other confusing fees. This proves that even an unsuccessful legal challenge can be a powerful tool, forcing an organization to confront and correct its own problematic practices for the benefit of all future members.

4. The ‘Burden of Proof’ Is More Than Just a Phrase

What it really means to have to prove your case.

In both the original decision and the re-hearing, the judge repeatedly stated that Mr. Sopatyk, as the petitioner, bore the “burden of proof.” This legal standard was critical to the outcome. It meant he had to prove his claim by a “preponderance of the evidence,” which the court documents defined as:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

In this case, it meant Mr. Sopatyk’s job was to prove that the $660 fee was, more likely than not, an illegal charge for resale documents. The HOA’s defense—that it was a legally separate “working capital fee” that was simply mislabeled—created enough doubt that he couldn’t clear this hurdle.

5. A Small Contradiction Can Damage Credibility

When every word you say (and write) is on the record.

A fascinating detail appeared in the re-hearing decision, highlighting how every word matters in a legal proceeding.

There was a discrepancy in Mr. Sopatyk’s statements. His sworn petition, filed on August 9, 2016, stated the $660 fee was “split between the seller and the buyer.” However, during the hearing, he testified that he had “in fact paid the entire $660.”

The judge noted this contradiction directly in footnote 3 of the re-hearing decision, stating: “either Mr. Sopatyk’s sworn statement or his testimony must be false.” While not the deciding factor, this kind of inconsistency can subtly erode a petitioner’s standing. Remember the “burden of proof” from Takeaway 4? It requires convincing a judge to “incline a fair and impartial mind” to your side. Contradictions, even small ones, make that inclination much harder to achieve.

Conclusion: The Devil Is in the Details

This case is the perfect microcosm of community association disputes. It began with a clerical error (form), was adjudicated on intent (substance), was lost on a technicality (the burden of proof), yet resulted in a victory for transparency. Mr. Sopatyk may not have won his case, but he won a better system for his neighbors.

The ultimate lesson? In an HOA, the most powerful tool isn’t always a lawsuit—sometimes, it’s a magnifying glass. It leaves us with a thought-provoking question: When is it worth challenging the system for clarity and fairness, even if the outcome isn’t a clear ‘win’ on paper?

Case Participants

Petitioner Side

  • Brian Sopatyk (petitioner)
  • Nathan Andrews (petitioner attorney)
    ASU Alumni Law Group
  • Jill M. Kennedy (petitioner attorney)
    ASU Alumni Law Group
  • Chance Peterson (petitioner attorney)
    ASU Alumni Law Group
  • Judy Sopatyk (party)
    Wife of petitioner and co-purchaser of the unit

Respondent Side

  • Bradley R. Jardine (HOA attorney)
    Jardine Baker Hickman & Houston
    Attorney for Respondent
  • Amy Telnes (property manager/witness)
    The Lakeshore Village Condo. Association, Inc.
    Association manager who testified
  • Michael Cibellis (association president/witness)
    The Lakeshore Village Condo. Association, Inc.
    Association president who testified at rehearing

Neutral Parties

  • Thomas Shedden (ALJ)
  • Judy Lowe (Commissioner)
    ADRE
    Arizona Department of Real Estate Commissioner
  • Greg Hanchett (Interim Director)
    OAH
    Signed Certification of Decision
  • Abby Hansen (HOA Coordinator)
    ADRE
    Administrative contact for rehearing requests
  • Rosella J. Rodriguez (administrative staff)
    Involved in copy mailing/distribution

Barbara Printy vs. Olive Grove Village Association Inc.

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Case Summary

Case ID 16F-H1616010-BFS
Agency ADRE
Tribunal OAH
Decision Date 2016-11-14
Administrative Law Judge Tammy L. Eigenheer
Outcome The ALJ concluded that the Petitioner established by a preponderance of the evidence that the Respondent violated A.R.S. § 33-1243(J) and governing documents by failing to complete the required 2014 audit by March 31, 2015. The audit was not completed until October 2016. The ALJ imposed a $5,000 civil penalty due to the ongoing refusal to comply.
Filing Fees Refunded $750.00
Civil Penalties $5,000.00

Parties & Counsel

Petitioner Barbara Printy Counsel Phil Whitaker
Respondent Olive Grove Village Association Inc. Counsel Jonathan Ebertshauser

Alleged Violations

A.R.S. § 33-1243(J)

Outcome Summary

The ALJ concluded that the Petitioner established by a preponderance of the evidence that the Respondent violated A.R.S. § 33-1243(J) and governing documents by failing to complete the required 2014 audit by March 31, 2015. The audit was not completed until October 2016. The ALJ imposed a $5,000 civil penalty due to the ongoing refusal to comply.

Key Issues & Findings

Failure to obtain annual financial audit

Petitioner alleged Respondent failed to obtain an audit of the 2014 financials. Respondent's fiscal year ended Dec 31, 2014. The audit was not received until Oct 11, 2016, despite multiple requests by Petitioner. ALJ found Respondent violated statute and governing documents.

Orders: Respondent ordered to pay Petitioner $750.00 filing fee and pay Department $5,000.00 civil penalty.

Filing fee: $750.00, Fee refunded: Yes, Civil penalty: $5,000.00

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1243(J)

Video Overview

Audio Overview

Decision Documents

16F-H1616010-BFS Decision – 528449.pdf

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16F-H1616010-BFS Decision – 538188.pdf

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16F-H1616010-BFS Decision – 540732.pdf

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16F-H1616010-BFS Decision – 562623.pdf

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16F-H1616010-BFS Decision – 564331.pdf

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16F-H1616010-BFS Decision – 564332.pdf

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Administrative Decision Briefing: Printy v. Olive Grove Village Association Inc.

Executive Summary

This document synthesizes the administrative law proceedings and final decision regarding the dispute between Barbara Printy (Petitioner) and the Olive Grove Village Association Inc. (Respondent). The central conflict involved the Respondent’s failure to conduct a timely financial audit for the 2014 fiscal year, as mandated by Arizona Revised Statutes (A.R.S.) and the Association’s own governing documents.

The Administrative Law Judge (ALJ) determined that the Respondent committed a clear violation of A.R.S. § 33-1243(J). Despite multiple requests from the Petitioner starting in early 2015, the Association did not receive the required audit until October 2016—nearly eighteen months past the deadline set in its Covenants, Conditions, and Restrictions (CC&Rs). Consequently, the Respondent was ordered to reimburse the Petitioner’s $750 filing fee and pay a civil penalty of $5,000 to the Department of Real Estate.

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Factual Background and Parties

The dispute involves the following entities and legal context:

• Petitioner: Barbara Printy, a condominium owner within the Association.

• Respondent: Olive Grove Village Association Inc., a condominium owners association located in Phoenix, Arizona.

• Subject Matter: Failure to provide a required financial audit for the fiscal year ending December 31, 2014.

• Jurisdiction: Originally filed with the Department of Fire, Building and Life Safety, the matter was transferred to the Department of Real Estate on July 1, 2016, under the authority of A.R.S. § 32-2199 et seq.

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Governing Regulatory Framework

The ALJ’s decision was based on three distinct but overlapping requirements for financial transparency and reporting:

Authority

Requirement

Deadline

A.R.S. § 33-1243(J)

Annual financial audit, review, or compilation must be completed.

No later than 180 days after fiscal year-end.

Association CC&Rs

Books and records must be audited by an independent auditor.

Results submitted to Owners within 90 days of fiscal year-end.

Association By-Laws

Treasurer must cause an audit by a CPA.

Complete audit in even-numbered years; review allowed in odd years.

While the state statute allows up to 180 days for a financial review, the Association’s CC&Rs established a stricter 90-day deadline for a full audit. The 2014 fiscal year audit was therefore legally due by March 31, 2015.

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Chronology of Non-Compliance

The Petitioner made repeated attempts to obtain the 2014 audit, which were met with delays and conflicting information from the Association:

1. April 15, 2015: Petitioner requested the audit at an Association meeting. She was informed it would be ready by June.

2. October 15, 2015: Petitioner submitted a formal written request.

3. October 21, 2015: At a meeting, the Association directed the Petitioner to contact the management company for the information.

4. March 17, 2016: The Association informed homeowners that they would be charged $35.00 each for a copy of the audit.

5. March 23, 2016: The Petitioner filed a formal Petition with the state, paying a $750.00 filing fee.

6. August 2016: The Respondent finally engaged a CPA to perform the 2014 audit.

7. October 11, 2016: The Respondent received the audit report, one day before the scheduled administrative hearing.

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Legal Analysis and Conclusions

Violation of Statutory and Governing Documents

The ALJ concluded that the Petitioner proved by a preponderance of the evidence that the Respondent violated A.R.S. § 33-1243(J). The Association admitted that an audit was required for the 2014 financials under both the CC&Rs and the By-Laws.

Defense and Rebuttal

• Respondent’s Defense: The Association argued that inconsistencies between the CC&Rs and By-Laws caused confusion regarding the level of review required. They also argued against a civil penalty, suggesting the cost would ultimately be passed on to homeowners via assessments.

• Petitioner’s Evidence: The Petitioner testified to the ongoing and “flagrant refusal” of the Association to comply with its governing documents. She further noted that the audit received on the eve of the hearing revealed discrepancies in financial records when compared to previously received compilations.

Final Ruling

The ALJ found that the audit should have been completed by March 31, 2015. The Respondent’s failure to engage a CPA until August 2016 constituted a clear breach of duty.

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Sanctions and Orders

The ALJ issued a Recommended Order, which was subsequently certified as the final administrative decision:

• Filing Fee Reimbursement: The Respondent was ordered to pay the Petitioner $750.00 within 30 days of the order’s effective date.

• Civil Penalty: Due to the nature of the violation, the ALJ imposed a civil penalty of $5,000.00, payable to the Department of Real Estate within 60 days.

• Method of Payment: The civil penalty must be paid via cashier’s check or money order.

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Administrative Certification and Finality

The decision-making process followed a strictly defined administrative timeline:

1. November 14, 2016: ALJ Tammy L. Eigenheer issued the initial decision.

2. December 20, 2016: Deadline for the Department of Real Estate to accept, reject, or modify the decision. Since no action was taken by the Department, the ALJ decision was certified as final per A.R.S. § 41-1092.08(D).

3. January 9, 2017: A “Nunc Pro Tunc” order was issued by Interim Director Greg Hanchett to correct the date of issuance of the certification to January 9, 2017.

Notice to Parties: The final decision includes the right to request a rehearing from the Department of Real Estate or seek judicial review through the Superior Court, provided such actions are taken within the statutory timeframes. Failure to act in a timely manner results in the loss of these rights.

Study Guide: Barbara Printy v. Olive Grove Village Association Inc.

This study guide reviews the administrative legal proceedings regarding the dispute between a condominium owner and her homeowners association. It focuses on the statutory requirements for financial audits, the hierarchy of governing documents, and the administrative process for resolving such disputes in Arizona.

Part 1: Short-Answer Quiz

1. What was the core allegation made by the Petitioner against Olive Grove Village Association Inc.?

2. According to A.R.S. § 33-1243(J), what are the default requirements for an association’s annual financial report if the condominium documents do not specify an audit by a CPA?

3. How did the Respondent’s Covenants, Conditions, and Restrictions (CC&Rs) differ from the state statute regarding the timing of the audit?

4. What inconsistency existed between the Association’s CC&Rs and its By-Laws regarding financial reviews?

5. Describe the progression of the Petitioner’s requests for the audit from April 2015 to March 2016.

6. When did the Respondent finally engage a CPA, and when was the audit eventually received?

7. What is the legal definition of “preponderance of the evidence” as used in this administrative proceeding?

8. What was the Respondent’s primary argument against the imposition of a civil penalty?

9. Which state departments have held jurisdiction over disputes between property owners and condominium associations according to the source?

10. What was the purpose of the “Order Nunc Pro Tunc” issued on January 9, 2017?

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Part 2: Answer Key

1. The Core Allegation: The Petitioner, Barbara Printy, alleged that the Olive Grove Village Association violated A.R.S. § 33-1243(J) by failing to obtain a required audit of the 2014 financials. She claimed the Association failed to complete this audit within the 90-day timeframe mandated by its own governing documents.

2. Statutory Requirements: In the absence of stricter requirements in condominium documents, the board must provide for an annual financial audit, review, or compilation. This must be completed within 180 days of the fiscal year’s end and made available to owners within 30 days of request following its completion.

3. CC&R vs. Statute Timing: While the state statute allows up to 180 days for a financial report, the Association’s CC&Rs specifically required the audit to be completed and submitted to owners within 90 days after the end of the fiscal year. This established a more stringent deadline of March 31, 2015, for the 2014 fiscal year.

4. Governing Document Inconsistency: The CC&Rs mandated an audit by an independent auditor at the close of every fiscal year. However, the By-Laws suggested a “complete August” (audit) was only required in even-numbered years, while a review could be conducted in odd-numbered years.

5. Progression of Requests: Printy first requested the audit at a meeting in April 2015, followed by a written request in October 2015 and further verbal requests in October 2015 and March 2016. Throughout this period, she was told various things, including that the information was with the CPA, that she should contact the management company, or that she would be charged $35.00 for the audit.

6. Timeline of Compliance: Despite the audit being due in early 2015, the Respondent did not engage a CPA to perform the work until August 2016. The Association did not actually receive a copy of the completed audit until October 11, 2016, which was the eve of the administrative hearing.

7. Preponderance of the Evidence: This legal standard requires that the evidence presented is of greater weight or more convincing than the opposing evidence. It means that the facts sought to be proved are shown to be “more probable than not.”

8. Argument Against Penalties: The Respondent argued that a civil penalty was inappropriate because the CC&Rs and By-Laws were inconsistent, leading to confusion regarding the necessary level of review. Furthermore, they contended that any penalty would ultimately be a burden on the homeowners themselves through increased assessments.

9. Jurisdictional Departments: Originally, the matter was filed with the Department of Fire, Building and Life Safety. As of July 1, 2016, jurisdiction over these disputes was transferred to the Arizona Department of Real Estate.

10. Order Nunc Pro Tunc: This order was issued to correct a clerical error regarding the date of the decision’s certification. It retroactively established January 9, 2017, as the official date of issuance for the certification of the Administrative Law Judge’s decision.

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Part 3: Essay Questions

1. The Hierarchy of Governing Documents: Analyze how the conflict between the CC&Rs and the By-Laws impacted the Association’s compliance. Discuss the legal implications when internal documents provide conflicting instructions for fiduciary duties like financial audits.

2. Fiduciary Transparency and Homeowner Rights: Evaluate the Association’s conduct in responding to the Petitioner’s repeated requests for financial records. Discuss whether the Association’s suggestions—such as charging $35 for a copy of the audit—align with the statutory requirements of A.R.S. § 33-1243(J).

3. Administrative Law Processes: Explain the process by which an Administrative Law Judge’s decision becomes a final agency action. Refer specifically to the role of the Department of Real Estate in accepting, rejecting, or modifying a decision within the statutory 30-day window.

4. The Significance of Civil Penalties: Assess the ALJ’s decision to impose a $5,000 civil penalty. Consider the Petitioner’s claim of “ongoing and flagrant refusal” versus the Respondent’s claim that penalties harm innocent homeowners.

5. Financial Discrepancies and Audit Importance: The Petitioner testified that the final audit showed discrepancies compared to previous financial compilations. Discuss why an independent audit is a critical tool for condominium associations compared to simpler financial “compilations” or “reviews.”

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Part 4: Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

A presiding officer who conducts hearings and issues recommendations or decisions in disputes involving government agencies.

A.R.S. § 33-1243(J)

The Arizona Revised Statute governing the financial reporting and audit requirements for condominium associations.

An official examination and verification of financial accounts and records by an independent certified public accountant (CPA).

By-Laws

The internal rules and regulations that govern the administration and management of an association.

Covenants, Conditions, and Restrictions (CC&Rs)

Legal documents that lay out the rules of a community or condominium and are binding on all property owners within that association.

Civil Penalty

A financial punishment imposed by a government agency or court for a violation of laws or regulations, distinct from criminal fines.

Compilation

A basic financial report that organizes an association’s financial data into financial statement format without providing any assurance or auditing.

Nunc Pro Tunc

A Latin legal phrase meaning “now for then,” used to correct an order retroactively to correct a previous clerical error or omission.

Petitioner

The party who initiates a legal proceeding or petition, in this case, the homeowner Barbara Printy.

Preponderance of the Evidence

The standard of proof in most civil cases, meaning the evidence shows that a claim is more likely to be true than not.

Respondent

The party against whom a legal petition is filed, in this case, Olive Grove Village Association Inc.

Review

A financial reporting service that is more analytical than a compilation but less thorough than a full audit.

Case

Agency
ADRE
Tribunal
OAH
Docket No
16F-H1616010-BFS
Case Title
Barbara Printy v. Olive Grove Village Association Inc.
Decision Date
2016-11-14
Alj Name
Tammy L. Eigenheer

Parties

Party Id
P1
Role
petitioner
Name
Barbara Printy
Party Type
homeowner
Attorney Name
Phil Whitaker
Attorney Firm
STEGALL KATZ & WHITAKER P.C.
Party Id
R1
Role
respondent
Name
Olive Grove Village Association Inc.
Party Type
HOA
Attorney Name
Jonathan Ebertshauser
Attorney Firm
Carpenter, Hazlewood, Delgado & Bolen PLC

Issues

Summary

Petitioner alleged Respondent failed to obtain an audit of the 2014 financials. Respondent's fiscal year ended Dec 31, 2014. The audit was not received until Oct 11, 2016, despite multiple requests by Petitioner. ALJ found Respondent violated statute and governing documents.

