ALJDEC decisions subject to certification as final

19F-H1918019-REL · Department of Real Estate - H/C · 2018-12-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 13, 2018 APPEARANCES: Mark K. Sahl, Esq. and Timothy D. Butterfield, Esq. appeared on behalf of Respondent Greenlaw Townhouses Unit Two Homeowners Association. ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. The Arizona Department of Real Estate (“Department”) is authorized by statute to receive and to decide petitions for hearings from members of homeowners’ associations in Arizona. 2. Petitioner William P. Lee owns a townhouse in Greenlaw Unit Two, and is a member of Greenlaw United Two Homeowners Association (“Greenlaw”). 3. On or about September 12, 2018, Mr. Lee filed a single-issue petition with the Department which contained an allegation that Greenlaw had violated amendments 1, 2, and 3 of its Covenants, Conditions, and Restrictions (“CC&Rs”), and Greenlaw’s Rules and Regulations when it banned all parking on Greenlaw streets and contracted with a towing company to boot vehicles parked on Greenlaw streets. 4. Greenlaw filed a timely answer to the petition. 5. The Department referred the petition to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 6. On October 22, 2018, the Department issued a Notice of Hearing setting the above-captioned matter for hearing on December 13, 2018. 7. The October 22, 2018 Notice of Hearing provided that the issue set for determination was Mr. Lee’s allegation that Greenlaw “violated Community Document CC&Rs amendments 1, 2, & 3 and Association Rules and Regulations in a single issue petition when it banned all parking on the association streets and contracted with a towing service to boot vehicles.” 8. A hearing was held on December 13, 2018. 9. Mr. Lee testified on behalf of himself, and submitted exhibits H1 through H6. Greenlaw did not provided no testimony or evidence. 10. On or about July 2, 1999, Greenlaw Declaration of CC&Rs was recorded at the Coconino County Recorder.[1] 11. Owners agree to be bound by the CC&Rs.[2] 12. Section (I)(b) of the CC&Rs concerns Ownership. Section (I)(b) provides: The areas designated on the plat of record of the subject property (Tract A as depicted on said plat) shall be considered common area nad shall be owned by the Greenlaw Townhouses Unit Two Homeowners Association, an Arizona corporation (here-after “Association”.) in trust for the benefit of the lot owners pursuant to the terms of the bylaws of the Association. Said By- laws and Articles of Incorporation are fully incorporated herein. Each lot owner shall be a beneficiary of an equal undivided interest in said trust. Its maintenance and use shall be controlled by the Association but the Association shall not allow any structure to be erected in such open space except as necessary for maintenance activity or playground and sports activities (excluding bleachers, restrooms, snack bars or any structure not required for the activity itself).

13. Amendments 1, 2, and 3 of Greenlaw CC&Rs provide: Amendment #1

Article II, PERMITTED USES, is amended by adding a new paragraph (n) as follows:

The Association, after conferring with the office of the Fire Marshal, City of Flagstaff, shall cause signs to be placed and curbs painted red to designate fire lanes for access of emergency vehicles. No parking shall be permitted in such designated fire lanes and violations will be enforced by citation as with other fire lane violations on private property.

APPROVED: Yes 39, No 6.

Amendment #2

Article II, PERMITTED USES, is amended by adding a new paragraph (o) as follows:

It shall be a violation of these Covenants, Conditions and Restrictions for any resident or visitor to park on roads of the Greenlaw Townhouses Unit II Subdivision during periods of snow removal. At the direction of the Association, violators will be towed at the expense of the owner of the vehicle.

APPROVED: Yes 39, No 6.

Amendment #3

Article II, PERMITTED USES, is amended by adding a new paragraph (p) as follows: Vehicles parked at curb side in an obvious state of disrepair for a period of seventy-two (72) hours shall be considered abandoned and towed from the property at the expense of the owner of the vehicle

APPROVED: Yes 42, No 6.Section 7(B) of the CC&Rs concerns Alterations, Additions and Improvements and provides in relevant part that “[n]o alterations of any Limited or General Common Elements or any additions or improvements thereto shall be made by any Owner without the prior written approval of the Board. . . .”[3] 14. Section 8 of Greenlaw’s current Rules and Regulations ban parking on any association street as follows: Parking is not allowed on any association street or alleyway at any time. Eva, Heidi and Jeffrey Loops are not city streets. They are owned and maintained solely by the HOA. Under city code, the streets are considered “Private Fire Access Lanes.” Consequently, cars parked in violation may be booted and/or towed by a contracted independent towing company.

