ALJDEC decisions subject to certification as final

20F-H2019022-REL · Department of Real Estate - H/C · 2020-03-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kenneth W Zablotny,

Petitioner

vs.

Sycamore Hills Estates, Inc.,

Respondent

No. 20F-H2019022-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 13, 2020.

APPEARANCES: Kenneth Zablotny, Petitioner, appeared on his own behalf. Sycamore Hills Estates, Inc., Respondent, did not appear.

ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera.

_____________________________________________________________________

FINDINGS OF FACT

On or about October 15, 2019, Petitioner filed a Homeowners Association (HOA) Dispute Process Petition (Petition) with the Arizona Department of Real Estate (Department). Petitioner asserted a violation of Arizona Revised Statute (A.R.S.) §33-1805 and Article X of the Sycamore Hills Estates Bylaws (Bylaws).

On or about December 20, 2019, the Department issued a Notice of Hearing in which it set forth the issue for hearing as follows:

The Petitioner alleges in the petition that that Sycamore Hills Estates, Inc. is in violation of A.R.S. §33-1805 and community documents Bylaws Article X Books and in a single-issue petition.

All errors in original.

The Department issued a Notice of Hearing, setting a hearing on February 13, 2020, at 1:00 p.m. The Department mailed copies of the Notice of Hearing to Respondent at its address of record.

The Notice of Hearing informed the parties that “[i]f Respondent does not appear, the hearing will proceed in the Respondent’s absence.”

Respondent did not request to appear telephonically and did not request that the hearing be continued. Although the start of the hearing was delayed 20 minutes, Respondent did not appear through an authorized member, employee, or attorney.

At the hearing, Petitioner testified on his own behalf.

HEARING EVIDENCE

Petitioner testified that he was a homeowner in Respondent’s community since 2012. Petitioner was a real estate agent and attended every board meeting.

Petitioner testified that during the November 20, 2017, board meeting, Petitioner inquired about the status of a homeowner’s current dues. The homeowner was a board member who went into a public foreclosure. During the board meeting, Respondent’s manager, Char DuFresne, informed Petitioner that the homeowner’s finances were up to date.

On an unspecified date, Petitioner inquired about the status of another homeowner’s current dues when that homeowner went into foreclosure. Ms. DuFresne informed Petitioner that the homeowner was current in his dues.

On an unspecified date, Petitioner learned that the second homeowner owed $1,600.00 in homeowner’s association fees.

Upon learning this, Petitioner requested to see Respondent’s books and records. Ms. DuFresne refused to allow Petitioner to view the books and records. Petitioner sought the advice of an attorney.

On or about December 14, 2017, Petitioner’s attorney wrote a letter to Respondent and requested Respondent to furnish the relevant information available to Petitioner pursuant to A.R.S. § 33-1805. Respondent did not respond to Petitioner’s attorney’s letter.

On or about March 24, 2019, Petitioner requested Respondent’s expenditure statements via Respondent’s website. Respondent did not reply to that request.

On or about May 20, 2019, Petitioner submitted a written request to view the books and records in person, at Respondent’s convenience. Petitioner offered two dates. Respondent did not acknowledge Petitioner’s request.

On or about June 10, 2019, Petitioner made a second request to view the books and records. Respondent did not respond.

On or about August 19, 2019, Petitioner sent Respondent a letter, via certified mail, requesting to view the books and records. Respondent did not respond.

On or about September 9, 2019, Petitioner sent a certified letter to the board of directors requesting to view Respondent’s books and records. The board of directors informed Petitioner that he could not see the documents.

After Petitioner filed the Petition, Ms. DuFresne sent information on one account. Petitioner explained that Respondent had four accounts. Petitioner requested to view the books and records on the other three accounts. Ms. DuFresne responded that she did not have time to meet with Petitioner and that she would send him what she had. Ms. DuFresne never sent the books and records.

In November 2019, Ms. DuFresne sent Petitioner a financial statement that was not legible.

On or about December 3, 2019, Petitioner made one last request to Respondent to meet in person to view the books and records. Respondent never replied.

Petitioner wanted to view Respondent’s books and records from 2017 to 2019. Petitioner opined that he had a right to observe them pursuant to A.R.S. § 33-1805 and Section X of the Bylaws.

CONCLUSIONS OF LAW

The Department has jurisdiction to hear disputes between a property owner and a planned community association. A.R.S. § 41-2198.01(B).

In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1805. A.M. R2-19-119.

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).

A.R.S. § 33-1805, Association financial and other records, provides, in pertinent part:

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.

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 a session of a board meeting that is not required to be open to all members pursuant to section 33-1804.

4. Personal, health or financial records of an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.

5. Records relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.

C. The association shall not be required to disclose financial and other records of the association if disclosure would violate any state or federal law.

Article X, Books and Records, provides, in pertinent part:

The books, records, and papers of the Association shall at all times, during reasonable business hours, be subject to inspection by any Member. The Declaration, the Articles of Incorporation and the Bylaws of the Association shall be available for inspection by any Member at the principal office of the Association, where copies may be purchased at a reasonable cost.

Petitioner established that Respondent violated A.R.S. § 33-1805 and Section X of the Bylaws. The evidence showed that Respondent did not give Petitioner any access to review the books and records despite Petitioner’s repeated requests. Petitioner requested to see the documents in person at the convenience of Respondent. Respondent’s failure to respond and provide dates and times, within reasonable business hours, was in violation of Section X of the Bylaws.

The Administrative Law Judge concludes that Petitioner established by a preponderance of the evidence that Respondent violated A.R.S. § 33-1805 and Section X of the Bylaws as described above. The Administrative Law Judge concludes that Petitioner’s Petition should be upheld.

ORDER

In view of the foregoing,

IT IS ORDERED that the Petition be upheld.

IT IS FURTHER ORDERED Petitioner be deemed the prevailing party in this matter.

IT IS FURTHER ORDERED that Respondent supply Petitioner with the relevant documents, within ten (10) days of this Order, pursuant to A.R.S. § 33-1805 and Section X of the Bylaws.

IT IS FURTHER ORDERED that Respondent pay Petitioner his filing fee of $500.00, to be paid directly to Petitioner within thirty (30) days of this Order.

No Civil Penalty is found to be appropriate in this matter.

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, March 3, 2020.

/s/ Antara Nath Rivera

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

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