Issue Id

ISS-001

Type

statute

Citation

A.R.S. § 33-1243(J)

Caption

Failure to obtain annual financial audit

Violation(S)

Failure to complete 2014 financial audit within 90 days (CC&Rs) or 180 days (Statute) of fiscal year end.

Outcome

petitioner_win

Filing Fee Paid

750.0

Filing Fee Refunded

True

Civil Penalty Amount

5000.0

Orders Summary

Respondent ordered to pay Petitioner $750.00 filing fee and pay Department $5,000.00 civil penalty.

Cited

  • A.R.S. § 33-1243(J)

Money Summary

Issues Count
1
Total Filing Fees Paid
750.0
Total Filing Fees Refunded
750.0
Total Civil Penalties
5000.0

Outcomes

Petitioner Is Hoa

False

Petitioner Win

yes

Summarize Judgement

The ALJ concluded that the Petitioner established by a preponderance of the evidence that the Respondent violated A.R.S. § 33-1243(J) and governing documents by failing to complete the required 2014 audit by March 31, 2015. The audit was not completed until October 2016. The ALJ imposed a $5,000 civil penalty due to the ongoing refusal to comply.

Tags

  • audit
  • financial records
  • civil penalty
  • untimely performance

Case Participants

Petitioner Side

  • Barbara Printy (Petitioner)
  • Phil Whitaker (Petitioner's Attorney)
    Stegall Katz & Whitaker P.C.
    Also listed as Philip B. Whitaker

Respondent Side

  • Olive Grove Village Association Inc. (Respondent)
    Association of condominium owners
  • Jonathan Ebertshauser (Respondent's Attorney)
    Carpenter, Hazlewood, Delgado & Bolen PLC
    Affiliation inferred from mailing list address for Respondent's counsel

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Signed Certification of Decision
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
    Recipient of decision transmission
  • Rosella J. Rodriguez (Clerk)
    Office of Administrative Hearings
    Signed mailing/transmission certification

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

Uploaded 2026-04-24T10:59:37 (79.0 KB)

17F-H1716002-REL Decision – 575055.pdf

Uploaded 2026-04-24T10:59:43 (689.5 KB)

17F-H1716002-REL Decision – 523915.pdf

Uploaded 2026-04-24T10:59:47 (103.0 KB)

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

Kristi Hillebrand vs. Camelback Garden Farms Homeowners Association

Posted on by

Case Summary

Case ID 16F-H1616009-BFS
Agency —
Tribunal —
Decision Date 2016-09-30
Administrative Law Judge DM
Outcome Petition is dismissed
Filing Fees Refunded —
Civil Penalties —

Parties & Counsel

Petitioner Kristi Hillebrand Counsel Mark J. Bainbridge, Esq. (The Bainbridge Law Firm, LLC)
Respondent Camelback Garden Farms Homeowners Association Counsel Mark E. Lines, Esq. (Shaw & Lines, LLC)

Alleged Violations

No violations listed

Video Overview

Audio Overview

Decision Documents

16F-H1616009-BFS Decision – 520854.pdf

Uploaded 2026-04-24T10:58:00 (188.6 KB)

16F-H1616009-BFS Decision – 528135.pdf

Uploaded 2026-04-24T10:58:05 (63.2 KB)

16F-H1616009-BFS Decision – 520854.pdf

Uploaded 2026-01-28T11:12:56 (188.6 KB)

16F-H1616009-BFS Decision – 528135.pdf

Uploaded 2026-01-28T11:12:56 (63.2 KB)

Briefing Document: Hillebrand v. Camelback Garden Farms Homeowners Association

Executive Summary

On September 30, 2016, Administrative Law Judge (ALJ) Diane Mihalsky issued a decision in the matter of Kristi Hillebrand v. Camelback Garden Farms Homeowners Association. The Petitioner, Kristi Hillebrand, alleged that the Respondent (the HOA) violated various Covenants, Conditions, and Restrictions (CC&Rs), bylaws, and Arizona statutes. The allegations focused on four primary areas: election procedures, open meeting law compliance, records requests, and RV parking enforcement.

The ALJ recommended the dismissal of all claims. The decision established that the Petitioner failed to meet the burden of proof—a preponderance of the evidence—to show that the HOA's actions violated governing documents or state law. Specifically, the ALJ found that the HOA's interpretation of election procedures was reasonable, its meeting notice practices were consistent with statutory requirements, and it had fulfilled its obligations regarding document disclosure. This decision was certified as the final agency action by the Department of Fire, Building and Life Safety on November 10, 2016.

Case Overview and Procedural History

Parties Involved
  • Petitioner: Kristi Hillebrand, a homeowner and member of the Association.
  • Respondent: Camelback Garden Farms Homeowners Association, a nonprofit association representing 65 single-family homes in Litchfield Park, Arizona.
Procedural Timeline
  1. March 21, 2016: Hillebrand filed a petition with the Arizona Department of Building, Fire and Life Safety (DBFLS).
  2. December 1, 2015: Prior to this petition, a settlement was reached in Maricopa County Superior Court Case No. CV2014-011316, resolving claims regarding RV parking carports.
  3. July 25, 2016: The ALJ dismissed Hillebrand’s claim regarding RV parking enforcement because the issue had been resolved by the prior settlement.
  4. July 29 & September 26, 2016: Formal hearings were conducted.
  5. September 30, 2016: ALJ issued the recommendation for dismissal.
  6. November 10, 2016: The decision was certified as final after no action was taken by the DBFLS to modify or reject it.

Analysis of Key Themes

1. Election Procedures and Write-in Candidacy

The Petitioner contested the February 20, 2016, annual meeting, specifically the Board’s refusal to allow her to be nominated from the floor or run as a write-in candidate.

  • Board Action: The Board president, Aaron Chournos, denied the request, citing statutory requirements for advance notice of candidates.
  • Legal Conclusion: The ALJ noted that no statute, CC&R, or bylaw specifically addresses write-in ballots or floor nominations. The Board’s interpretation—that advance notice of matters to be decided (including candidate names) is required—was deemed "not unreasonable."
  • Quorum Dispute: The Petitioner argued a lack of quorum (requiring one-third of 65 lots, or 22 members). The ALJ found that 23 lots were represented, satisfying the requirement, and that Petitioner failed to prove ballots were invalid.
2. Open Meeting Law Compliance

The Petitioner alleged that the Board held meetings without proper notice to the membership on three dates in early 2016.

  • Executive Sessions: The January 9, 2016, meeting was determined to be an executive session held to review candidate applications. A.R.S. § 33-1804 permits closed sessions for personal or financial information about members.
  • Notice Practices: Witnesses for the Respondent testified that notices were emailed and posted on a community board.
  • Statutory Protection: Per A.R.S. § 33-1804(B), the failure of any specific member to receive actual notice does not invalidate actions taken at a meeting, provided reasonable notice procedures are in place.
3. Records Disclosure and Transparency

The Petitioner claimed the Association withheld responsive documents, specifically QuickBooks spreadsheets and ballot-related envelopes/emails.

  • Respondent's Defense: Dr. Neil Stafford testified that all responsive, existing records were provided.
  • QuickBooks and Privacy: The ALJ found no evidence that a QuickBooks spreadsheet of dues existed after the treasurer's resignation. Furthermore, A.R.S. § 33-1805(B)(4) exempts personal financial records of individual members from disclosure.
  • Sign-in Sheets: While Petitioner noted "pd" (paid) notations on sign-in sheets, the ALJ ruled that even if delinquent members had voted, it would not have voided the election results under the Association’s governing documents.

Governing Statutory Framework

The following Arizona Revised Statutes (A.R.S.) were central to the ALJ's legal conclusions:

Statute Focus Area Key Provision
A.R.S. § 33-1804 Open Meetings Meetings must be open; executive sessions are allowed for legal advice, litigation, or personal member information.
A.R.S. § 33-1805 Records Access Financial and other records must be available within 10 business days, excluding privileged or personal information.
A.R.S. § 33-1812 Voting Outlines procedures for absentee ballots and establishes that they count toward a quorum.
A.R.S. § 10-3304 Corporate Power Validity of corporate action cannot be challenged solely on the ground that the corporation lacked power to act.
A.R.S. § 41-1092.07 Burden of Proof The Petitioner bears the burden to establish violations by a preponderance of the evidence.

Important Quotes with Context

On the Nature of Board Governance

"Respondent is a nonprofit corporation. Respondent’s board members are unpaid volunteers who may have full-time jobs and families and do not have the benefit of a professional property manager to help them manage Respondent’s affairs."

  • Context: The ALJ highlighted the volunteer nature of the Board to contextualize their management of Association affairs and the application of A.R.S. § 10-3304.
On Legal Standards and Past Practices

"[Board members] are not bound by alleged past practices or policies of past boards that have never been reduced to writing and formally adopted."

  • Context: This was used to dismiss the Petitioner's arguments regarding how elections were handled in the past (e.g., via show of hands) versus the formal procedures used in 2016.
On the Definition of "Preponderance of the Evidence"

"A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not… superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other."

  • Context: The ALJ used this definition to explain why the Petitioner's claims failed; the evidence presented did not sufficiently outweigh the Respondent's defenses.

Actionable Insights for Planned Communities

  1. Formalize Election Rules: To avoid disputes regarding floor nominations or write-in candidates, associations should ensure their bylaws or written policies explicitly state the requirements for candidacy and the cutoff dates for applications.
  2. Maintain Clear Notice Procedures: While A.R.S. § 33-1804 protects the validity of meetings if notice is sent but not received, associations should maintain consistent records of how and when notices are posted (e.g., email logs and photos of community boards).
  3. Distinguish Executive Sessions: Boards should clearly identify the statutory basis for moving into an executive session (such as personnel or financial privacy) to defend against claims of violating open meeting laws.
  4. Record Retention and Privacy: Associations must balance the duty to provide records with the duty to protect member privacy. Financial ledgers containing individual member data are generally exempt from production.
  5. Adhere to Written Documents: Board actions must be grounded in the "unequivocal language" of statutes, CC&Rs, and bylaws rather than informal historical practices.

Legal Analysis and Study Guide: Hillebrand v. Camelback Garden Farms Homeowners Association

This study guide provides a comprehensive overview of the administrative law case Kristi Hillebrand v. Camelback Garden Farms Homeowners Association (No. 16F-H1616009-BFS/REL). It explores the application of Arizona Revised Statutes (A.R.S.) regarding homeowners' associations (HOAs), election procedures, open meeting laws, and records requests.

1. Case Overview and Procedural History

Parties and Background
  • Petitioner: Kristi Hillebrand, a member and homeowner within the Camelback Garden Farms planned community.
  • Respondent: Camelback Garden Farms Homeowners Association, a nonprofit association representing 65 lots in Litchfield Park, Arizona.
  • Presiding Official: Administrative Law Judge (ALJ) Diane Mihalsky.
The Dispute

On March 21, 2016, the Petitioner filed a petition with the Department of Building, Fire and Life Safety (later handled by the Department of Real Estate) alleging that the Respondent violated its Covenants, Conditions, and Restrictions (CC&Rs), bylaws, and Arizona statutes. The allegations focused on:

  1. Improper election procedures at the February 20, 2016 annual meeting.
  2. Violations of Arizona’s open meeting laws.
  3. Failure to provide all responsive documents to a records request.
  4. Failure to enforce RV parking restrictions (this claim was dismissed due to a prior settlement).
Legal Outcome

The ALJ issued a decision on September 30, 2016, dismissing the petition. This decision was certified as the final administrative decision on November 10, 2016, after no action was taken by the Department of Fire Building and Life Safety to modify or reject it.

2. Key Legal Concepts and Governing Statutes

Arizona Revised Statutes (A.R.S.)

The case relies heavily on the following statutory provisions:

Statute Focus Area Key Provisions
§ 33-1804 Open Meetings Meetings must be open to all members; notice must be hand-delivered or mailed 10–50 days in advance; specifies five criteria for closed "executive" sessions.
§ 33-1805 Records Requests Financial and other records must be available for examination within 10 business days; specifies exemptions for privileged or personal information.
§ 33-1812 Voting/Quorum Prohibits proxies after declarant control; requires absentee ballots; stipulates that absentee ballots count toward establishing a quorum.
§ 41-2198.01 Administrative Jurisdiction Authorizes the Department to receive and decide petitions regarding violations of community documents or statutes.
Quorum and Voting Requirements
  • Quorum: Under the Respondent’s bylaws, one-third of the votes entitled to be cast (22 out of 65 lots) constitutes a quorum.
  • Voting Rights: Every lot is entitled to one vote.
  • Elections: Bylaws require five board members with two-year staggered terms, with a minimum of three members.

3. Detailed Findings of Fact

The February 2016 Election
  • Nomination Process: Respondent issued a call for candidates in December 2015 with a deadline of January 8, 2016. Petitioner did not apply by the deadline.
  • The Floor Nomination Issue: At the meeting, Petitioner attempted to be nominated from the floor. The Board President denied this, citing Arizona law requiring advance notice of candidate names.
  • Quorum Verification: 23 lots were represented at the meeting (either in person or by ballot). This exceeded the 22-lot requirement for a one-third quorum.
  • The Results: Alice Thomas and Becky Bernal were elected to two-year terms. Melissa Cruz was appointed to fill a one-year vacancy.
Open Meeting Allegations
  • January 9, 2016 Meeting: This was ruled a valid "executive" meeting because it involved discussing the personal and financial qualifications of board applicants.
  • Notice Procedures: The Board testified to noticing meetings via email and community board postings. Under A.R.S. § 33-1804(B), the failure of a specific member to receive notice does not invalidate actions taken at the meeting.
Records Request Dispute
  • Petitioner sought QuickBooks spreadsheets and email/envelope records related to ballots.
  • The ALJ found that Respondent had produced all responsive documents in its possession. Furthermore, financial records of individual members are exempt from disclosure under A.R.S. § 33-1805(B)(4).

4. Short-Answer Practice Quiz

Q1: What is the "preponderance of the evidence" standard as defined in this case? A: It is proof that convinces the trier of fact that a contention is "more probably true than not," or evidence that has the "most convincing force."

Q2: Under what circumstances may a portion of an HOA meeting be closed to members? A: Under A.R.S. § 33-1804(A), meetings may be closed for: (1) Legal advice, (2) Pending or contemplated litigation, (3) Personal/health/financial information of an individual, (4) [Not explicitly detailed in text but implied], and (5) Discussion of a member's appeal of a violation (unless the member requests an open session).

Q3: Does the failure of a member to receive a meeting notice invalidate the actions taken at that meeting? A: No. According to A.R.S. § 33-1804(B), the validity of actions is not affected by a member's failure to receive actual notice.

Q4: How many days does an association have to fulfill a request to examine records? A: Ten business days, per A.R.S. § 33-1805(A).

Q5: Why was the Petitioner’s claim regarding RV parking restrictions dismissed before the hearing? A: The claim was dismissed because the matter had already been resolved through a prior settlement agreement in Maricopa County Superior Court (Case No. CV2014-011316).

5. Essay Prompts for Deeper Exploration

  1. Statutory Interpretation vs. Written Policy: Analyze the ALJ's conclusion that board members are bound by "unequivocal language of applicable statutes" but not by "alleged past practices or policies… that have never been reduced to writing." How does this principle protect or harm the interests of individual homeowners?
  2. The Limits of Transparency: Compare the requirements of A.R.S. § 33-1804 (Open Meetings) and § 33-1805 (Records). Discuss the balance the law attempts to strike between a member's right to information and the privacy/legal interests of the Association and its individual members.
  3. Procedural Validity in Elections: Evaluate the Board President's decision to deny floor nominations and write-in candidates based on his interpretation of "advance notice." Given that the ALJ found this interpretation "not unreasonable," discuss the implications for democratic participation within small HOAs that lack professional management.

6. Glossary of Important Terms

  • Absentee Ballot: A ballot cast by a member who is not physically present at a meeting; under A.R.S. § 33-1812, these count toward a quorum.
  • CC&Rs (Covenants, Conditions, and Restrictions): The governing documents that dictate the rules and limitations of a planned community.
  • Declarant Control: The period during which the developer of a community maintains control over the HOA; once this period ends, certain rules (like the prohibition of proxies) take effect.
  • Executive Session: A closed portion of a board meeting reserved for sensitive matters such as legal advice or personnel issues.
  • Preponderance of the Evidence: The burden of proof in civil and administrative cases, requiring that a claim be more likely true than not.
  • Proxy: The authorization for one person to act or vote on behalf of another. (Note: A.R.S. § 33-1812 prohibits voting by proxy in HOAs after declarant control ends).
  • Quorum: The minimum number of members or votes that must be present (in person or by absentee ballot) for the proceedings of a meeting to be valid.
  • With Prejudice: A legal term meaning a claim is dismissed permanently and cannot be refiled (as seen in the Petitioner's previous settlement regarding RV parking).

HOA Governance on Trial: Key Lessons from the Hillebrand vs. Camelback Garden Farms Dispute

Managing a planned community is rarely just about landscaping and aesthetics; it is a high-stakes legal balancing act governed by strict statutory requirements and community bylaws. When transparency fails or expectations clash, the result is often a costly administrative battle. The case of Kristi Hillebrand vs. Camelback Garden Farms Homeowners Association (No. 16F-H1616009-BFS/REL) provides a definitive case study in the limits of homeowner challenges and the necessity of sticking to the written word of the law.

This article dissects the Administrative Law Judge’s (ALJ) decision to extract critical lessons for boards and members alike regarding election integrity, open meeting protocols, and the boundaries of records access.

The Core Allegations: What Started the Dispute?

