ALJDEC decisions subject to certification as final

20F-H2020051-REL · Department of Real Estate - H/C · 2020-08-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Debra K. Morin,

Petitioner,

Solera Chandler Homeowners' Association, Inc.,

Respondent.

No. 20F-H2020051-REL

ADMINISTRATIVE LAW JUDGE DECISION

TELEPHONIC HEARING: May 20, 2020 and July 15, 2020.

APPEARANCES: Debra K. Morin (Petitioner) represented herself. Lydia Linsmeier, Esq. represented Solera Chandler Homeowners’ Association (Solera).

ADMINISTRATIVE LAW JUDGE: Kay Abramsohn

_____________________________________________________________________

FINDINGS OF FACT

Pursuant to Arizona Revised Statutes (A.R.S.) 33-1801 et seq., the Arizona Department of Real Estate (Department) is authorized by statute to receive and to decide Petitions for Hearings from members of planned community associations in Arizona.

Petitioner has lived in Solera for four years. On or about March 12, 2020, Petitioner filed a two-issue petition (Petition) with the Department alleging Solera had violated the following:

(a) the Articles of Incorporation (A)(5) and (A)(6);

(b) the By-Laws (A)(3.11.13), (3.11.18.), (3.12);

(d) the CC&Rs (A)(1) in 1.4;

(e) the CC&Rs (A)(2) in 2.1;

(f) the CC&Rs (A)(7) in 7.1;

(g) the R&Rs (A)(1) in 1.1, in 1.2, and in 1.4; and

(h) the Solera Code of Ethics for Board Members #1, #6, #7, #8, and #9.

Petitioner’s Issue #1 is as follows: Solera, the Solera Board of Directors (Board), and Premier Management Company (Premier) “do not allow direct communication from homeowners. Petitioner indicated that she wanted this “policy” rescinded and that she had raised this issue at a March 4, 2020 Board Meeting.

Petitioner’s Issue #2 is as follows: Solera, the Board, and Premier “are not providing oversight to the General Manager in maintaining all Areas of Association Responsibility ... in good condition and repair at all times.” Petitioner indicated that “all” the landscaping in the Areas of Association Responsibility (AREAS) is “still having uncontrolled weeds” and that the Community Center and the AREAS were “not maintained in good condition and repair at all times.”

Petitioner argued that Solera, the Board and Premier are required to be held to the law and the governing documents to maintain the AREAS “in good condition at all times just as homeowners are expected to do so.” Petitioner requested relief, in the event that her Petition was affirmed, that (1) the Board publically admit at a Board meeting their failures to follow the governing documents and specify the steps the Board is taking to “improve direct communication with homeowners;” (2) establish “direct communication rules” for reporting management deficiencies; and, (3) compliance monitoring by the “Real Estate Board.”

Solera filed a Response to the Petition and, further, on April 2, 2020, filed a Motion to Dismiss the Petition, asking the Department to dismiss the Petition because the issues were outside the Department’s jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) § 32-2199.01(A) and that the relief Petitioner requested could not be granted as a matter of law.

The matter was referred to the Arizona Office of Administrative Hearings (Tribunal) for conduct of an administrative hearing regarding the Petition.

On May 12, 2020, Solera renewed its Motion to Dismiss.

The Tribunal issued its Minute Entry on May 18, 2020, noting that Petitioner had not responded to the Motion to Dismiss.

At the May 20, 2020 hearing, the parties presented their arguments regarding the Motion to Dismiss. The statutory parameters of the Tribunal’s jurisdiction do not include interpretation of or application of a non-governing document such as the Board’s Code of Ethics; this circumstance called for removal from consideration herein of the underlying allegations regarding ethics and mismanagement of Solera based on the Solera Code of Ethics. As a result, Petitioner withdrew her Issue #1.

Regarding Solera’s Motion to Dismiss, the Tribunal ruled that, with Petitioner’s withdrawal of Issue #1 and removal of the underlying allegations of ethics and oversight/mismanagement based on non-governing documents, a bare-bones issue remained in the Petition, essentially, Petitioner’s allegation of a failure of Solera to maintain the AREAS in good condition and repair at all times. Based on the foregoing, Solera’s Motion to Dismiss was effectively denied.

