ALJDEC decisions subject to certification as final
20F-H2019035-REL · Department of Real Estate - H/C · 2020-04-28
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Kenneth E Kassa,
Petitioner,
vs.
Queen Creek Ranchettes Homeowners Association, Inc.,
Respondent.
No. 20F-H2019035-REL
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: April 08, 2020 at 1:30 PM.
APPEARANCES: Kenneth Kassa (“Petitioner”) appeared on his own behalf. Queen Creek Ranchettes Homeowners Association Inc. (“Respondent” and “Association”) was represented by Jody Augustin. Dean McDaniels, Kelly Kassa, Kimberly Timm, Sonya Foster, and Colleen Kaul observed.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
_____________________________________________________________________
After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Decision and Final Order to the Commissioner of the Arizona Department of Real Estate (“Department”).
FINDINGS OF FACT
Background and Procedure
The Department is authorized by statute to receive and to decide petitions for hearings from members of homeowners’ associations and from homeowners’ associations in Arizona.
On December 16, 2019, Petitioner filed a single-issue petition against the Association with the Department. Petitioner tendered $500.00 to the Department with his petition.
On January 10, 2020, the Association filed its Answer with the Department whereby it denied all complaint items in the petition.
Per the Notice of Hearing, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 12, 2020, regarding the following issues based on Petitioner’s petition:
Petitioner alleges in the petition that Queen Creek Ranchettes Homeowners’ Association, Inc. is in violation of A.R.S. § 33-1804.
On March 25, 2020, the undersigned Administrative Law Judge issued an Order Setting Telephonic Hearing to the parties pursuant to Arizona Supreme Court Administrative Order No. 2020–48.
The Parties and Governing Documents
Respondent is a homeowners’ association whose members own properties in a residential real estate development located in Queen Creek, Arizona. Membership for the Association is compromised of the Queen Creek Ranchettes Phase I subdivision.
Petitioner is a Queen Creek Ranchettes Phase I subdivision property owner and a member of the Association.
The Association is governed by its Covenants, Conditions, and Restrictions (“CC&Rs”), and overseen by a Board of Directors (“the Board”). The Association is also regulated by Title 33, Chapter 16, Article 1 of the Arizona Revised Statutes (“Ariz. Rev. Stat.”)
The Association’s CC&Rs were rerecorded with the Pima County Recorder’s Office on January 20, 1989. The CC&Rs empower the Association to control certain aspects of property used within the development. When a party buys a residential unit in the development, the party receives a copy of the CC&Rs and agrees to be bound by their terms. Thus, the CC&Rs form an enforceable contract between the Association and each property owner.
Bylaws Article IV, Meetings of Members, Section 4.01 states “the first annual meeting of the Members shall be held within one (1) year from the date of incorporation of the Association, and each subsequent regular annual meeting shall be held on the same day of the same month of each calendar year thereafter at the hour of 10:00 a.m. (Mountain Standard Time). The Board may fix a different date and time for the meeting. If the scheduled day for any annual meeting of the Association is a legal holiday (either federal or State of Arizona), the meeting shall be held at the same hour on the first day following which is not a legal holiday. Any business of the Association may be transacted at the annual meeting.”
Bylaws Article IV, Meetings of Members, Section 4.02 states “Meetings of the Members shall be held at the principal office of the Association or at any other place within the State of Arizona, County of Maricopa, that the Board may from time to time select.”
Bylaws Article IV, Meetings of Members, Section 4.03 states “Special meetings of the Association maybe called at any time by the President of the Association or by the Board upon written request of either (i) the Members who are entitled to cast one-fourth (1/4) of all the votes of the Class A membership, or (ii) the Blass B Member, if any.”
Bylaws Article IV, Meetings of Members, Section 4.04 states “Written notice of each meeting of the Association shall be given by, or at the direction of, the Secretary or person authorized to call the meeting by mailing a copy of the notice, postage prepaid, at least five (5) days but not more than thirty (30) days before the meeting to the ownership role of the Association or to such other address as may have been supplied in writing by such Member to the Association for the purpose of notice. Such notice shall specify the place, day and hour of the meeting. Duplicates of notices need not be given to Voting Representatives.”
Bylaws Article VI, Meetings of the Board, Section 6.01 states “Regular meetings of the Board shall be held at least annually at such place and hour as may be fixed from time to time by the Board. Meetings may be held by conference telephone or similar communications equipment by means of which all participants can hear each other.”
Bylaws Article VI, Meetings of the Board, Section 6.02 states “Special meetings of the Board shall be held when called by the President of the Association or by any two Directors after not less than three (3) days’ notice to each Director. A call or notice of a special meeting shall state the purpose or purposes for which the meeting is being called or noticed, and only business affecting or related to such purpose or purposes may be conducted at such meeting.”
Bylaws Article VII, Powers and Duties, Section 7.01 states “The Board shall be vested with all the rights, powers and privileges and charged with all the duties and responsibilities of the Association.”
Bylaws Article XI, Miscellaneous, Section 11.02 states “In the case of any conflict between the Declaration and these Bylaws, the Declaration shall control. All of the terms and provisions of the Declaration are incorporated herein by this reference and made a part hereof as if set forth in full herein.”
Hearing Evidence
Petitioner testified on his own behalf and admitted Exhibits A-E into the record. The Association called Jody Augustin as a witness and submitted Exhibits 1-4 into the record. The Notice of Hearing and Department’s agency file were also admitted into the record as their own exhibits.
At all times relevant to the matter at bar, Ms. Augustin was a member of the Association’s Board. Petitioner was not a member during this period of time.
In years 2017, 2018, and 2019 the Association held one annual public meeting for Members. All other meetings, monthly or otherwise, were held privately by the Board.