In March 2016, Petitioner Kristi Hillebrand filed a formal complaint against the Camelback Garden Farms Homeowners Association (HOA), alleging that the Board had systematically sidelined members and ignored governance standards. Her petition focused on four primary areas:

  • Improper Election Procedures: Claiming the HOA unlawfully barred her from being nominated from the floor or running as a write-in candidate during the February 2016 annual meeting.
  • Open Meeting Law Violations: Alleging the Board held multiple "secret" or un-noticed meetings in early 2016.
  • Records Access Failures: Claiming the HOA withheld responsive financial documents, specifically QuickBooks ledgers.
  • Enforcement Inconsistency: A claim regarding RV parking restrictions. This was summarily dismissed because the issue had been resolved in a prior 2015 settlement—a high-stakes dispute where Hillebrand was previously ordered to pay $35,000 in attorney fees to her neighbors.

Under Arizona law, the Petitioner bore the burden of proof. To prevail, she had to establish these violations by a preponderance of the evidence, proving her claims were more likely true than not.

The Election Controversy: Floor Nominations and Quorum

The friction began in December 2015, when the HOA issued a "Call for Candidates." Petitioner Hillebrand admitted she failed to respond by the January 8 deadline because she was "busy planning a party for over 100 guests." This unforced error set the stage for the conflict at the February 20, 2016, annual meeting.

When Hillebrand attempted to be nominated from the floor, Board President Aaron Chournos denied the request, citing the need for advance notice. The ALJ upheld this decision, noting that no statute or bylaw required the Association to allow floor nominations or write-in candidates once the official ballots had been distributed.

The Petitioner also challenged the election's validity on quorum grounds, claiming only 19 valid ballots were cast (falling short of the 22 required for a one-third quorum of the 65 lots). However, the Board provided evidence of higher engagement. Board member Dr. Neil Stafford and Secretary Kathy Loscheider helped establish a record showing that Alice Thomas and Becky Bernal received 28 votes each, while Melissa Cruz received 27. The ALJ found Hillebrand’s tally of 19 insufficient to overturn the official record.

Election Dispute Summary
Topic Petitioner’s Argument ALJ’s Legal Conclusion
Nominations Members must be allowed floor nominations and write-in options. No statute or bylaw requires these; the Board’s "advance notice" requirement was a reasonable interpretation.
Quorum Only 19 valid ballots were cast, meaning no quorum (22 required) was met. Petitioner failed to prove a violation; the official tally recorded 27–28 votes per candidate.
Voter Eligibility Only members current on dues should vote, per past board practices. CC&Rs did not require dues to be current for voting; unwritten "past practices" are not legally binding.

Transparency and the Open Meeting Law

Transparency disputes often stem from a misunderstanding of A.R.S. § 33-1804. Hillebrand alleged "un-noticed" meetings occurred on January 9, February 27, and March 5, 2016. The ALJ’s ruling clarified the distinction between open and closed sessions:

  • The January 9 Meeting: This was a lawful Executive Session. The Board met privately to review the "personal and financial qualifications" of the three candidate applicants. Arizona law specifically allows private sessions for such personal information.
  • The February 27 Discussion: Evidence suggested this was an informal discussion regarding a structure for members (the Hardys) rather than a formal, noticed meeting.
  • The March 5 Meeting: While Hillebrand and others (including former treasurer Louise Vaccaro) testified they did not receive notice, the HOA successfully demonstrated that it followed its standard procedure of posting notices on the community board and sending emails.

Legal Standard: A.R.S. § 33-1804(B) **The failure of an individual member to receive actual notice of a meeting does not invalidate the actions taken at that meeting, provided the association followed reasonable notice procedures prescribed by law or the bylaws.**

Access to Association Records: What is Protected?

Hillebrand sought access to QuickBooks spreadsheets, specifically looking for a ledger identifying which members were delinquent on their dues. The HOA provided ballots and sign-in sheets but withheld the digital spreadsheets.

The ALJ ruled that the HOA was within its rights for two critical reasons. First, under A.R.S. § 33-1805(B)(4), an association is permitted to withhold records relating to the personal or financial information of individual members. A ledger showing delinquency is a protected financial record. Second, Dr. Stafford testified that the HOA produced all responsive documents in its possession; the law does not require a board to create a new spreadsheet or report if one does not already exist.

Essential Takeaways for Homeowners and Boards

  1. Governing Documents Overrule "Tradition": Boards are bound by the written CC&Rs and bylaws, not "the way things have always been done." Former treasurer Louise Vaccaro testified to an unwritten policy of banning delinquent voters, but because this wasn't in the CC&Rs, it was legally unenforceable.
  2. Executive Sessions are Shielded: Boards have the legal right to meet privately for specific matters: legal advice, pending litigation, and personal/financial discussions regarding members or employees.
  3. Deadlines Matter: A homeowner’s personal schedule (e.g., party planning) does not waive statutory or association deadlines. Missing a "Call for Candidates" deadline effectively ends a member's chance to appear on the ballot.
  4. Privacy is Not Optional: Financial data of individual homeowners is protected. Boards should be cautious not to over-share delinquency lists, and members must realize they are not entitled to their neighbors' private financial standing.

Conclusion: Final Verdict and Future Outlook

The Administrative Law Judge ultimately dismissed the petition in its entirety, finding no evidence that the Camelback Garden Farms HOA violated statutes or its own governing documents. This decision was certified as the final administrative order on November 10, 2016.

While this case was originally handled through the Department of Fire Building and Life Safety, jurisdiction over such HOA disputes has since shifted to the Arizona Department of Real Estate.

The lasting lesson of Hillebrand is that governance is a matter of strict adherence to written text. For boards, the best defense against litigation is a clear paper trail of meeting notices and a rigid commitment to the CC&Rs. For homeowners, the case serves as a reminder that the burden of proof is a high bar, and "past practices" are no substitute for recorded bylaws.

Case Participants

Petitioner Side

  • Kristi Hillebrand (Petitioner)
    Camelback Garden Farms Homeowners Association
    Association member and property owner
  • Mark J. Bainbridge (Attorney)
    The Bainbridge Law Firm, LLC
    Legal counsel for Petitioner
  • Louise Vaccaro (Witness)
    Camelback Garden Farms Homeowners Association
    Former board member who resigned January 7, 2016
  • Greg Josey (Witness)
    Camelback Garden Farms Homeowners Association
    Association member
  • Mary Ellen Kunz (Witness)
    Camelback Garden Farms Homeowners Association
    Association member

Respondent Side

  • Mark E. Lines (Attorney)
    Shaw & Lines, LLC
    Legal counsel for Respondent
  • Neil Stafford (Witness)
    Camelback Garden Farms Homeowners Association
    Board member since 2014
  • Kathy Loscheider (Witness)
    Camelback Garden Farms Homeowners Association
    Former board secretary
  • Aaron Chournos (Former Board President)
    Camelback Garden Farms Homeowners Association
    Resigned from board after moving out of subdivision
  • Daniel Shuler (Board Member)
    Camelback Garden Farms Homeowners Association
  • Alice Thomas (Elected Board Member)
    Camelback Garden Farms Homeowners Association
    Elected to a two-year term at the February 20, 2016 meeting
  • Becky Bernal (Elected Board Member)
    Camelback Garden Farms Homeowners Association
    Elected to a two-year term at the February 20, 2016 meeting
  • Melissa Cruz (Appointed Board Member)
    Camelback Garden Farms Homeowners Association
    Appointed to fill the remaining 1-year term of Louise Vaccaro

Neutral Parties

  • Diane Mihalsky (Administrative Law Judge)
    Office of Administrative Hearings
    Presiding judge who issued the decision
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Louis Dettorre (Deputy Commissioner)
    Arizona Department of Real Estate
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Certified the final administrative decision
  • Rosella J. Rodriguez (Staff)
    Office of Administrative Hearings
    Processed decision communications

David Carr vs. Sunset Plaza Condominium Association

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Case Summary

Case ID 16F-H1616011-BFS
Agency ADRE
Tribunal OAH
Decision Date 2016-09-09
Administrative Law Judge Thomas Shedden
Outcome The Administrative Law Judge dismissed the petition, finding that the Association did not violate the By-Laws regarding the special meeting request and that the homeowners' attempted amendments were invalid because authority to amend rests with the Board.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner David Carr Counsel —
Respondent Sunset Plaza Condo Association Counsel Paige Hulton

Alleged Violations

Article VI, Section 2 of By-Laws

Outcome Summary

The Administrative Law Judge dismissed the petition, finding that the Association did not violate the By-Laws regarding the special meeting request and that the homeowners' attempted amendments were invalid because authority to amend rests with the Board.

Why this result: Petitioner failed to prove a violation of the By-Laws; the Board had authority to set the meeting schedule and the governing documents did not grant homeowners the power to amend By-Laws without Board action.

Key Issues & Findings

Failure to call special meeting and recognize amendments

Petitioner alleged the HOA Board violated the By-Laws by denying a request for a special meeting and refusing to adopt amendments passed by homeowners at a meeting they organized themselves.

Orders: Petition dismissed. Respondent deemed prevailing party. Respondent's request for civil penalty against Petitioner denied.

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

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Decision Documents

16F-H1616011-BFS Decision – 517259.pdf

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16F-H1616011-BFS Decision – 517327.pdf

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16F-H1616011-BFS Decision – 525294.pdf

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16F-H1616011-BFS Decision – 517259.pdf

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16F-H1616011-BFS Decision – 517327.pdf

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16F-H1616011-BFS Decision – 525294.pdf

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Briefing on Administrative Law Judge Decision: Carr v. Sunset Plaza Condo Association

Executive Summary

This briefing outlines the administrative legal proceedings and final decision in the matter of David Carr v. Sunset Plaza Condo Association (No. 16F-H1616011-BFS). The case originated from a dispute regarding the rights of homeowners to call special meetings and unilaterally amend association By-Laws and Rules.

The Petitioner, David Carr, alleged that the Sunset Plaza Condo Association violated its own By-Laws by refusing to schedule a requested special meeting and subsequently failing to recognize amendments passed by a subset of homeowners during an unsanctioned meeting. The Administrative Law Judge (ALJ), Thomas Shedden, determined that the Association acted within its authority and that the power to amend By-Laws resides with the Board of Management, not the general membership. Consequently, the petition was dismissed, and the decision was certified as final by the Department of Real Estate on October 26, 2016.

Detailed Analysis of Key Themes

1. Governance and Amendment Authority

The central conflict in this matter involved a misunderstanding of which body holds the authority to amend governing documents. The Petitioner argued that amendments passed by nine homeowners (a quorum of the sixteen-home association) at an unofficial meeting should be binding.

However, the analysis of the Association’s governing documents revealed a clear hierarchy:

  • By-Law Amendments: Article XIII of the By-Laws stipulates that amendments are made by a majority of a quorum of the Board at regular or special meetings, provided notice is given.
  • Rule Amendments: The Association’s Declaration [paragraph 3(K)] grants the Board authority to make and amend rules, which become binding once a majority of homeowners approve them in writing.
  • Petitioner Error: The ALJ noted that the Petitioner failed to provide legal authority showing homeowners have the power to independently amend By-Laws or Rules without Board action.
2. Procedural Compliance for Special Meetings

The dispute was triggered by a request for a special meeting under Article VI, Section 2 of the By-Laws, which allows five or more homeowners to apply in writing to the Board Chairman for such a meeting.

The Board's actions were found to be compliant because:

  • The homeowners' request letter explicitly stated that if their proposed date (February 13, 2016) was unacceptable, the meeting should be held within thirty days.
  • The Board denied the February 13 date but scheduled an open meeting for February 22, 2016—within the requested thirty-day window.
  • The Board provided an agenda and invited homeowners to submit additional items for discussion, thereby fulfilling the spirit and letter of the meeting request.
3. Evidentiary Standards and Burden of Proof

As the Petitioner, Mr. Carr carried the burden of proof to demonstrate a violation by a preponderance of the evidence. The Association carried the same burden regarding its request for civil penalties against Mr. Carr.

  • Preponderance of the Evidence: Defined in the proceedings as evidence with "the most convincing force" and "superior evidentiary weight."
  • Findings: The ALJ ruled that Mr. Carr did not meet his burden of proof regarding the alleged violations. Conversely, while the Board prevailed, it failed to prove that Mr. Carr’s actions warranted a civil penalty, as misconstruing documents does not necessarily constitute a violation of those documents.
4. Administrative Jurisdiction and Reassignment

The case highlights a shift in Arizona administrative oversight. Originally, the Arizona Department of Fire, Building and Life Safety issued the Notice of Hearing. However, effective July 1, 2016, responsibilities for such matters were reassigned to the Arizona Department of Real Estate.

Important Quotes with Context

Quote Context
"A special meeting of the membership may be called upon written application to the Board of Management’s Chairman by five or more homeowners." Context: The specific provision (Article VI, Section 2) of the By-Laws that the Petitioner claimed the Association violated.
"Mr. Carr was confused as to the nature of the condominium documents at issue, frequently referring to the Articles of Incorporation, but because the Association is not incorporated, there are no Articles." Context: ALJ Shedden noting the Petitioner's lack of legal clarity regarding the Association's corporate status and governing structure.
"The By-Laws and Declaration show that this authority [to amend] rests with the Board… Consequently, there is no authority for the Board to make the changes that were purportedly passed on February 13, 2016." Context: The legal reasoning for dismissing the claim that the homeowners' "vote" to change rules was valid.
"Although Mr. Carr has misconstrued the condominium documents at issue, the Association has not shown that he violated any of these documents." Context: The ALJ’s reasoning for denying the Association’s request to assess a civil penalty against the Petitioner.

Actionable Insights

For Association Boards
  • Strict Adherence to Timelines: When homeowners request a special meeting, the Board should respond within the requested timeframe or the timeframe dictated by the By-Laws. In this case, offering an alternative date within 30 days was sufficient to avoid a violation.
  • Document Hierarchy: Boards must maintain clear distinctions between the Declaration and the By-Laws. Consistency between these documents is vital to defending against claims of "conflict" between provisions.
  • Procedural Transparency: Providing an open meeting agenda and allowing homeowner input can serve as a defense against claims that the Board is "declining" to address member concerns.
For Homeowners
  • Verification of Amendment Power: Before attempting to vote on changes to association rules, members must verify through the By-Laws whether the power to amend lies with the membership or the Board.
  • Official vs. Unofficial Meetings: "Special meetings" held by homeowners without Board sanction—even if a quorum of members is present—may not have the legal authority to effect changes to governing documents.
  • Administrative Recourse: Parties dissatisfied with an ALJ decision have the right to request a rehearing from the Department of Real Estate or seek judicial review in Superior Court, provided they act within the statutory timeframes (typically within 30 days of the decision being certified).

Final Administrative Status

The decision rendered by ALJ Thomas Shedden on September 9, 2016, was transmitted to the Department of Real Estate. Because the Department took no action to reject or modify the decision by October 17, 2016, it was officially certified as the final administrative decision on October 26, 2016.

Study Guide: Administrative Law and Condominium Association Disputes

This study guide provides a comprehensive overview of the legal proceedings and administrative principles found within the case of David Carr vs. Sunset Plaza Condo Association. It covers the regulatory framework, the nature of condominium governance, and the standards of proof applied in Arizona administrative hearings.

I. Case Overview and Key Entities

The Dispute

The case involves a petition filed by David Carr (Petitioner) against the Sunset Plaza Condo Association (Respondent). The core of the dispute centered on whether the Association's Board of Management violated its own By-Laws by denying a request for a special meeting and refusing to incorporate changes to the By-Laws and Rules voted upon by a subset of homeowners.

Principal Entities and Figures
  • Office of Administrative Hearings (OAH): The Phoenix-based office responsible for conducting hearings on administrative matters.
  • Arizona Department of Real Estate: The agency with authority over this matter as of July 1, 2016. It assumed responsibilities previously held by the Arizona Department of Fire, Building and Life Safety.
  • Thomas Shedden: The Administrative Law Judge (ALJ) who presided over the hearing and issued the decision.
  • David Carr: The Petitioner, a homeowner who represented himself in the proceedings.
  • Sunset Plaza Condo Association: The Respondent, an unincorporated association represented by legal counsel.

II. Key Legal and Procedural Concepts

1. Regulatory Jurisdiction

Under ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11, the Department of Real Estate holds the authority to oversee disputes involving condominium documents and community associations.

2. Condominium Governing Documents

The hierarchy and authority of an association are defined by specific documents:

  • By-Laws: Regulations governing the internal management of the association. In this case, Article VI, Section 2 governed the calling of special meetings, and Article XIII governed the amendment process.
  • Declaration: A document outlining the broader powers of the Board and the Association. At Sunset Plaza, paragraph 3(K) of the Declaration granted the Board authority to make and amend rules, subject to homeowner approval.
  • Articles of Incorporation: These were notably absent in this case because the Sunset Plaza Condo Association is not incorporated.
3. Burden of Proof: Preponderance of the Evidence

In administrative hearings under ARIZ. ADMIN. CODE § R2-19-119, the standard of proof is the "preponderance of the evidence." This is defined as the greater weight of evidence that has the most convincing force. It does not require the elimination of all reasonable doubt but must incline an impartial mind to one side of the issue rather than the other.

4. Administrative Decision Certification

An ALJ's decision is not always the final word immediately. The process includes:

  • Transmittal: The ALJ transmits the decision to the relevant agency (Department of Real Estate).
  • Review Period: The agency has a set timeframe (in this case, approximately 35 days) to accept, reject, or modify the decision.
  • Certification: If the agency takes no action within the statutory timeframe, the ALJ’s decision is certified as the final administrative decision by operation of law (A.R.S. § 41-1092.08(D)).

