ALJDEC decisions subject to certification as final
21F-H2120009-REL · Department of Real Estate - H/C · 2020-12-16
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
John D Klemmer,
Petitioner,
v.
Caribbean Gardens Association,
Respondent.
No. 21F-H2120009-REL
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: November 6, 2020
APPEARANCES: Petitioner John D. Klemmer represented himself. Nicole D. Payne, Esq., represented Respondent Caribbean Gardens Association.
ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn
_____________________________________________________________________
FINDINGS OF FACT
Caribbean Gardens Association (Caribbean) is a condominium community association located in Phoenix, Arizona.
On or about August 21, 2020, John D. Klemmer (Petitioner) filed a corrected, or amended, single-issue petition (Petition) with the Department. The Petition alleged that, on April 15, 2020, the Caribbean Board had violated its CC&Rs by refusing to manage, operate, maintain and administer a particular “common area” which, if Caribbean did not acknowledge ownership thereof, would lead to the common area being lost to its rightful owners, i.e., the forty (40) Unit owners of Caribbean. Petitioner alleged violations by Caribbean of CC&Rs Article 1, Sections 1.5 and 1.8; Article 3, Section 3.4; Article 4, Section 4.1; Article 8, Section 8.1; and, Article 12, Section 12.4.”
Through counsel, on or about September 4, 2020, Caribbean denied the allegations and filed a Motion to Dismiss with the Department.
The parties failed to resolve the matter informally.
On or about September 23, 2020, the Department issued a Notice of Hearing to the parties notifying them that an administrative hearing regarding the Petition would be conducted by the Office of Administrative Hearings.
On October 23, 2020, Caribbean filed a Motion for Summary Judgment, arguing first that Petitioner is seeking declaratory and injunctive relief that cannot be granted by the Department or the Tribunal and he must seek such in another forum. Caribbean argued that Petitioner is required to file a derivative action under the Arizona Nonprofit Corporation Act at Arizona Revised Statutes (A.R.S.) § 10-3630 et seq. Caribbean further argued that Petitioner has raised more than one issue but has only paid a filing fee for a single-issue petition and, therefore, must pay additional filing fees. Finally, Caribbean argues the Enabling Statutes are unconstitutional, and neither the Department nor the Tribunal OAH have jurisdiction to accept or hear the Petition.
The Tribunal’s authority is limited to rule on the Petition and its alleged violations. The alleged issue is that the Caribbean Board is in violation of the Caribbean CC&Rs by refusing to “manage, operate, maintain and administer” one particular area within Caribbean, which area Petitioner argues is a “common area” or “common element.”
Petitioner argued that this particular location will be lost to its rightful owners, i.e., the 40 Unit owners, if Caribbean Board does not claim ownership of the area. Petitioner argued that each of the 40 owners has an “undivided ownership interest in the common areas and [common] elements” of Caribbean. Petitioner argued that each owner is required in its Deed to accept the Caribbean plat (Plat).
The “common area” or “common element” of which Petitioner is concerned is located in an outside area on the second level between exterior walls of Unit 206 and Unit 207. That area is not specifically delineated on the Plat; the Plat is blank in that location.
The otherwise blank space on the Plat document between Unit 206 and Unit 207 is, in fact, taken up by a concrete slab and outside iron railings attached to the slab which railings essentially fence off the slab between the two Units. The area is not a staircase landing and may only accessed by Unit 207 through a door from one of the rooms in Unit 207.
Petitioner argued that Unit 207 does not include any space other than the interior of the Unit and its delineated “balcony” that is identified on the Plat document. In this regard, Petitioner argued that all space/area not delineated on the Plat document as an Apartment, or as a patio (as such are delineated on the first level) or as a balcony (as such are delineated on the second level), are “common area” belonging to the 40 Unit owners. Petitioner further argued that this particular space is, in fact, a “common [architectural] element” belonging to all 40 Unit owners.
Petitioner argued that the owners of Unit 207 are exclusively occupying this particular “common area” or “common element” as though that area is another “room” of Unit 207 by moving in furniture, putting up walls, and making improvements to the exterior walls of Unit 206. Photographs demonstrated that this area contains furniture and other decorative items.