At hearing, Petitioner focused on documenting each AREAS location at which she had observed weeds or maintenance issues. Petitioner presented over eighty (80) photographs, some of which were taken before and some of which were taken after the Petition was filed. As to items she had observed in AREAS, Petitioner complained of the Community Center exterior, street conditions, street asphalt and sealing repairs, storm drains, sidewalks, water pooling and/or intrusion issues, walls, curbing, exposed landscaping lights wiring, exposed landscaping drip irrigation lines, tree removal and stumps, and weeds in granite rock locations.

At hearing, Petitioner’s position was the same as to all “maintenance” issues she raised, which was that the same standard must be applied to Solera (from CC&Rs Article 7, Section 7.1) that is applied to the homeowners (from CC&Rs Article 7, Section 7.2) on their responsibility to “maintain in good condition and repair at all times” their respective AREAS and homes/lots. Petitioner argued that the homeowners have no discretion with regard to any delay in taking care of issues and Solera should not be able to take months to address an issue. At hearing, Petitioner argued that the General Manager is not monitoring and maintaining the AREAS and, thus, Solera is responsible to do so and, further, that Solera, the Board, and Premier are all culpable for these problems.

The hearing evidence regarding Petitioner’s complaint to Solera about weeds is representative of the overall situation she believes exists as to Solera, the Board and Premier.

On February 21, 2020, Petitioner complained to Solera (copying Premier) alleging a violation of the CC&Rs Article 7, Maintenance and 7.1, AREAS, as to weeds. Petitioner complained:

This is NOT being done and our HOA looks disgusting with the continued presence of unchecked weeds inside and outside our community! No excuses, you cannot hold homeowners to a higher standard than you are willing to do for our HOA. You are on notice to rectify this violation immediately! Please reply with the date this will be completed.

Within three hours, Denise Frazier, the on-site general manager (an employee of Premier), responded:

On behalf of the [Board], I can provide you with the following information: the landscape crew hula hoes and sprays daily, based on routine maintenance cycle and location of site work. The spray technician was on site 1/28 and 1/29 and sprayed all areas. He was also onsite on 2/6 and 2/7 and sprayed all areas. Considering that we have 1,143,550 square feet of granite and 270,933 square feet of turf, the maintenance of weeds is a continuous and ongoing concern that is constantly being addressed.

YOUR response is just more excuses! You (the Board of Directors, General Manager, and Premier Management Company) are responsible for administering the landscape contract for our HOA as specified in our CC&Rs. With that comes the fiduciary responsibility to oversee and to directly supervise the contractor for compliance with each line item of the signed contract. Not to make excuses for their nonperformance! This contractor has been doing our landscaping for over 4 years that I have lived here so there are no viable excuses. Our entire HOA landscaping should always look properly maintained at all times in each zone!

It appears that since it is not your personal money being spent, it is ok to have substandard work performance. It is evident that no one of YOU inspected the landscape contractor’s work on 1/28 and 1/29 “sprayed all areas” because this was not a blanket spraying, it was spot spraying of existing weeds (over two weeks old) and not sufficient to maintain abatement of new weeds. It would have been more effective to blanket spray all of the granite areas so we would not continue have new weeds.

On 2/6 and 2/7 “sprayed all areas” again, this was not a blanket spraying of the areas, it was a spot spraying of individual weeds which was not sufficient to control the new weeds that were emerging with the winter rains. Again, blanket spraying would have solved this issue.

As far as hula hoeing, someone needs to train these guys on proper use. I observed a couple landscape workers attempting this weed removal technique. I went back and looked at the job they had done. The weeds were still on the ground, you could see the granite turned up in each spot they touched, and the overall landscape appearance was disgusting!

Considering the numbers, the General Manager quoted for granite and turf, this landscape contract seems inadequate for our needs unless substandard performance is the norm for our HOA. The budgeted amount for 2020 for landscape services is $392,506 which we should not have to wait for any particular zone to be maintained, the entire property should be well maintained for that amount of money. Someone is NOT monitoring and insuring compliance for each area.