15. In May of 2018, Greenlaw revised its Rules and Regulations. The Rules and Regulations were adopted by email. 16. On July 6, 2018, Greenlaw sent a copy of the May 2018 revised Rules and Regulations to its members by electronic mail (“e-mail”) in the form of an attachment entitled, “Greenlaw II Townhomes Rules and Regulations – May 2018.pdf”. 17. Mr. Lee received the July 5, 2018 e-mail and the May 2018 Revised Rules and Regulations. 18. Mr. Lee contended that he did not receive an e-mail which explained that the Rules and Regulations had been changed or revised in May of 2018. Mr. Lee contended that the 2003 Greenlaw Revised Rules and Regulations allowed parking on the association streets. Mr. Lee argued that Greenlaw has never prohibited parking on the streets. Mr. Lee argued that even if the May 2018 revised Rules and Regulations were controlling, Greenlaw violated the 2003 Revised Rules and Regulations when it booted vehicles on Greenlaw streets in 2017. 19. Greenlaw argued that because it has control over the maintenance and use of Greenlaw streets through section (I)(b) of the Greenlaw CC&Rs, it has the authority to ban parking on Greenlaw streets and to contract with a towing company to boot vehicles parked on Greenlaw streets. 20. Greenlaw further contended that the May 2018 Rules and Regulations are not in conflict with amendments 1, 2, and 3 of the CC&Rs. Amendments 1, 2, and 3 of the CC&Rs do not authorize parking, but prohibit parking on Greenlaw streets in specific scenarios. Greenlaw argued that any purported violation of the prior version of the Rules and Regulations was cured with the adoption of the May 2018 revised Rules and Regulations. CONCLUSIONS OF LAW Ariz. Rev. Stat. “A.R.S.” § 32-2199(B) permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents under the authority Title 33, Chapter 16.[4] This matter lies with the Department’s jurisdiction. Mr. Lee bears the burden of proof to establish that Greenlaw violated amendments 1, 2, and 3 of the CC&Rs, and the Greenlaw Rules and Regulations by a preponderance of the evidence.[5] Greenlaw bears the burden to establish affirmative defenses by the same evidentiary standard.[6] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[7] A preponderance of the evidence is “[t]he 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.”[8] In Arizona, if a restrictive covenant is unambiguous, it is enforced to give effect to the intent of the parties.[9] “Restrictive covenants must be construed as a whole and interpreted in view of their underlying purposes, giving effect to all provisions contained therein.”[10] Mr. Lee failed to establish by a preponderance of the evidence that Greenlaw’s decision to ban parking on Greenlaw streets and to contract with a towing company to boot vehicles parked on Greenlaw streets, violated amendments 1, 2, and 3 of the Greenlaw CC&Rs. Amendments 1, 2, and 3 of the Greenlaw CC&Rs do not allow parking on the streets, but rather, provide specific scenarios in which parking on the streets is banned. Mr. Lee failed to establish by a preponderance of the evidence that Greenlaw’s decision to ban parking on Greenlaw streets and contract with a towing company to boot vehicles parked on Greenlaw streets violated its Rules and Regulations. Mr. Lee failed to establish that the 2003 Rules and Regulation referenced in Mr. Lee’s petition were the controlling Rules and Regulations at the time that he filed the petition. The weight of the evidence presented at hearing shows that Greenlaw’s Rules and Regulations were revised in May of 2018 and are Greenlaw controlling Rules and Regulations. Although Mr. Lee provided testimony that Greenlaw booted vehicles which were parked on the Greenlaw streets, Greenlaw has in effect cured any purported previous violation through the enactment of the May 2018 Revised Rules and Regulations. order IT IS ORDERED that Petitioners’ petition is denied because he has not established that Greenlaw Townhouses Unit Two Homeowners Association violated Amendments 1, 2, and 3 of its CC&Rs, nor Greenlaw Rules and Regulations, when it banned all parking on association streets and contracted with a towing company to boot vehicles.

NOTICE Pursuant to A.R.S. §32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to A.R.S. § 32-2199.04. Pursuant to A.R.S. § 41-1092.09, a request for rehearing in this matter must be filed with the Commissioner of the Department of Real Estate within days of the service of this Order upon the parties.

Done this day, December 31, 2018. /s/ Velva Moses-Thompson Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate

Transmitted U.S. Mail to:

William P. Lee 2521 Eva Loop Flagstaff, Arizona 86004

Mark K. Sahl, Esq. CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP 1400 E. Southern Ave, Suite 400 Tempe, AZ 85282

----------------------- [1] Respondent’s Exhibit 1 at 1. [2] See Respondent’s Exhibit 4 at 4 (§ 4). [3] Id. at 8. [4] See A.R.S. § 33-1803, which authorizes homeowners associations in planned communities to enforce the development’s CC&RSs [5] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [6] See A.A.C. R2-19-119(B)(2). [7] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [8] Black’s Law Dictionary at page 1220 (8th ed. 1999). [9] See Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006). [10] Lookout Mountain Paradise Hills Homeowners’ Ass’n v. Viewpoint Assocs., 867 P.2d 70, 75 (Colo. App. 1993) (quoted in Powell, 211 Ariz. at 557 ¶ 16, 125 P.3d at 377).

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826