ALJDEC decisions subject to certification as final

21F-H2120001-REL-RHG · Department of Real Estate - H/C · 2021-03-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Debra K Morin,

Petitioner,

vs.

Solera Chandler Homeowners' Association, Inc.,

Respondent.

No. 21F-H2120001-REL-RHG

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 25, 2021

APPEARANCES: Petitioner Debra K. Morin appeared on her own behalf. Respondent Solera Chandler Homeowners’ Association Inc. was represented by Lydia A. Peirce Linsmeier.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

This matter was previously heard before the Office of Administrative Hearings during a hearing on October 29, 2020.

An Administrative Law Judge Decision was issued on November 18, 2020.

After the Administrative Law Judge Decision was issued, Respondent submitted a Request for Rehearing (Request). The basis of the Request focused on Conclusion of Law 8, which provided as follows:

Respondent improperly conducted association business in closed sessions via conference calls rather than in meetings open to the members.

In the Request, Respondent acknowledged that executive sessions were conducted via conference calls, but denied that the unanimous written consents at issue were the result of any open meetings conducted via conference call.

The Commissioner of the Department of Real Estate granted the Request and a rehearing was held on February 25, 2021.

At the rehearing, the evidence and argument centered on how the unanimous written consents came to be executed.

The evidence presented during the rehearing established that the topics for which unanimous written consents were being obtained, an individual from the community management company would email each member of the Board of Director individually and ask them the reply to the email indicating whether they were voting yes or no on the proposal. The items for which all of the members of the Board of Directors voted yes were considered passed by unanimous consent. The Board President would then sign the unanimous written consent on behalf of the Board of Directors.

At hearing, Respondent argued the individual emails did not constitute a meeting of the Board of Directors outside of an executive session such that the meeting had to be open to the members of the association.

All Findings of Fact from the initial hearing are incorporated by reference as if set forth herein.

CONCLUSIONS OF LAW

The Department has jurisdiction to hear disputes between a property owner and a condominium owners association. A.R.S. § 32-2199 et seq.

In this proceeding, Petitioner bear the burden of proving by a preponderance of the evidence that Respondent violated A.R.S. § 33-1804. A.A.C. R2-19-119.

A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990).

A.R.S. § 33-1804 provides, in relevant 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:

1. Legal advice from an attorney for the board or the association. On final resolution of any matter for which the board received legal advice or that concerned pending or contemplated litigation, the board may disclose information about that matter in an open meeting except for matters that are required to remain confidential by the terms of a settlement agreement or judgment.

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, 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.

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.

. . . .

D. Notwithstanding any provision in the declaration, bylaws or other community documents, for meetings of the board of directors that are held after the termination of declarant control of the association, notice to members of meetings of the board of directors shall be given at least forty-eight hours in advance of the meeting by newsletter, conspicuous posting or any other reasonable means as determined by the board of directors. . . . Notice to members of meetings of the board of directors is not required if emergency circumstances require action by the board before notice can be given. . . .

F. It is the policy of this state as reflected in this section that all meetings of a planned community, whether meetings of the members’ association or meetings of the board of directors of the association, be conducted openly and that notices and agendas be provided for those meetings that contain the information that is reasonably necessary to inform the members of the matters to be discussed or decided and to ensure that members have the ability to speak after discussion of agenda items, but before a vote of the board of directors or members is taken. Toward this end, any person or entity that is charged with the interpretation of these provisions, including members of the board of directors and any community manager, shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings.

A.R.S. § 10-3821 provides, in pertinent part, as follows:

A. Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by chapters 24 through 40 of this title to be taken at a directors' meeting may be taken without a meeting if the action is taken by all of the directors. The action must be evidenced by one or more written consents describing the action taken, signed by each director and included in the minutes filed with the corporate records reflecting the action taken.

When construing a statute, the primary goal is to ascertain the legislature’s intent. State ex rel. Thomas v. Contes, 216 Ariz. 525, 527, 169 P.3d 115, 117 (App. 2007). This is accomplished by first looking to the text of the statute. Id. If the language is clear, its plain meaning is ascribed, unless it would lead to absurd results. Id.; Marsoner v. Pima County, 166 Ariz. 486, 488, 803 P.2d 897, 899 (1991). If ambiguity exists, secondary principles of statutory construction are used to determine the intent. Contes, 216 Ariz. at 527.

Non-privileged Association Business Conducted in Closed Session

While A.R.S. § 10-3821 may allow the board of a non-profit corporation to take actions without a meeting by unanimous consent, A.R.S. § 33-1804 requires that all meetings of the board of directors of a homeowners association, outside of an executive session, must be open to the members.

Respondent improperly conducted association business in closed sessions via email rather than in meetings open to the members.

Accordingly, Petitioner established by a preponderance of the evidence that Respondent committed the alleged violation set forth as Complaint #1.

Consideration is given to the fact that Respondent was faced with an unprecedented global pandemic while balancing the need to comply with the applicable statutes and conduct association business. Therefore, the Administrative Law Judge finds no civil penalty is appropriate given the circumstances.

ORDER

IT IS ORDERED that Petitioner’s petition is affirmed as to the limited issue brought for this rehearing.

IT IS FURTHER ORDERED that Respondent reimburse Petitioner her $500.00 filing fee for the issue on which she prevailed.

IT IS FURTHER ORDERED Respondent is directed to comply with the requirements of A.R.S. § 33-1804 going forward.

NOTICE

This administrative law judge order, having been issued as a result of a rehearing, is binding on the parties. A.R.S. § 32-2199.02(B). A party wishing to appeal this order must seek judicial review as prescribed by A.R.S. § 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. A.R.S. § 12-904(A).

Done this day, March 17, 2021.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile March 17, 2021 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

Joshua M. Bolen Esq.

Lydia A. Peirce Linsmeier

CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

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-137160-45720000 FDS

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-137160-45720000