At hearing, Alex Gomez, a Caribbean Board Member, testified that the Board’s position regarding the disputed area is that the area is not a common area but is a “balcony” attached to the specific unit, i.e., attached to Unit 207. Mr. Gomez indicated that Caribbean has never “maintained” any balconies, including the disputed area. Mr. Gomez acknowledged that this area is an original feature of Caribbean and is not delineated on the Plat.
At hearing, Caribbean argued that the disputed area is not a common area and is not a common element, but is a “limited common element” of which the Unit 207 owners have exclusive right to use.
CONCLUSIONS OF LAW
The Department has jurisdiction to receive petitions, hear disputes between a property owner and a condominium community association, and take other actions pursuant to Arizona Revised Statutes (A.R.S.), Title 33, Chapter 16.
The Arizona Office of Administrative Hearings (Tribunal) is a separate state agency authorized by statute to hear and decide agency-referred contested matters through the conduct of an administrative hearing and issuance of a written decision.
In this proceeding, pursuant to Arizona Administrative Code (A.A.C.) R2-19-119, Petitioner bears the burden of proving by a preponderance of the evidence that, as alleged, Caribbean has violated CC&Rs Article 1, Sections 1.5 and 1.8; Article 3, Section 3.4; Article 4, Section 4.1; Article 8, Section 8.1; and, Article 12, Section 12.4” by refusing to claim ownership and manage, operate, maintain and administer the at-issue.
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).
Article 1, Section 1.5 of the CC&Rs defines “Apartment” as follows:
“Apartment” means a part of the Property, including one or more rooms situated in an Apartment Building comprising a part of the Property designated or intended for independent use as a dwelling unit, as so specified on the plat or survey attached as Exhibit “B”. Each Apartment shall consist of the space enclosed and bounded by the horizontal and vertical planes as shown on said Plat, and shall also include the patio and balcony areas identified with the Apartment by said Plat.
Article 1, Section 1.6 of the CC&Rs defines “Common Elements” as follows:
“Common Elements” means the “general common elements” as that term is defined in Section 33-551, Arizona Revised Statutes, together with the parking areas, yard areas, storage areas, swimming pool and swimming pool furniture and equipment, outside walks and driveways, landscaping, and all other portions of the Property except the Apartments.
Article 1, Section 1.8 of the CC&Rs defines “Plat” as follows:
“Plat” means the plat of survey of the Property and of all Apartments submitted to this horizontal regime, said Plat being in two pages, attached hereto as Exhibit “B” and recorded simultaneously with the recording of this Declaration.
Article 3, Section 3.4 of the CC&Rs provides as follows:
The Common Elements shall be exclusively managed, operated, maintained and administered by the Association, acting through its Board, for the use and benefit of all Owners, and for such other purposes as determined from time to time by said Board. The Board shall have the exclusive right and power to establish and impose rules and regulations governing the use, maintenance and development of all and any part of the Common Elements, and any Owner, or any other person using any part of the Common Elements shall abide by such rules and regulations.
Article 4, Section 4.1 of the CC&Rs provides as follows:
Title to the Common Elements shall be vested in the Owners who, as among one another, shall own such Common Elements as tenants in common, with ownership of an undivided percentage interest in said Common Elements in accordance with their respective percentage interests in the Common Elements as set forth in Exhibit “C”, provided, however, that no Owner shall exercise any right of partition with respect to his undivided percentage interest in said Common Elements, or bring any action for dissolution of the Association, so long as anyone of the restrictions or conditions stated in any part of Article III or this Article IV, remain in effect, it being agreed that these restrictions are necessary in order to preserve the rights of the Owners with respect to the operation and management of the Common Elements.
Article 7, Section 7.2 of the CC&Rs provides, in pertinent part, as follows:
Each Owner shall be entitled to the exclusive use of the interior surfaces (extending to the middle) of the perimeter walls including patio and balcony walls, doors, floors and ceilings and the surfaces of the patio and balcony floors within his Apartment ...
Article 8, Section 8.1 of the CC&Rs provides as follows:
If any portion of the Common Elements shall actually encroach upon any Apartment, or if any Apartment shall actually encroach upon any portion of the Common Elements, or if any Apartment shall actually encroach upon another Apartment, as the Common Elements and the Apartments are shown by the surveys comprising the Plat, there shall be deemed to be mutual easements in favor of the Owners of the Common Elements and the respective Owners involved to the extent of such encroachment so long as the same shall exist.
