ALJDEC decisions subject to certification as final

20F-H2020046-REL · Department of Real Estate - H/C · 2020-07-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Susan L. Alandar,

Petitioner,

vs.

Ventana Lakes Property Owners' Association,

Respondent.

No. 20F-H2020046-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 11, 2020

APPEARANCES: Petitioner Susan L. Alandar appeared on her own behalf. Respondent Ventana Lakes Property Owners’ Association was represented by Nicholas Nogami.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

On or about February 3, 2020, Petitioner Susan L. Alandar filed a Homeowners Association (HOA) Dispute Process Petition (Petition) with the Arizona Department of Real Estate (Department) alleging violations of statute and community documents by Respondent Ventana Lakes Property Owners’ Association. Petitioner indicated two issues would be presented, paid the appropriate $1000.00 filing fee, and asserted violations of A.R.S. § 33-1804; Article IV, Section E of the Bylaws; Article 5, Section C of the Covenants, Conditions & Restrictions (CC&Rs); Article IV.C.23 of the CC&Rs; and Article XII, Section B of the CC&Rs.

On or about March 10, 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 Ventana Lakes Property Owners’ Association is in violation of:

A.R.S. § 33-1804

Community Documents Bylaws Article IV, Section E

Community documents CC&R’s Article V, Section C; Article IV, Section C(23); and Article XII, Section B.

On or about April 28, 2020, the Administrative Law Judge continued the hearing and ordered Petitioner to clarify the issues for hearing. Specifically, Petitioner was instructed as follows:

[N]o later than May 8, 2020, Petitioner shall provide the Office of Administrative Hearings with the clearly identified issues she wishes to pursue at hearing. Specifically, the second issue presented in the petition is overly vague and does not present a singular issue to be determined. Therefore, Petitioner must provide a singular provision of the governing documents she alleges to have been violated by Respondent. In the alternative, Petitioner may identify multiple provisions of the governing documents she alleged to have been violated by Respondent if she also pays the $500.00 filing fee for each additional violation.

In response to the order to clarify the issues, Petitioner identified her issues for hearing as follows:

I contend that the Ventana Lakes Board of Directors has:

1. Interviewed candidates for appointment to the Board in closed executive session in violation of ARS § 33-1804.

2. Discriminately penalized homeowners without authorization by rule in violation of the CC&R’s Article V Section C. This action is also in conflict with Bylaws Article IV.E.8 and Ventana Lakes Rule 8.4.A.

3. Refused homeowners use of facilities without authorization by rule in violation of CC&R’s Article III Section A. This action is also in conflict with CC&R’s Article IV Section C.23 (and 2020 CC&R’s Article IV Section C.25) and the Bylaws Article IV.E.8 and Ventana Lakes Rule 8.4.A.

4. Refused homeowners written requests for Board action be placed on the agenda for the next upcoming Board meeting in violation of Ventana Lakes Rule 8.3.B.1.b.

Petitioner paid the additional $1000.00 filing fee to increase the petition from two issues to four issues.

Issue 1

Petitioner alleged Respondent improperly conducted interviews of candidates for appointment to vacancies on the Board during closed sessions in violation of A.R.S. § 33-1804.

Respondent acknowledged that prior to June 2019, the Board conducted all interviews to fill vacancies on the Board, held their discussions, and voted in executive sessions. The Board would then announce the decision and swear in the new Board member in an open meeting. When the Board was questioned about the open meeting law, the Board determined its previous practice was not in accordance with the law.

Since June 2019, the Board has conducted interviews of candidates in executive sessions to elicit private information that may impact the candidate’s ability to perform the duties of a Board member. As an example, one candidate revealed in executive session that his wife had been diagnosed with dementia and her medical needs would come before any Board duties. The Board would then cast its votes on the candidates in open session.

Respondent also indicated that candidates are invited to participate in an open forum during which time members can ask the candidates questions prior to the vote.

Petitioner argued that the interviews should be conducted in open session unless the Board was specifically going to ask a question regarding information that constituted an exception to the open meetings law.

Issue 2 and Issue 3

Petitioner argued Respondent wrongfully penalized and denied use of facilities to members of the Italian American Club for purported violations of the Association’s rules. Petitioner asserted that the rules were not enforced equally to different groups and that Respondent was not authorized to impose such sanctions.

In January 2018, the Italian American Club (IAC) met with the Board in an Executive Session regarding the club’s non-compliance with different rules and requirements. At that time, the IAC was advised that failure to conform and comply with all requirements would result in the loss of the privilege to use the Yacht Club.

