ALJDEC decisions subject to certification as final

19F-H1919066-REL · Department of Real Estate - H/C · 2019-08-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 5, 2019 APPEARANCES: Petitioner John Sellers appeared on his own behalf. Ed O’Brien, attorney, appeared on behalf of Respondent Rancho Madera Condominium Association. ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera _____________________________________________________________________ FINDINGS OF FACT 1. Respondent is a condominium unit owners’ association whose members own the 46 condominiums in the Rancho Madera condominium development in Cave Creek, Arizona. 2. On April 29, 2019, Petitioner emailed a written request to Jeff Kaplan (Mr. Kaplan), the president of Respondent. The request listed four items and read as follows: Please consider this email as one consolidated renewed records request, such requests having previously been largely ignored, now in the name of John Sellers and Margaret swanTKO, as members of the Association since April 26, 2019, for the following, which requests have previously been issued in my name alone: 1. Copies of all records and communications, including emails and contemporaneous notes of any conference calls between Carpenter Hazelwood, the Assoication and/or it’s Agents, with and between ROI, Mrs D Sellers, and or any of their Agents since Nov 1 2018. 2. All legal invoices for the current Petition, including those paid for by the insurer. As there is no litigation exception, please supply in unredacted format. 3. There is and never was any litigation pending per the Association’s own disclosure on the resale of lot 12. Therefore, please supply copies of all notices, emails, minutes and relevant records for any and all Executive Sessions of the Board since the filing of the current AZDRE Petition. To include the meeting where Carpenter Hazelwood were retained to defend the current Petition. 4. All communications, emails, notices, of any kind related to the meeting(s) of members conducted for the purposes of signing the notarized petition introduced into evidence at the last Hearing. Such petition alleged a vendetta on my part. Such meetings are identified by the dates notarized by Town of Cave Creek employees in records previously supplied to you evidencing such meetings.

All errors in original.

