ALJDEC decisions subject to certification as final

20F-H2019032-REL-RHG · Department of Real Estate - H/C · 2020-08-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

John R Ashley,

Petitioner,

vs.

Rancho Reyes II Community Association, Inc.,

Respondent.

No. 20F-H2019032-REL-RHG

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 28, 2020

APPEARANCES: John R. Ashley on his own behalf; Wendy Ehrlich, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On March 27, 2020, the Arizona Department of Real Estate (“Department”) issued an Order Granting Rehearing and Notice of Rehearing setting the above-captioned matter for rehearing on May 21, 2020 at the Office of Administrative Hearings (“OAH”) in Phoenix, Arizona. The matter was continued and the rehearing was conducted on July 28, 2020.

Petitioner John R. Ashley appeared at the rehearing and testified on his own behalf. Respondent Rancho Reyes II Community Association, Inc. was represented by counsel but presented no witnesses.

The parties agreed that the Administrative Law Judge should take notice of the record from the original matter.

On or about December 9, 2019, Mr. Ashley filed with the Department the single-issue petition that gave rise to this matter.

In his petition, Mr. Ashley alleged that the Respondent had violated Article III, Section 4 and Article IV, Section 2 of the Bylaws. According to that petition, Respondent did so by failing to have a quorum of Board members at the membership meetings in December 2017 and December 2018.

Because Mr. Ashley paid the fee for only a single issue hearing, he was directed to file with the OAH a statement setting forth his single issue.

Through a Notice dated February 18, 2020, Mr. Ashley informed Respondent and the tribunal that his single issue was the allegation that the Respondent had violated Article III, Section 4 of the Bylaws.

In the original matter, on February 10, 2020, Respondent filed a Motion to Dismiss Petition, arguing to the effect that the petition should be dismissed because Article III, Section 4 does not require that a quorum of Board members be present for a meeting of the members. Mr. Ashley did not file a response to the Motion to Dismiss, and through an Order dated March 3, 2020, Respondent’s Motion was granted.

On March 10, 2020, Mr. Ashley filed with the Department his Request for Rehearing. Respondent filed with the Department a Response on March 23, 2020. As set out above, the Department granted Mr. Ashley’s request and the matter was noticed for rehearing.

Bylaws Article III is entitled “Meetings of Members;” Section 4 is entitled “Quorum.”

Article III, Section 4 provides in pertinent part: “The presence at the meeting of Members entitled to cast, or of proxies entitled to cast, one-tenth (1/10th) of the votes of each class of membership will constitute a quorum for any action except as otherwise provided in the Articles of Incorporation, the Declaration, or these Bylaws.”

Bylaws Article IV is entitled “Board of Directors: Selection and Term of Office.”

Bylaws Article VI is entitled “Meetings of Directors;” Section 3 is entitled “Quorum.” Article VI, Section 3 shows that a majority of Directors constitutes a quorum for the transaction of business.

Mr. Ashley argues that Roberts Rules of Order support his position, but he presented no evidence to show that Roberts Rules are part of the “Articles of Incorporation, the Declaration, or [the] Bylaws.”

The record shows that there were originally two classes of members, the homeowners and the Developers, but only the membership class remains. Mr. Ashley argues that there is a third class of member, the Board membership class. According to Mr. Ashley, Article III, Section 4 requires a quorum of the Board membership class at each annual meeting of the members.

CONCLUSIONS OF LAW

The Department of Real Estate has authority over this matter. Ariz. Rev. Stat. Title 32, Ch. 20, Art. 11.

Mr. Ashley 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.

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).

The Bylaws are a contract between the Association and the members, the terms of which the parties are required to comply with. See McNally v. Sun Lakes Homeowners Ass’n #1, Inc., 241 Ariz. 1, 382 P.3d 1216 (2016 App.); Rowland v. Union Hills Country Club, 157 Ariz. 301, 757 P.2d 105 (1988 App.).

Article III, Section 4 of the bylaws is unambiguous in that there is no requirement for a quorum of Board members to be present at a meeting of the membership. The tribunal is required to give effect to those unambiguous terms. See Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006.

Mr. Ashley did not present substantial evidence that Roberts Rules of Order are applicable to this matter.

Mr. Ashley did not present substantial evidence that the Bylaws include a “Board membership class.”

Mr. Ashley’s allegation that Respondent conducted member-meetings without a quorum of Board members present cannot be a violation of Bylaws Article III, Section 4 because Article III, Section 4 does not require a quorum of Board members to be present at a meeting of the members.

Consequently, Mr. Ashley has not shown by a preponderance of the evidence that Respondent violated Bylaws Article III, Section 4.

Mr. Ashley’s petition should be dismissed and the Respondent be deemed to be the prevailing party in this matter.

ORDER

IT IS ORDERED that Petitioner John R. Ashley’s petition is dismissed.

NOTICE

This administrative law judge order, having been issued as a result of a rehearing, is binding on the parties. Ariz. Rev. Stat. section 32-2199.02(B). A party wishing to appeal this order must seek judicial review as prescribed by Ariz. Rev. Stat. section and title 12, chapter 7, article 6. Any such appeal must be filed with the superior court within thirty-five days from the date when a copy of this order was served upon the parties. Ariz. Rev. Stat. section 12-904(A).

-54864001

001

-137160-45720000Done this day, August 11, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

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

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

John R Ashley

2630 E Cambridge Ring Dr.

Tucson, AZ 85706

[email redacted]

Wendy Erlich, Attorney PLLC

9671 N Horizon Vista Place

Oro Valley, AZ 85704

[email redacted]

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001

-137160-45720000By _____