ALJDEC decisions subject to certification as final

19F-H1918028-REL · Department of Real Estate - H/C · 2019-01-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 10, 2019, at 8:30 a.m. APPEARANCES: Patricia Wiercinski (“Petitioner”) appeared on her own behalf; Long Meadow Ranch East Property Owners Association, Inc. (“Respondent”) was represented by Ashley N. Moscarello, Esq., Goodman Law Group. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Arizona Department of Real Estate (“the Department”) is authorized by statute to receive and to decide Petitions for Hearings from members of homeowners’ associations and from homeowners’ associations in Arizona. Respondent is a homeowners’ association whose members own property and/or residences in Long Meadow Ranch East development in Prescott, Arizona. Petitioner owns a house on property in Long Meadow Ranch East and is a member of Respondent. On or about October 18, 2018, Petitioner filed a single-issue petition with the Department that alleged that Respondent had violated A.R.S. § 33-1805 by failing to produce its documents regarding its deliberations, decisions, and actions with respect to an incident that occurred on or about June 19, 2017, that allegedly involved Petitioner’s husband, Wayne Coates, being belligerent and cursing at a potential buyer of the property across the street from Petitioner’s house.[1] Respondent filed a written answer to the petition, denying that it had violated any statute by refusing to produce any records. The Department referred the petition to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on January 10, 2019. Petitioner submitted eight exhibits, including a video, and testified. Respondent submitted one exhibit and presented the testimony of three witnesses: (1) Michael “Mike” Olson, the President of Respondent’s board; (2) Gregg Arthur, a Director on Respondent’s board; and (3) Kathy Andrews, Respondent’s community manager. Hearing Evidence John Allen owned property on Puntenney Rd. that he was trying to sell in 2017 that was located across the street from Petitioner and Mr. Coates’ house in Respondent’s development. On June 19, 2017, Mr. Allan received an email from a purchaser about Mr. Coates threatening a purchaser. Mr. Allan subsequently shared the email with members of Respondent’s Board. Mr. Olson testified that, although Respondent did not consider communications to or among Board Directors to be official communications because no member of Respondent ever asked the Board to take action about the incident and neither Mr. Olson nor any Board Director ever suggested that they thought it was appropriate for Respondent to take any action about the incident, Respondent voluntarily provided an email string that was not kept as an official record but was obtained from its President’s and Directors’ personal email servers regarding the June 19, 2017 incident.

Mr. Olson testified that because Mr. Coates has a history of threatening and bullying neighbors and others in Respondent’s development, Respondent redacted the names of the potential purchasers and real estate agent. The Administrative Law Judge has inferred the role of the redacted names based on context and other evidence offered at the hearing. The email string provided in relevant part as follows: Mon 6/19/2017 9:36 PM From: [Redacted (Potential Purchaser)] To: John Allen

Something really weird just happened. [Redacted] the Builder went out with his wife and architect and son to look at the property again. The neighbor across the street on the west side of Puntenney came out of his house and was belligerent and cursing at t hem telling them nothing was for sale around here and they shouldn’t be snooping around. His wife said there were for sale signs right there and they were there to look at a lot and he was very verbally abusive to them. He called to let me know as a courtesy and said they are not sure if they are interested in the lot now since they would have to go by that house every day…

I just wanted to let you guys know and I’ll keep you posted if anyone else has similar complaints. I planned on going out tomorrow to check on Flyers and add more flyers to the boxes. So I’ll let you know if I hear from the guy.

From: [Redacted (Potential Purchasers)] Jun 20, 2017 at 10:30 AM Subject: Re: Puntenny Property To: [Redacted (Real Estate Agent)]

Date: June 19th 2017, at approximately 5:00 pm. . . . .

We entered the subdivision with notification of 3 realtors that we wanted to look at the property they had listed. Gate code was provided and in 2 vehicles we entered.

At the intersection of the lot Easement from the west entrance to said property listed by [redacted] my wife [redacted] and my Son were parked at entrance on Puntenney Dr, when an elderly man came out of a home to the west and began to yell and scream questioning why [we] were on premises.

