ALJDEC decisions subject to certification as final

11F-H1112002-BFS · Department of Fire Building and Life Safety - H/C · 2012-01-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 19, 2011 APPEARANCES: James Vincent Gruner appeared personally. Hunters Pointe Condominium Association was represented by its attorney, Jeffrey B. Corben, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. James Vincent Gruner (“Petitioner”) has resided in the Hunters Pointe Condominium Association (“Respondent”) for 15 years. 2. Petitioner and Respondent are governed by the Declaration of Horizontal Property Regime and Declaration of Covenants, Conditions and Restrictions for Hunters Pointe Condominiums (“CC&Rs”). See Exhibit 22 3. On August 3, 2011, Petitioner filed a Petition with the Arizona Department of Fire, Building, and Life Safety (“Department”) alleging the following violation by Respondent: On or about 1-7-11…the Respondent committed the specific following act, or specifically failed to act in the following manner, or caused the following condition to occur: Our Association authorised [sic] the removal of a large fountain located at the entry way of our community. Removal of the fountain violates paragraph 10.2 of our CC&R’s. Paragraph 10.2 states that “restorations of the property shall be undertaken by the Association.” “Such restoration shall be performed substantially in accordance with this declaration and the original plans and specifications for the buildings, the common elements and the units.” The original site plan filed with the city clearly specifies that a fountain is to be located at the entry way to the complex. Removal of [the] fountain has resulted in a dilapidated appearance of our community and likely contributed to diminished property values.

