ALJDEC decisions subject to certification as final

20F-H2019033-REL · Department of Real Estate - H/C · 2020-03-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Donna M Bischoff,

Petitioner,

vs.

Country Hills West Condominium Association, Inc.,

Respondent.

No. 20F-H2019033-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 10, 2020.

APPEARANCES: Donna M. Bischoff, Petitioner, appeared on her own behalf. Doug Meyer appeared on behalf of Country Hills West Condominium Association, Inc., Respondent.

ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera

_____________________________________________________________________

FINDINGS OF FACT

On or about December 11, 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 Statutes (A.R.S.) §§ 33-1250(C), 33-1248(B), and Article 3, Section 2 of the Bylaws of Country Hills West Association, Inc. (Bylaws).

On or about January 13, 2020, 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 Country Hills West Condominium Association, Inc. is in violation of A.R.S. § 33-1250(C), A.R.S. § 33-1248(B) and community documents Bylaws Article 3.2.

All errors in original.

At the hearing, Petitioner testified on her own behalf. Doug Meyer, President and Director of Respondent, testified on behalf of Respondent.

HEARING EVIDENCE

At the hearing, Petitioner testified that she owned her unit for three and a half years. She attended meetings since she purchased her unit.

She testified that Respondent held two yearly meetings since 2017. Respondent held meetings on August 28, 2017, and October 18, 2018. The scheduled yearly meeting for 2019 was initially scheduled for November 20, 2019. However, that meeting was rescheduled for December 19, 2019. The meeting was again rescheduled for December 30, 2019. Ultimately, the meeting was rescheduled, for a third time, for January 24, 2020. That postponement was a violation of the Bylaws because Respondent did not have a required yearly meeting in 2019. The November 20, 2019, meeting was cancelled because some of the ballots had write in ballots and write in ballots were prohibited even though the Bylaws and Articles of Incorporation are silent on that issue. Petitioner argued that this same board of directors allowed write in ballots in 2017.

In October 2018, Petitioner requested to see election results from the October 2018 elections. Respondent did not give Petitioner the results. On an unspecified date, Petitioner was ultimately given the voting tallies from that election. However, Petitioner wanted to know which units voted.

Petitioner opined that the November 20, 2019, election should have taken place with the write in ballots. She argued that the board of directors could not choose how to interpret a silent document.

At the hearing, Mr. Meyer testified that Petitioner was informed that write in ballots were not valid for the November 20, 2019, election. Mr. Meyer acknowledged that Respondent rescheduled the November 20, 2019, yearly meeting to January 24, 2020. The meeting was rescheduled because there were write in candidates on the ballot and that was prohibited. Because the election was to be held on November 20, 2019, Respondent quickly sent out interest forms to residents who wanted to be on the ballot. Respondent needed time to reprint the ballot and mail them out.

On or about December 30, 2019, Respondent held a membership meeting to discuss write in ballots. There was no quorum at this meeting. Mr. Meyer stated that Bylaws had a mechanism to protect ballots. The Bylaws allowed “nomination” whereby a member can elect themselves.

Mr. Meyer testified that there was no quorum at the October 18, 2018, meeting, and thus, no election occurred. Quorum was defined in Article 4, Section 3 of the Bylaws. Therefore, there was no obligation to publish actual ballots. However, a few weeks prior to the hearing at the Office of Administrative Hearings, Respondent gave the vote tallies and a list of unit members who voted to Petitioner. Mr. Meyer acknowledged that Respondent did not have quorum for the last 20 years.

Mr. Meyer opined that while members, themselves, were not against write in ballots, Respondent needed to figure out how to handle write in ballots because the Bylaws were silent on that issue. As for the November 20, 2019, vote, any ballots with write in ballots would have been thrown out because members were informed that write in ballots were prohibited.

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 et seq. 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.”

