ALJDEC decisions subject to certification as final

19F-H1918042-REL · Department of Real Estate - H/C · 2019-07-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 5, 2019, followed by post-hearing briefing; hearing record closed as of July 8, 2019. APPEARANCES: Joan A. Tober appeared telephonically on her own behalf. Diana J. Elston, Esq., represented Civano 1 Neighborhood Homeowners Association (HOA). ADMINISTRATIVE LAW JUDGE: Kay Abramsohn _____________________________________________________________________

FINDINGS OF FACT The Arizona Department of Real Estate (“the Department”) is authorized by statute to receive and to decide Petitions for Hearings from members of home owners’ associations in Arizona. On or about December 26, 2018, Petitioner filed a single-issue petition (“Petition”) with the Department. The Petition alleges that, despite three informal requests, HOA failed to provide to her “all information” that was discussed at a Board Meeting regarding the North Ridge wall. The Petition further states that, at that meeting, a letter (“Letter”) from the HOA attorneys was “disclosed and discussed” and comments were made about prior “costs” regarding the wall. Petitioner’s November 29, 2018 request to HOA asked for the following: I am requesting any and all documentation to include the [Letter] that was disclosed and discussed at the November 20, 2018 Board meeting regarding the structural integrity and the Association members’ responsibility for same and all background information.

HOA responded the next day, November 29, 2018, indicating that the Board President had misspoken about giving a copy of the Letter to residents because the Letter contained legal analysis and legal advice to the Board and, thus, was privileged attorney-client communication. HOA’s January 29, 2019 response to the Petition indicated that the Board President had, during the meeting, referenced receiving the privileged “legal opinion” Letter from the HOA attorneys. At hearing, Petitioner presented evidence regarding her request and her various summaries and synopses of the matter. Petitioner essentially argued that the HOA had intentionally waived confidentiality when the Board President mentioned the Letter at the meeting and the other Board members did not object, i.e., showing unanimous consent to waive confidentiality. Petitioner acknowledged that the Board provided various other documents since the meeting and her request, but argued that the HOA has not provided a copy of the Letter. Petitioner she argues that, since the wall issue has been an issue since 2013, there are likely more documents she should be given under her request for “any and all documents” regarding the problems with the wall. Petitioner referenced needing various “background” documents regarding 2013 and 2014 items; for some, but not all, she provides further explanation of what a “background” document would be. Petitioner acknowledged that HOA has 10 days to respond with “access” to requested documents. She argued that HOA gave her documents she already had obtained from the city and there are other documents she is waiting for.[1] Petitioner worked for the company that developed the land/homes in the association area. Petitioner purchased her home in 2001. She has been a Board member in the past; she is currently a member on the Finance Committee. Since 2008, Petitioner has taped every meeting and she often creates a transcript of the meetings.[2] The attorney letter had been discussed by the Board in executive session prior to the meeting. HOA argued that, by its mere mention at the meeting, the Board had not waived confidentiality or attorney-client privilege as to the Letter. HOA argued that A.R.S. § 33-1805 deals with business records and that HOA has the right to assert privilege as to attorney-client communication. Additionally, HOA essentially argued that the request for “any and all” documents was too broad to know what Petitioner wanted to see; however, HOA also indicated that simply by reviewing her presented proposed exhibits, it can be determined that Petitioner has received copies of requested documents. CONCLUSIONS OF LAW This matter lies within the Department’s jurisdiction. Pursuant to A.R.S. §§ 32-2102 and 32-2199 et al., regarding a dispute between an owner and a planned community association, the owner or association may petition the department for a hearing concerning violations of condominium documents or violations of the statutes that regulate condominiums as long as the petitioner has filed a petition with the department and paid a filing fee as outlined in A.R.S. § 32-2199.05. Pursuant to A.R.S. §§ 32-2199(2), 32-2199.01(D), 32-2199.02, and 41-1092, OAH has the authority to hear and decide the contested case at bar. OAH has the authority to interpret the contract between the parties. See Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007) In these proceedings, a petitioner bears the burden of proving by a preponderance of the evidence that a respondent has violated the planned community document(s) provisions or statutes alleged to have been violated.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] A.R.S. § 33-1805(A) states that, with the exceptions stated in subsection (B), “all financial and other records of the association shall be made reasonably available for examination…” and that a home owners association has “ten business days” to fulfill a written request. A.R.S. § 33-1805(B) states that “privileged communication between an attorney for the association and the association” may be withheld. Therefore, HOA is not statutorily required to provide access or a copy of the Letter to Petitioner or to any resident. The Administrative Law Judge concludes that the hearing record demonstrates that the HOA provided requested records in compliance with A.R.S. § 33-1805 and HOA is the prevailing party on this Petition/Complaint. order IT IS ORDERED that the HOA be deemed the prevailing party with regard to the Petition and Petitioner bears her filing fee. 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, July 29, 2019.

/s/ Kay Abramsohn Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate

Transmitted through US Mail to:

Joan A. Tober 5048 S. Civano Blvd Tucson, AZ 85747

Diana J. Elston, Esq. Jones, Skelton & Hochuli PLC N Central, Ste 2700 Phoenix, AZ 85004

By Felicia Del Sol ----------------------- [1] For example, Petitioner was concerned about a landscaping contract that, apparently, had expired and no new contract had been demonstrated to exist. Petitioner did not demonstrate a connection between the wall issues and the landscaping maintenance; however, the Board President testified that the $5.00 per person fee/budget increase was intended to cover landscaping and the North Ridge wall area. [2] Petitioner provided several recordings and “transcripts” to the hearing record; at hearing, she also referenced portions of transcripts and particular recording moments, some of which were not transcribed. [3] See Ariz. Admin. Code R2-19-119. [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary 1220 (8th ed. 1999).

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