III. Short-Answer Practice Questions

  1. Which agency originally issued the Notice of Hearing for this matter, and which agency eventually took over its responsibilities?
  2. According to Article VI, Section 2 of the Sunset Plaza By-Laws, what is the requirement for calling a special meeting of the membership?
  3. On what grounds did the Board deny the homeowners' request for a special meeting on February 13, 2016?
  4. What was the outcome of the unofficial meeting held by nine homeowners on February 13, 2016?
  5. How many homes are in the Sunset Plaza Condo Association, and how many homeowners constitute a quorum?
  6. According to Article XIII of the By-Laws, who has the authority to amend the By-Laws, and what is required?
  7. Why was David Carr's argument regarding the "Articles of Incorporation" dismissed?
  8. What is the effective date of an ALJ decision once it has been certified by the Director?
  9. The Association requested a civil penalty against Mr. Carr. Why did the ALJ deny this request?
  10. What are the two primary options for a party who loses an administrative decision and wishes to challenge it?

IV. Essay Prompts for Deeper Exploration

  1. The Balance of Authority: Analyze the conflict between the homeowners' attempt to self-govern and the Board's established legal authority. In the context of Carr vs. Sunset Plaza, explain why the homeowners' vote to change the By-Laws was deemed invalid despite achieving a quorum.
  2. Procedural Fairness in Administrative Actions: Discuss the Board’s response to the request for a special meeting. Did the Board’s decision to schedule an open meeting on February 22 instead of the requested February 13 meet the "sufficient facts and circumstances" threshold to avoid a violation of the By-Laws? Support your argument with the ALJ's findings.
  3. The Standard of Evidence: Define "preponderance of the evidence" as used in this case. Contrast it with the "beyond a reasonable doubt" standard used in criminal law. Why is the preponderance standard appropriate for administrative disputes between homeowners and associations?
  4. The Finality of Administrative Decisions: Describe the lifecycle of an administrative decision from the hearing to certification. Explain the significance of A.R.S. § 41-1092.08 regarding agency inaction and the resulting "final agency action."

V. Glossary of Important Terms

Term Definition
Administrative Law Judge (ALJ) An official who presides over hearings and adjudicates disputes involving government agencies.
ALJCERT A designation indicating that an ALJ decision has been certified as the final agency action.
By-Laws The rules and regulations adopted by an organization for its administration and management.
Civil Penalty A financial fine imposed by an administrative judge for violations of statutes or community documents.
Declaration A legal document that defines the rights and obligations of property owners within a common interest development.
Petitioner The party who initiates a legal action or petition (in this case, David Carr).
Preponderance of the Evidence Evidence that has superior weight or convincing force, making a fact more likely than not.
Quorum The minimum number of members of an assembly that must be present to make the proceedings of that meeting valid.
Respondent The party against whom a petition is filed (in this case, Sunset Plaza Condo Association).
Superior Court The court of general jurisdiction where parties may seek judicial review of a final administrative decision.

Understanding the Limits of Homeowner Autonomy: Lessons from the Sunset Plaza Case

1. Introduction: The Conflict at Sunset Plaza

In the complex landscape of community association governance, a recurring friction point exists between the elected Board of Directors and homeowners who feel their interests are being sidelined. This tension reached a legal flashpoint in the case of Carr v. Sunset Plaza Condo Association, where a group of homeowners attempted a "rebel" takeover of the community’s governing documents.

Frustrated by what they perceived as Board inaction, these owners organized a "special meeting" to force a slate of amendments. However, as this case demonstrates, passion for reform does not supersede the rule of law. David Carr’s subsequent legal challenge provides a masterclass in the common pitfalls of pro se litigants—most notably illustrated by his persistent confusion regarding the association's legal status, as he repeatedly referenced nonexistent "Articles of Incorporation" for an unincorporated association. The central question remains: Can homeowners unilaterally rewrite community rules when they feel the Board is being unresponsive?

2. The Catalyst: A Request for Action

The dispute began in early 2016 with a lack of formality that would later undermine the homeowners' legal standing. Six homeowners submitted an undated letter to the Board of Management requesting a special meeting for February 13, 2016, to vote on various community issues. The letter did, however, provide a concession: if the proposed date was unacceptable, the meeting should be held "within thirty days."

The Board, exercising its administrative discretion, issued a notice on February 4, 2016, denying the February 13th request. Instead, they pointed to a scheduled open meeting on February 22, 2016, providing an agenda and an invitation for members to submit discussion items. This move was a tactical and legal fulfillment of their duties under the By-Laws.

Article VI, Section 2 "A special meeting of the membership may be called upon written application to the Board of Management’s Chairman by five or more homeowners."

3. The "Rebel" Meeting of February 13

Refusing to accept the Board's alternative, the homeowners opted for "self-help" governance. On February 5, 2016, homeowner Leslie Grant notified the community that the February 13th meeting would proceed regardless of Board approval. To further this unsanctioned effort, Ms. Grant distributed "replacement ballots" to the membership on February 10, just three days before their gathering.

On February 13, nine homeowners—representing a quorum of the sixteen-home association—met and voted to pass eleven revisions to the By-Laws and Rules. When the Board predictably refused to recognize these votes, the battle moved to the courts. It is worth noting that while this dispute brewed, the Board demonstrated proper procedural authority by formally amending the By-Laws themselves, effective March 24, 2016—a sharp contrast to the homeowners' informal maneuvers.

4. The Legal Battle: Carr v. Sunset Plaza Condo Association

On April 4, 2016, David Carr filed a petition with the Arizona Department of Fire, Building and Life Safety. Following a legislative shift, jurisdiction was transferred to the Arizona Department of Real Estate on July 1, 2016. To prevail, Carr had to meet the "Preponderance of the Evidence" standard.

Preponderance of the Evidence: The greater weight of the evidence… evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

The Administrative Law Judge (ALJ), Thomas Shedden, found that the "greater weight" of evidence favored the Association. The Board’s decision to offer the February 22nd meeting was deemed a reasonable and timely response to the homeowners' own request for a meeting "within thirty days."

Petitioner’s Claims vs. Court Findings

Petitioner’s Claims Court Findings
The Board violated Article VI, Section 2 by refusing the February 13th special meeting. No Violation: The Board acted reasonably by providing a meeting on Feb 22, which fell within the "thirty-day" window suggested in the homeowners' own letter.
The Feb 13th vote was valid because a quorum of homeowners was present. Invalid Action: Per Article XIII, the authority to amend By-Laws is reserved for the Board, not a quorum of homeowners acting independently.
The Board must be forced to incorporate the eleven revisions passed on Feb 13th. No Legal Basis: Under Paragraph 3(K) of the Declaration, homeowners lack the authority to initiate and pass By-Law amendments unilaterally.
5. Key Legal Takeaway: Who Truly Holds the Power?

The ALJ’s ruling underscores the "hierarchy of documents" that serves as the bedrock of community law. Expert review of the Sunset Plaza records even revealed a clerical mess: the re-typed Declaration contained a typographical error, featuring two "Paragraph 2s" and no "Paragraph 3," meaning the Board’s rule-making authority (Paragraph 3(K)) was often cited as 2(K) in correspondence. Despite such record-keeping flaws, the legal hierarchy remained clear:

  • Article XIII of the By-Laws: Explicitly reserves the power to amend By-Laws to a majority of a quorum of the Board.
  • Paragraph 3(K) of the Declaration: Confirms the Board’s authority to make and amend rules.

The ALJ clarified a nuanced distinction: while the Board drafts and amends rules, those rules only become binding once approved by a majority of homeowners in writing. Crucially, this is a veto or confirmation power, not a legislative power. Homeowners cannot bypass the Board to create their own laws.

6. The Final Verdict and Certification

On September 9, 2016, ALJ Shedden dismissed David Carr’s petition. While the Association pushed for Carr to be hit with civil penalties for filing a "frivolous" petition, the Judge declined. He noted that while Carr was legally mistaken and had "misconstrued" the documents—largely due to his confusion over the association's lack of incorporation—his actions did not rise to the level of a fineable violation.

The procedural finality of the case is a reminder of administrative timelines. The decision was transmitted to the Department of Real Estate on September 12, 2016. Because the Department took no action to modify or reject the decision by the October 17, 2016 deadline, the ALJ’s decision was officially certified as final on October 26, 2016.

7. Conclusion: Navigating Condo Governance

The Carr v. Sunset Plaza case is a cautionary tale for those who favor "rebel" governance over established procedure. For homeowners and boards, three critical takeaways emerge:

  1. Adhere to the Document Hierarchy: The Declaration and By-Laws are not mere suggestions; they are binding contracts. Amendments must originate from the body granted authority by those documents—usually the Board.
  2. A Quorum is Not a Mandate: While a quorum allows a meeting to conduct business, it does not grant homeowners the power to perform acts (like amending By-Laws) that the governing documents specifically reserve for the Board of Directors.
  3. Reasonable Alternatives Prevent Litigation: The Association’s strongest defense was the Board's willingness to facilitate dialogue. By offering the February 22nd meeting as a reasonable alternative to the homeowners' demand, the Board neutralized the claim that they were "refusing" to meet.

Effective change in a community association is achieved through the ballot box and formal amendment processes, not through unsanctioned meetings and "replacement ballots." Following the law is always more cost-effective than a failed day in court.

Case Participants

Petitioner Side

  • David Carr (petitioner)
    Appeared on his own behalf

Respondent Side

  • Paige Hulton (attorney)
    Mulcahy Law Firm, PC
    Attorney for Respondent at hearing
  • Beth Mulcahy (attorney)
    Mulcahy Law Firm, PC
    Listed on mailing list for final certification

Neutral Parties

  • Thomas Shedden (ALJ)
    Office of Administrative Hearings
    Presiding Administrative Law Judge
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
    Recipient of decision
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Certified the decision
  • Rosella J. Rodriguez (clerk)
    Office of Administrative Hearings
    Processed mailing of certification

Other Participants

  • Leslie Grant (homeowner)
    Wrote letters regarding special meeting; provided replacement ballot

John Klemmer vs. Caribbean Gardens Association

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Case Summary

Case ID 16F-H1616006-BFS
Agency ADRE
Tribunal OAH
Decision Date 2016-08-19
Administrative Law Judge Dorinda M. Lang
Outcome The ALJ dismissed the petition in its entirety. While the HOA admitted responsibility for common areas, the Petitioner failed to establish that the water staining on the subfloor or the condition of the pipes constituted damage requiring repair or replacement. The ALJ relied on the Respondent's expert testimony that the subfloor was structurally sound.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John Klemmer Counsel —
Respondent Caribbean Gardens Association Counsel Alexis Firehawk

Alleged Violations

A.R.S. §§ 33-1212(1), 33-1212(2), 33-1247(B), 33-1251(C), 33-1221(1), 33-1253(A)(1), 33-1253(A)(2), 33-1253(H)

Outcome Summary

The ALJ dismissed the petition in its entirety. While the HOA admitted responsibility for common areas, the Petitioner failed to establish that the water staining on the subfloor or the condition of the pipes constituted damage requiring repair or replacement. The ALJ relied on the Respondent's expert testimony that the subfloor was structurally sound.

Why this result: Insufficient evidence to prove that the staining constituted structural damage or that mold/bacteria levels required remediation; Respondent provided expert testimony that the area was structurally sound.

Key Issues & Findings

Maintenance and Repair of Common Elements

Petitioner alleged the HOA was responsible for repairing water damage/staining to the subfloor and pipes in the common area ceiling/floor space caused by flooding from the unit above. Petitioner sought replacement of stained wood and remediation.

Orders: Petition dismissed in its entirety.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1212(1)
  • A.R.S. § 33-1212(2)
  • A.R.S. § 33-1247(B)
  • A.R.S. § 33-1251(C)
  • A.R.S. § 33-1221(1)
  • A.R.S. § 33-1253(A)(1)
  • A.R.S. § 33-1253(A)(2)
  • A.R.S. § 33-1253(H)

Video Overview

Audio Overview

Decision Documents

16F-H1616006-BFS Decision – 513174.pdf

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16F-H1616006-BFS Decision – 521856.pdf

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16F-H1616006-BFS Decision – 513174.pdf

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16F-H1616006-BFS Decision – 521856.pdf

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Administrative Law Judge Decision: Klemmer v. Caribbean Gardens Association

Executive Summary

This briefing document summarizes the administrative hearing and subsequent final decision in the matter of John Klemmer vs. Caribbean Gardens Association (No. 16F-H1616006-BFS). The dispute centered on whether the Caribbean Gardens Association (the Respondent) was legally obligated to repair or replace materials in a common area located between the Petitioner’s unit and the unit above.

The Petitioner alleged that water damage, staining, and potential contamination necessitated the replacement of subflooring and cleaning of a sewer pipe. While the Respondent acknowledged responsibility for the common area in question, they argued that no structural damage existed. Following a hearing on August 2, 2016, Administrative Law Judge (ALJ) Dorinda M. Lang determined that the Petitioner failed to meet the required burden of proof. The petition was dismissed in its entirety, and the decision was certified as final on October 6, 2016.

Detailed Analysis of Key Themes

1. Responsibility for Common Areas

A central component of the case was the definition and responsibility of "common areas" within the association. The Petitioner cited several Arizona Revised Statutes (A.R.S.) and the association’s Covenants, Conditions, and Restrictions (CC&Rs) to argue that the Respondent was responsible for the space above his ceiling and below the upstairs unit’s flooring.

  • Undisputed Jurisdiction: The Respondent did not dispute its responsibility for the areas defined as common areas under the CC&Rs.
  • Legal Basis: The allegations involved violations of A.R.S. §§ 33-1212, 33-1247(B), 33-1251(C), 33-1221(1), and 33-1253, as well as specific articles of the association’s third amendment.
2. The Burden of Proof and Evidentiary Standards

The case turned significantly on the legal standard of "preponderance of the evidence." As the Petitioner, John Klemmer held the burden to prove that the damage was sufficient to mandate specific repairs.

  • Standard Applied: The ALJ defined preponderance of the evidence as proof that convinces the trier of fact that a contention is "more probably true than not."
  • Failure to Establish Fact: Although the Petitioner provided photographs of staining and discoloration, the ALJ found this evidence insufficient to prove that the wood required replacement or that the sewer pipe was malfunctioning.
3. Structural vs. Cosmetic Damage

A primary conflict in the testimony was the distinction between aesthetic staining and structural integrity.

  • Expert Testimony: Michael Busby, a licensed contractor and witness for the Respondent, testified that the discoloration did not constitute structural damage. He noted that water staining near a toilet is "not uncommon" and that any potential structural issues could be resolved through bracing rather than replacement.
  • Lack of Specialized Testing: The Petitioner expressed concerns regarding mold and bacteria; however, because no formal testing was conducted or presented, the court could not find a requirement for remediation.
4. Administrative Oversight and Finalization

The case reflects a transition in state oversight and the strict timelines of administrative law.

  • Agency Transition: Effective July 1, 2016, jurisdiction over such matters shifted from the Department of Fire, Building and Life Safety to the Arizona Department of Real Estate.
  • Final Certification: Because the Department of Fire, Building and Life Safety did not accept, reject, or modify the ALJ's decision by the September 26, 2016 deadline, the decision was automatically certified as final per A.R.S. § 41-1092.08(D).

Important Quotes with Context

Quote Context
"Petitioner failed to establish his factual allegation that the area was damaged to the extent that repairs were necessary." The ALJ’s primary conclusion regarding why the case was dismissed despite the HOA’s admitted responsibility for the area.
"Proof by preponderance of the evidence 'is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it…'" The legal definition used by the court to evaluate the strength of the Petitioner's claims against the Respondent's defenses.
"[Michael Busby] testified that the water staining to that area (below a toilet) is not uncommon… [and] it was not structurally damaged." Testimony from the Respondent's witness which successfully argued that the visible damage did not necessitate the extensive repairs requested.
"Petitioner offered no legal authority that Respondent is responsible for cleaning the area or any evidence that the pipe must be perfectly straight to function properly." The court's response to the Petitioner's secondary complaints regarding the cleanliness and alignment of a sewer pipe.

Actionable Insights

For Homeowners and Petitioners
  • Necessity of Professional Testing: When alleging health hazards such as mold or bacteria, visual evidence (photographs) is often insufficient. Homeowners should provide professional lab results or expert environmental reports to establish a need for remediation.
  • Establishing Structural Impact: To compel an association to perform replacements rather than simple repairs (like bracing), a petitioner must provide evidence from a structural expert or licensed contractor proving that the material's integrity is compromised.
For Homeowners Associations (HOAs)
  • Proactive Mitigation Offers: In this case, the Respondent offered to "brace" the area even though they denied structural damage. Making a reasonable offer of repair can demonstrate a good-faith effort to maintain common areas, which may be viewed favorably if the petitioner declines and insists on more expensive, unnecessary replacements.
  • Expert Witness Reliability: Utilizing licensed contractors who have personal history with the property (e.g., a former handyman) can provide persuasive testimony regarding the "commonality" of certain types of wear and tear, such as staining under plumbing fixtures.
Procedural Compliance
  • Monitoring Statutory Deadlines: Parties must be aware that administrative decisions become final if the governing agency does not act within a specific timeframe (in this case, approximately 35 days). Once certified, the window for requesting a rehearing or judicial review is limited and governed by A.R.S. § 41-1092.09.

Case Study and Legal Review: Klemmer v. Caribbean Gardens Association

This study guide provides a comprehensive overview of the administrative hearing between John Klemmer (Petitioner) and the Caribbean Gardens Association (Respondent). It explores the legal standards, factual disputes, and administrative procedures involved in Arizona Department of Real Estate matters.

Key Concepts and Case Overview

1. Jurisdictional Transition

The matter was initially filed with the Department of Fire, Building and Life Safety. However, as of July 1, 2016, that department ceased to exist, and jurisdiction over such matters was transferred to the Arizona Department of Real Estate. The Office of Administrative Hearings (OAH) maintains jurisdiction to hear these petitions pursuant to A.R.S. § 41-1092.02.