I would highly recommend that YOU take steps to find another landscape contractor that can readily provide a level of service that each of you would require from a private landscape contractor doing maintenance on your personal property that you would pay with your own money.

At hearing, Petitioner argued that Solera must follow their own guidelines and that she, as a homeowner, has the authority to enforce the HOA documents against Solera through the statutory petition process based on CC&Rs Article 9, Section 9.1, Enforcement. Amongst her arguments, Petitioner argued that the Board is either accepting or paying for substandard work and that the Board is making excuses and taking license in violating the CC&Rs.

CC&R Article 9, Section 9.1, Enforcement, provides that Solera “or any owner” shall have the right to enforce “the Project Documents in any manner provided for in the Project Documents or by law or in equity ...” However, only the Board has the power to levy reasonable monetary penalties against an owner for violations of the documents when the owner is given notice and an opportunity to be heard.

CC&R Article 9, Section 9.5 provides that, with the exception of a judicial construction, Solera has “the exclusive right to construe and interpret the provisions of the [CC&Rs].” Further, Solera’s construction or interpretation of the CC&Rs “is final, conclusive and binding as to all Persons and property benefited or bound by” the CC&Rs.

Denise Frazier, Solera’s onsite general manager, testified regarding maintenance issues. Ms. Frazier oversees day-to-day operations at Solera and does not make decisions regarding maintenance issues, unless it’s an emergency and then she has authority to spend up to a particular amount. Maintenance projects are reviewed by a Building and Grounds Committee (B&G), and once determined by the Finance Committee that finances are in order for such, the matter goes to the Board for approval.

Solera has Reserves (involving funds set aside for particular items) and a schedule for large maintenance projects, such as items at/in the Community Center, sidewalks, and repairing or resealing the streets. While Solera’ Reserves is reviewed, or updated, “at least every 5 years,” Ms. Frazier indicated that the Board typically does it annually.

While B&G inspects the sidewalks annually, the Reserves’ schedule for sidewalks is every 4 years. Solera looks at issues at a 1⁄4 inch standard but utilizes City of Chandler trip-hazard guidelines of 1⁄2 inch to determine where to make repairs. A sidewalk area that had been covered in cool-decking was in disrepair and Ms. Frazier indicated that it took “several months” to be repaired; Petitioner complained of this on February 21, 2020. In the interim, Solera had placed orange warning cones over the particular sidewalk area and swept up the disintegrating cool-decking.

Regarding streets, the Reserves’ schedule calls for repairs every 8 years and sealing cracks every 2 years. After a November 2019 Board Meeting, some asphalt repairs were approved to be done; a 1⁄4 inch crack standard was used by B&G. Street resealing (up to the curbing) is scheduled to be done in 2021 in the Reserves; Ms. Frazier noted that a repair is just a repair and not a “restoration” of the street.

Regarding Petitioner’s concerns as to some concrete curbing and several “boundary” walls, Ms. Frazier indicated that these were the City of Chandler’s responsibility. Ms. Frazier was unaware of any particular City ordinance for maintaining those items. Ms. Frazier noted that the damage observed on the City wall in A103 (on the right) was water wicking as a result of watering being done inside the wall; the same issue can be seen in the photographs in A102.

Regarding the exposed landscaping lights wiring, Ms. Frazier indicated that, in 2018, Solera had done a lighting project and that, in 2020, as Solera was replacing trees and placing new granite, the landscapers had exposed the lines so that the lines would not be cut as the new items were put in place. Ms. Frazier further noted that, as to the exposed landscaping drip irrigation lines, if there were no plants at a particular location, the drip irrigation lines were not buried because the landscapers still needed to know the locations of the drip irrigation lines.

Regarding trees and stumps, Solera employs an arborist every two years, apparently to review the health of the trees on the property. Ms. Frazier indicated that Solera has one landscaping company on contract for trimming trees up to ten feet high and another company that trims trees over ten feet high; stump removal is normally ground down by yet another company. Ms. Frazier noted that Solera is in the process of trimming trees over ten feet high and in the process of stump removal at this time.

