ALJDEC decisions subject to certification as final

12F-H1212012-BFS · Department of Fire Building and Life Safety - H/C · 2012-10-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 14, 2012 APPEARANCES: Petitioners appeared on their own behalf. Respondent was represented by Joseph Tadano, Esq. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ RULING This hearing involved an allegation made by Petitioners Cynthia and Bruce Santomarco that Mountainview Lake Estates Homeowner Association (Respondent) violated the Amended and Restated Declaration of Covenants, Conditions and Restrictions for Mountainview Lake Estates (CC&Rs) by failing to require homeowners within the community to file a claim against their insurance for damage to roofs resulting from a hailstorm on October 5, 2010. The Administrative Law Judge concludes that Petitioner failed to establish a violation by Respondent.

FINDINGS OF FACT 1. At all times relevant to this matter, Petitioner owned a townhome in the community known as Mountainview Lake Estates (MLE). MLE consisted of 68 units. 2. Respondent is an association of homeowners located in Scottsdale, Arizona. 3. As provided in the CC&Rs, Respondent was responsible for the regular maintenance and repair of the roofs of the units within MLE. During the week of October 3, 2010, USA Roofing, Inc. (USA Roofing) was performing regularly scheduled maintenance on the roofs of 13 units within MLE, including Petitioners’ roof. This maintenance included recoating the foam roofs in the community. 4. On October 5, 2010, a severe hailstorm struck the MLE area. 5. After the hailstorm, USA Roofing notified Respondent that it would, at no additional charge, patch any hail damage to the 13 units that it was in the process of recoating. 6. After patching and recoating the roofs of the 13 units, USA Roofing informed Respondent that it could repair the roofs of the remaining units that suffered damage from the hailstorm for $500.00 per unit. 7. Following the hailstorm, Respondent consulted an attorney regarding its obligation to repair the roofs in MLE in accordance with the CC&Rs. 8. On January 27, 2011, Adrianne A. Speas, Attorney with Ekmark & Ekmark, L.L.C., sent a letter to the MLE homeowners at the request of Respondent. The letter indicated that, reading the CC&Rs as a whole, “the Owners [were] obligated to make repairs to their roofs if their roofs [were] ‘substantially destroyed’ and there [were] insurance proceeds available for the repairs.” The letter went on to explain that because the damage to each of the roofs in question was only going to cost $500.00 to repair, the roofs could not be said to be “substantially destroyed” and it was appropriate for Respondent to repair the roofs. Exhibit D. 9. On March 18, 2011, Respondent sent a letter to the MLE homeowners. The letter notified homeowners that 13 units had already been repaired and recoated and needed no further action. The homeowners of the remaining 55 units were advised they could choose whether to file a claim with their insurance companies and have repairs completed with the insurance proceeds or to have Respondent complete the repairs on the roofs as originally planned. Homeowners were instructed to notify Respondent by April 15, 2011, if they had made or intended to make an insurance claim. 10. In March 2011, Sunvek Roofing inspected the roofs of five MLE units. Based on the number of hailstrikes and the depth of the hailstrikes, Sunvek Roofing recommended new foam roofs for the five units 11. In total, 14 MLE homeowners elected to file a claim with their insurance and had their roofs repaired or replaced. USA Roofing completed repairs to the roofs of the remaining units. 12. At some point, the homeowner of Unit 70 filed a complaint with the Registrar of Contractors (ROC) regarding the roof repairs completed by USA Roofing. The ROC inspected the roof and determined the work was compliant with ROC standards. 13. None of the MLE homeowners reported any roof leaks to Respondent, and no MLE residence was rendered uninhabitable as a result of roof damage. 14. On May 30, 2012, Petitioners filed a Petition with the Department of Fire, Building and Life Safety (Department) alleging Respondent violated the CC&Rs by failing to require MLE homeowners to file a claim against their insurance for damage to roofs resulting from the October 5, 2010, hailstorm. 15. On June 4, 2012, the Department sent a letter to Respondent notifying it that Petitioners had filed a Petition alleging that Respondent violated the CC&Rs. 16. On June 22, 2012, Respondent filed an Answer with the Department denying the allegations set forth in the Petition. 17. On August 10, 2012, the Department issued a Notice of Hearing to the parties notifying them that a hearing on the Petition would be conducted by the Office of Administrative Hearings. 18. On September 14, 2012, a hearing was held on the Petition and the parties presented evidence and argument regarding the CC&Rs.