2. The Burden of Proof: Preponderance of the Evidence

In administrative hearings of this nature, the Petitioner bears the burden of proof. The standard used is "preponderance of the evidence," defined as:

  • A.A.C. R2-19-119: The standard of proof on all issues.
  • Legal Definition: Evidence that is of greater weight or more convincing than the evidence offered in opposition. It must convince the trier of fact that the contention is "more probably true than not."
3. Defining Common Areas and Responsibility

The dispute centered on the definition of "common areas" within a homeowner association. Per the Respondent’s Covenants, Conditions, and Restrictions (CC&Rs) and the third amendment thereto:

  • The area between a unit’s ceiling and the floor of the unit above is classified as a common area.
  • While the Respondent did not dispute its responsibility for common areas, the legal conflict arose over whether specific conditions (staining and discoloration) constituted "damage" requiring remediation.
4. Administrative Finality

An Administrative Law Judge (ALJ) issues a decision that must be transmitted to the relevant state agency. Under A.R.S. § 41-1092.08:

  • The agency has a specific timeframe (in this case, until September 26, 2016) to accept, reject, or modify the ALJ decision.
  • If the agency takes no action within this period, the ALJ decision is automatically certified as the final administrative decision.

Short-Answer Practice Questions

1. Who were the primary parties involved in case No. 16F-H1616006-BFS? Answer: The Petitioner was John Klemmer, and the Respondent was the Caribbean Gardens Association.

2. What specific physical conditions did the Petitioner cite as evidence of damage? Answer: The Petitioner provided photographs showing discoloration of the upper unit’s subfloor, staining on a sewer pipe, and a "crooked" sewer pipe.

3. Why did the Administrative Law Judge dismiss the petition despite the Respondent admitting responsibility for common areas? Answer: The Petitioner failed to establish that the area was damaged to the extent that repairs were legally necessary. He did not provide evidence that the staining required remediation or that the sewer pipe was malfunctioning.

4. What was the testimony of the Respondent's expert, Michael Busby, regarding the subfloor? Answer: Busby, a licensed contractor, testified that the discoloration was not structural damage. He noted that water staining below a toilet is common and suggested that even if damage were present, it would only require bracing rather than replacement.

5. What is the consequence if a party fails to take timely action after an administrative decision is certified? Answer: Rights for rehearing or judicial review (via the Superior Court) may be lost.

Essay Prompts for Deeper Exploration

1. Analysis of Evidentiary Standards

The ALJ's decision rested heavily on the "preponderance of the evidence" standard. Write an essay discussing why the Petitioner’s evidence (photographs of staining and concerns about mold/bacteria) failed to meet this threshold in the face of the Respondent’s expert testimony. In your analysis, address the distinction between aesthetic concerns (staining/dirt) and compensable structural damage under the law.

2. The Role of Expertise in Property Disputes

Examine the impact of Michael Busby’s testimony on the outcome of the case. How does the testimony of a licensed contractor influence the "trier of fact" compared to the testimony of a homeowner? Discuss how the Petitioner might have strengthened his case regarding the alleged presence of mold or the functionality of the sewer pipe.

3. Administrative Procedure and Finality

Explain the process by which an ALJ decision becomes a "Final Agency Action" within the Arizona administrative system. Use the timeline from the Caribbean Gardens Association case (from the August 2 hearing to the October 6 certification) to illustrate the roles of the ALJ, the Department of Real Estate, and the Office of Administrative Hearings.

Glossary of Important Terms

Term Definition
A.R.S. Arizona Revised Statutes; the codified laws of the state of Arizona.
Administrative Law Judge (ALJ) A judge who serves as the trier of fact in hearings involving state agency actions.
CC&Rs Covenants, Conditions, and Restrictions; the governing documents that dictate the rules and responsibilities of a homeowners association and its members.
Common Area Areas within a development or association that are not owned by an individual unit holder and are typically the responsibility of the association to maintain.
Petitioner The party who files a petition or initiates a legal action (in this case, John Klemmer).
Preponderance of the Evidence The standard of proof in civil and administrative cases; evidence that makes a fact more likely than not.
Respondent The party against whom a petition is filed (in this case, Caribbean Gardens Association).
Subfloor The foundational wood or material located beneath the finished flooring of a unit.
Certification The process by which an ALJ decision is officially recognized as the final decision of an agency.

When Stains Aren't Enough: Lessons from an HOA Common Area Dispute

1. Introduction: The Reality of Condo Living and Common Area Conflicts

Condominium living is defined by a shared environment where individual property rights intersect with collective maintenance obligations. One of the most common flashpoints in these communities occurs when a homeowner identifies a perceived defect in a common area and demands a specific, often high-cost, remediation from the Homeowners Association (HOA). These disputes frequently hinge on a single question: what legally constitutes "damage" that requires repair?

The case of John Klemmer vs. Caribbean Gardens Association serves as a textbook example of this tension. It illustrates that simply identifying a visual abnormality—such as a stain—is not enough to compel an Association to act. To prevail in such a dispute, a homeowner must meet a specific legal burden of proof, moving beyond subjective concerns to provide objective evidence of structural or functional failure.

2. The Dispute: A Ceiling, a Pipe, and a Disagreement

The conflict involved Petitioner John Klemmer and the Respondent, Caribbean Gardens Association. Mr. Klemmer alleged that the Association had violated its duties under the Arizona Revised Statutes (including A.R.S. §§ 33-1212, 33-1247, 33-1251, 33-1221, and 33-1253) and its own governing documents, specifically the CC&Rs (Third Amendment, Article 3, Section 3.8 and Article 7, Section 7.1) and the recorded plat specifications.

The dispute was triggered by a leak from the unit above Mr. Klemmer’s. Upon inspection of the space between his ceiling and the floor of the upstairs unit, the Petitioner observed:

  • Discoloration and water staining on the upper unit’s subfloor.
  • Staining and "dirt" on the common sewer pipe.
  • A sewer pipe that appeared "crooked" in its alignment.

While the Association conceded that the space in question was a "common area" under its maintenance jurisdiction, it refused the Petitioner's demand to fully replace the wood and plumbing.

3. The Legal Framework: Defining the "Preponderance of Evidence"

This matter was adjudicated by the Office of Administrative Hearings. Notably, the case occurred during a jurisdictional transition; as of July 1, 2016, oversight of such HOA disputes shifted from the Department of Fire, Building and Life Safety to the Arizona Department of Real Estate.

Regardless of the agency, the Administrative Law Judge (ALJ) applied the "preponderance of the evidence" standard. For a homeowner to win, they must provide:

  • Proof that convinces the judge that a claim is "more probably true than not."
  • Evidence that carries greater weight or is more convincing than the evidence offered by the Association in opposition.

In this instance, the Petitioner bore the entire burden of proving that the Association was legally obligated to perform the specific replacement he requested rather than the more conservative repairs the Association proposed.

4. Expert Testimony vs. Owner Concerns

The hearing highlighted a significant gap between a homeowner’s subjective fears and a professional’s technical assessment. While the Petitioner relied on visual evidence, the Respondent produced expert testimony from Michael Busby, a licensed contractor.

Petitioner’s Concerns Respondent’s Expert Testimony (Michael Busby)
Aesthetic Staining: Argued that stained wood on the subfloor must be replaced to ensure safety. Structural Integrity: Testified that discoloration did not amount to structural damage; the wood remained sound even after a subsequent "catastrophic" flood.
Contamination Fears: Expressed concerns regarding the presence of mold and bacteria. Commonality & Data: Stated that water staining below a toilet is common and noted that the Petitioner provided no actual testing/data to support claims of mold.
Plumbing Alignment: Argued the sewer pipe was "dirty" and "crooked," suggesting poor maintenance. Necessity of Repair: Asserted that if the floor required any support, "bracing" would be the appropriate fix, not a total replacement of the subfloor.

The conflict reached an impasse when the Petitioner refused the Association's offer to "brace" the subfloor, insisting that nothing short of a full replacement of the wood was acceptable.

5. The Decision: Why the Petition was Dismissed

The Administrative Law Judge dismissed the petition in its entirety, finding that the Petitioner failed to bridge the gap between "visible staining" and "legal damage." The ruling was based on several key findings:

  • Stains are Not Structural Failures: The ALJ noted that photos of staining do not, on their own, support a finding that wood is compromised or requires replacement.
  • Subjective Fear vs. Objective Data: While the Petitioner was concerned about mold and bacteria, the court found he failed to provide any professional testing or lab data to establish that levels required remediation.
  • Functionality is the Standard: Regarding the "crooked" and "dirty" pipe, the ALJ pointed out that the Petitioner provided no legal authority or evidence suggesting a pipe must be "perfectly straight" or "clean" to function properly. Without proof of a leak or failure, the pipe met the maintenance standard.
6. Timeline of Finality: The Certification Process

Administrative decisions follow a specific procedural path to reach finality. In this case, the timeline was as follows:

  • August 19, 2016: The Administrative Law Judge issued the initial decision to dismiss the petition.
  • September 26, 2016: The statutory deadline for the Department to accept, reject, or modify the ALJ’s decision.
  • October 6, 2016: With no action taken by the Department to alter the ruling, the decision was officially certified as the final administrative action.
7. Key Takeaways for Homeowners and Associations

This case provides a roadmap for how administrative courts view the balance of power between owners and HOAs:

  1. Responsibility vs. Repair Necessity: Proving an HOA is responsible for a common area is only the first step. The Association maintains the discretion to choose the method of repair (e.g., bracing vs. replacement). The burden is on the homeowner to prove that the Association’s chosen method is a violation of the CC&Rs or statutes.
  2. The Need for Expert Evidence: Visual assumptions are insufficient in a legal setting. If a homeowner alleges mold, bacteria, or structural instability, they must produce professional data, such as engineering reports or lab results, to meet the preponderance of evidence standard.
  3. Functionality Over Aesthetics: Administrative courts prioritize the functional and structural integrity of common elements. Cosmetic concerns—such as stained wood or pipes that are not perfectly aligned—rarely meet the legal threshold for mandated replacement if the systems are still performing their intended functions.
8. Conclusion: Navigating Future Disputes

The Klemmer decision reinforces the principle that "perfect" is not the legal standard for HOA maintenance; "functional and sound" is. Before escalating a dispute to a formal petition, homeowners should evaluate whether they have the objective evidence necessary to overcome the Association’s discretionary authority.

Under A.R.S. § 41-1092.09(A) and § 41-1092.08(H), parties who disagree with a final administrative decision may have the right to request a rehearing or seek judicial review. This next step typically involves the Superior Court, provided the request is filed within strict statutory timeframes. For both boards and owners, the lesson is clear: in the eyes of the law, data and expert testimony will always outweigh visual aesthetic concerns.

Case Participants

Petitioner Side

  • John Klemmer (petitioner)
    Caribbean Gardens Association (Owner)
    Listed as John D. Klemmer in appearances
  • John A. Klemmer (witness)

Respondent Side

  • Alexis Firehawk (attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
  • Michael Busby (witness)
    Caribbean Gardens Association
    Licensed contractor and former handyman
  • Alex Gonzalez (witness)

Neutral Parties

  • Dorinda M. Lang (ALJ)
    Office of Administrative Hearings
  • Kathryn Bergamon (observer)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Certified the decision
  • Louis Dettorre (agency staff)
    Arizona Department of Real Estate
    CC'd on certification
  • Rosella J. Rodriguez (clerk)
    Office of Administrative Hearings
    Mailed certification

John & Debborah Sellers vs. The Crossings at Willow Creek HOA

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Case Summary

Case ID 16F-H1616013-BFS
Agency ADRE
Tribunal OAH
Decision Date 2016-08-22
Administrative Law Judge Diane Mihalsky
Outcome The ALJ granted summary judgment in favor of the Petitioners because the Respondent admitted to violating A.R.S. § 33-1804 by appointing board members without a public meeting. The Respondent was ordered to reimburse the filing fee, but civil penalties were declined because the violation was based on a mistake of law rather than intentional misconduct.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John & Debborah Sellers Counsel —
Respondent The Crossings at Willow Creek HOA Counsel Joshua M. Bolen

Alleged Violations

A.R.S. § 33-1804

Outcome Summary

The ALJ granted summary judgment in favor of the Petitioners because the Respondent admitted to violating A.R.S. § 33-1804 by appointing board members without a public meeting. The Respondent was ordered to reimburse the filing fee, but civil penalties were declined because the violation was based on a mistake of law rather than intentional misconduct.

Key Issues & Findings

Violation of Open Meeting Law (Board Appointments)

Petitioners alleged the remaining board member appointed new directors to fill vacancies without a public meeting. Respondent admitted the violation but claimed exigent circumstances due to lack of quorum and expiring management contract.

Orders: Respondent ordered to reimburse Petitioners' filing fee. No civil penalty imposed as the violation was not intentional or repeated.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1804
  • Dennis J. Legere and Pinnacle Peak Shadows HOA

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Video Overview

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Decision Documents

16F-H1616013-BFS Decision – 505356.pdf

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16F-H1616013-BFS Decision – 513402.pdf

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16F-H1616013-BFS Decision – 505356.pdf

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16F-H1616013-BFS Decision – 513402.pdf

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Administrative Law Judge Decision: Sellers v. The Crossings at Willow Creek HOA

Executive Summary

This briefing document details the administrative legal proceedings and final decision in the case of John & Debborah Sellers (Petitioners) vs. The Crossings at Willow Creek HOA (Respondent), Case No. 16F-H1616013-BFS.

The dispute centered on the Respondent's violation of Arizona Revised Statutes (A.R.S.) § 33-1804 regarding open meeting requirements. Following the resignation of three out of four board members in July 2015, the sole remaining board member continued to conduct HOA business and eventually appointed new members in January 2016 without holding public meetings.

The Administrative Law Judge (ALJ) granted Summary Judgment to the Petitioners, ordering the Respondent to reimburse the Petitioners' filing fees. However, the ALJ declined to impose civil penalties, citing the HOA's lack of intentional or routine misconduct and the existence of exigent circumstances. This decision was certified as final by the Department of Real Estate on August 22, 2016, after the department failed to take action to modify or reject the recommendation.

Detailed Analysis of Key Themes

1. Statutory Compliance and Public Meeting Requirements

The core of the legal violation involved A.R.S. § 33-1804, which mandates that meetings of a Homeowners Association board must be open to all members. The Respondent admitted to violating this statute by:

  • Allowing a single remaining board member to conduct business for several months.
  • Appointing interim board members in January 2016 without following the emergency meeting requirements set forth in A.R.S. § 33-1804(D)(2).

The Respondent acknowledged that "emergency" exceptions were not properly applied, and they agreed to comply with these requirements moving forward.

2. Discretionary Authority and Civil Penalties

A significant portion of the analysis focused on A.R.S. § 41-2198.02(A), which states that an ALJ may levy a civil penalty for violations. The use of the word "may" affords the Director discretion rather than a mandate. In determining whether to penalize the HOA, the ALJ compared this case to Dennis J. Legere and Pinnacle Peak Shadows HOA:

  • The Legere Case: Involved a board that routinely and repeatedly took actions via email to avoid public meetings for its own convenience.
  • The Current Case: The ALJ found that The Crossings at Willow Creek HOA did not repeatedly or routinely violate the law. Instead, the violation was born from "exigent circumstances" and a mistake regarding legal requirements when the board was reduced to a single member.
3. Exigent Circumstances as a Mitigating Factor

The Respondent argued that their actions, while technically in violation of the law, were driven by necessity. The HOA "lacked the required number of Directors under its bylaws" and faced the expiration of its management contract. The ALJ accepted these as mitigating factors, concluding that the remaining board member did not intentionally violate the statute but acted based on a misunderstanding of the law during a crisis.

Important Quotes with Context

Quote Context
"The remaining board member continued to conduct Respondent’s business and in January 2016, appointed board members to serve the remaining terms… in violation of A.R.S. § 33-1804." The fundamental factual basis for the Petitioners' motion for summary judgment.
"Respondent acknowledged that because the exceptions to the public meetings required by A.R.S. § 33-1804(A) do not include an emergency… the remaining board member’s actions violated the statute’s requirements." The HOA's formal admission of the statutory violation.
"By use of the word, 'may,' the statute affords the Director… discretion to levy a civil penalty, even in cases where the Respondent homeowners’ association admits a statutory violation." The legal reasoning used to justify why a fine was not mandatory despite the admitted guilt.
"Respondent did not repeatedly or routinely violate the law, but instead took action due to exigent circumstances based upon a mistake about the law’s requirements." The ALJ’s distinction between this case and more severe, intentional violations found in other precedents.
"Because it is on notice of the law’s requirements, if Respondent again violates A.R.S. § 33-1804, a civil penalty should be imposed at that time." A formal warning that the HOA's "mistake" defense will not be valid for future infractions.

Actionable Insights

For Homeowners Association Boards
  • Adherence to Open Meeting Laws: Boards must strictly follow A.R.S. § 33-1804, even during internal crises. Vacancies do not suspend the requirement for public meetings or proper emergency meeting protocols under A.R.S. § 33-1804(D)(2).
  • Documentation of Exigency: If a board must act under pressure, it should still attempt to align with statutory requirements to avoid "notice of violation" which makes future penalties more likely.
  • Immediate Corrective Action: The Respondent’s agreement to reimburse filing fees and commit to future compliance likely helped avoid more severe civil penalties.
For Homeowners (Petitioners)
  • Summary Judgment Strategy: Petitioners can successfully move for summary judgment when an HOA admits to the facts of a statutory violation, even if the HOA claims the violation was unintentional.
  • Recovery of Costs: While civil penalties are discretionary and paid to the state, homeowners can successfully petition for the reimbursement of their filing fees when a violation is confirmed.
  • Precedent as a Tool: Using previous cases (like Legere) is essential in administrative hearings to argue for or against the severity of sanctions.