Finally, regarding weeds in Solera, Ms. Frazier noted that, due to the amount of rain that the metropolitan area had received, the conditions were simply optimal for weeds. She indicated that the landscapers typically had not used weed spray with dye to prevent the spraying from showing in an unattractive manner, but in wanting to demonstrate to residents that weed spraying was taking place, Solera had instructed the landscapers to use weed spray with a dye.

With the exception of four (4) photographs, Petitioner’s other 118 photographs document weeds in AREAS on dates after the filing of her Petition.

Solera maintained that it has met and continues to meet its CC&R responsibilities to “manage, maintain, repair and replace” the AREAS. Solera argued that it has procedures and cross-checks for determining maintenance and repairs and that the Board relies on licensed contractors to perform the necessary, contracted-for, work. Finally, Solera argued that, pursuant to the CC&R Article 7, Section 7.1, the Board is “the sole judge as to appropriate maintenance, repair and replacement” of all AREAS and that Petitioner’s subjective opinions as to what, when or how maintenance and/or repair work ought to be done are simply not relevant.

Neither party indicated that any homeowner received any violation notices about weeds during the weather conditions that existed in early 2020.

CONCLUSIONS OF LAW

This matter lies within the Department’s jurisdiction. Pursuant to A.R.S. §§ 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 A.R.S. § 32-2199.05.

Pursuant to A.R.S. §§ 32-2199(2), 32-2199.01(D), 32-2199.02, and 41-1092, OAH has the authority to consider and decide the contested petitions, the authority to order any party to abide by the statute, community documents and contract provisions at issue, the authority to interpret the contract between the parties, and the authority to levy a civil penalty on the basis of each proven violation. See also Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007).

In these proceedings, a petitioner bears the burden of proving by a preponderance of the evidence that a respondent has violated the planned community document(s’) provisions or statutes alleged to have been violated.

“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.”

Overall, the hearing record demonstrated that Petitioner’s Petition was brought based on her belief that the Board and General Manager were non-responsive to her and to her complaints and were not providing appropriate oversight in order to maintain the development’s AREAS. Each of Petitioner’s February 21, 2020 complaints to the Board demonstrate her dissatisfaction. In this case, after the arguments on the Motion to Dismiss, Petitioner withdrew Issue #1; the issue had no connection to Solera’s governing documents. Issue #2 was also stated to be an allegation that the Board and General Manager were not providing appropriate oversight regarding maintenance. In an effort to allow Petitioner to proceed on her filed Petition, the Tribunal extracted from Issue #2, the bones of an alleged violation of Solera’s failure to “maintain in good condition and repair at all times” the AREAS.

In this case, the Administrative Law Judge concludes that Petitioner has not demonstrated that Solera is in violation of its governing documents through any failure to “maintain in good condition and repair at all times” the AREAS. While the CC&Rs allow an owner to bring to the Board a complaint, the CC&Rs specify that the Board is the sole judge regarding appropriate maintenance, repair and replacement of all AREAS. The developer was ultimately responsible for the process by which Solera and its entire property area was developed and responsible to put in place the methods by which the Board administers, maintains, preserves and the use and enjoyment of the entire development, not just the AREAS. The hearing record demonstrated that the Board has in place various processes and methods by which it undertakes its responsibilities to maintain the development. Solera maintains and repairs the AREAS through and pursuant to its various governing documents, including CC&Rs, R&Rs, and its Design Guidelines. The Administrative Law Judge concludes that Solera is in compliance with its governing documents including CC&R Article 7, Section 7.1. Therefore, the Petition should be dismissed.

order

IT IS ORDERED Petitioner’s Petition is dismissed and Solera is deemed the prevailing party.

IT IS FURTHER ORDERED Petitioner shall bear her filing fee.

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, August 19, 2020.

/s/ Kay Abramsohn

Administrative Law Judge

-54864001

001

-137160-45720000

Transmitted by either mail, e-mail, or facsimile August 19, 2020 to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Debra K Morin

3900 E Gleneagle Pl.

Chandler, AZ 85249

Lydia A. Perce Linsmeier, Esq.

CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

1400 E. Southern Ave., Suite 400

Tempe, Arizona 85282-54864001

001

-137160-45720000

By Felicia Del Sol