ALJDEC decisions subject to certification as final

20F-H2019040-REL · Department of Real Estate - H/C · 2020-05-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Richard P. Quinn,

Petitioner,

vs.

Homestead North Homeowners Association,

Respondent.

No. 20F-H2019040-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: Written briefs in lieu of hearing

APPEARANCES: Petitioner Richard P. Quinn appeared on his own behalf. Respondent Homestead North Homeowners Association was represented by Quinten T. Cupps.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

FINDINGS OF FACT

On or about December 31, 2019, Petitioner Richard P. Quinn 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 Homestead North Homeowners Association. Petitioner indicated a single issue would be presented, paid the appropriate $500.00 filing fee, and asserted a violation of “Article III, Section III, Item 4.”

On or about February 6, 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 Homestead North Homeowners Association is in violation of community documents Bylaws Article III, Section III, Item 4.

At a prehearing conference, the issue presented was clearly set forth and determined to present the following questions, 1) Was the amount owed by Karen Igo, a Board member, a delinquent Assessment under the Bylaws such that it automatically constituted a resignation; and 2) If so, was the Board obligated to accept the resignation and/or did the Board accept the resignation. Respondent also argued that, because Ms. Igo had paid the balance due prior to the petition being filed, the issue was moot.

The parties agreed that, if the second question were answered in favor of Respondent, the first question was moot. Accordingly, the questions were bifurcated and the parties submitted briefs on the second question.

Article III, Section 4 of Respondent’s Bylaws provides as follows:

Disqualification and Resignation of Directors. Any director may resign at any time by sending written notice of resignation to the Secretary of the Association. Unless otherwise specified therein, any resignation shall take effect upon receipt by the Secretary. Except in the case of injury, illness or similar circumstances, more than three (3) consecutive absences from regular meetings of the Board by any director may be cause for immediate removal, effective as of the conclusion of the last missed meeting. In the event that a director ceases to be an Owner of a Lot or have an interest therein, the directorship shall immediately and automatically terminate. NO director shall continue to serve on the Board if such director is more than thirty (30) days delinquent in the payment of an Assessment or in violation of Declaration or Architectural Guidelines and said delinquency or violation shall automatically constitute a resignation effective when the Board of Directors accepts such resignation.

Emphasis added.

Article III, Section 9 of Respondent’s Bylaws provides as follows:

Quorum. At all meetings of the Board, a majority of the directors shall constitute a quorum for the transaction of business. Every act or decision done or made by a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the Board. If there is less than a quorum present at any meeting of the Board, the majority of those present may adjourn the meeting from time to time. At any adjourned meeting, any business that might have been transacted at the original meeting may be transacted without further notice.

On or about March 13, 2019, the Board posted a “Wall Charge” to Ms. Igo’s account in the amount of $3,925.00. The charge was listed under the Code type “Self-Help” and not “Assessment”. On April 22, 2019; April 30, 2019; May 30, 2019; June 28, 2019; July 30, 2019; August 30, 2019; and September 30, 2019, Ms. Igo made $100.00 payments, which paid her monthly assessment of $48.50 and reduced the balance of the “Wall Charge”. On October 21, 2019, Ms. Igo paid $3600.00, which paid her balance in full with a $52.00 credit remaining.

Petitioner indicated that he, as a member of the Board, accepted Ms. Igo’s resignation from the Board in his email to the Board members on October 18, 2019. Petitioner asserted that no other Board members responded to the email to vote for, vote against, or abstain from accepting Ms. Igo’s resignation. Petitioner argued that, pursuant to Robert’s Rules of Order, his vote accepting Ms. Igo’s resignation constituted a majority vote in that the vote total was one in favor and zero against.

Petitioner also stated that he attempted to bring up the topic during the October 30, 2019 Executive Session, but the President of the Board “shut down” the Executive Session at that point.

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.”

Regardless of whether the outstanding charge was an assessment, the plain language of Article III, Section 4 of the Bylaws requires that the automatic resignation resulting from a delinquent assessment is effective only when the Board of Directors accepts the resignation.

Petitioner’s attempt to accept Ms. Igo’s automatic resignation by email was not an act of the Board. An email correspondence does not constitute a duly held meeting of the Board. Furthermore, an email communication cannot constitute a quorum of the Board, so Petitioner’s purported “vote” could not be considered a majority of the Board voting on the matter.

Petitioner pointed to no instance in which a quorum of the Board took a vote at a duly held meeting on Ms. Igo’s automatic resignation and the majority of those votes were cast in favor of accepting Ms. Igo’s resignation.

Accordingly, Petitioner failed to establish by a preponderance of the evidence that the Board accepted Ms. Igo’s resignation.

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.

-54864001

001

-137160-45720000Done this day, May 5, 2020.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile March 6, 2020 to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Richard P Quinn

39921 W Walker Way

Maricopa, AZ 85138

Quinten Cupps, Esq.

The Village at Grovers Condominium Association

1900 W Broadway Rd.

Tempe, AZ 85282

-54864001

001

-137160-45720000