The individual was verbally abusive and extremely confrontational. Making rude remarks while cussing.

My wife told the individual that we were looking at property and that we had notified realtors that we would be looking today.

The individual continue[d] to display extreme aggressive behavior, to include stating that there is not any properties for sale on the area and that we needed to leave immediately.

In an attempt to explain our situation the man continued to display more aggressive behavior. So my wife and son drove up to meet with myself in the other vehicle, in which myself and my architect were told us what had occurred.

In closing when we returned one thing that stands out is would we want to live next to this type of behavior of [a] neighbor? The answer is no, this lot was one that we had in our top 2 Lots as a consideration for purchase but due to the volatile potential of this man, we have decided at this point to remove it from our list.

[In] addition any property that would require us to drive past or have the chance of contact with this individual.

We are seeking a quiet, peaceful, and neighborly place to retire. Not a place with hostility and confrontation. . . . .

On June 20, 2017, at 8:41 AM, [Redacted Real Estate Agent] write:

Thank you so much for informing me of the situation you encountered yesterday with your family and Architect. Again, I apologize.

I wrote an e-mail last night to the out-of-state owner and this morning I received an e-mail back. He knows this person, Wayne Coates, and said he has been an issue in the neighborhood before. He has contacted Hoamco [Respondent’s property management company] and is seeking legal [counsel] to stop this menace.

The owner, John Allen is asking a favor of you. Can you please write something to me explaining what you told me on the phone of his belligerent and obnoxious behavior yesterday? He would like to have “proof” to show the HOA that they need to put a stop to this behavior.

Also, Here is a map of his property and position as it relates to the lot.

John will be coming into town this coming weekend (Sunday), and we are meeting at the lot, probably Monday. We could coordinate a meeting with you, your wife and Architect next week when you return and see if it is a good fit for you.

From Joe Zielinski Subject: Re: LMR Problem Date June 20, 2017 at 7:33:41 AM To: Gregg Arthur, Mike Olson, Boris Biloskirka, Kathy Andrews, Jim Robertson

Gregg and all, The YCSO [Yavapai County Sheriff’s Office] may file charges against Wayne for disorderly conduct/harassment, based on what happened to Mr. Allan and the others in attendance, given Wayne’s arrest record and prison term and criminal history. It would involve a trip/call by Mr. Allan to YCSO and an Incident Report. It would involve testimony at . . . trial, since I don’t believe Wayne would ever plead guilty or accept a plea. The Arizona disorderly conduct statute is 13-2904. Sub Paragraphs 1.3, and 4 seem applicable. Unfortunately, I am familiar with the routine, because of Wayne’s actions against me. I don’t believe Wayne (and Patricia’s) aggressive and disruptive behavior will stop.

I’ve been trying to get an appointment with Shelia Polk’s office, either with her or one of her Assistant AGs to discuss my own ongoing problems with Wayne and Patricia. . . . .

From Gregg Arthur To: Mike Olson, Joe Zielinski, Boris Biloskirka, Kathy Andrews, Jim Robertson Cc: John Allan Sent Tuesday, June 20, 2017 6:34 AM Subject: FW: LMR Problem

Dear LMR Board and HOAMCO

I was hoping that this would not be a situation we would have to encounter with Wayne Coates and Patricia however here it is on our door step. Many owners at LMR have waited long and patiently for the market to recover so that they can sell their properties or build the home that they may have postponed until retirement and the timing was right. In the Real Estate World, this is about as bad as it gets . . For a property owner the same.

Wayne thru his actions appears to have interfered with and destroyed a property sale. We need to meet and take action on this matter as it will have a broad and chilling effect amongst the realtor community (effecting us all) not to mention the property owners. I feel Mr. Allen has been harmed by Wayne Coates in this matter and we could not sit by, action needs to be taken and quickly to prevent this from happening again. . . . .