The IAC used the Yacht Club for its meetings. As part of the process of reserving and using the Yacht Club, the group was required to submit a schematic one week prior to the event, which allowed the maintenance crew to set up the area for the meeting. Respondent indicated the process was required because its insurance policy provided that volunteers were not allowed to move or set up tables.

On or about March 29, 2019, the IAC submitted a floor plan for an upcoming event on April 4, 2019.

On or about April 3, 2019, a member of the IAC emailed Respondent requesting that more tables and chairs be set up.

On or about April 4, 2019, the facilities manager responded that he could not accommodate the requested changes given the last minute nature of the request.

At or around 12:35 p.m. on April 4, 2019, members of the IAC were observed via security cameras moving additional tables and chairs from the storage area. The facilities manager confronted the members insisting they stop moving the tables and chairs, but they refused to do so. After the situation escalated and became a verbal altercation, Respondent agreed to set up the tables and chairs as requested to prevent any further incidents. Members of the IAC agreed that they would not move any more tables or chairs after the staff left. However, members were again observed on security cameras removing another table and chairs from the storage area.

In an executive session on April 17, 2019, the Board reviewed the events including watching and listening to the recordings of the incident. The Board determined it would revoke the ability of the IAC to use of all Respondent’s facilities for a period of one year beginning on May 1, 2019, and ending on April 30, 2020.

No evidence was presented that the revocation was still in place at the time of the hearing.

Issue 4

Petitioner argued that the Board improperly refused homeowners’ written requests for Board action be placed on the agenda for upcoming Board meetings in violation of Ventana Lakes Rule 8.3.B.1.b.

Petitioner asserted that if the Board received a written request for an item to be placed on the agenda for an upcoming Board meeting, the Board president was required to place that item on the agenda, regardless of the number of requests received or the nature of the request made, i.e. if the matter had previously been addressed and decided.

The parties were in agreement that the Board president had received written requests for items to be placed on the agenda for upcoming meetings that were not included in the agenda.

Petitioner acknowledged that it would not be practical for the Board president to include every written request on the agenda if the Board received hundreds of requests for a single meeting, but offered that such an example was not realistic.

REFERENCED AUTHORITY

A.R.S. § 33-1804 provides, in pertinent part, as follows:

A. 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:

. . . .

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, 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.

Article III, Section A of the CC&Rs provides, in pertinent part, as follows:

Easements of Enjoyment. Every Resident shall have a right and easement of enjoyment in and to the Common Areas, subject to any restriction or limitations contained herein or in any instrument conveying to the Association or subjecting to the Declaration such property, and subject further to the reasonable rules of the Association. These rights shall pass with the title to every Lot, subject to the following provisions:

1. the Board of Directors has the right to suspend any Resident from using the recreational facilities and other Common Areas;

2. the Board shall have authority to dedicate or transfer Common Areas to such public agencies, authorities or utilities easements and rights-of-way which are intended to benefit Ventana Lakes and which do not have any substantial adverse affect on the enjoyment of the Common Areas by the Members; and

3. the Board of Directors has the right to regulate the use of the Common Areas through the Ventana Lakes Rules and to prohibit access to those Common Areas, such as landscaped rights-of-way, not intended for use by the Members. The Ventana Lakes Rules shall be intended to enhance the preservation of the Common Areas or the safety and convenience of the users thereof, or otherwise shall serve to promote the best interests of the Owners and Residents.

Article IV, Section C of the CC&Rs provides, in pertinent part, as follows:

Covenants, Conditions, Restrictions and Easements. Unless otherwise noted, the following Covenants, conditions, restrictions and reservations of easements and rights shall apply to all Lots and the Owners thereof, and all Residents. . . .

23. Health, Safety and Welfare. In the event activities and facilities are deemed by the Board to be a nuisance or to adversely affect the health, safety or welfare of Owners and Residents, the Board may make rules restricting or regulating their presence on Ventana Lakes as part of the Ventana Lakes Rules or may direct the Architectural Committee to make rules governing their presence on Lots as part of the architectural guidelines.

Article V, Section C of the CC&Rs provides as follows:

The Ventana Lakes Rules. The Association may, from time to time and subject to the provisions of this Declaration, adopt, amend and repeal rules to be known as the Ventana Lakes Rules. The Ventana Lakes Rules may restrict and govern the use of the Common Area facilities by any Member, Resident, or any other person; provided, however, that the Ventana Lakes Rules shall not discriminate among Members and shall not be inconsistent with this Declaration, the Articles of Incorporation, or Bylaws. Upon adoption, the Ventana Lakes Rules shall have the same force and effect as if they were set forth in and were a part of this Declaration.