4. The Department designated Petitioner’s Petition as Case No. HO 11- 12/002. 5. The Department forwarded Case No. HO 11-12/002 to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. Hearing Evidence 6. Petitioner testified on his own behalf. Ronald W. Stephenson, a resident of Unit 2016, testified on behalf of Petitioner. Cathy Gillespie, a board member, testified for Respondent.[1] 7. The original site plan filed with the City of Mesa reflects the placement of a fountain at the formal entry to Respondent’s complex, as evidenced by Petitioner’s Exhibit 6. 8. Petitioner argued that the fountain had been improperly removed, that the property must be restored pursuant to paragraph 10.2 of the CC&Rs, that restoration involves the replacement of the fountain, and that the property was left in a dilapidated condition, possibly resulting in diminished property values. 9. Ms. Gillespie testified that paragraph 10.2 of the CC&Rs was inapplicable. In particular, Ms. Gillespie opined that “obsolescence” did not apply and that, instead, Respondent “was looking at the whole picture.”[2] Ms. Gillespie further testified that paragraph 13 of the CC&Rs authorized the removal, that paragraph 4 of the CC&Rs permitted the disposal of the fountain, that paragraph 4.3 of the CC&Rs made the board’s determination to remove and replace the fountain binding on Petitioner, and that paragraph 5 of the CC&Rs permitted Respondent to remove the fountain to change the character of a common element. 10. Respondent argued further that the equitable doctrine of laches should apply in this matter because Petitioner did not complain to Respondent for months after the fountain had been removed. 11. The fountain at issue had been in a state of disrepair for an extended period of time. In addition, Ms. Gillespie testified that Maricopa County now required Respondent to install a fence barrier around the fountain and its base to comply with local building code requirements. 12. Ms. Gillespie testified that approximately 35 percent of Respondent’s homeowners were delinquent in paying their assessments. As a result, Respondent was severely underfunded and lacked the financial capacity to pay to repair and maintain the fountain. 13. Respondent’s February 3, 2010 board meeting minutes reflect that the fountain pump repair would cost $600.00. The board planned to ask owners about the removal of the fountain at Respondent’s annual meeting. Owners who were present for the February 3, 2010 meeting agreed to remove the fountain. The fountain issue was listed on the annual meeting notice sent to homeowners. See Exhibit 8 14. At Respondent’s annual meeting on March 4, 2010, there was discussion about removing the fountain because of a shortfall in funds. All attending the meeting agreed with the suggestion that the board look at selling the fountain. It was noted in the minutes that rocks had been placed in the fountain and would remain there to deter skateboarders. See Exhibit 18 15. Respondent’s regular board meeting minutes for April 1, 2010, reflect that the fountain had been advertised in Craigslist for sale. No response to the advertisement was received by Respondent. Respondent’s board decided to look for a charity to donate the fountain in exchange for its removal at no cost to Respondent. Owners who were present at the meeting agreed with that suggestion. See Exhibit 19 16. Respondent’s regular board meeting minutes for May 6, 2010, reflect that a decision had been made to donate the fountain to a non-profit organization because Respondent could not sell it. Respondent’s board did not want to incur any expense to remove the fountain. Landscape designs were discussed for the fountain’s base. All owners present at the meeting agreed with the board’s actions. See Exhibit 20 17. At Respondent’s board meeting on June 3, 2010, the board voted to remove the fountain. See Exhibit 21 18. In January of 2011, the fountain was removed. The base of the fountain was not removed and what appears to be debris remained in the base as of the time of hearing, as evidenced by Petitioner’s Exhibit and Exhibit 12. The record reflects that the fountain base was lightly filled with rubble from January 2011 to November 2011, and completely full of rubble, including pieces of concrete, from November 18, 2011, until the time of hearing. 19. In May 2011, Petitioner began to complain to Respondent about the removal of the fountain. 20. At its July 2011 board meeting, Respondent’s board offered to mediate the dispute with Petitioner. However, Petitioner did not respond to that offer and filed the instant petition on August 3, 2011. CONCLUSIONS OF LAW 1. Pursuant to A.A.C. R2-19-119(B), Petitioner has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. A.A.C. R2-19-119(A). 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence, ( 5 (1960). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). 3. Laches is an affirmative defense, and Respondent bears the burden of establishing the defense by a preponderance of the evidence. A.C.C. R2- 19-119)B)(2). Respondent has not shown that under the facts and circumstances of this case, there was unreasonable delay that has resulted in prejudice to Respondent sufficient to deny the relief Petitioner seeks, and consequently has not met its burden. See Flynn v. Rogers, 172 Ariz. 62 (1992). 4. Paragraph 4 of the CC&Rs provides that Respondent “shall serve as the governing body for all of the Owners for the protection, improvement, alteration, expansion, augmentation, disposal, divestment, redescription, maintenance, repair, replacement, administration and operation of the Property…” This section is general in nature and is subject to the specific provisions of the CC&Rs. 5. Paragraph 4.3 of the CC&Rs does not vest in the board binding authority to interpret and apply the CC&Rs with respect to its own actions. Such an interpretation would render the CC&R’s meaningless. The plain meaning is to grant to the board the authority to determine how the CC&Rs are to be interpreted and applied in disputes between owners.[3] 6. Paragraph 5 of the CC&Rs authorizes Respondent “to lease, convey easements or grant concessions consistent with the overall character and use of the Property with respect to parts of the Common Elements and to change the character, description and use thereof, subject to the provisions of this Declaration.” (emphasis added). 7. Paragraph 13 of the CC&Rs applies to alterations, additions, or improvements to the Common Elements by owners and does not govern actions by Respondent’s board. 8. Paragraph 10.2 of the CC&Rs requires “restoration” in three situations: (1) destruction; (2) condemnation; and (3) obsolescence. 9. The evidence does not support a finding of destruction, which is defined by paragraph 10.1(1) of the CC&Rs as casualty, damage or destruction of property. 10. The evidence does not support a finding of condemnation, which is defined by paragraph 10.1(2) of the CC&Rs as a taking by condemnation, eminent domain or conveyance in lieu of condemnation or eminent domain. 11. The CC&Rs do not define the terms “obsolete” or “obsolescent.” Webster’s II New Riverside University Dictionary defines “obsolete” as “[n]o longer in use…[o]utmoded in style, design or construction.” 12. Respondent’s asserted justification for action, specifically the cost of repair and the requirement of Maricopa County to add fencing, is consistent with a finding that the fountain was obsolete. Respondent has not credibly cited to any other provision that would otherwise justify its action in removing the fountain or take it from the provenance of paragraph 10.2 of the CC&Rs. 13. Paragraph 10.1(4) of the CC&Rs provides that “in the case of obsolescence, [the term “restoration”] shall mean restoration of the Property to an attractive, sound and desirable condition.” [4] 14. Paragraph 10.2 of the CC&Rs provides that any restoration be “performed substantially in accordance with [the CC&Rs] and the original plans and specifications for the Buildings, the Common Elements and Units.” [5] 15. The fountain is a “common element” as defined by paragraph 1.5 of the CC&Rs. 16. Respondent violated paragraph 10.2 of the CC&Rs by not restoring the fountain “to an attractive, sound and desirable condition,” as required by paragraph 10.1(4) of the CC&Rs. The debris presently in the base is unattractive, not a desirable look for the entrance of the community, and is a potential safety hazard. Respondent also violated paragraph 10.2 of the CC&Rs by not restoring the fountain “substantially in accordance with [the CC&Rs] and the original plans and specifications for the Buildings, the Common Elements and Units.” Although the Respondent is not required to reproduce the exact fountain, the Respondent is required to restore the common element as a “fountain.” 17. The Petitioner has prevailed, and therefore, Respondent shall pay to Petitioner his filing fee required by A.R.S. § 41-2198.01. RECOMMENDED ORDER Respondent is ordered to comply with paragraph 10.2 of the CC&Rs by the installation of a common element that is in substance a “fountain,” to be ”substantially” in the location of the former fountain, and that is “attractive, sound and [of] desirable condition.”[6] Given the financial condition of the Respondent, Respondent, will have 180 days from the effective date of the Order entered in Case No. HO 11-12/002 to restore the common element. Respondent is further ordered to pay Petitioner his filing fee of $550.00 within 30 days of the effective date of the Order entered in Case No. HO 11-12/002. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five (5) days from the date of that certification. Done this day, January 18, 2012.

/s/ Brian Brendan Tully Administrative Law Judge Transmitted electronically to:

Gene Palma, Director Department of Fire Building and Life Safety ----------------------- [1] Ms. Gillespie believes she is also the board’s current secretary. [2] Essentially the cost of repairing and maintaining the existing fountain and the requirement of Maricopa County that a fence be added to the fountain. See generally the testimony of Cathy Gillespie. Hearing Record 1:38:10 – 1:56:18. See in particular, 1:52:18 – 1:53:31. [3] Paragraph 4.3 provides in relevant part that “…in the event of any dispute or disagreement between the Owners relating to the Property, or any question of interpretation or application of the provisions of this Declaration, the Articles or Bylaws, the determination thereof by the Board shall be final and binding on each and all of such Owners.” (emphasis added) [4] Although there is a distinction between “partial and “substantial” obsolescence in both paragraphs 10.1 and 10.2, the distinction appears to turn solely on whether a defined vote was cast. As there was no evidence of such action, obsolescence would appear to be “partial,” and Respondent’s board may act on its own. In either case, the analysis of required restoration remains the same. [5] See note 6 supra. [6] Respondent has great leeway in determining the character of such replacement. In particular, both the scale and design may change as the replacement need only be “substantially” in accordance with the original plan, for which there was no detail. For example, the common element may incorporate the existing basin, while eliminating standing water, such as through a smaller water feature that drains into rocks.

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