The public meeting for 2020 has yet to take place.
The Association provided notice for all meetings they held by placing flyers in common areas. No other form of notice was provided to Members.
Regarding meetings held between 2017 and 2019, neither public nor private meeting minutes were delineated to Members at the conclusion of each meeting. Instead, all meeting minutes were made available to Members upon written request.
Closing Arguments
Petitioner’s closing argument
Petitioner argued that Respondent’s conduct violated Arizona’s Open Meeting Law, e.g. Ariz. Rev. Stat. § 33-1804, because, as Petitioner opined, several of the Board’s closed meetings, “should have been open to the public.” Petitioner further argued that the Association’s single annual meeting was unlawful because the only purpose it served was to apprise Members of, “what was discussed behind closed doors throughout the year.” Petitioner closed by arguing that the onus was on Respondent to provide evidence that it had, in fact, posted or otherwise shared meeting the Board’s minutes with Members.
Respondent’s closing argument
Respondent argued that the Bylaws clearly endowed and permitted the Board with the duty to hold one annual meeting for Members each year, which the Association did from 2017 through 2019. Specifically relying on Bylaws Article IV, section 1, Respondent argued that had maintained compliance with its requirement to hold one annual meeting for Members. Respondent denied being in violation of Ariz. Rev. Stat. § 33-1804.
Conclusions of Law
This matter lies within the Department’s jurisdiction. Pursuant to Ariz. Rev. Stat. §§ 32-2102 and 32-2199 et al., regarding a dispute between an owner and a planned community association, the owner or association may petition the department for a hearing concerning violations of condominium documents or violations of the statutes that regulate condominiums as long as the petitioner has filed a petition with the department and paid a filing fee as outlined in Ariz. Rev. Stat. § 32-2199.05.
Pursuant to Ariz. Rev. Stat. §§ 32-2199(2), 32-2199.01(D), 32-2199.02, and 41-1092, OAH has the authority to hear and decide the contested case at bar. OAH has the authority to interpret the contract between the parties.
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 33-1804.
“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.”
Ariz. Rev. Stat. § 33-1804(A) provides, in pertinent part, as follows:
Notwithstanding any provision in the declaration, bylaws or other documents to the contrary, all meetings of the members' association and the board of directors, and any regularly scheduled committee meetings, are open to all members of the association or any person designated by a member in writing as the member's representative and all members or designated representatives so desiring shall be permitted to attend and speak at an appropriate time during the deliberations and proceedings. Any portion of a meeting may be closed only if that closed portion of the meeting is limited to consideration of one or more of the following:
1. Legal advice from an attorney for the board or the association.
2. Pending or contemplated litigation.
3. 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.
4. Matters 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.
5. Discussion of a member's appeal of any violation cited or penalty imposed by the association except on request of the affected member that the meeting be held in an open session.
Ariz. Rev. Stat. § 33-1804(B) provides, in pertinent part, “Not fewer than ten nor more than fifty days in advance of any meeting of the members the secretary shall cause notice to be hand-delivered or sent prepaid by United States mail to the mailing address for each lot, parcel or unit owner or to any other mailing address designated in writing by a member. The notice shall state the date, time and place of the meeting. A notice of any annual, regular or special meeting of the members shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the declaration or bylaws, changes in assessments that require approval of the members and any proposal to remove a director or an officer.”
Ariz. Rev. Stat. § 33-1804(C) provides, in pertinent part, “Before entering into any closed portion of a meeting of the board of directors, or on notice of a meeting under subsection D of this section that will be closed, the board shall identify the paragraph under subsection A of this section that authorizes the board to close the meeting.”
“In applying a statute . . . its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.” Each word, phrase, clause, and sentence must be given meaning so that no part of the legislation will be void, inert, or trivial. Legislation must also be given a sensible construction that avoids absurd results. If the words do not disclose the legislative intent, the court will scrutinize the statute as a whole and give it a fair and sensible meaning.
The material facts in the record are clear.
It is undisputed that the Association held at least one public annual meeting for Members between 2017 and 2019.
The crux of Petitioner’s dispute stems from his belief that many of the Board’s private meetings, if not all, should have been public, and that none of the Board’s private meeting were noticed to Members. However, Petitioner provided no evidence to suggest that the Association was in violation of Ariz. Rev. Stat. § 33-1804 based on what was discussed in private Board meetings held between 2017 and 2019. Moreover, Petitioner’s secondary argument is a separate and distinct issue. Neither the appropriateness nor lawfulness of the Board’s noticed private meetings, or lack thereof as alleged, may be addressed by this Tribunal.
Therefore, based on a review of the relevant and credible evidence in the record, the undersigned Administrative Law Judge concludes that Petitioner has not sustained his burden of proof in this matter. Thus, no violation of Ariz. Rev. Stat. § 33-1804 exists in this case.
Final Order
Based on the foregoing,
IT IS ORDERED THAT Petitioner’s petition be denied.
NOTICE
This Administrative Law Judge Order, having been issued as a result of a rehearing, is binding on the parties. Ariz. Rev. Stat. § 32-2199.02(B). A party wishing to appeal this order must seek judicial review as prescribed by Ariz. Rev. Stat. § 41-1092.08(H) 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. § 12-904(A).
Done this day, April 28, 2020.
/s/ Jenna Clark
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile April 28, 2020 to:
Judy Lowe, Commissioner
Arizona Department of Real Estate
100 N. 15th Avenue, Suite 201
Phoenix, Arizona 85007
[email redacted]
Kenneth E. Kassa, Petitioner
19312 E. Sonoqui Blvd.
Queen Creek, AZ 85142
[email redacted]
Queen Creek Ranchettes HOA, Inc., Respondent
P.O. Box 250
Queen Creek, AZ 85142
[email redacted]