CONCLUSIONS OF LAW 1. The Department has jurisdiction to hear disputes between a property owner and a planned community association. A.R.S. § 41-2198.01(B). 2. In this proceeding, Petitioners bear the burden of proving by a preponderance of the evidence that Respondent violated the CC&Rs. A.A.C. R2-19-119. 3. A preponderance of the evidence is “[e]vidence 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). 4. “[W]hen a restrictive covenant is unambiguous, it is enforced so as to give effect to the intent of the parties.” Powell v. Washburn, 211 Ariz. 553, 556 (2006). “[E]nforcing the intent of the parties is the ‘cardinal principle’ in interpreting restrictive covenants.” Id. at 557 (citation omitted). When determining the intent of the parties, the restrictive covenants must be read as a whole. Id. at 558. 5. The CC&Rs provide, in relevant part:

ARTICLE VI EXTERIOR MAINTENANCE Section 1. By Association. In addition to maintenance upon the Common Area, the Association shall provide and has the right to provide the following maintenance upon each Lot which is subject to Assessment only as follows: . . . . (c) repair and replace only the tiles, shingles, and foam surfaces of the roofs of Dwelling Units, excluding the underlying wood base of the roof and excluding any skylights; . . . . Such exterior maintenance shall not include repairs or replacements caused by any of the perils covered by a standard form fire insurance policy with extended coverage endorsement thereon, or caused by flood, earthquake or other acts of God. Any such repair or replacement shall be governed by Article VII, Section 4 herein. . . . . ARTICLE VII DUTIES AND POWERS OF THE OWNER’S ASSOCIATION . . . . Section 4. Lot Damage and Destruction, Reconstruction. In the event that a structure on any Lot covered by insurance written in the name of the Owner shall be substantially destroyed by fire or other casualty, said Owner shall, upon receipt of the insurance proceeds, contract to repair or rebuild such damaged or destroyed portions of the structures on the Lot in a good workmanlike manner in conformance with the original plans and specifications of said structures.

6. Petitioners argued that the October 5, 2010, hailstorm was an act of God that relieved Respondent of the responsibility of repairing the damage as detailed in Article VI of the CC&Rs. 7. While the October 5, 2010, hailstorm may be considered an act of God, Article VI goes on to provide that any “repair or replacement [resulting from an act of God] shall be governed by Article VII, Section 4 herein.” Article VII, Section 4, provides that if a structure “shall be substantially destroyed,” the homeowner must file an insurance claim. (Emphasis added). 8. The evidence presented established that many, if not all, of the roofs in MLE suffered some sort of damage as a result of the October 5, 2010, hailstorm. 9. The only evidence presented to establish that the roofs of MLE units repaired by USA roofing were “substantially destroyed” such that the homeowners should have been required to file a claim with their insurance was from the Sunvek Roofing representative who testified that he believed the roofs needed to be replaced based on the size and number of hailstrikes. 10. No evidence was presented to show that the repairs completed by USA Roofing failed to correct the damage sustained. The ROC determined the repair work completed by USA Roofing on Unit 70 was compliant with ROC standards. One homeowner testified his roof had been patched by USA Roofing, was not scheduled to be recoated until 2013, and had not had any leaking or any other issues. No MLE homeowners reported any roof leaks to Respondent following the repairs completed by USA Roofing. 11. As USA Roofing was able to repair the roofs and prevent any further issues for only $500.00 per unit, the roofs of the MLE units cannot be said to have been “substantially damaged.” Accordingly, it was Respondent’s responsibility to repair and maintain the roofs of the MLE units as provided in the CC&Rs. 12. Petitioners failed to establish by a preponderance of the evidence that Respondent violated the CC&Rs by failing to require MLE homeowners to file a claim against their insurance for damage to roofs resulting from the October 5, 2010, hailstorm. 13. The Administrative Law Judge concludes that Petitioner’s Petition should be dismissed.

RECOMMENDed order In view of the foregoing, IT IS ORDERED that no action is required of Respondent in this matter and that the Petition be dismissed.

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 days from the date of that certification.

Done this day, October 4, 2012.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Gene Palma, Director Department of Fire Building and Life Safety -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826