ALJDEC decisions subject to certification as final

21F-H2121051-REL · Department of Real Estate - H/C · 2021-07-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Clifford (Norm) Burnes,

Petitioner,

vs.

Saguaro Crest Homeowners Association, Inc.,

Respondent.

No. 21F-H2121051-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 16, 2021

APPEARANCES: Clifford (Norm) Burnes on his own behalf; John Crotty, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On June 4, 2021, the Arizona Department of Real Estate (“Department”) issued a Notice of Hearing setting the above-captioned matter for hearing on July 16, 2021 at the Office of Administrative Hearings in Phoenix, Arizona.

The issue for hearing is Petitioner Clifford (Norm) Burnes’s allegation that on May 3, 2020, Respondent Saguaro Crest Homeowners Association Inc.’s Board of Directors violated Ariz. Rev Stat. section 33-1803 “Open meetings; exceptions” when it “took two actions in the absence of an open meeting by obtaining unanimous written consent of the Board’s members.”

Respondent acknowledges that it took the two actions by consent as allowed by Ariz. Rev. Stat. section 10-3821 and it asserts that consistent with that statute, no meeting actually occurred and therefore section 33-1803 does not apply.

Mr. Burnes filed his single-issue petition on May 7, 2021. In his petition Mr. Burnes asserted that the Respondent had violated section 33-1803 in at least seven ways. At the hearing, the ALJ informed Mr. Burnes that because he paid the fee for only a single issue, he was required to identify a single violation for adjudication.

Mr. Burnes identified that single alleged violation as: at the meeting on May 3, 2020 “members were not permitted to attend and speak after discussion but before the Board takes formal action.”

Mr. Burnes appeared and testified and he called Board president Esmerelda Sarina Martinez as a witness. The parties stipulated to the admission of their exhibits.

In April 2020, Mr. Burnes and his wife raised with the Board two issues or complaints related to lot 7 that abuts the Burnes’s lot: whether lot 7 was entitled to a waiver of the construction bond or deposit and a concern regarding the placement of the house on lot 7.

After Mr. Burnes raised the issues, Jamie Argueta, whose position and function apparently are not in the record, conducted research, and Mr. Burnes, the Board members and Mr. Argueta exchanged emails about the issues.

On April 19 and 21, 2020, the Board members and Mr. and Ms. Burnes met and discussed the issues. Exhibit B is minutes from those meetings.

Ms. Martinez, Board member Mr. Madill, and perhaps Mr. Burnes, also had a discussion or two with a couple of other HOA members, but Ms. Martinez characterized this as neighbors talking and not a meeting.

Ms. Martinez drafted the two consent forms at issue without input from others and on May 3, 2020, she brought the forms and related documents to each of the other Board member’s homes, and she asked each to read the information and sign if they felt it appropriate. Each Board member signed each consent form.

Exhibit A is the signed unanimous consent form and related information through which the Board agreed to honor a waiver of the construction deposit for lot 7.

Exhibit B is the signed unanimous consent form regarding the placement of the home on lot 7 and other information, which although not explicit in the record, appears to be the information that the Board members had when determining whether to sign the second consent form.

Exhibit H is the minutes from the August 29, 2020 Board meeting that was the first regularly scheduled meeting after the consent forms were signed on May 3, 2020.

Those minutes do not include an entry showing that the written consent documents had been filed with the corporate records reflecting the action taken, which filing is a requirement of subsection 10-3281(A).

The Association’s Bylaws section 3.5 “Action Without a Meeting” provides the directors with “the right to take any action in the absence of a meeting, which they could take at a meeting by obtaining the written consent of all the directors.”

Mr. Burnes requests that Respondent be ordered to rescind the consent orders or actions at issue, comply with the open meeting law when conducting business, that it pay Mr. Burnes’s filing fee, and that it be assessed a civil penalty.

CONCLUSIONS OF LAW

Mr. Burnes alleges that Respondent violated Ariz. Rev. Stat. section 33-1803. Consequently, the Department of Real Estate has authority over this matter. Ariz. Rev. Stat. Title 32, Ch. 20, Art. 11.

Petitioner bears the burden of proof to show that the alleged violation occurred. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

A preponderance of the evidence is:

The 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 1373 (10th ed. 2014).

“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.... If the petitioner prevails, the administrative law judge shall order the respondent to pay to the petitioner the filing fee required by section 32-2199.01.” Ariz. Rev. Stat. § 32-2199.02(A).

Ariz. Rev. Stat section 10-3821 “Action without meeting” provides in part:

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.

***

C. The consent signed under this section has the effect of a meeting vote and may be described as such in any document.

Ariz. Rev. Stat. section 33-1803 “Open meetings; exceptions” provides in part:

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....

***

E. 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, all of the following apply:

***

4. Any quorum of the board of directors that meets informally to discuss association business ... shall comply with the open meeting and notice provisions of this section without regard to whether the board votes or takes any action on any matter at that informal meeting.

F. It is the policy of this state as reflected in this section that all meetings of a planned community ... be conducted ... 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 ... shall construe any provision of this section in favor of open meetings.

Mr. Burnes has not proven that Respondent violated Ariz. Rev. Stat. section 33-1803 because Respondent did not conduct a meeting on May 3, 2020, but rather took action without a meeting as allowed by section 10-3821.

Consequently, Mr. Burnes’s petition should be dismissed and Respondent be deemed the prevailing party in this matter.

ORDER

IT IS ORDERED that Petitioner Clifford (Norm) Burnes’s petition is dismissed.

NOTICE

Pursuant to Ariz. Rev. Stat. section 32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to Ariz. Rev. Stat. section 32-2199.04. Pursuant to Ariz. Rev. Stat. section 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 28, 2021

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

John Crotty

Jennifer Elias

Law Offices of Farley, Choate & Wood

23800 N Farmers Way

Phoenix, AZ 85085

[email redacted]

Clifford (Norm) S. Burnes

4138 W Bent Saguaro Court

Tucson, AZ 85746

[email redacted]

-54864001

001

-137160-45720000

By Miranda Alvarez