ALJDEC decisions subject to certification as final

21F-H2120016-REL · Department of Real Estate - H/C · 2021-01-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Haining Xia,

Petitioner,

Dorsey Place Condominium Association,

Respondent.

No. 21F-H2120016-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: January 7, 2021

APPEARANCES: Petitioner Haining Xia appeared on his own behalf. Nick Nogami, Esq. represented Respondent Dorsey Place Condominium Association.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

On or about September 21, 2020, Haining Xia (“Petitioner”) filed a Homeowners Association (“HOA”) Dispute Resolution Petition (“Petition”) with the Arizona Department of Real Estate (“Department”) against Dorsey Place Condominium Association (“Respondent”). Petitioner asserted a violation of Respondent’s Bylaws Articles 3.3., 4.1, and 4.4.

On or about November 20, 2020, the Department issued a Notice of Hearing in which it set forth the issue for hearing as follows:

Respondent never elected the board at its Annual Members Meetings. In the notices for Annual Members Meeting of 2018 and 2019, board election was not even on the agendas. This is in direct violation of HOA Bylaws Article 3.3, Article 4.1 and Article 4.4.

At the hearing, Petitioner testified on his own behalf. Respondent did not present any witnesses, however, its counsel presented argument.

Respondent had previously submitted to the Office of Administrative Hearings a Motion to Dismiss for lack of jurisdiction in pertinent part as follows:

The OAH only has jurisdiction to hear disputes between a “Unit owner” and a “Condominium” as such terms are defined by A.R.S. §33-1202(10) and (23). See A.R.S. §32-2199.01(A) (“For a dispute between an owner and a condominium association or planned community association that is regulated pursuant to title 33...”). Accordingly, the Association must be a “Condominium” in order for the OAH to have jurisdiction over any dispute between these parties. However, the Association is not a Condominium because its Condominium status was terminated in 2019 pursuant to a “Condominium Termination Agreement” recorded on April 9, 2019. A copy of this document is attached hereto as Exhibit A. As the Condominium was terminated in April 2019, the Association no longer meets the legal requirements of A.R.S. §33-1202(10) and therefore the OAH does not have jurisdiction over this dispute. In fact, the subject property is currently being utilized as an apartment complex, making the Petitioner’s claims moot and not within the OAH’s jurisdiction.

The Administrative Law Judge issued a Minute Entry on January 4, 2021, addressing Respondent’s Motion to Dismiss as well as Petitioner’s Response thereto, as follows:

. . . having reviewed Respondent’s Motion to Dismiss (“Motion”), Petitioner’s Response to Motion to Dismiss, and Respondent’s Reply in Support of its Motion to Dismiss, concludes that the Motion cannot be ruled upon at this time. This conclusion is based upon the fact that the Minute Entry issued by Judge Daniel Martin referenced motions and reply briefs filed, upon which the motion to dismiss with prejudice was granted based on the “reasons advanced” in those filings. The undersigned has not had the benefit of seeing those filings, and therefore, is unaware of the reasons asserted therein. Absent those documents, the undersigned cannot determine if Respondent’s position is appropriate or can be granted.

Consequently, the Motion will be addressed at the scheduled hearing.

Prior to the hearing, Respondent submitted the referenced motions and briefs.

At hearing, Respondent argued what was presented in the Motion to Dismiss, referenced the Maricopa County Superior Court ruling that upheld the termination agreement, and asserted that the jurisdictional issue is dispositive.

Petitioner testified at hearing that he continues to own the unit as the sale has not been finalized and argued that the condominium status could not be changed because he still owns it. Petitioner argued that the termination agreement is not valid because it “does not contain valid signatures” and that it was a “usurpation of corporate power.” Petitioner asserted that he plans to appeal the Superior Court ruling, however, he has not yet done so. Petitioner stated that the judge in that case was “not aware Petitioner is still the titled owner” of the unit.

At hearing, initially Petitioner sought to invalidate the termination agreement. The Administrative Law Judge advised Petitioner that the issue regarding the validity of the termination agreement has been adjudicated in Maricopa County Superior Court and that the Office of Administrative Hearings does not have the authority to overturn or modify that ruling.