From: JOHN ALLAN Date: Tuesday, June 20, 2017 at 6:11 AM To: Gregg Arthur Subject: LMR Problem

Good Morning Gregg

My wife and I are coming to Prescott and will arrive late Saturday night. Will be there for 3 days or so. Wondering if you would like to get together for lunch so as to finally have a chance to meet. Please let me know. I would like to meet with my LMR friend.

As you know, I have been trying to sell our other lot at LMR with what I thought was little or no action. Yesterday, I rec’d an e-mail from my realtor whom I had prodded into action only to find that there is a major problem with a neighbor who is apparently going out of his way to scare potential buyers off. I am attaching the e-mail from my realtor and ask that you share it with the BOD in that from my point of view, an owner should not be allowed to interfere with a potential sale of another owner’s property. Would appreciate your thoughts on the matter. Plan to send this to HOAMCO as well and will employ legal action if necessary. . . . .

From: Michael Olson To: Kathy Andrews CC: Gregg Arthur, Jim Robertson, Joe Zielninski, Tom Reid Subject: Re: LMRE questions Date: Monday, February 26, 2018 4:08:47PM

I would be willing to consider a deal with Patricia. We will help them with the gate if they take down their no videotaping sign.

I have no comment on buying a Go Pro. In my eyes it would be for [Josh’s] personal protection. Video from his phone would be just as efficient if need be. . . . .

On Feb 26, 2018, at 12:05 PM, Kathy Andrews wrote:

Hello everyone, I just have a couple of questions for you. Wayne & Patricia would like to hold a garage sale on March 16th & 17th. Do you have any issues with that? You could deny their request to have the gate open for their sale to the open violations. Your call.

I haven’t heard back from anyone regarding the ‘Go Pro’ for Compliance use. Is this something the Board wants to authorize, or provide for Josh to use when he does his inspections?[2]

Mike Olson is president of Respondent’s Board. Gregg Arthur, Jim Robertson, Joe Zielninski, and Tom Reid are Directors. Kathy Andrews is employed by HOAMCO, Respondent’s property manager. John Allan is a member of Respondent who was trying to sell his lot in June 2017. Petitioner pointed out that the email was sent to a quorum of the Board. Petitioner argued that the Board was required to make a motion and arrive at a formal decision if it decided it was not going to take action against her husband, Wayne Coates, over the June 2017 incident. Petitioner testified that, despite numerous requests, she never received such an email. She also never received a document showing that he Board ever addressed the incident in an executive session or at an open meeting. She also never received the map referenced in the real estate agent’s email to the potential purchasers dated June 20, 2017, at 8:41 a.m. Petitioner testified that because the Board had made a resolution to electronically store documents evidencing Respondent’s business,[3] it must possess but refused to produce the documents that she sought. Petitioner played onto the record a video of a conversation between Joe Zielninski and an YCSO’s deputy. Mr. Zielninski described a letter that would be sent to Santa Cruz about the incident. Petitioner testified that she never received such a letter from Respondent. Petitioner acknowledged that she never asked Mr. Zielninski for a copy of the letter. Petitioner also acknowledged that she never contacted individual Board members about any private communications that they may have had that concerned herself and/or her husband. Respondent never took any action against Petitioner or her husband Wayne Coates as a result of the June 19, 2017 incident. The Board never voted on a Go Pro camera and Respondent never purchased a camera for its compliance officer to use to document violations. Wayne Coates was never criminally charged as a result of the June 2017 incident. Mike Olson testified that he received a copy of the email that Gregg Arthur sent to the Board, with copies of the real estate agent’s email about the June 2017 incident to John Allan. Only Gregg Arthur and Joe Zielninski responded to the email. There was never any discussion about the Board acting on the issue or voting on taking any action as a result of the incident. Although Mr. Olson did not clearly remember an incident that had happened more than a year earlier, he did not recall ever seeing a map. Mr. Olson testified that the Board never discussed the incident in an executive session. He never met the potential purchasers, but remembers calling them after he learned of the incident to assure them that their names would not be given to Mr. Coates and Petitioner. Mr. Olson testified that the names of the potential purchasers and real estate agent were redacted because Mr. Coates had a history of bullying and intimidating people. Otherwise, Respondent had produced to Complainant the private communications that discussed the incident. Mr. Olson testified that the Board had never addressed the June 19, 2017 incident formally or in its official capacity. Mr. Arthur testified that he learned of the June 2017 incident from a phone call from Mr. Allan. Mr. Arthur explained that he is a realtor and had sold the property to Mr. Allan. Because the real estate market was in decline at the time, it was difficult for property owners to sell their property. Mr. Arthur testified that no one wants to buy land next to someone who acts like Mr. Coates, but that Mr. Allan eventually sold his lot to someone else. . Mr. Arthur testified that he did not receive any communications about the incident other than Mr. Allan’s phone call and the private emails that Respondent voluntarily produced to Petitioner. The Board never discussed the incident at an executive meeting or at a general membership meeting and did not take any action as a result of the incident. Ms. Andrews testified that she keeps records of Respondent’s Board’s agendas, resolutions, minutes, expenditures, receipts, contracts, financials, and other documents evidencing Respondent’s or the Board’s official actions or records. Ms. Andrews testified that because the Board never voted to purchase a Go Pro camera for the compliance officer, there are no other documents relating to it. However, the records include the compliance reports that compliance officers write after their inspections. Ms. Andrews testified that Respondent’s records do not include any documents that pertain to the June 19, 2017 incident. CONCLUSIONS OF LAW 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 Title 33, Chapter 16. This matter lies with the Department’s jurisdiction. Petitioner bears the burden of proof to establish that Respondent violated A.R.S. § 33-1805 by a preponderance of the evidence.[4] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[5] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] 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.”[7] A.R.S. § 33-1805(A) provides as follows: Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member or any person designated by the member in writing as the member's representative . . .

