HOA - ALJDEC decisions

22F-H2222030-REL · Department of Real Estate - H/C · 2022-08-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Arleen D Jouxson

Petitioner

vs.

The Villages at Aviano Condominium Association,

Respondent

No. 22F-H2222030-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: June 21, 2022

APPEARANCES: Ellen B. Davis, Esq. for Petitioner; Diana J. Elston, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On March 3, 2022, the Arizona Department of Real Estate issued a Notice of Hearing setting the above-captioned matter for hearing on April 12, 2022 at the Office of Administrative Hearings in Phoenix, Arizona. The matter was continued and the hearing was conducted on June 21, 2022.

Petitioner is Arleen D. Jouxson; Respondent is The Villages at Aviano Condominium Association. The Association is a non-profit corporation consisting of 392 units located in Phoenix.

At the hearing, Ms. Jouxson was represented by counsel and called the current president of the Association’s Board, Eloise Figueroa, to testify, but she did not testify herself and she presented no other witnesses.

The Association was represented by counsel and called attorney Jonathan Dessaules who testified about his involvement in a lawsuit between Ms. Figueroa and the Association.

On January 25, 2022, Ms. Jouxson filed with the Department a petition raising two issues, the second of which she has withdrawn.

At issue is Ms. Jouxson’s assertion that the Association violated community documents and a statute in its conduct related to the April 13, 2021 (annual) member meeting and election of two board members. More specifically, Ms. Jouxson alleges that (1) the Association exceeded its authority and it usurped the members’ authority to elect board members when the Association concluded that Ms. Figueroa and Linda Bahr were the top two vote-getters during that election and (2) the election never occurred because the Association canceled it.

In March 2021, the Association, through its property manager, noticed an Annual Member Meeting to be conducted by Zoom on April 13, 2021. Sign-in was scheduled to start at 5:45 p.m.

An election of two Board Members was also scheduled for the April 13th member-meeting.

The Association mailed to the members absentee ballots to be used for the April 13th election.

The ballots show that to be counted, ballots were required to be received by the Association’s management company by 3:00 p.m. April 13, 2021, but ballots would also be accepted at the meeting no later than 6:00 p.m.

The ballots showed that there were six candidates for the two seats, but also show that nominations for other candidates would be taken from the floor during the member meeting.

The absentee ballots show that they would expire on completion of the election.

A total of 191 completed ballots were received by the Association before the member meeting was convened. Forty ballots were required for a quorum.

The membership meeting was convened at 6:01 p.m. and the property manager announced that enough ballots had been received to meet the quorum requirement. Ms. Jouxson was in attendance.

The Board was represented by its attorney Curtis Ekmark.

Tony Basuini, who was then the Board president and whose seat was not up for election, and board member Joe Orr, whose seat was up for election, were present at the membership meeting. The third seat was vacant and also was up for election.

Shortly after the member meeting was convened, Mr. Basuini made a motion to postpone the election.

Ms. Figueroa, through her attorney at that time, Mr. Dessaules, raised objections to postponing the election, as did other association members.

Discussion ensued during which association members raised objections to postponing the meeting and questioned whether the Board could postpone a member meeting that had been convened with a quorum.

After discussion, Mr. Basuini renewed his motion and Mr. Orr seconded the motion to postpone the member meeting.

An association member questioned whether it was proper for the Board to act without a vote of the members considering that the April 13th meeting was a member meeting. Mr. Basuini replied that the meeting had now been postponed.

Members made additional objections and additional discussion was had.

Mr. Basuini then called for a vote on postponing the election, which passed when he and Mr. Orr voted in favor of the motion. A member asked for clarification as to what had been voted on and passed, to which Mr. Basuini replied that the meeting had been postponed to allow for new candidates to run for the two open Board seats and two newly approved seats.

Someone requested that the Association not destroy the ballots that had been returned.

At the direction of the Association’s attorney, the property manager ended the April 13, 2021 member meeting, presumably by ending the Zoom call. The ballots were not counted on April 13, 2021.

On April 27, 2021, Ms. Figueroa filed in Maricopa County Superior Court a Complaint against the Association for Breach of Contract and Declaratory and Injunctive Relief.

In her suit, Ms. Figueroa requested that the Court declare (i) that the election for the 2021 board of directors that ended on April 13, 2021 was valid, (ii) that she and Ms. Bahr prevailed in that election, and (iii) that she and Ms. Bahr were valid board members who were entitled to be seated as directors.

Ms. Figueroa also filed a request for a Temporary Restraining Order, asking for a preliminary injunction to enforce the results of the 2021 election and to seat herself and Ms. Bahr as board members.

The Association, through counsel, filed its answer on May 26, 2021.

Through their respective counsel, Ms. Figueroa and the Association negotiated a potential settlement. During those negotiations, the Association proposed to immediately complete the annual election, to count all proper ballots that were submitted by the April 13th deadline, and to seat the two highest vote-getters.