Thereafter, Petitioner addressed the actual issue in his filed Petition. Petitioner testified that the 2018 Notice of Meeting provided notice that the purpose of the meeting was to vote for a special assessment, and that the meeting was supposed to be held in March 2018, but was not held until August 2018. Petitioner asserted that there was not a valid board for that meeting.

Petitioner further asserted that the 2019 annual meeting was held to discuss the termination agreement, however, there was no election of board members or appointment of officers. Petitioner requested “a definitive answer as to whether there were valid corporate officers.”

Petitioner failed to present any evidence at hearing, documentary or otherwise, but rather relied solely on his own assertions.

CONCLUSIONS OF LAW

A.R.S. § 32-2199(B) permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of Title 33, Chapter 16. This matter lies with the Department’s jurisdiction.

Petitioner bears the burden of proof to establish that Respondent violated its Bylaws Article 3.3, Article 4.1 and Article 4.4 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.”

Article 3.3 of the Bylaws, Annual Members Meeting states:

The annual meeting of the Members shall be held in the month of March each year, beginning March 2006, with the exact date to be determined each year by the Board, provided that the Board may elect to delay the annual meeting past March in any given year (but in no event later than May 31) if necessary to permit preparation of financial statements or budgets, or for such other reasons as may be determined by the Board, in its good faith discretion. At each annual meeting the Members shall elect the Board and transact such other business as may properly be brought before the meeting.

Article 4.1 of the Bylaws, Election states:

The business and affairs of the Association shall be managed, conducted and controlled by the Board. The directors shall be appointed or elected as provided in the Declaration, and for the term(s) specified therein. Except as provided in the Declaration, each director shall be elected at the annual meeting of Members concurrent with the expiration of the term of the director he or she is to succeed, and, except as otherwise provided in these Bylaws or in the Articles or the Declaration, shall hold office until his or her successor is elected and qualified. Nothing herein shall be construed to prevent the appointment or election of any person or persons to two or more terms as director, whether or not such terms shall be consecutive. No person shall be eligible for election as a director who is not at the time of election a Member of the Association, except such persons as may be designated by Declarant or by a corporate, partnership or other non-individual Unit Owner. If, after election: (a) any director (except for a director designated by Declarant or by a corporate, partnership or other non-individual Unit Owner) cease to be a Member, he or she shall thereupon no longer be a director and his or her office shall become vacant; or (b) a corporate, partnership or other non-individual Unit Owner ceases to be a Member, any director serving by virtue of having been designated by such corporate, partnership or other non-individual Unit Owner shall thereupon no longer be a director and his or her office shall become vacant.

Article 4.4 of the Bylaws, Annual Board Meetings states:

Within thirty (30) days after each annual meeting of Members, the newly elected directors shall meet forthwith for the purpose of organization, the election of officers, and the transaction of other business and, if a quorum of the directors is present, no prior notice of such meeting shall be required to be given, provided that the place and time of such first meeting of newly-elected directors may be changed by written consent of all of the directors.

Petitioner did not establish by a preponderance of the evidence that Respondent “never elected the board at its Annual Members Meetings” or that “in the notices for annual Members Meeting of 2018 and 2019, board election was not even on the agendas” as alleged in his Petition. In fact, Petitioner failed to present any documentary evidence at hearing to establish the alleged violations and instead, presented mere assertions, notwithstanding being given the opportunity to fully present his case.

Consequently, Petitioner failed to establish, by a preponderance of the evidence, that Respondent violated Article 3.3, Article 4.1 and Article 4.4. of Respondent’s Bylaws as alleged in the filed Petition.

order

IT IS ORDERED that Petitioners’ 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, January 22, 2021.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

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001

-137160-45720000Transmitted through US Mail to:

Haining Xia

15742 E Eagle Crest Rd.

Fountain Hills, AZ 85268

Edith Rudder

Carpenter, Hazlewood, Delgado & Bolen, PLC

1400 E. Southern Ave., Suite 400

Tempe, AZ 85282