Article IV.E.8 of the Bylaws provides, in pertinent part, as follows:

Section E. Powers and Duties. The Board of Directors shall have all powers to responsibly administer the affairs of the Association. They may act on all affairs of the Association provided they are not in conflict with laws, or the Community Documents. The Board of Directors shall have the responsibility of administering and exercising all powers and duties provided for by law or in the Community Documents, except such matters as are reserved to the Voting Members by law or by Community Documents. Without limiting the generality of this section, the Board of Directors shall be responsible for the following:

. . . .

8. To adopt and amend rules and enforce the same covering the operation and use of all of the Property.

Ventana Lake Rules 8.3.B provides, in pertinent part, as follows:

B. Board President

1. In addition and pursuant to the Bylaws, Article V, Section E, the Board President shall:

. . . .

b. Prepare all monthly Board Meeting Agendas and ensure they are provided for review by other Board members prior to posting and distribution, and that written requests for Board action by Association members are placed on the agenda for the next upcoming meeting.

Ventana Lake Rules 8.4.A

8.4. Responsibilities for Ventana Lakes Rules

A. All Board Policies to be in Ventana Lakes Rules

Any policy, rule, regulation, resolution or other action taken by the Board which could be reasonably construed as such, shall be processed pursuant to this Rule, and become part of the Ventana Lakes Rules, as referenced in the CC&R’s. See Rule 10, Volunteers and Establishment of Committees.

The Board shall ensure that all current Rules for Homeowners are provided to all new homeowners in written form from the Management Office. All current Ventana Lakes Rules are to be available for viewing and downloadable from the VLPOA website, and available from the Management Office in hard copy upon request.

A hard copy of the Rules for the Board shall be provided to all new Board Directors at or before the annual Organizational Meeting.

A hard copy of the Rules for Volunteers and Committees shall be made available to any volunteer upon request, and provided to all Committee Chairs.

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. See Ariz. Rev. Stat. section 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). Respondent bears the burden to establish affirmative defenses by the same evidentiary standard. See A.A.C. R2-19-119(B)(2).

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 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.” Black’s Law Dictionary at page 1220 (8th ed. 1999).

Issue 1

The uncontroverted evidence at hearing established that the Board conducted interviews of potential Board members in closed executive sessions for the purpose of eliciting personal, health, or financial information from the potential candidates.

It was also established that the potential Board members were invited to participate in a question and answer session in the open portion of the Board meeting.

While Petitioner may believe the interviews were being conducted in executive session for nefarious purposes, no evidence was presented to establish such motives existed.

Accordingly, Petitioner failed to establish Respondent acted in violation of A.R.S. § 33-1804.

Issue 2 and Issue 3

The evidence presented indicated that the one year prohibition of the IAC’s use of Respondent’s facilities had expired and was no longer in effect at the time of the hearing. No evidence was submitted to establish that the IAC was still precluded from using the facilities.

A.R.S. § 32-2199.02, provides, in pertinent part, as follows:

A. The administrative law judge may order any party to abide by the statute, condominium documents, community documents or contract provision at issue and may levy a civil penalty on the basis of each violation.

Because the evidence established the IAC was no longer precluded from using Respondent’s facilities at the time of the hearing, even assuming, arguendo, that the Administrative Law Judge found the revocation of use privileges was improper, the Administrative Law Judge could not order any action to be taken by Respondent. Accordingly, this matter is moot.

Issue 4

The plain language of Ventana Lake Rules 8.3.B provides that the Board president prepares the monthly Board meeting agendas and must ensure that written requests for Board action by Association members are placed on the agenda for the next upcoming meeting.

Nothing in the rule requires that all requests must be placed on the agenda.

As Petitioner acknowledged, it would not be practical for the Board president to include every written request on the Board meeting agenda in the unlikely event hundreds of such requests were received.

While the hypothetical may be unlikely, it does demonstrate that the Board president has inherent authority to limit the number of items to be included on the Board meeting agenda. Without any specific requirement as to the minimum or maximum number of items to be included, one must conclude that the Board president’s authority is broad with respect to setting the Board meeting agenda.

Therefore, Petitioner failed to establish that Respondent violated Ventana Lake Rules 8.3.B when the Board president failed to include every written request from members on the Board meeting agenda.

ORDER

IT IS ORDERED that Petitioner’s petition is denied.

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, July 23, 2020.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile July 23, 2020 to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Susan L Alandar

10513 W Tonopah Dr.

Peoria, AZ 85382

Nicholas Nogami, Esq.

Carpenter Hazlewood Delgado & Bolen, LLP

1400 E Southern Ave., Suite 400

Tempe, AZ 85282-5691

By c. serrano

-54864001

001

-137160-45720000