HOA - ALJDEC decisions

21F-H2121058-REL · Department of Real Estate - H/C · 2021-10-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Daniel B. Belt,

Petitioner,

Beaver Valley Improvement Association,

Respondent

No. 21F-H2121058-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: September 10, 2021; the record was held open until September 24, 2021, to allow the parties to submit written closing arguments

APPEARANCES: Petitioner Daniel B. Belt appeared on his own behalf. Ellen B. Davis, Esq. represented Respondent Beaver Valley Improvement Association. Petra Paul and William Campbell appeared as witnesses.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

On or about June 8, 2021, Daniel B. Belt (“Petitioner”) filed a Homeowners Association (HOA) Dispute Process Petition (“Petition”) with the Arizona Department of Real Estate (“Department”) alleging a violation of Planned Community Statutes, specifically, A.R.S. § 33-1812(6), by Beaver Valley Improvement Association (“Respondent”). Petitioner indicated a single issue would be presented and paid the appropriate $500.00 filing fee.

On or about July 16, 2021, the Department issued a Notice of Hearing in which it set forth the issue for hearing as follows:

The dispute between Petitioner and Respondent arises from A.R.S. § 33-1812(6). The Petitioner states in the petition narrative, “... PDS refused to give petitioner the ballots containing the names, addresses and signatures, in compliance with ARS 33-1812(6)...”

At hearing, Petitioner testified on his own behalf and presented the testimony of Petra Paul. Respondent presented the testimony of William Campbell.

Petitioner asserted that his Petition, which essentially asserts “voter fraud,” is a “life and death matter.”

Petra Paul, Managing Agent for Planned Development Services HOA Management & Accounting Company (“PDS”), testified that PDS’s contract with Respondent is for accounting services only, and not HOA management services. Consequently, PDS does not manage Respondent. Ms. Paul testified that the only involvement that PDS had with the election as issue was mailing the annual meeting documents to the members for Respondent. Ms. Paul emphasized that PDS did not conduct Respondent’s election and did not tabulate the ballots, but rather only facilitated in the mailing of the ballots to Respondent’s members, collecting the returned ballots and reviewing the number of ballots returned to ensure that a quorum was established for a valid election. Ms. Paul testified that the counting of the ballots occurred at the annual meeting with the members present, including Petitioner, and that all ballots were verified and announced.

Ms. Paul testified regarding her interactions with Petitioner. Ms. Paul testified that Petitioner requested copies of the ballots prior to the election (which took place on a Saturday). Petitioner was advised that he was not permitted to see the ballots prior to the election. Petitioner thereafter demanded copies of the ballots the Monday after the election. Ms. Paul testified that Petitioner was provided copies of redacted ballots, as the names, email addresses, and signatures had been removed. However, Petitioner would not accept the redacted copies. Ms. Paul explained that she offered Petitioner the opportunity to review the non-redacted ballots, however advised him that he could not take those with him.

Ms. Paul testified that with each interaction with Petitioner, he became increasingly agitated, that the office staff at PDS was intimidated by Petitioner because Petitioner refused to leave PDS’s premises, Petitioner picketed on the property and sat in his car in PDS’s parking lot. Ms. Paul described Petitioner’s behavior as “irrational, mean, and bullying” and that she and other employees were concerned for their personal safety. Further, Petitioner’s behavior was impacting PDS’s business operations. Consequently, PDS through Ms. Paul, obtained an Injunction Against Workplace Harassment (“Injunction”) against Petitioner after Petitioner spent 45 days picketing outside of PDS’s office. The Injunction indicates that Petitioner made threats against PDS employees, stating, “You’ll be sorry,” “You’ll regret this,” and “You haven’t seen the end of me.” The Injunction further indicates that Petitioner remained in PDS’s parking lot or the street adjacent to the building holding a large sign that stated, “PDS Embezzlers, Frauds, Liars.”

Ms. Paul expressed her concern that Petitioner should not be allowed to know how individual members voted because she was afraid that Petitioner would resort to intimidating and bullying them based on their votes. Ms. Paul testified that PDS demanded its legal fees be paid by Respondent and PDS resigned its services from Respondent due to Petitioner’s “abusive and erratic” interactions with her and other PDS employees.

William Campbell, a member of Respondent’s Board of Directors testified regarding Respondent’s Policy and Procedure regarding Ballot/Proxy Handling Procedure for the Annual Meeting, which was approved by Respondent’s Board on July 10, 2004. Mr. Campbell testified regarding paragraph number 3 that states:

BALLOTS WILL BE PLACED IN A MANILA ENVELOPE(S) ACCORDING TO STATUS, I.E. DUES CURRENT / DUES NOT CURRENT WITH THE BOTTOM PORTION FOLDED UNDER TO MAINTAIN THE SECRECY OF THE BALLOT.

Emphasis in original.