Final Administrative Status

The Department of Real Estate had until August 10, 2016, to accept, reject, or modify the ALJ's decision. As no action was taken by that deadline, the decision was officially certified as final on August 22, 2016. This certification triggers the five-day window for the effective date of the order and begins the timeline for any potential requests for rehearing or judicial review in Superior Court.

Study Guide: Sellers v. The Crossings at Willow Creek HOA (Case No. 16F-H1616013-BFS)

This study guide provides a comprehensive analysis of the administrative law case involving John and Debborah Sellers and The Crossings at Willow Creek HOA. It examines the legal requirements for homeowners association (HOA) board actions, the interpretation of Arizona Revised Statutes (A.R.S.), and the discretionary power of administrative law judges in levying penalties.

I. Case Overview and Core Themes

The Dispute

The case originated when John and Debborah Sellers (Petitioners) filed a petition against The Crossings at Willow Creek HOA (Respondent). The Petitioners alleged that the HOA violated state law following the resignation of three out of four board members in July 2015. The remaining board member continued to conduct HOA business and appointed new members in January 2016 without adhering to public meeting requirements.

Central Legal Issues
  1. Public Meeting Requirements: Whether a lone board member can conduct business and appoint new members without a public meeting under A.R.S. § 33-1804.
  2. Emergency Exceptions: Whether "exigent circumstances" (such as an expiring management contract and lack of a quorum) justify bypassing statutory requirements for public meetings.
  3. Discretionary Penalties: The criteria used by the Department of Real Estate and Administrative Law Judges (ALJs) to determine if civil penalties are warranted under A.R.S. § 41-2198.02(A).

II. Statutory Framework and Legal Precedent

The following table outlines the primary statutes and legal precedents cited in the case:

Reference Summary of Application
A.R.S. § 33-1804(A) Requires that HOA meetings be open to all members of the association.
A.R.S. § 33-1804(D)(2) Sets specific requirements for "emergency" meetings that bypass standard notice/publicity; the Respondent failed to meet these requirements.
A.R.S. § 41-2198.02(A) Grants the ALJ authority to order compliance and "may" levy a civil penalty (not to exceed $500 in specific housing contexts).
A.R.S. § 41-1092.08 Governs the timeline for the Department of Real Estate to accept, reject, or modify an ALJ decision.
Legere v. Pinnacle Peak Shadows Legal precedent where a board routinely used email for decisions; used in this case to contrast "intentional" vs. "mistaken" violations.

III. Summary of Findings and Decision

The Violation

The Respondent admitted to violating A.R.S. § 33-1804. While they argued the remaining board member acted out of necessity (the next meeting was not until February 2016 and the management contract was expiring), the ALJ ruled that the statutory exceptions to public meetings do not include a general "emergency" unless specific procedures are followed.

The Remedy
  • Summary Judgment: Granted to the Petitioners because the violation was acknowledged.
  • Reimbursement: The HOA was ordered to reimburse the Petitioners' filing fee.
  • Civil Penalties: The ALJ declined to impose a civil penalty. The decision noted that the violation was a "mistake about the law’s requirements" rather than a "routine or repeated" intentional violation like that seen in the Legere case.
Finality of the Decision

The ALJ decision was transmitted on July 6, 2016. Under A.R.S. § 41-1092.08, the Department of Real Estate had until August 10, 2016, to act. Because no action was taken by the Department, the ALJ decision was certified as final on August 22, 2016.

IV. Short-Answer Practice Questions

1. Why did the Petitioners move for summary judgment against the HOA? Answer: Because the HOA's sole remaining board member conducted business and appointed new members in January 2016 without following the public meeting requirements set forth in A.R.S. § 33-1804.

2. What reason did the Respondent give for the board member's unilateral actions? Answer: The HOA argued it lacked the required number of directors under its bylaws and its management contract was set to expire before the next regularly scheduled meeting in February 2016.

3. Under A.R.S. § 41-2198.02(A), is an ALJ required to levy a civil penalty if a violation is found? Answer: No. The statute uses the word "may," affording the Director discretion to levy or withhold a penalty based on the circumstances of the violation.

**4. How did the ALJ distinguish this case from the Legere precedent?** Answer: In Legere, the board routinely used email for decisions to serve its own convenience. In this case, the ALJ found the HOA acted due to exigent circumstances and a mistake of law, rather than a routine or intentional effort to bypass the law.

5. What happens if the Department of Real Estate fails to accept, reject, or modify an ALJ decision within the statutory timeframe? Answer: Pursuant to A.R.S. § 41-1092.08(D), the ALJ decision is certified as the final administrative decision.

V. Essay Prompts for Deeper Exploration

  1. Exigent Circumstances vs. Statutory Compliance: Analyze the tension between a board's fiduciary duty to maintain operations (e.g., renewing management contracts) and the strict requirements of A.R.S. § 33-1804. Should the law allow for more flexibility when a board loses its quorum?
  2. The Role of Intent in Administrative Sanctions: Discuss why the ALJ determined that a "mistake about the law's requirements" did not warrant a civil penalty. Compare the deterrent effect of a warning versus a financial penalty in the context of HOA governance.
  3. The Certification Process: Explain the procedural journey of an ALJ decision from the Office of Administrative Hearings to final certification by the Department of Real Estate. Why is the timeline for "accepting, rejecting, or modifying" significant for the parties involved?

VI. Glossary of Important Terms

  • A.R.S. § 33-1804: The Arizona statute governing open meetings for planned communities.
  • Administrative Law Judge (ALJ): An official who presides over hearings and moves for decisions in administrative law cases.
  • Certification of Decision: The process by which an ALJ’s recommendation becomes a final, binding agency action.
  • Civil Penalty: A financial sanction levied by a government agency for a violation of laws or regulations.
  • Exigent Circumstances: Situations requiring immediate action or urgency, often used as a defense for bypassing standard procedures.
  • Motion for Summary Judgment: A legal request to the judge to rule in favor of one party without a full trial, based on the fact that the essential facts are not in dispute.
  • Petitioners: The parties (John & Debborah Sellers) who initiated the legal action.
  • Respondent: The party (The Crossings at Willow Creek HOA) against whom the action was brought.
  • Sanctions: Penalties or other means of enforcement used to provide incentives for obedience with the law.

When One Board Member Acts Alone: Lessons from Sellers vs. The Crossings at Willow Creek

1. Introduction: A Board in Crisis

It is a nightmare scenario for community governance: a sudden wave of resignations leaves the Board of Directors without a quorum, effectively creating a "ghost board." In these moments of perceived crisis, the remaining leadership often feels a desperate pressure to act unilaterally to keep the association functional. However, as community association leaders must understand, administrative exigency does not grant a license to bypass Arizona’s open meeting laws.

The case of John & Debborah Sellers vs. The Crossings at Willow Creek HOA (No. 16F-H1616013-BFS) serves as a definitive lesson in this balance. This dispute was adjudicated through the Office of Administrative Hearings (OAH), which serves as the statutory forum for resolving HOA disputes in Arizona. The central question: Can a single remaining board member legally conduct business and appoint new directors in private?

2. The Conflict: One Member, Multiple Appointments

The conflict began following a leadership vacuum in July 2015, when three out of the four sitting board members resigned. For several months, the community was governed by a sole director. In January 2016, this remaining director took unilateral action to appoint new members to fill the vacancies.

The Association defended these actions by citing a state of emergency. They argued that because the board lacked the minimum number of directors required by its bylaws and the association’s management contract was nearing expiration, immediate action was necessary. As a legal analyst, it is critical to note a fundamental principle here: statutory requirements, such as the Open Meeting Act, override internal bylaws and contractual pressures.

Fact Check: The Association claimed urgency to justify appointments in January 2016, yet a regularly scheduled board meeting was already on the calendar for February 22, 2016. This proves that a legal, public forum for these appointments was less than 30 days away, undermining the "emergency" defense.

3. The Legal Violation: Navigating A.R.S. § 33-1804

Arizona law is unequivocal regarding the transparency of board actions. Under A.R.S. § 33-1804(A), all meetings of the association and the board of directors must be open to all members. The Association eventually admitted during legal proceedings that their actions failed to comply with these requirements.

The Administrative Law Judge (ALJ) found the HOA’s actions illegal based on the following statutory failures:

  • Failure to Meet Emergency Standards: For a meeting to qualify as an "emergency" under A.R.S. § 33-1804(D)(2), the board must provide notice to members "by any means the board deems appropriate" and must "state the emergency" clearly within the meeting minutes. The Respondent failed to provide such notice or documentation.
  • Lack of Broad Exceptions: The ALJ noted that A.R.S. § 33-1804(A) does not contain a blanket exception for "emergencies." To bypass the standard notice requirements of the Open Meeting Act, a board must strictly follow the procedural safeguards found in subsection (D).
  • Defining Urgency vs. Convenience: An "emergency" is a legal term of art requiring immediate necessity to protect the community; it is not a subjective tool used for administrative convenience or to bypass the membership.
4. The Ruling: Accountability vs. Intent

In her decision, ALJ Diane Mihalsky granted Summary Judgment to the Petitioners. However, the ruling made a distinct separation between a board's "mistake of law" and "routine bad faith." While the Association was ordered to reimburse the Sellers for their $500 filing fee, the Judge declined to levy additional civil penalties at that time.

The following table compares the Sellers case with the precedent set in Legere vs. Pinnacle Peak Shadows HOA:

Feature Legere Case (No. 14F-H1414001) Sellers Case (No. 16F-H1616013)
Nature of Intent Routine and repeated violations for board convenience (conducted via email). Single-instance violation due to exigent circumstances and a mistake of law.
Legal Consequence Civil penalties were levied against the board. No civil penalty at this time; reimbursement of $500 filing fee only.

The Judge reasoned that because the director acted out of a mistaken understanding during a crisis rather than a routine practice of ignoring the law, a civil penalty under A.R.S. § 41-2198.02(A) was not yet warranted.

5. Finality and the Path Forward

The timeline of this case highlights the transition of oversight within Arizona’s regulatory agencies. The ALJ's decision was initially transmitted on July 6, 2016, to the Department of Fire Building and Life Safety. However, during the finalization process, these functions were consolidated under the Department of Real Estate.

By August 10, 2016, the Department of Real Estate had taken no action to reject or modify the ALJ’s decision. Consequently, on August 22, 2016, the decision was certified as the final administrative action of the Department.

In a stern warning to the Association, Judge Mihalsky noted that the HOA is now legally "on notice." The decision explicitly states that if the Association violates A.R.S. § 33-1804 again, "a civil penalty should be imposed at that time," as they can no longer claim ignorance of the statute.

6. Key Takeaways for HOA Boards and Homeowners

As an educator in community association law, I advise all boards to distill this case into three primary lessons:

  1. Process Over Expediency: Internal pressures—such as expiring management contracts or bylaw requirements for a minimum number of directors—never justify a violation of state law. Public transparency is the non-negotiable priority.
  2. The "Emergency" High Bar: To bypass standard meeting notices, the situation must be a genuine emergency, and the board must document the emergency in the minutes and provide whatever notice is possible under A.R.S. § 33-1804(D)(2).
  3. The Finality of Being "On Notice": Boards often receive leniency for a first-time "mistake of law." However, once an OAH ruling is issued, that leniency vanishes. Future violations by this Association will almost certainly result in aggressive civil penalties.

Homeowners have the statutory right to witness the business of their association. This case reinforces that even in a crisis, the board works for the members, and that work must be done in the light of day.

Case Participants

Petitioner Side

  • John Sellers (petitioner)
  • Debborah Sellers (petitioner)

Respondent Side

  • Joshua M. Bolen (attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Attorney for The Crossings at Willow Creek HOA

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Certified the decision
  • Debra Blake (Interim Director)
    Department of Fire Building and Life Safety
    Recipient of electronic transmission
  • Judy Lowe (Commissioner)
    Department of Real Estate
    Recipient of final certification
  • Louis Dettorre (Agency Staff)
    Department of Real Estate
    Attn line for Commissioner Lowe
  • F. Del Sol (Administrative Staff)
    Office of Administrative Hearings
    Signed transmission for ALJ
  • Rosella J. Rodriguez (Administrative Staff)
    Office of Administrative Hearings
    Signed transmission for Director Hanchett

Province Community Association vs. Caroll Gaines

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Case Summary

Case ID 16F-H1616007-BFS
Agency ADRE
Tribunal OAH
Decision Date 2016-06-06
Administrative Law Judge Diane Mihalsky
Outcome The Administrative Law Judge ruled in favor of the Petitioner (HOA). The Judge found that the Respondent violated the age-restriction CC&Rs by allowing her minor great-grandchildren to occupy the unit (defined as bodily presence for a considerable time, here 80-85 hours/week). The reasonable accommodation previously granted was validly revoked by the HOA after it was discovered the caregiver (granddaughter) was working/schooling outside the home. Respondent was ordered to comply with the CC&Rs and reimburse the filing fee.
Filing Fees Refunded $550.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Province Community Association Counsel Mark K. Sahl, Esq.
Respondent Caroll Gaines Counsel Robert J. Metli, Esq.

Alleged Violations

Article 3, Section 3.1(b)

Outcome Summary

The Administrative Law Judge ruled in favor of the Petitioner (HOA). The Judge found that the Respondent violated the age-restriction CC&Rs by allowing her minor great-grandchildren to occupy the unit (defined as bodily presence for a considerable time, here 80-85 hours/week). The reasonable accommodation previously granted was validly revoked by the HOA after it was discovered the caregiver (granddaughter) was working/schooling outside the home. Respondent was ordered to comply with the CC&Rs and reimburse the filing fee.

Why this result: Respondent failed to prove that the minors were not 'occupying' the home under the definitions of the CC&Rs, and failed to prove the necessity of the accommodation after the HOA revoked it based on new information regarding the caregiver's employment.

Key Issues & Findings

Age Restricted Housing / Occupancy by minors

The HOA alleged the homeowner violated age restrictions by having her great-grandchildren and granddaughter live in the home. The homeowner claimed an accommodation for care, which the HOA later revoked upon finding the granddaughter worked outside the home during the day.

Orders: Respondent shall comply with Article 3, Section 3.1(b) of the CC&Rs and pay Petitioner the filing fee.

Filing fee: $550.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • Article 3, Section 3.1(b)
  • Section 2.48

Video Overview

Audio Overview

Decision Documents

16F-H1616007-BFS Decision – 500334.pdf

Uploaded 2026-04-24T10:57:47 (138.2 KB)

16F-H1616007-BFS Decision – 507052.pdf

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16F-H1616007-BFS Decision – 500334.pdf

Uploaded 2026-01-27T21:12:56 (138.2 KB)

16F-H1616007-BFS Decision – 507052.pdf

Uploaded 2026-01-27T21:12:56 (61.2 KB)

Legal Briefing: Province Community Association vs. Caroll Gaines (No. 16F-H1616007-BFS)

Executive Summary

This briefing document analyzes the administrative law proceedings and final decision in the matter of Province Community Association (Petitioner) vs. Caroll Gaines (Respondent). The case centers on a dispute regarding the enforcement of age-restricted housing covenants in Province, a 55+ planned community in Maricopa, Arizona.

The core conflict arose when the Petitioner alleged that Respondent Caroll Gaines violated the community’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs) by allowing her minor great-grandchildren to effectively occupy her residence. While the Respondent argued that the children did not stay overnight and were only present for childcare purposes while her granddaughter acted as her caregiver, the Administrative Law Judge (ALJ) ruled in favor of the Petitioner. The decision established that "occupancy" and "residing" extend beyond overnight stays to include significant, consistent daytime presence (80–85 hours per week). The decision was certified as final on July 14, 2016.

Detailed Analysis of Key Themes

1. Integrity of Age-Restricted Housing

Province is marketed as a "55+ age-restricted community" where homeowners invest with the expectation of a specific living environment. The Petitioner argued, and the ALJ agreed, that failing to enforce age restrictions could jeopardize the community’s legal status under the federal Housing for Older Persons Act (HOPA) and devalue homeowners' investments. Testimony from neighbors highlighted that residents chose the community specifically because of these restrictions.

2. Definition of "Occupancy" vs. "Overnight Stay"

A pivotal legal theme in this case is the distinction between staying overnight and "occupancy."

  • CC&R Provision: Article 3, Section 3.1(b) allows persons under 19 to stay overnight for up to 90 days per year but prohibits them from "occupying" a unit.
  • Definition of "Occupy": The CC&Rs define "occupancy" as actually residing in the unit for at least 90 days in a calendar year.
  • Judicial Interpretation: The Respondent argued that because the children did not sleep at the residence, they were not "occupying" it. However, the ALJ ruled that "residing" means to dwell for a "considerable time." The ALJ determined that being present for 80 to 85 hours per week constitutes residency, regardless of where the children slept.
3. Reasonable Accommodation and Revocation

The Respondent, who is wheelchair-bound and requires 24-hour care, sought a "reasonable accommodation" to allow her granddaughter and great-grandchildren to live with her.

  • Initial Approval: The Association initially granted the request in September 2015 based on the understanding that the granddaughter was providing 24-hour care.
  • Revocation: The Association revoked the accommodation in October 2015 after discovering via social media (NextDoor.com) that the granddaughter was working and attending school outside the home, and therefore not providing the 24-hour care as described. The ALJ found that the accommodation was "convenient" rather than "necessary," leading to the enforcement of the standard CC&Rs.

Important Quotes with Context

On the Impact of Exceptions

"If an overnight stay for more than ninety days were required for occupancy, all the homeowners in Province could provide childcare services to their grandchildren or others seven days a week from before sunrise until well after sunset. Province would no longer be an age-restricted community because the exception would have swallowed the rule."

