ALJDEC decisions subject to certification as final

19F-H1919068-REL · Department of Real Estate - H/C · 2019-09-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 21, 2019 APPEARANCES: Michael J. Stoltenberg on his own behalf; Nicole Payne, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT 1. On July 3, 2019, the Arizona Department of Real Estate issued a Notice of Hearing setting the above-captioned matter for hearing on August 21, 2019 at the Office of Administrative Hearings in Phoenix, Arizona. 2. The Notice of Hearing shows that Petitioner Michael J. Stoltenberg alleges that Respondent Rancho Del Oro Homeowners Association has violated Association CC&Rs 1.8, 1.9, 2.1, 3.1, 4.1, 4.2, 4.3, 14.2, and all parts of article 4 in a single issue petition. 3. Mr. Stoltenberg appeared and testified; the Association presented the testimony of Diana Crites of Crites Property Management. 4. Through Orders dated July 18 and August 5, 2019, the undersigned Administrative Law Judge informed the parties that he read the petition to encompass more than one issue and that Mr. Stoltenberg would be required either to identify a single issue for hearing or to pay to the Department the appropriate fee for a multi-issue hearing. 5. At the hearing, Mr. Stoltenberg agreed to limit his petition to the single issue of whether the Association had violated CC&R section 4.3 by failing to deliver to him a copy of the 2019 budget fifteen days before the meeting at which the budget was considered. 6. CC&R section 4.3 provides that it is the Board’s duty to prepare a budget at least sixty days before the fiscal year and at least thirty days before the meeting at which the budget is presented to the membership, and that the Board shall cause a copy of the budget and the amount of the assessments to be levied against each residential unit for the following year to be delivered to each unit owner at least fifteen days prior to that meeting. 7. The Association conducted its annual meeting on January 17, 2019. At that time, the monthly dues were increased by 10% to $154 per month. Dues increases of up to 10% do not require approval of the membership. 8. In November 2018, the Association informed the members of the annual meeting and that the dues would be increased to $154 per month. 9. Mr. Stoltenberg had entered into evidence a copy of the 2019 budget that he received in January 2019, and that was postmarked January 2, 2019. Mr. Stoltenberg provided credible testimony that he did not receive the budget more than fifteen days before the January 17, 2019 meeting. 10. Mr. Stoltenberg requested that the 2019 dues increase be rescinded. CONCLUSIONS OF LAW 1. The Department of Real Estate has authority over this matter. Ariz. Rev. Stat. Title 32, Ch. 20, Art. 11. 2. Petitioner bears the burden of proof, and the standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 3. A preponderance of the evidence is: The 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. Black’s Law Dictionary 1373 (10th ed. 2014). 4. The CC&Rs are a contract between the parties and the parties are required to comply with its terms. See Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003); see also Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)(the tribunal must give effect to a contract’s clear and unambiguous terms). 5. CC&R section 4.3 unambiguously requires that the annual budget be delivered to the unit owners at least fifteen days before the meeting at which the budget is considered. The preponderance of the evidence shows that the Association placed the budget in the mail on January 2, 2019, which is fifteen days before the meeting, but it was not delivered to Mr. Stoltenberg on that date and was not delivered to him fifteen days before the meeting as required. 6. Consequently, Mr. Stoltenberg has met his burden to show that the Association violated CC&R section 4.3. 7. Mr. Stoltenberg has not demonstrated that the dues increase should be rescinded, nor has he shown that it is appropriate to issue a civil penalty against the Association. 8. Because Mr. Stoltenberg is the prevailing party, the Association must pay to him his $500 filing fee. Ariz. Rev. Stat. § 32- 2199.02. ORDER IT IS ORDERED that Petitioner Michael J. Stoltenberg is deemed to be the prevailing party in this matter; IT IS FURTHER ORDERED that Rancho Del Oro Homeowners Association must pay to Mr. Stoltenberg his filing fee of $500.00 within thirty days of this Order. NOTICE Pursuant to Ariz. Rev. Stat. section 32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to Ariz. Rev. Stat. section 32-2199.04. Pursuant to Ariz. Rev. Stat. section 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, September 4, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted to:

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

Lydia A. Peirce Linsmeier Nicole Payne CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP 1400 E. Southern Ave., Suite 400 Tempe, Arizona 85282

Michael J. Stoltenberg 11777 E Calle Gaud Yuma, AZ 85367

By F. Del Sol

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