Article 9, Section 9.2 of the CC&Rs provides as follows:
The Common Elements shall be used only by the Owners residing therein, their guests and other authorized visitors and for such purposes as are incidental to the residential use of the Apartments or such other purposes as may be approved by the Board.
Article 12, Section 12.4 of the CC&Rs provides as follows:
Each grantee of Declarant, by the acceptance of a deed of conveyance, or each purchaser under any agreement of sale, accepts the same subject to all restrictions, conditions, covenants, reservations, liens and charges, and the jurisdiction, rights and powers created or reserved by this Declaration, and all rights, benefits and privileges of every character hereby granted, created, reserved or declared, and all impositions and obligations hereby imposed shall be deemed and taken to be covenants running with the land and equitable servitudes, and shall bind any person having at any time any interest or estate in said land, and shall inure to the benefit of such grantee or purchaser in like manner as though the provisions of this Declaration were recited and stipulated in full in each and every deed of conveyance or purchase contract.
A.R.S. § 33-1212, Unit Boundaries, provides as follows:
Except as provided by the Declaration,
...
4. Any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, entryways or patios, and all exterior doors and windows or other fixtures designed to serve a single unit, but located outside the unit's boundaries, are limited common elements allocated exclusively to that unit.
A.R.S. § 33-1218, Limited Common Elements, provides as follows:
Except for the limited common elements described in § 33-1212, paragraphs 2 and 4, other than porches, balconies, patio and entryways, the declaration shall specify to which unit or units each limited common element is allocated. ...
The hearing record presents a variety of positions for possible interpretation. CC&R Article 1, Section 1.5 defines Apartment as the part of the Property so delineated on the Plat document; however, the Plat document does not delineate this particular disputed area in any manner. The disputed area is not delineated on the Plat document as a part of the “Apartment” or as a “patio” or as a “balcony.” The parties did not dispute that access to the disputed area may only be gained through Unit 207; neither party indicated that Unit 207’s access to the disputed area was added at some time after the Property buildings were built, i.e. that the Unit 207 access was not an original feature. CC&R Article 1, Section 1.6 describes a Common Element with some specificity, but also includes “all other portions of the Property except the Apartments.” The Apartments are clearly delineated on the Plat document. CC&R Article 9, Section 9.2 provides that Common Elements are used “for such purposes as are incidental to the residential use of the Apartments or such other uses as may be approved by the Board.” Mr. Gomez testified that the Board’s position was that the disputed area is a “balcony” attached to Unit 207; however, he did not reference any particular Board approval determination reduced to writing and designating the disputed area as such. However, and finally, A.R.S. § 33-1212(A) provides that “[a]ny shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, entryways or patios, and all exterior doors and windows or other fixtures designed to serve a single unit, but located outside the unit's boundaries, are limited common elements allocated exclusively to that unit.” Accordingly, the Administrative Law Judge concludes that the disputed area must be a balcony “designed to serve a single unit, but located outside the unit’s boundaries.”
Therefore, based on the hearing record, the Administrative Law Judge concludes that Petitioner has not established, as alleged, any violation by Caribbean of the referenced CC&R provisions. As a result, the Administrative Law Judge concludes that Petitioner’s Petition shall be dismissed.
RECOMMENDED ORDER
IT IS ORDERED that Petitioner’s Petition is dismissed.
IT IS FURTHER ORDERED that Petitioner bears his $500.00 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, December 17, 2020.
/s/ Kay Abramsohn
Administrative Law Judge
Transmitted electronically to:
Judy Lowe, Commissioner
Arizona Department of Real Estate
100 N. 15th Avenue, Suite 201
Phoenix, Arizona 85007
John D. Klemmer
1901 E. Missouri Ave, #101
Phoenix, AZ 85016
[email redacted]
Petitioner
Lydia A. Pierce Linsmeier, Esq.
Nicole D. Payne, Esq.
Carpenter, Hazlewood, Delgado & Bolen, LLP
1400 E. Southern Ave, Ste 400
Tempe, AZ 85282
[email redacted]
[email redacted]
Counsel for Respondent
By FDS