  • Context: The ALJ’s rationale for why daytime presence must be factored into the definition of "residing" to protect the community’s fundamental character.
On the Definition of Residency

"Reside means 'to dwell permanently or for a considerable time.' Eighty or 85 hours per week is a considerable time."

  • Context: This statement forms the basis of the legal conclusion that the Respondent was in violation of the CC&Rs even if the children did not stay overnight.
Regarding the Revocation of Accommodation

"The Association has determined that the accommodation requested is not necessary to accommodate your disability… there has been no assertion and/or showing by you that arrangements other than your granddaughter and her children moving in with you cannot be made to provide that care without violating the age restriction provisions."

  • Context: Excerpt from the Petitioner's October 1, 2015, letter revoking the accommodation, highlighting the burden of proof required for a disability accommodation that violates core community rules.

Evidence Summary

The following table summarizes the key evidence presented during the hearing on June 1, 2016:

Witness/Evidence Source Key Testimony/Data Point
Rebecca Clark (Neighbor) Reported children were "there all the time," riding bicycles in the cul-de-sac; noted the family's car was in the driveway most nights.
Rosie Kuzmic (Advisory Committee) Confirmed multiple complaints from neighbors regarding children and the potential threat to the community's age-restricted status.
Respondent/Family Testimony Admitted children were at the home 5 days a week (6:00 AM – 7:30 PM) and on weekends, totaling ~80 hours per week.
NextDoor.com Post Post by the granddaughter revealed she was working/in school, contradicting the initial "24-hour care" justification for accommodation.
Petitioner's Exhibits Documentation of CC&Rs and the recorded 2010 amendment defining "Occupancy."

Actionable Insights

For Homeowners’ Associations (HOAs)
  • Clarity in Definitions: HOAs should ensure that definitions of "occupancy" and "residency" are explicit and account for substantial daytime presence, not just overnight stays.
  • Verification of Accommodations: When granting reasonable accommodations for caregivers, associations should require specific verification of necessity and monitor for changes in circumstances that might render the accommodation invalid.
  • Consistent Enforcement: The ruling suggests that proactive enforcement is necessary to prevent "the exception from swallowing the rule," particularly in communities where age-restricted status is a primary value proposition.
For Residents and Caregivers
  • Residency Limits: Residents should be aware that "occupancy" can be legally defined by the total number of hours spent at a property, even if that presence does not include sleeping overnight.
  • Burden of Proof for Disability: Requests for accommodation must demonstrate that the specific arrangement is necessary for the disability, rather than merely convenient for the family members involved.
  • Transparency: Discrepancies between formal requests and public statements (such as social media posts) can be used as grounds for revoking previously granted housing exceptions.

Final Decision and Order

The Administrative Law Judge ordered the following:

  1. Compliance: Respondent must comply with Article 3, Section 3.1(b) of the CC&Rs (effectively meaning the children cannot be present for a "considerable time" that constitutes residency).
  2. Costs: Respondent was ordered to pay the Petitioner’s filing fee.
  3. Finality: The decision was certified as final by the Interim Director of the Office of Administrative Hearings on July 14, 2016, following the agency's failure to take action to modify or reject the ALJ's recommendation.

Case Study: Province Community Association v. Caroll Gaines

This study guide provides an analysis of the administrative hearing regarding age-restricted housing regulations within the Province Community Association. It explores the legal complexities of Covenants, Conditions, and Restrictions (CC&Rs), the implementation of the Housing for Older Persons Act (HOPA), and the definitions of residency versus occupancy in a planned community.

Key Concepts and Case Overview

1. The Nature of Age-Restricted Communities

Province is a planned community in Maricopa, Arizona, specifically marketed to retired persons aged 55 and older. It is governed by a homeowners’ association (Petitioner) and operates under the federal Housing for Older Persons Act of 1995 (HOPA). These communities are permitted to restrict residency based on age to maintain their specialized status.

2. Covenants, Conditions, and Restrictions (CC&Rs)

The legal framework of the community is defined by its CC&Rs. In this case, the central dispute involves:

  • Article 3, Section 3.1(b): States the property is an age-restricted community. It allows persons under 19 to stay overnight for up to 90 days per year but explicitly forbids them from "occupying" any unit.
  • Section 2.48 (Amended): Defines "Occupy," "Occupies," or "Occupancy" as actually residing in a unit for at least 90 days in a calendar year.
3. Reasonable Accommodation vs. Community Standards

The Respondent, Caroll Gaines, requested an accommodation for her granddaughter and great-grandchildren to live with her to provide 24-hour care due to her disabilities (high blood pressure, hemochromatosis, Meniere’s syndrome, and mobility issues).

  • Granting and Revocation: The Association initially granted the request but revoked it after finding that the granddaughter was working and attending school outside the home, suggesting that 24-hour care was not being provided as originally asserted.
  • Legal Conflict: The Association argued that the accommodation was a "convenience" rather than a "necessity" and that alternative care arrangements could be made without violating age restrictions.
4. Legal Definition of "Residing"

A pivotal element of the Administrative Law Judge's (ALJ) decision was the interpretation of what it means to "reside." The Respondent argued that because the children did not stay overnight after the revocation, they were not "occupying" the home. However, the ALJ determined:

  • "Reside" means to dwell permanently or for a "considerable time."
  • Spending 80 to 85 hours per week at a location constitutes a considerable time.
  • "Residence" refers to bodily presence as an inhabitant, regardless of where one's "domicile" (legal home) is located.

Short-Answer Practice Questions

1. Who bears the burden of proof in this administrative hearing?

Answer: The Petitioner (Province Community Association) bears the burden of proof to establish a violation by a preponderance of the evidence. The Respondent bears the burden of establishing affirmative defenses.

2. What federal act allows Province to operate as an age-restricted community?

Answer: The Housing for Older Persons Act of 1995 (HOPA).

3. How do the CC&Rs define "Occupancy"?

Answer: Under Section 2.48, occupancy is defined as actually residing in the unit for at least 90 days in the applicable calendar year.

4. What was the primary reason the Association revoked the Respondent's reasonable accommodation?

Answer: The Association discovered through social media (NextDoor.com) and discussions that the granddaughter was working and going to school outside the home, contradicting the claim that she was providing 24-hour care.

5. How many overnight stays are permitted for persons under 19 per year according to the CC&Rs?

Answer: Up to 90 days per year.

6. What was the ALJ’s ruling regarding the children’s presence in the home during the day?

Answer: The ALJ ruled that spending 80–85 hours per week in the home constituted "residing" and therefore violated the CC&Rs, even if the children did not stay overnight.

Essay Prompts for Deeper Exploration

  1. The "Exception Swallowing the Rule": Analyze the ALJ’s argument that if daytime-only residency (85 hours a week) were permitted in an age-restricted community, "the exception would have swallowed the rule." Discuss the potential long-term impacts on the community's legal status if the Association had lost this case.
  2. Necessity vs. Convenience in Accommodations: Evaluate the criteria used by the Association to revoke the reasonable accommodation. At what point does a caregiver's schedule turn a "necessary" living arrangement into a "convenient" one under the law?
  3. Judicial Interpretation of Language: The ALJ used dictionary definitions and legal dictionaries to define "reside" and "occupy." Discuss the importance of linguistic precision in drafting community bylaws and how ambiguous terms can lead to protracted legal disputes.

Glossary of Important Terms

Term Definition
Administrative Law Judge (ALJ) A judge who orients over administrative hearings and issues decisions based on testimony and evidence regarding agency regulations.
CC&Rs Covenants, Conditions, and Restrictions; the governing documents that dictate the rules for a planned community.
Domicile A person's permanent legal home, requiring both bodily presence and an intention to make the place one's home.
HOPA Housing for Older Persons Act; federal legislation providing exemptions for senior housing to allow age-based discrimination.
Occupancy Actually residing in a unit for a specific duration (in this case, 90 days) within a calendar year.
Preponderance of the Evidence The evidentiary standard where proof is "more probably true than not," or the "greater weight" of the evidence.
Reside To dwell permanently or for a considerable time; defined by bodily presence as an inhabitant.
Respondent The party against whom a petition is filed; in this case, the homeowner Caroll Gaines.
Petitioner The party filing the petition for a hearing; in this case, the Province Community Association.

Beyond Sleepovers: Understanding "Occupancy" in Age-Restricted Communities

1. Introduction: The Maricopa Dispute

In the manicured cul-de-sacs of Province, a planned community in Maricopa, Arizona, the marketing slogan "retire like you mean it" isn't just a lifestyle pitch—it is a contractual promise. Developed by Meritage Homes Corporation, Province is the only 55+ age-restricted community in the city. However, a significant ruling by the Arizona Office of Administrative Hearings in the case of Province Community Association vs. Caroll Gaines (No. 16F-H1616007-BFS) has redefined what it means to "reside" in such a community.

The dispute centered on whether a homeowner, Caroll Gaines, violated the association's Declaration of Covenants, Conditions, and Restrictions (CC&Rs) by allowing her minor great-grandchildren to be present in her home for nearly every waking hour. While the homeowner argued that no violation occurred because the children did not stay overnight, the Association contended that their consistent, long-term presence constituted prohibited occupancy. Administrative Law Judge (ALJ) Diane Mihalsky was tasked with determining where "visiting" ends and "occupying" begins.

2. The Rules of the Road: CC&Rs and Age Restrictions

The legal integrity of an age-restricted community relies on strict adherence to the federal Housing for Older Persons Act (HOPA). To maintain this status, Province operates under specific CC&Rs that limit the presence of younger individuals.

The heart of the legal conflict lies in Article 3, Section 3.1(b):

Age Restricted Housing. PROVINCE is intended to provide housing primarily for persons 55 years of age or older, pursuant to HOPA . . . .¹ The Property shall be operated as an age restricted community in compliance with any and all applicable Arizona and federal laws. Subject to the foregoing, persons under 19 years of age may stay overnight in a Unit for up to 90 days during the year, but shall not Occupy any Unit. ¹ The federal Housing for Older Persons Act of 1995. See 24 C.F.R. Part 100.

To navigate these rules, the Association distinguishes between two categories of presence for those under 19:

  • Staying Overnight: Explicitly permitted for a maximum of 90 days per calendar year.
  • Occupying: Strictly prohibited for individuals under the age of 19.

3. The Definition of "Occupancy" vs. "Visiting"

The pivotal issue before ALJ Mihalsky was the interpretation of "Occupy." A July 28, 2010, amendment to Section 2.48 of the CC&Rs clarified "Occupy" as "actually residing in the Unit for at least 90 days in the applicable calendar year."

The Respondent, Ms. Gaines, maintained that "residing" required sleeping at the property. However, testimony from the homeowner’s daughter and granddaughter revealed a staggering volume of presence: the children were at the home for 60 to 65 hours during the work week and another 14 to 15 hours on weekends.

ALJ Mihalsky determined that the children were present for a total of 80 to 85 hours per week. In her decision, the ALJ defined "reside" as "to dwell permanently or for a considerable time" or having a "bodily presence as an inhabitant."

Crucially, the ALJ applied the "exception swallowing the rule" logic: if overnight stays were the only metric for occupancy, every homeowner in Province could provide full-time childcare services for minors seven days a week, from sunrise to well after sunset. Under such a narrow interpretation, Province would effectively cease to be an age-restricted community, as the intent of the CC&Rs would be nullified by daytime inhabitants.

4. The Role of Reasonable Accommodation

The case was complicated by a request for "Reasonable Accommodation." Ms. Gaines, who is wheelchair-bound and requires 24-hour care, requested in August 2015 that her granddaughter, Alisha Jennings, and the great-grandchildren be allowed to move in so Ms. Jennings could act as a caregiver. The Association initially granted this request.

However, the Association revoked the accommodation on October 1, 2015, following an investigation sparked by a post on NextDoor.com. The post revealed that Ms. Jennings was actually working and attending school outside the home during the day, meaning she was not providing the 24-hour care that formed the basis of the request.

ALJ Mihalsky upheld the revocation, noting that the arrangement was one of "convenience" rather than "necessity." The ruling emphasized that there was no evidence suggesting that other care arrangements—ones that would not require the children to reside in the home—could not have been made to meet Ms. Gaines’ medical needs.

5. Neighbor Testimony and Community Impact

Testimony from neighbors provided a window into the stakes for the broader community. Becky Clark, a resident living cater-cornered to Ms. Gaines, provided compelling testimony regarding the daily presence of the children.

Notably, Ms. Clark herself has six children and 15 grandchildren, yet she testified that she chose to move to Province specifically for its age-restricted status. She argued that she would not have purchased her home had she known children would be residing across the street. This detail underscored the Association’s position: the enforcement of age restrictions is not a matter of personal animosity toward children, but a matter of protecting the specific contractual lifestyle and investment the residents purchased.

Advisory Committee member Rosie Kuzmic echoed these concerns, stating that failure to enforce the CC&Rs would jeopardize Province’s legal status under HOPA and negatively impact homeowner investments.

6. Final Decision and Takeaways

On June 6, 2016, ALJ Mihalsky issued an order requiring the Respondent to comply with Article 3, Section 3.1(b) of the CC&Rs. Furthermore, Ms. Gaines was ordered to pay the Association’s filing fees. The decision was certified as a final agency action on July 14, 2016.

Key Takeaways for Homeowners:

  • Overnight stays are not the only metric for occupancy. Legal residency can be established by a "bodily presence" over a "considerable time," regardless of where a person sleeps.
  • "Residing" is defined by the total volume of hours. The court found that 80–85 hours per week constitutes occupancy.
  • HOAs must strictly enforce age restrictions to protect HOPA status. Inconsistent enforcement creates "exceptions that swallow the rule," threatening the community’s legal standing as a senior-only development.
  • Reasonable accommodations are subject to ongoing verification. If the underlying facts of an accommodation change—such as a caregiver working outside the home—the HOA has the authority to revoke the status if the arrangement is deemed a convenience rather than a medical necessity.

7. Compelling Conclusion

The Province vs. Gaines case serves as a definitive reminder that "retiring like you mean it" requires a strict adherence to the governing documents. While family and caregiving are vital aspects of life, they must be balanced against the contractual obligations of an age-restricted community. As this ruling demonstrates, the definition of "occupancy" is not confined to a pillow and a bed; it is measured by the footprint of one's daily life within the community. For homeowners, understanding the fine print regarding childcare and long-term visits is essential to protecting both their lifestyle and their legal standing.

Case Participants

Petitioner Side

  • Mark K. Sahl (Petitioner Attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
  • Rebecca Clark (Witness)
    Province Community Association (Member)
    Neighbor; resides at 19697 N. Heron Court
  • Rosemary Kuzmic (Witness)
    Province Community Association
    Member of Advisory Committee (shadow board)
  • Dayle Cruz (Witness)
    Post commander for Petitioner's security guards
  • Pamela Hilliard (Witness)
    Province Community Association
    Former Community Manager/Supervisor

Respondent Side

  • Caroll Gaines (Respondent)
    Province Community Association (Member)
    Homeowner; presented testimony
  • Robert J. Metli (Respondent Attorney)
    Munger Chadwick, PLC
  • Barbara Gaines (Witness)
    Respondent's daughter
  • Alisha Jennings (Witness)
    Respondent's granddaughter

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; signed Certification of Decision
  • Judy Lowe (Commissioner)
    Department of Real Estate
    Received copy of decision
  • Rosella J. Rodriguez (Administrative Staff)
    Office of Administrative Hearings
    Mailed/processed certification

Kesha A. Hodge v. Cottonfields Community Association

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Case Summary

Case ID 15F-H1516002-BFS
Agency DFBLS
Tribunal OAH
Decision Date 2016-04-18
Administrative Law Judge Tammy L. Eigenheer
Outcome The ALJ recommended dismissal, finding that the Board's action to withdraw Notices of Errata did not legally amend the community documents and thus did not require the member approval mandated for amendments. The Department of Fire Building and Life Safety certified the decision.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Kesha A. Hodge Counsel —
Respondent Cottonfields Community Association Counsel —

Alleged Violations

Declaration Section 14.2; REMA Article 5 § 5.1, Article 12

Outcome Summary

The ALJ recommended dismissal, finding that the Board's action to withdraw Notices of Errata did not legally amend the community documents and thus did not require the member approval mandated for amendments. The Department of Fire Building and Life Safety certified the decision.

Why this result: Petitioner failed to prove a violation because the Withdrawals did not legally amend the Declaration or REMA, rendering the requirement for a member vote inapplicable.

Key Issues & Findings

Unauthorized Amendment/Withdrawal of Notices

Petitioner alleged that the Board's vote to withdraw Notices of Errata and allow the Golf Course Owner to use property differently constituted an amendment requiring a two-thirds member vote, which was not obtained.

Orders: Complaint dismissed.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

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Decision Documents

15F-H1516002-BFS Decision – 491229.pdf

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15F-H1516002-BFS Decision – 491324.pdf

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15F-H1516002-BFS Decision – 499789.pdf

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15F-H1516002-BFS Decision – 491229.pdf

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15F-H1516002-BFS Decision – 491324.pdf

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15F-H1516002-BFS Decision – 499789.pdf

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Administrative Law Decision: Hodge vs. Cottonfields Community Association

Executive Summary

This briefing document analyzes the administrative legal proceedings in the case of Kesha A. Hodge vs. Cottonfields Community Association (No. 15F-H1516002-BFS). The dispute centered on whether the Association’s Board of Directors violated community governing documents by voting to record "Notices of Withdrawal" regarding previous "Notices of Errata" without obtaining a two-thirds majority vote from the membership.

The Petitioner, Kesha A. Hodge, alleged that the Board's actions in July 2015 effectively altered land-use restrictions on the Southern Ridge Golf Club property in violation of the Reciprocal Easement and Maintenance Agreement (REMA) and the Association’s Declaration. The Respondent argued that these filings were administrative notices with no legal effect on the underlying land-use restrictions.

