ALJDEC decisions subject to certification as final

20F-H2019014-REL · Department of Real Estate - H/C · 2020-01-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Paul L Moffett,

Petitioner,

vs.

Vistoso Community Association,

Respondent.

No. 20F-H2019014-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 16, 2019, with post hearing submissions received through January 7, 2020.

APPEARANCES: Petitioner Paul L. Moffett appeared and was represented by Richard M. Rollman. Respondent Vistoso Community Association was represented by Jason E. Smith.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

On or about September 25, 2019, Petitioner Paul L. Moffett filed a Homeowners Association (HOA) Dispute Process Petition (Petition) with the Arizona Department of Real Estate (Department) alleging a violation of community documents by Respondent Vistoso Community Association. Petitioner indicated a single issue would be presented, paid the appropriate $500.00 filing fee, and asserted a violation of “Article VII Membership and Voting, Section 7.3.1 Voting Classes.”

On or about October 31, 2019, the Department issued a Notice of Hearing in which it set forth the issue for hearing as follows:

The Petitioner alleges that Vistoso Community Association is in violation of community document CC&Rs Article VII Membership and Voting section 7.3.1 Voting Classes in a single-issue petition.

At hearing, Petitioner testified on his own behalf and Respondent presented the testimony of Kimberly Rubly, Vice President of Southern Region. Based on the evidence presented at hearing, the following occurred:

On or about March 20, 2007, Vistoso Highlands obtained ownership of 39 lots from Declarant.

On or about August 21, 2014, and October 14, 2014, Pulte’s predecessor obtained ownership of 168 total lots from Declarant. On or about January 2, 2019, Pulte obtained ownership of the 168 lots from its predecessor.

On or about March 29, 2019, Respondent held an election of the Board of Directors.

In the days preceding the election, the property management staff reached out to Pulte and Vistoso Highlands to obtain their votes for the election.

Both Pulte and Vistoso Highlands cast all their available votes, 207 votes, for Sarah Nelson. Patrick Straney, and Dennis Ottley.

Article VII, Section 7.3.1 of the Declaration provides, in pertinent part, “a Class A Member shall not be entitled to vote with respect to any Lots, Parcels or Apartment Units in regard to which the Owner is paying only a reduced Assessment pursuant to Section 8.3.”

Article VIII, Section 8.3 of the Declaration allows Developer Owners to pay a reduced assessment for a maximum of two years after the initial Developer Owner obtains ownership from the Declarant.

Pursuant to Article VIII, Section 8.3, the reduced assessments should have terminated on March 20, 2009, for the lots owned by Vistoso Highlands and on October 14, 2016, for the lots owned by Pulte.

For whatever reason, neither Vistoso Highlands nor Pulte had been paying the full assessment as required by the Declaration as of the date of the election.

Petitioner argued that because Vistoso Highlands and Pulte were paying reduced assessments even though they should have been paying the full assessments, they were not entitled to vote in the election.

Respondent argued that because Vistoso Highlands and Pulte were not paying reduced assessments “pursuant to Section 8.3” the prohibition in Section 7.3.1 was not applicable.

CONCLUSIONS OF LAW

Arizona statute permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents or violations of statutes that regulate planned communities. A.R.S. § 32-2199. That statute provides that such petitions will be heard before the Office of Administrative Hearings.

Petitioner bears the burden of proof to establish that Respondent committed the alleged violations by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

One cannot read Section 7.3.1 of the Declaration without taking into consideration the provisions of Section 8.3. Section 7.3.1 provides that those members paying only a reduced assessment pursuant to Section 8.3 are not entitled to vote. Section 8.3 provides a Developer Owner is permitted to pay a reduced assessment for a maximum of 24 months after a parcel is purchased from the Declarant.

In the instant matter, Vistoso Highlands and Pulte (or Pulte’s predecessor) were paying reduced assessments for years beyond when they should have started paying full assessments. While the failure to be invoiced and to pay a full assessment on the 207 parcels at issue is certainly a financial concern for the association as a whole, that does not necessitate a finding that Vistoso Highlands and Pulte were not entitled to cast votes in the election.

Because Vistoso Highlands and Pulte were paying reduced assessments but not pursuant to Section 8.3, the prohibition on them voting found in Section 7.3.1. was not applicable to them.

Accordingly, Vistoso Highlands and Pulte were entitled to vote in the election at issue. Thus, Petitioner failed to sustain his burden to establish a violation of Article VII, Section 7.3.1.

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.

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001

-137160-45720000Done this day, January 27, 2020.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile January 27, 2020 to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Jason E. Smith

CARPENTER HAZLEWOOD DELGADO & WOOD, PLC

Sean K. Moynihan

1400 E. Southern Ave, Ste 400

Tempe, AZ 85282-5693

[email redacted]

Richard M. Rollman

Gabroy, Rollman & Bosse, P.C.

3507 N. Campbell Ave., Suite 111

Tucson, AZ 85719

By Alyssa Leverette

-54864001

001

-137160-45720000