3. On or about May 29, 2019, Petitioner filed a Homeowners Association (HOA) Dispute Process Petition (Petition), with the Arizona Department of Real Estate (Department), in which Petitioner alleged that “[t]he bulk of the request was denied, with the exception of 1 1 page minute supplied on May 13, 2019.” All errors in original. In the Petition, Petitioner alleged that Respondent violated A.R.S. § 33-1258 because Respondent failed to timely provide him with the requested documents. 4. Respondent filed an Answer with the Department denying the allegations set forth in the Petition. 5. On or about June 18, 2019, 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. 6. On August 5, 2019, a hearing was held on the Petition and the parties presented evidence and argument regarding the statute and the documents provided to Petitioner. 7. At hearing, Petitioner testified that he received documents responsive to item #2, on Friday, August 2, 2019. Petitioner indicated that he was satisfied with Respondent’s compliance. Petitioner also testified that he received one document responsive to item #3. However, Petitioner stated that the redacted copy of that document was partially compliant with his records request. 8. Petitioner testified that Respondent previously indicated that it did not have records of the meeting minutes responsive to item #4. He stated that he requested the April 6, 2019 and April 8, 2019 meeting records because he opined that Respondent could not have gotten 21 signatures from the residents without a meeting. Petitioner stated that he wanted to subpoena the notary public to review what she [saw] both days, but that subpoena was “quashed.” 9. Petitioner testified that he strongly believed that emails responsive to item #1 existed. He stated that he requested those emails so that he could prove Respondent communicated about Petitioner. 10. At hearing, Mr. Kaplan testified, on behalf of Respondent, and argued that Respondent received over 400 emails from Petitioner in the last three years. He stated that about 100 of the emails were records requests. Mr. Kaplan argued that Respondent gave Petitioner everything in its possession, in accordance with Petitioner’s Petition. He further stated that Respondent went above and beyond the records request when it gave Petitioner documents that were not requested by Petitioner in an effort to be transparent. 11. Mr. Kaplan testified that Respondent gave Petitioner all documents, including but not limited to emails, contracts, tax returns, insurance records, and financial documents that did not fall under the exceptions of A.R.S. § 33-1258. 12. Mr. Kaplan responded as follows with respect to each of requests: a. As to item #1, Mr. Kaplan stated that these records did not exist and were not in Respondent’s possession. b. As item #2, Mr. Kaplan stated that Respondent gave Petitioner redacted invoices because those records fell under the attorney client privilege. He discussed that the redacted content dealt with the current litigation and thus, was privileged. c. As to item #3, Mr. Kaplan stated that under A.R.S. § 33-1248, records of these minutes are not the same as open meeting policies. He stated that Respondent complied with the records request and gave Petitioner the redacted version of the executive sessions minutes. d. As to item #4, Mr. Kaplan testified that the signatures were that of residents who requested that Petitioner not be awarded the house in his pending divorce because they were unhappy with Petitioner and did not want him as their neighbor any longer. Mr. Kaplan stated that these same neighbors went to Petitioner’s divorce proceedings to influence the court to award the house to Petitioner’s ex-wife. Mr. Kaplan further stated that there were no meetings on April 6, 2019 or April 8, 2019. Thus, there were no minutes in existence or in Respondent’s possession. Additionally, Respondent had no documents, in its possession, regarding the notary public. 13. Mr. Kaplan testified that Petitioner always had access to financial and bank records. This access was through Respondent’s website and was accessible to all residents. Mr. Kaplan opined that Respondent adhered to Petitioner’s records request to the best of its abilities. He stated that Respondent provided Petitioner with all records and documents that were in their possession and that were not subject to the exceptions under A.R.S. § 33-1258. 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, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1805. 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. A.R.S. § 33-1258 provides, in pertinent part: A. 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. The association shall not charge a member or any person designated by the member in writing for making material available for review. The association shall have ten business days to fulfill a request for examination. On request for purchase of copies of records by any member or any person designated by the member in writing as the member’s representative, the association shall have ten business days to provide copies of the requested records. An association may charge a fee for making copies of not more than fifteen cents per page. B. Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to any of the following: 1. Privileged communication between an attorney for the association and the association. 2. Pending litigation. 3. Meeting minutes or other records of session of a board meeting that is not required to be open to all members pursuant to section 33-1248. 5. As to item #1 and item #4, Petitioner failed to establish by a preponderance of the evidence that these documents existed at the time of the April 29, 2019 request such that Respondent’s failure to provide the documents was a violation of A.R.S. § 33-1258. Whether Respondent was required to maintain a copy of the documents in accordance with the purported record retention policy is not relevant to a determination as to whether Respondent complied with the statute. 6. Petitioner failed to establish a violation of A.R.S. § 33-1258, for item #3. Petitioner did not dispute that the records were exempt from the exceptions under A.R.S. § 33-1258(B). 7. In his testimony, Petitioner acknowledged that Respondent complied with item #2. 8. The evidence of record established that Respondent gave Petitioner access to review any and all documents that were available to all residents. Moreover, Respondent gave Petitioner documents and records in addition to the records request. 9. In this case, the Administrative Law Judge concludes that Petitioner has not established by a preponderance of the evidence that Respondent violated A.R.S. § 33- 1258 as described above. The Administrative Law Judge concludes that Petitioner’s Petition should be dismissed. ORDER

IT IS ORDERED that Petitioner’s Petition is dismissed.

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 30 days of the service of this Order upon the parties.

Done this day, August 26, 2019.

/s/ Antara Nath Rivera Administrative Law Judge

Copy mailed/e-mailed/faxed August 26, 2019 to:

Judy Lowe, Commissioner Arizona Department of Real Estate 100 N. 15th Avenue, Suite 201 Phoenix, Arizona 85007 Attn: [email redacted]

John A Sellers PO Box 3431 Carefree, AZ 85377

Edith I. Rudder & Edward D. O'Brien Carpenter, Hazlewood, Delgado & Bolen LLP 1400 E Southern Ave., Suite 400 Tempe, AZ 85282-5691

By -----------------------

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