Mr. Campbell further testified regarding Respondent’s May 8, 2021 Meeting Minutes. Those meeting minutes illustrate that Respondent’s Board unanimously reaffirmed Respondent’s policy of secret ballots, as follows:

President Mexal recognized member Dan Belt who expressed dissatisfaction that he was not able to view all the ballots from the 2021 election inclusive of individual members personal information. A discussion was held regarding the long-standing practice of the BVIA providing its members to a secret ballot. Vice President Campbell made an offer to Mr. Belt that would provide him an opportunity to review the ballots without disclosing an individual’s private information but with the ability for any member who wants to confirm their vote was counted to be given the opportunity to view their individual ballot, preserving the practice of a secret ballot and any members privacy concerns.

Vice President Campbell made a motion to arrange for a meeting for any interested members to attend a review of the ballots (without personally identifying information) and allow members to confirm their personal ballots were included. Director Hallett seconded the motion, and the motion was approved unanimously.

Treasurer Sarah Linkey made a motion to reaffirm that all Board of Directors elections be conducted with a secret ballot. Director Hallet seconded the motion, and the motion was approved unanimously.

Mr. Campbell testified regarding Respondent’s Bylaws, specifically, Article VII Books and Records, which states in pertinent part, “Notwithstanding the foregoing, the following are not subject to inspection by any party other than the Board of Directors, its management agent, if any, . . . (d) Personal . . . information about an individual Member of the Association. . . .”

Mr. Campbell testified that the way in which individual members voted is considered private information and the members believed they had the right to a secret ballot. Mr. Campbell asserted that Respondent’s Bylaws would need to be amended in order to provide personal information. Mr. Campbell testified that there was nothing irregular about this election, and that Petitioner was told he could have copies of the ballots with the members’ demographic information, just not their voting information. However, Mr. Campbell devised a way in which he could match a members’ demographic information to the members’ vote if upon Petitioner’s inspection, something appeared irregular. Mr. Campbell further testified that there was a meeting at the end of May 2021 during which members were permitted to view the ballots and the ballots were recounted and the votes were confirmed. Mr. Campbell also brought the ballots to the June 2021 meeting in the event that any member wanted to view the ballots, and again at the July 2021 meeting. Mr. Campbell testified that no one availed themselves of the opportunities in June or July.

Mr. Campbell referenced Article VII, Section 1 of the Arizona Constitution which provides that “all elections by the people shall be by ballot, or by such other method as may be prescribed by law; Provided, that secrecy in voting shall be preserved.” Mr. Campbell opined that if voting were not conducted by secret ballot, that there would be a chilling effect in that members would not vote for fear of repercussions.

Mr. Campbell acknowledged that Respondent was not utilizing the correct form for secret ballots as they were not in manila envelopes, however, the ballots remained secret because they were folded.

CONCLUSIONS OF LAW

Arizona statute permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents or violations of statutes that regulate planned communities. That statute provides that such petitions will be heard before the Office of Administrative Hearings.

Petitioner bears the burden of proof to establish that Respondent committed the alleged violation 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.”

A.R.S. § 33-1812(A) provides in pertinent part:

. . . any action taken at an annual, regular or special meeting of the members shall comply with all of the following if absentee ballots or ballots provided by some other form of delivery are used:

. . .

6. The completed ballot shall contain the name, address and signature of the person voting, except that if the community documents permit secret ballots, only the envelope shall contain the name, address and signature of the voter.

7. Ballots, envelopes and related materials, including sign-in sheets if used, shall be retained in electronic or paper format and made available for member inspection for at least one year after completion of the election.

A.R.S. § 33-1805 provides the following in pertinent part:

A. Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member or any person designated by the member in writing as the member's representative. The association shall not charge a member or any person designated by the member in writing for making material available for review. The association shall have ten business days to fulfill a request for examination. On request for purchase of copies of records by any member or any person designated by the member in writing as the member's representative, the association shall have ten business days to provide copies of the requested records. An association may charge a fee for making copies of not more than fifteen cents per page.

B. Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to any of the following:

. . . .

4. Personal . . . records of an individual member of the association . . .

Petitioner failed to prove by a preponderance of the evidence that Respondent violated A.R.S. § 33-1812(A)(6) as alleged in his Petition. A.R.S. § 33-1812(A)(6) requires that “[t]he completed ballot shall contain the name, address and signature of the person voting, except that if the community documents permit secret ballots, only the envelope shall contain the name, address and signature of the voter.” In this case, the credible evidence of record established that the ballots contained the name, email address, and signature of the person voting, and that the ballots were intended to be secret pursuant to the community documents. Respondent permitted Petitioner the opportunity to review those ballots. Petitioner declined to do so. Respondent also provided redacted copies of those ballots which Petitioner refused to accept. Instead, Petitioner demanded copies of the ballots containing the personal information of Respondent’s members, most notably, the way in which each member cast their respective votes. In addition to the fact that the ballots were to be secret, Respondent is precluded by A.R.S. § 33-1805(B)(4) from disclosing such personal information of its members. Thus, Petitioner failed to sustain his burden to establish a violation by Respondent.

ORDER

IT IS ORDERED that Petitioner’s Petition is dismissed.

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, October 5, 2021.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile October 5, 2021 to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Daniel B. Belt

19402 N. 15th Dr.

Phoenix, AZ 85027

Lori Rutledge

17235 N. 75th Ave, Ste. H-100

Glendale, AZ 85308