(Emphasis added.) A.R.S. § 33-1804(E)(4) provides that “[a]ny quorum of the board of directors that meets informally to discuss association business, including workshops, shall comply with the open meeting and notice provisions of this section without regard to whether the board votes or takes any action on any matter at that informal meeting.” (Emphasis added.) Petitioner did not establish that the Board ever took any action regarding her husband Wayne Coates’ June 19, 2017 interaction with the potential purchasers of John Allan’s land and their real estate agent. Although the Board members informally discussed the event in private emails, which were provided to Appellant, the mere fact that a quorum of Board members may discuss a topic does not make it official Board business, especially if they do not end up taking any action to make a matter board business. Any other result would impose an unnecessary and burdensome requirement on volunteers who are not compensated for their time who are may be neighbors and who may also be friends, in addition to being Board members. If Petitioner felt that the June 19, 2017 incident should be Board business, she could have brought it up at a general membership meeting. Because Petitioner did not establish that any official documents exist regarding the June 19, 2017 incident that Respondent failed to produce to her, her petition must be dismissed. order IT IS ORDERED that Petitioners’ petition is denied because she has not established that Respondent violated A.R.S. § 33-1805(A) by or failing to produce to her any documents that it possessed concerning the June 19, 2017 incident. 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, January 22, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

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

Ashley N. Moscarello, Esq. Goodman Law Group 3654 N. Power Rd., Ste. 132 Mesa, AZ 85215

Patricia Wiercinski 13250 N Puntenney Rd. Prescott, AZ 86305

By: Felicia Del Sol ----------------------- [1] The petition generally alleges Respondent’s failure to produce records responsive to Petitioner’s records request that did not provide any specific description of the records sought. The Administrative Law Judge bases her statement of the issue on the evidence that the parties presented at the hearing. Petitioner acknowledged that her records request was for documents showing the response to the June 19, 2017 incident. [2] Respondent’s Exhibit A; Petitioner’s Exhibit 1. The emails are in reverse chronological order, with the most recent emails first. [3] See Petitioner’s Exhibit 4. [4] 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). [5] See A.A.C. R2-19-119(B)(2). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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