ALJDEC decisions subject to certification as final

19F-H1918022-REL-RHG · Department of Real Estate - H/C · 2019-04-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 16, 2019 APPEARANCES: Tom J. Martin on his own behalf; Carolyn B. Goldschmidt, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT 1. On January 25, 2019, the Arizona Department of Real Estate issued a Notice of Rehearing setting the above-captioned matter for rehearing on March 12, 2019 at the Office of Administrative Hearings in Phoenix, Arizona. 2. The matter was continued and the rehearing was conducted on April 16, 2019. 3. On or about September 28, 2018, Petitioner Tom J. Martin filed with the Department a single-issue petition that gave rise to this matter. 4. In his petition, Mr. Martin alleged that Respondent SaddleBrooke Home Owners Association #1, Inc. violated its website and its policy manual. With his petition, Mr. Martin included printouts from the website and a copy of Respondent’s Policy Number BC-3. 5. On the petition form, Mr. Martin checked the boxes showing that he alleged that Respondent had violated its CC&Rs and Bylaws, but he did not identify any particular provisions. At the rehearing, Mr. Martin confirmed that in his petition he did not identify any particular provision(s) found in the CC&Rs or the Bylaws. 6. In his petition, Mr. Martin stated that the relief he was requesting was for the Respondent to provide financial support in the sum of $463,112.00 for the expansion of pickleball courts in Bobcat Canyon or to provide eight pickleball courts within a two mile radius of the community within the next year, and for the Respondent to be financially responsible for the maintenance of the pickleball courts in an amount equal to that which it spent on eight tennis courts. 7. On November 30, 2018, Respondent filed a Motion to Dismiss in the original matter. Respondent argued that the Department did not have jurisdiction over the matter because pursuant to Ariz. Rev. Stat. section 32-2199.01, hearings are limited to disputes regarding the planned community documents (or violations of the applicable statutes) and neither the website nor policy BC-3 are “community documents” within the meaning of Ariz. Rev. Stat. section 33-1802(2). Respondent also argued that Mr. Martin’s requested relief was not within the tribunal’s authority to grant. 8. Ariz. Rev. Stat. section 33-1802(2) defines community documents as “the declaration, bylaws, articles of incorporation, if any, and rules, if any.” 9. On December 4, 2018, Mr. Martin filed a Response to Respondent’s Motion to Dismiss. In his Response, Mr. Martin wrote that his “stated claim is specific: (a) the Association is in violation for not providing pickleball courts as advertised and marketed….” 10. In his Response, Mr. Martin argued that consistent with Ariz. Rev. Stat. section 1-213, “policy” should be given its ordinary meaning, and to the effect that in the ordinary sense of the word, a “policy” is a rule. 11. In his Response, Mr. Martin also asserted that because Respondent’s policy CE-3 defines “governing documents” as the Articles of Incorporation, CC&Rs, Bylaws, Rules and Regulations, BC-3 is a governing document. 12. Through an Administrative Law Judge Decision dated December 12, 2018, the undersigned ordered that Mr. Martin’s petition be dismissed because he had not alleged a violation meeting the requirements of Ariz. Rev. Stat. section 32-2199.01. 13. On December 31, 2019, Mr. Martin filed with the Department his request for a rehearing. Mr. Martin reasserted his position that a “policy” is a rule, and he argued that he could show that Respondent had violated its bylaws by failing to implement BC-3. More specifically, Mr. Martin alleged that Respondent had violated Bylaws article 4, section 6(3) by failing to implement policy BC-3. Mr. Martin also alleged that Respondent violated Articles of Incorporation Article XII by not providing pickleball as promised, which he alleged was in violation of policy BC-3. 14. Respondent’s CC&Rs at section 4.5 sets out its authority to adopt rules. Respondent has not adopted policy BC-3 as a rule. 15. At the rehearing, Mr. Martin confirmed that in his petition he had not alleged that Respondent violated Bylaws article 4, section 6. 16. At the rehearing, Respondent renewed its argument that the Department does not have jurisdiction over this matter. CONCLUSIONS OF LAW 1. Ariz. Rev. Stat. Title 32, Ch. 20, Art. 11 (Administrative Hearings) describes the process by which a petitioner may request that the Department refer to the Office of Administrative Hearings disputes between owners and planned community associations. Section 32-2199.01(A) shows that hearings are to be conducted for alleged “violations of … planned community documents or violations of the statutes that regulate … planned communities.” 2. If a violation of the planned community documents is found to exist: The administrative law judge may order any party to abide by the statute, condominium documents, community documents or contract provision at issue and may levy a civil penalty on the basis of each violation. All monies collected pursuant to this article shall be deposited in the condominium and planned community hearing office fund established by section 32-2199.05 to be used to offset the cost of administering the administrative law judge function. If the petitioner prevails, the administrative law judge shall order the respondent to pay to the petitioner the filing fee required by section 32-2199.01.

Ariz. Rev. Stat. § 32-2199.02

3. When the legislature defines a word or term, the tribunal must follow that definition. See e.g., Walker v. Scottsdale, 163 Ariz. 206, 786 P.2d 1057 (App. 1989). 4. The legislature has defined “community documents” to mean “the declaration, bylaws, articles of incorporation, if any, and rules, if any.” Ariz. Rev. Stat. § 33-1802(2). This definition does not include a planned community’s statements of policy, statements on its website, or advertising and marketing material. 5. Mr. Martin’s argument that policy BC-3 should be considered to be a rule is not persuasive because Respondent has not adopted that policy as a rule. See McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.)(CC&Rs are a contract that both parties must abide by). 6. In his petition, Mr. Martin alleged only that Respondent violated its website and its policy manual, which are not community documents within the meaning of Ariz. Rev. Stat. section 33-1802(2). Because Mr. Martin did not allege in his petition that Respondent violated community documents, his petition does not meet the requirements of Ariz. Rev. Stat. section 32-2199.01(A). Moreover, the relief Mr. Martin is requesting is not within the scope of the Administrative Law Judge’s authority. See Ariz. Rev. Stat. § 32-2199.02. 7. Consequently, Mr. Martin’s petition should be dismissed. ORDER IT IS ORDERED that Petitioner Tom J. Martin’s petition is dismissed. NOTICE This administrative law judge order, having been issued as a result of a rehearing, is binding on the parties. Ariz. Rev. Stat. section 32- 2199.02(B). A party wishing to appeal this order must seek judicial review as prescribed by Ariz. Rev. Stat. section and title 12, chapter 7, article 6. Any such appeal must be filed with the superior court within thirty- five days from the date when a copy of this order was served upon the parties. Ariz. Rev. Stat. section 12-904(A). Done this day, May 10, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile May 10, 2019 to:

Judy Lowe, Commissioner Arizona Department of Real Estate 100 N. 15th Avenue, Suite 201 Phoenix, Arizona 85007

Attn: [email redacted] [email redacted] [email redacted] [email redacted] [email redacted] [email redacted]

Carolyn B. Goldschmidt Goldschmidt, Shupe, PLLC Carolyn B. Goldschmidt Michael S. Shupe 6700 North Oracle Rd., Suite 240 Tucson, AZ 85704

Tom J Martin 64343 E Greenbelt Ln. Tucson, AZ 85739

By: JS

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