The Office of Administrative Hearings (OAH) concluded that the Board’s recording of Withdrawals did not constitute an amendment to the community documents. Consequently, the Administrative Law Judge (ALJ) recommended the dismissal of the complaint, a decision that was certified as the final administrative decision on June 3, 2016.

Detailed Analysis of Key Themes

1. Governance and Authority Structures

The relationship between the Cottonfields Community Association and the Southern Ridge Golf Club is governed by two primary documents:

  • The Declaration of Covenants, Conditions and Restrictions (The Declaration): Specifically Section 7.9, which grants the Board authority to enter into and perform obligations under the REMA without member consent, except where member approval is expressly required.
  • The Reciprocal Easement and Maintenance Agreement (REMA): A contract between the Association and the golf course owner (Jaguar Premium Properties, LLP) governing the use of the Golf Course Property.
2. The Conflict of Land Use Restrictions

At the heart of the dispute is Section 5.1 of the REMA, which stipulates that the Golf Course Property must be used "solely and exclusively for Golf Course Use or as open space." Article 12 of the REMA protects this restriction by requiring that any modification to Section 5.1 must receive written approval from two-thirds of the Association's members, mirroring the requirements for amending the Declaration itself.

3. The Sequence of Legal Filings (2011–2015)

The case involves a complex history of board-level actions and litigation:

  • 2011 Revisions: The Board attempted to revise the definition of the Golf Course Property. Due to internal disagreement over whether this required a member vote, the Board recorded Notices of Errata, declaring the revisions void.
  • 2014 Litigation: The golf course owner, Jaguar, sued the Association over the validity of these revisions and the Notices of Errata.
  • 2015 Settlement and "Withdrawals": To settle the litigation, the Board voted (4-1) to record Notices of Withdrawal of the 2011 Notices of Errata.
4. Jurisdiction and the Nature of "Amendments"

The Department of Fire Building and Life Safety has jurisdiction over disputes regarding violations of "community documents" (declarations, bylaws, articles of incorporation, and rules). The central legal question was whether a "Notice of Withdrawal" functions as an amendment to a declaration. The OAH determined that while these notices provide public notice of a dispute or a change in board position, they do not possess the legal weight to rescind or ratify an actual land-use restriction.

Important Quotes with Context

On Board Authority

"Except to the extent that the Reciprocal Easement Agreement expressly requires the approval of Members… the Board shall have the power and authority (without the consent of any Members or any other Person) to make decisions and take all actions by, for and on behalf of the Association." — Section 7.9.3 of the Declaration

Context: This provision establishes the Board's broad powers to manage the REMA, which the Association used to justify the July 2015 vote to record the Withdrawals without a membership-wide vote.

On Use Restrictions

"The Golf Course Property shall be used solely and exclusively for Golf Course Use or as open space and for no other purposes." — Section 5.1 of the REMA

Context: This is the specific protection the Petitioner argued was being circumvented by the Board’s procedural filings.

On the Petitioner’s Allegation

"The Board… voted to withdraw the Notices of Erratas… and to allow the Golf Course Owner to use portions of the Golf Course Property in a manner other than as open space and/or golf course, even though the proposed change… had not received the written approval of the required number of members." — Kesha A. Hodge, Single Issue Petition (August 12, 2015)

Context: This summarizes the Petitioner's claim that the Board was using administrative filings (Withdrawals) to bypass the democratic requirements of the community.

On the Legal Finality of the Filings

"While the Notices of Errata may have given the public notice that the Revisions were not validly executed, that is not to say that they rescinded the Revisions. Similarly, it cannot be said that the Withdrawals had the effect of ratifying the Revisions." — Administrative Law Judge Tammy L. Eigenheer

Context: This finding was the basis for the dismissal. The ALJ ruled that the "Withdrawals" were essentially legally neutral regarding the validity of the underlying 2011 revisions.

Actionable Insights

For Homeowners and Members
  • Distinguish Between Notice and Substance: Homeowners should be aware that not every document recorded by a Board constitutes a formal amendment to community CC&Rs. Administrative notices (like Notices of Errata) may signal a Board's intent or legal position without legally altering the underlying property rights.
  • Statutory Timelines: The right to challenge an administrative decision is time-sensitive. Per A.R.S. § 41-1092.09(A), a party has a limited window to request a rehearing or seek judicial review in Superior Court before those rights are lost.
For Association Boards
  • Legal Counsel as a Shield: The Cottonfields Board successfully argued that their actions were based on the advice of counsel and were part of a litigation settlement. Documenting the legal rationale for procedural votes can provide a defense against claims of document violations.
  • Recording Administrative Actions: While the Board won this case, the confusion surrounding the 2011 Revisions and the 2015 Withdrawals suggests that recording contradictory notices (Errata vs. Withdrawal) can lead to protracted administrative litigation, even if the Board's actions are ultimately found to be within their authority.
Final Case Status
Action Date
ALJ Decision Issued April 18, 2016
Recommendation Dismissal of Complaint
Certification of Final Decision June 3, 2016
Effective Date of Orders 40 days from Certification

Note: This document is based solely on the provided excerpts of the OAH case records for Case No. 15F-H1516002-BFS.

Study Guide: Hodge v. Cottonfields Community Association

This study guide provides a comprehensive overview of the administrative legal case Kesha A. Hodge vs. Cottonfields Community Association (No. 15F-H1516002-BFS). It examines the governance of planned communities, the interpretation of community documents, and the administrative hearing process in Arizona.

I. Case Overview and Core Themes

The case centers on a dispute between a homeowner (Petitioner) and a planned community association (Respondent) regarding the Board of Directors' authority to record legal notices without a vote from the general membership.

Key Entities
  • Petitioner: Kesha A. Hodge, a homeowner in the Cottonfields Community.
  • Respondent: Cottonfields Community Association ("Association" or "the Board").
  • Jaguar Premium Properties, LLP: The owner of the Southern Ridge Golf Club ("Golf Course Property").
  • Office of Administrative Hearings (OAH): The tribunal responsible for adjudicating the dispute.
  • Department of Fire Building and Life Safety: The state agency with jurisdiction over planned community document violations.
Central Arguments
  • Petitioner's Stance: The Board violated community documents by recording "Notices of Withdrawal" that essentially ratified land-use changes to the golf course property without the required two-thirds member approval.
  • Respondent's Stance: The recording of "Notices of Withdrawal" was a administrative action related to a legal settlement and did not constitute an amendment to the community documents; therefore, no member vote was required.

II. Key Concepts and Governing Documents

1. Community Documents

The legal relationship between the parties is governed by two primary sets of documents:

  • The Declaration: Specifically, the Declaration of Covenants, Conditions and Restrictions for The Bougainvillea (Cottonfields Community).
  • The REMA: The Reciprocal Easement and Maintenance Agreement between the Association and the owner of the Golf Course Property.
2. Relevant Provisions
  • Declaration Section 7.9: Grants the Board authority to enter into and perform obligations under the REMA without member consent, except where the REMA expressly requires member approval.
  • Declaration Section 14.2: Establishes that amendments to the Declaration require a two-thirds vote of the Association members.
  • REMA Section 5.1: Restricts the use of the Golf Course Property "solely and exclusively for Golf Course Use or as open space."
  • REMA Article 12: Prohibits modifications to Section 5.1 without the written approval of the same number of members required to amend the Declaration (two-thirds).
3. Procedural History of the Dispute
  • 2011 Revisions: The Board voted to revise the definition of "Golf Course Property." Following disagreements, the Board recorded "Notices of Errata" claiming the revisions were void.
  • 2014-2015 Litigation: Jaguar sued the Association over the validity of the revisions.
  • 2015 Settlement: To settle the lawsuit, the Board voted to record "Notices of Withdrawal," effectively retracting the Notices of Errata.
  • 2016 ALJ Decision: The Administrative Law Judge (ALJ) concluded the Withdrawals were not amendments and recommended dismissal of the complaint.

III. Short-Answer Practice Questions

1. According to Arizona Revised Statutes (A.R.S.) § 33-1802, what four types of documents are defined as "community documents"?

Answer: The declaration, bylaws, articles of incorporation (if any), and rules (if any).

2. What was the specific factual basis for Kesha Hodge's petition filed on August 12, 2015?

Answer: The Petitioner alleged that the Board's July 22, 2015, vote to record "Notices of Withdrawal" allowed the golf course owner to use the property for purposes other than open space/golf course without obtaining the required member approval.

3. Why did the Administrative Law Judge (ALJ) conclude that the 2011 "Revisions" were not the issue in this specific case?

Answer: Because the Petitioner’s complaint specifically concerned the July 22, 2015, vote to record the "Withdrawals" of the Notices of Errata.

4. What threshold of member approval is required to amend the Declaration or modify Section 5.1 of the REMA?

Answer: A two-thirds (2/3) vote of the members of the Association.

5. What is the consequence if the Department of Fire Building and Life Safety fails to take action on an ALJ decision within the statutory timeframe?

Answer: Pursuant to A.R.S. § 41-1092.08(D), the ALJ decision is certified as the final administrative decision.

IV. Essay Prompts for Deeper Exploration

1. The "Meaningless" Document Argument: Analyze the Respondent’s argument that the "Notices of Withdrawal" were "essentially meaningless." Contrast this with the Petitioner’s argument that "land use restrictions must be recorded." How did the ALJ reconcile these opposing views to determine that the Board did not violate the Declaration?

2. Board Authority vs. Member Consent: Discuss the tension between Declaration Section 7.9 (granting the Board power to act on behalf of the Association) and REMA Article 12 (requiring member approval for land use changes). In the context of a legal settlement (like the one with Jaguar), where should the line be drawn between administrative board duty and member voting rights?

3. Administrative Review Process: Detail the timeline and procedural steps required for an ALJ recommendation to become a final order. Include the role of the OAH, the specific state department involved, and the rights of the parties to seek rehearing or judicial review in Superior Court.

V. Glossary of Important Terms

Term Definition per Source Context
A.R.S. § 41-2198.01(B) The statute granting the Department jurisdiction to hear disputes between property owners and planned community associations regarding document violations.
Administrative Law Judge (ALJ) The official who presides over the hearing, evaluates evidence, and issues a recommended decision to the state agency.
Certification of Decision The process by which an ALJ decision becomes final, often occurring automatically if the agency director takes no action within a set period (e.g., until May 23, 2016, in this case).
Dismissal with Prejudice The termination of litigation (specifically the 2014 Jaguar vs. Association case) that prevents the same claim from being filed again.
Notice of Errata A recorded document used in this case to publicly state that previous revisions to the REMA were purportedly void and unenforceable.
Notice of Withdrawal The document recorded by the Board in 2015 to retract the Notices of Errata as part of a settlement agreement.
Reciprocal Easement and Maintenance Agreement (REMA) A contract governing the operation and use of the Golf Course Property within the community.
Res Judicata A legal doctrine asserted by the Respondent suggesting that the matter had already been adjudicated or settled and could not be pursued again (though the ALJ focused on other grounds).
Summary Judgment A legal motion requesting the judge to decide the case based on the facts provided without a full trial; both parties in this case filed cross-motions for this.

Understanding the Cottonfields Dispute: When HOA Board Decisions Meet Property Restrictions

1. Introduction: A Community in Conflict

The Cottonfields Community and the adjacent Southern Ridge Golf Club recently served as the backdrop for a sophisticated legal battle concerning the boundaries of board authority. The dispute between homeowner Kesha A. Hodge and the Cottonfields Community Association centered on a fundamental question in community association law: Can administrative filings—such as "Notices of Errata"—be used to bypass substantive voting requirements for land-use changes?

This analysis examines Case No. 15F-H1516002-BFS, heard by the Office of Administrative Hearings. As a Real Estate & Community Association Law Analyst, I will explore the Administrative Law Judge's (ALJ) decision, which serves as a critical reminder that the procedural "paper trail" created by a Board cannot substitute for the substantive legal processes mandated by a community's governing instruments.

2. The Foundation: REMA and the 2/3 Rule

The legal framework of the Cottonfields Community is anchored by its Declaration and a specific servitude known as the Reciprocal Easement and Maintenance Agreement (REMA). These documents dictate the relationship between the residential lots and the golf course property.

  • The Declaration: The master governing document.
  • Section 1.37: Establishes and defines the "Reciprocal Easement Agreement" (REMA).
  • Section 7.9: Grants the Association authority to perform REMA obligations but explicitly limits the Board's power in Section 7.9.3, stating that Member approval is required whenever the REMA expressly mandates it.
  • The REMA (Reciprocal Easement and Maintenance Agreement): A recorded servitude binding the Association and the golf course owner.
  • Section 5.1 (Golf Course Use/Open Space): Explicitly restricts the Golf Course Property to be used "solely and exclusively for Golf Course Use or as open space."
  • Article 12: Requires a specific amendment threshold—any change to the land-use restrictions in Section 5.1 must be approved by the same number of members required to amend the Declaration.

The "Two-Thirds Rule" Per Section 14.2 of the Declaration, any substantive amendment requires the approval of two-thirds of the Association members. This supermajority requirement acts as a safeguard against unilateral board decisions that could fundamentally alter the community's character.

3. The Timeline of the Dispute (2011–2015)

The conflict was not the result of a single action, but a years-long administrative and legal saga:

  1. The 2011 Board Revisions: The Board voted twice to amend the REMA to revise the definition of "Golf Course Property" found in Recital C. Amid internal legal concerns that these revisions lacked the required 2/3 member vote, the Board recorded "Notices of Errata," effectively flagging the revisions as void and unenforceable.
  2. 2014–2015 Litigation: The Association and the golf course owner, Jaguar Premium Properties, entered into litigation regarding the validity of the 2011 Revisions and the subsequent Errata.
  3. July 2015 Settlement & Withdrawal: To settle the litigation, the Board voted 4-1 to record "Notices of Withdrawal" regarding the 2011 Notices of Errata.
  4. August 2015 Petition: Petitioner Hodge filed a Single Issue Petition with the Department of Fire Building and Life Safety. She alleged that by withdrawing the "void" notices, the Board effectively ratified the 2011 Revisions and changed land-use restrictions without the mandatory 2/3 member vote.

4. The Legal Technicality: Notice vs. Amendment

The crux of this case was whether the Board’s "Withdrawal of Errata" constituted a substantive amendment to the community’s land-use protections.

Perspective Argument / Reasoning
Petitioner's Argument (Hodge) Hodge argued that land-use restrictions must be recorded to be effective. She contended that by recording "Withdrawals" of the previous Errata, the Board essentially ratified the 2011 Revisions, thereby bypassing the 2/3 voting requirement.
Respondent's/ALJ's Conclusion The Board’s "Withdrawals" were legally "meaningless." Because the 2011 Revisions were never validly enacted via a 2/3 vote, they were void ab initio. Withdrawing an Errata (a notice of dispute) cannot magically breathe life into a void action.

The ALJ’s synthesis was sharp: The "Notices of Errata" did not originally rescind the 2011 Revisions; they merely provided public notice of a dispute. Consequently, withdrawing those notices did not "ratify" the revisions. As the ALJ noted, the Withdrawals "had no legal effect" on amending the actual governing documents. In short, the Board’s administrative filings were merely "noise" atop a void action; they did not constitute a formal amendment to the REMA or Declaration.

5. The Final Verdict: Dismissal and Certification

In Case No. 15F-H1516002-BFS, Administrative Law Judge Tammy L. Eigenheer found that the Petitioner failed to prove a violation of the community documents because the Board's vote did not—and could not—legally amend the REMA without a member vote.

The administrative process followed a strict two-step procedure:

  • Recommendation: On April 18, 2016, Judge Eigenheer recommended the dismissal of the complaint.
  • Final Certification: Under the authority of A.R.S. § 41-1092.08, Interim Director Greg Hanchett certified the decision as the final administrative action on June 3, 2016, after the Department took no action to reject or modify the recommendation within the statutory timeframe.

6. Key Takeaways for Homeowners and Boards

The Cottonfields case provides essential professional lessons for those navigating the complexities of community association governance:

  • Authority Limits: Boards must distinguish between administrative tasks and substantive amendments. A board cannot use "notices" or "errata" to bypass member voting rights when a change impacts land-use protections like the REMA.
  • The Power of Jurisdiction: Homeowners should be aware of A.R.S. § 41-2198.01(B). In Arizona, the Department has the jurisdiction to hear disputes, but only when they concern actual violations of the recorded "community documents" (Declarations, Bylaws, etc.).
  • Legal "Errata" vs. Substantive Compliance: Recording a notice may alter the public record's "paper trail," but it does not carry the legal weight required to alter established servitudes. If an underlying action (like the 2011 Revisions) was invalid at its inception, no amount of administrative filing can rectify it.

Final Thought: This case highlights that transparency and compliance are not interchangeable. While the Board’s various notices provided the public with information about a dispute, they could not replace the rigorous 2/3 member vote required for substantive land-use changes. For community members, the lesson is clear: The strength of your property protections lies in the specific amendment procedures dictated by your Declaration.

Case Participants

Petitioner Side

  • Kesha A. Hodge (Petitioner)
    Cottonfields Community
    Homeowner

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge
  • Debra Blake (Interim Director)
    Department of Fire, Building and Life Safety
  • Joni Cage (Staff)
    Department of Fire, Building and Life Safety
    c/o for Debra Blake
  • M. Aguirre (Staff)
    Office of Administrative Hearings
    Clerk/Admin
  • Greg Hanchett (Interim Director)
    Office of Administrative Hearings
    Signed Certification of Decision
  • Rosella J. Rodriguez (Staff)
    Office of Administrative Hearings
    Clerk/Admin