Subsequently, the Association provided that it appeared that Ms. Figueroa and Ms. Bahr had received the highest number of votes and that they would be seated on the Board on the effective date of a settlement agreement resolving the lawsuit.

The Association and its attorneys counted the ballots received and determined that Ms. Figueroa and Ms. Bahr had received the highest number of votes.

Ms. Figueroa and the Association entered a Settlement Agreement in which the Association acknowledged and certified that Ms. Figueroa and Ms. Bahr had received the highest number of votes and that they were elected to the Board. Ms. Figueroa signed on her own behalf and Mr. Basuini signed for the Association in his role as Board president.

Ms. Figueroa and the Association then filed with the Court a Stipulation to Dismiss and on June 22, 2021 the Court entered an Order of Dismissal with Prejudice.

As called for in the Settlement Agreement, Ms. Figueroa and Ms. Bahr were seated as Board members.

The April 13, 2021, member meeting was not reconvened and no other membership meetings were convened in 2021.

On January 25, 2022, Ms. Jouxson filed with the Department her petition that led to this matter being scheduled.

Ms. Jouxson argues that there was no member meeting and the Association’s decision to seat Ms. Figueroa and Ms. Bahr violated Ariz. Rev. Stat. section 32-1248(B), Bylaws section 3.1 and CC&R section 6.2, all of which require that Board members be elected by unit owners (i.e., members of the Association).

In her petition, Ms. Jouxson alleged that there was no election, because the election was canceled by the Board on April 13, 2021.

No Board meeting was noticed for, or convened on, April 13, 2021.

There was no evidence adduced showing that the Board members could cancel the election, which was being conducted at a member meeting that was convened with a quorum present.

Ms. Jouxson also argues that the Association had no authority to enter the Settlement Agreement because the substance of the agreement exceeded its scope of authority.

Ms. Jouxson argues that not all votes were counted because more absentee ballots were sent out than were returned by the deadline of 6:00 p.m. April 13, 2021. Ms. Jouxson presented no evidence showing that any of the ballots that were not returned were acted on by the members who received those ballots (i.e., that those members voted).

Ms. Jouxson argues that members may have intended to vote at the meeting or to have nominated themselves to run for the Board during the meeting but were not given a chance to, and were therefore disenfranchised. Ms. Jouxson did not present any evidence to show that any potential voter was disenfranchised, and her own ballot voting for Ms. Figueroa and Ms. Bahr is in evidence (showing she was not disenfranchised).

The Association’s membership can act without a meeting if every member is provided a ballot and certain other requirements are met. Bylaws § 2.11.

“Unless otherwise provided in the Condominium Documents, if a quorum is present at a meeting of the Members, the affirmative vote of a majority of the votes represented and voting is the act of the Members.” Bylaws § 2.13.

The Association argues that the election was valid and that the Settlement Agreement is binding on this tribunal.

CONCLUSIONS OF LAW

In her petition, Ms. Jouxson alleges that the Association has violated Ariz. Rev. Stat. section 33-1243(B) and its bylaws and declaration. Consequently, the Department of Real Estate has authority over this matter. See Ariz. Rev. Stat. Title 32, Ch. 20, Art. 11.

Ms. Jouxson 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).

As pertinent to this matter, Ariz. Rev. Stat. section 33-1248(B) provides that the Board may not act on behalf of the Association to elect members of the Board.

As pertinent to this matter, Bylaws section 3.1 and CC&R section 6.2 provide that the unit owners are to elect the Board.

Ms. Jouxson has not met her burden to show that Ariz. Rev. Stat. section 33-1248(B), Bylaws section 3.1, or CC&R section 6.2 were violated because she has not shown that Ms. Figueroa and Ms. Bahr were seated without an election by the members.

The evidence shows that a member meeting and Board election was noticed, that a sufficient number of ballots to constitute a quorum were received, and the member meeting was convened. The evidence also shows that the Association inappropriately postponed the April 13, 2021 membership meeting, when it did not allow the members to vote on the motion to postpone, the Association subsequently counted all valid ballots, which ballots did not expire until the completion of the election, and the results showed that Ms. Figueroa and Ms. Bahr had won the election.

Consequently, Ms. Jouxson’s allegation that there was no election is not proven, and she did not prove that the Board, rather than the membership, elected Ms. Figueroa and Ms. Bahr.

Ms. Jouxson presented no substantial evidence showing that there were irregularities in how the ballots were collected and she presented no substantial evidence showing that any member was disenfranchided.

Ms. Jouxson’s petition should be dismissed.

ORDER

IT IS ORDERED that Arleen D. Jouxson’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, August 4, 2022.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile August 4, 2022 to:

Louis Dettorre

Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Diana J. Elston

Jones, Skelton & Hochuli, P.L.C.

40 North Central Avenue, Suite 2700

Phoenix, Arizona 85004

[email redacted]

Ellen B. Davis

HENZE COOK MURPHY, PLLC

722 East Osborn Rd, Suite 120

Phoenix, AZ 85014

[email redacted]

By: Miranda Alvarez

Legal Secretary