A.R.S. § 33-1250(C), Voting; proxies; absentee ballots; applicability; definition provides in part that:

Notwithstanding any provision in the condominium documents, after termination of the period of declarant control, votes allocated to a unit may not be cast pursuant to a proxy. The association shall provide for votes to be cast in person and by absentee ballot and, in addition, the association may provide for voting by some other form of delivery, including the use of e-mail and fax delivery. Notwithstanding section 10-3708 or the provisions of the condominium documents, any action taken at an annual, regular or special meeting of the members shall comply with all of the following if absentee ballots or ballots provided by some other form of delivery are used:

The ballot shall set forth each proposed action.

The ballot shall provide an opportunity to vote for or against each proposed action.

The ballot is valid for only one specified election or meeting of the members and expires automatically after the completion of the election or meeting.

The ballot specifies the time and date by which the ballot must be delivered to the board of directors in order to be counted, which shall be at least seven days after the date that the board delivers the unvoted ballot to the member.

The ballot does not authorize another person to cast votes on behalf of the member.

The completed ballot shall contain the name, the address and either the actual or electronic signature of the person voting, except that if the condominium documents permit secret ballots, only the envelope shall contain the name, the address and either the actual or electronic signature of the voter.

Ballots, envelopes and related materials, including sign-in sheets if used, shall be retained in electronic or paper format and made available for unit owner inspection for at least one year after completion of the election.

A.R.S. § 33-1248(B), Open meetings; exceptions provides in part that:

Notwithstanding any provision in the condominium documents, all meetings of the unit owners' association and the board shall be held in this state. A meeting of the unit owners' association shall be held at least once each year. Special meetings of the unit owners' association may be called by the president, by a majority of the board of directors or by unit owners having at least twenty-five percent, or any lower percentage specified in the bylaws, of the votes in the association. Not fewer than ten nor more than fifty days in advance of any meeting of the unit owners, the secretary shall cause notice to be hand delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner. The notice of any meeting of the unit owners shall state the date, time and place of the meeting. The notice of any annual, regular or special meeting of the unit owners shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the declaration or bylaws, any changes in assessments that require approval of the unit owners and any proposal to remove a director or officer. The failure of any unit owner to receive actual notice of a meeting of the unit owners does not affect the validity of any action taken at that meeting.

Article 3, Section 2 of the Bylaws, provides that:

Selection. At each meeting at which Directors are to be elected, the Directors shall be elected by a majority vote of the Members voting in the manner specified in the Articles of Incorporation of this Association.

The evidence presented showed that there was one required yearly meeting in 2017, one required yearly meeting in 2018, and one non-quorum membership meeting in 2019. There was evidence that Respondent postponed its required yearly 2019 meeting to January 2020. Therefore, Respondent was in violation of A.R.S. § 33-1248(B).

The evidence showed that Respondent gave Petitioner the 2018 vote tallies and list of unit owners who voted a few weeks before this hearing. Respondent did not provide Petitioner with the required items including ballots, envelopes, related materials, and sign-in sheets. Petitioner would be limited to the information contained in those items. Thus, Respondent was in violation of A.R.S. § 33-1250(C).

There was undisputed testimony that the Bylaws were silent with respect to the validity of write in ballots. There was evidence that the board of directors prohibited members to write in candidates on the ballots. However, absent any clear language in the A.R.S. or the Bylaws prohibiting write in ballots, Respondent failed to show how the ballots were invalid. Thus, Respondent was in violation of Article 3, Section 2 of the Bylaws.

ORDER

In view of the foregoing,

IT IS ORDERED that the Petition be upheld on all issues.

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. § 33-1250(C).

IT IS FURTHER ORDERED that Respondent pay Petitioner his filing fee of $1,500.00, 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 30, 2020.

/s/ Antara Nath Rivera

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 North 15th Avenue, Suite 201

Phoenix, AZ 85007

Donna M. Bischoff

505 SE Davis Street, Apt. 2

McMinnville, OR 97128

Country Hills West Condominium Association, Inc.

c/o Hart’s HOA Management Company LLC

PO Box 1838

Flagstaff, AZ 86002

-54864001

001

-137160-45720000