HOA - ALJDEC decisions
22F-H2222040-REL · Department of Real Estate - H/C · 2022-07-12
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Steven Schmidt,
Petitioner,
vs.
Catalina Ridge Community Association, Inc.,
Respondent.
No. 22F-H2222040-REL
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: June 23, 2022 at 9:00 AM.
APPEARANCES: Steven Schmidt (“Petitioner”) appeared on his own behalf. Michael Shupe, Esq. appeared on behalf of Catalina Ridge Community Association (“Respondent” and “Association”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
_____________________________________________________________________
After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Order to the Commissioner of the Arizona Department of Real Estate (“Department”).
FINDINGS OF FACT
Background and Procedure
The Department is authorized by statute to receive and to decide petitions for hearings from members of homeowners’ associations and from homeowners’ associations in Arizona.
On March 21, 2022, the Department received a single-issue petition from Petitioner that alleged as follows:
The Association violated Article 7 Section 7 of the [Covenants, Conditions, and Restrictions] (“CC&Rs”) by incorrectly applying the method for determining the allowable square footage of an accessory structure.
On April 01, 2022, Petitioner’s $500.00 check cleared as payment to the Department.
On March 31, 2022, the Department issued notice of the underlying petition to Respondent.
On December 13, 2021, Respondent returned its Answer to the Department whereby it denied the merits of Petitioner’s allegations.
Per the Notice of Hearing, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 11, 2022, regarding the following issues:
Whether the Association violated CC&Rs Article 4 Sections 5 by “incorrectly [applying] the method for determining the allowable square footage of an accessory structure.”
(Emphasis added.)
The Parties and Governing Documents
Respondent is a homeowners’ association whose members own properties in a residential real estate development located in Tucson, Arizona. Membership for the Association is comprised of the Rivers Edge and Canada Del Oro Estates subdivisions, known collectively as Catalina Ridge.
Petitioner owns Lot 9 within the Catalina Ridge subdivision and is a member of the Association.
The Association is governed by its CC&Rs and overseen by a Board of Directors (“the Board”). The CC&Rs empower the Association to control certain aspects of property use within the development. When a party buys a residential unit in the development, the party receives a copy of the CC&Rs and agrees to be bound by their terms. Thus, the CC&Rs form an enforceable contract between the Association and each property owner.
On an unknown date, the Association’s CC&Rs were recorded with the Pima County Recorder’s Office.
On October 25, 2019, the Association’s Amended and Restated Declaration of CC&Rs were recorded with the Pima County Recorder’s Office.
Catalina Ridge CC&Rs Article VII, Use Restrictions, provides as follows:
Section 7 Accessory Structures. Accessory structures shall include, but are not limited to, detached garages and guest homes and shall be limited to twenty (20) feet in height. Accessory structures shall be limited to 5% of the lot area or forty percent (40%) of the main Dwelling Unit, whichever is less.”
Stipulated Evidence
Petitioner submitted his Architectural Review Committee (“ARC”) Submittal Form to the Association for his detached garage (“project”) on May 15, 2019, along with a cover letter referenced on the form.
The submission to the ARC included plans for the project prepared by Envision Corporation, dated March 29, 2019.
Petitioner submitted a second application to the ARC for his project on June 19, 2019, along with the required $3,000 deposit.
On July 25, 2019, the Association sent Petitioner a Denial Letter for his project. In pertinent parts, Petitioner was advised that his request to build a 1,441 square foot standalone garage was denied because, “The Committee believes that the square footage of a home does not include garage area or patio.”
Section 2.2.2 of the Design Guidelines, as referenced in the Denial Letter, was included in a version of the Design Guidelines adopted by the Association in April 2009. The Design Guidelines were subsequently amended in March 2020. The prior section became Section 3.2.2 of the March 2020 Design Guidelines, but the language of said Section was unchanged between the versions.
Sections 7.6 and 7.7 of the CC&Rs referenced in the Denial Letter were included in the CC&Rs applicable at the time of the denial letter. The CC&Rs were amended and restated in October 2019, but the language of Sections 7.6 and 7.7 was unchanged between the versions of the CC&Rs.
Petitioner requested that the ARC reconsider its decision.
On January 08, 2020, the ARC met to discuss Petitioner’s request, as well as to review new correspondence from neighbors provided by Petitioner.
On January 10, 2020, the Association sent Petitioner a Second Denial Letter for his project. In pertinent part, Petitioner was advised that his project request was denied again, after additional consideration, because, “[The proposed build] does not meet the size requirements of the Declaration (previous and revised.)”
Petitioner attended the February 05, 2022, ARC meeting and requested an appeal of its decision.
On February 07, 2020, the Association sent Petitioner a third and Final Denial Letter. In pertinent part, Petitioner was advised that his project request was denied again because, “The plans and submission were not changed in any way.”
The square footage of Mr. Petitioner’s proposed detached garage is 1,441.
The livable square footage of Petitioner’s home is 2,820.
The square footage of the covered front porch of Petitioner’s home is 289.
The square footage of the covered rear porch of Petitioner’s home is 327.
The square footage of the attached garage of Petitioner’s home is 1002.
Hearing Evidence
Petitioner briefly testified on his own behalf. Respondent declined to provide witness testimony. Stipulated Findings of Fact, Stipulated Exhibits 1-9, Respondent’s Pre-Hearing Memorandum, and the Department’s electronic file were admitted into the record.
Catalina Ridge CC&Rs Article I, Definitions, provides as follows:
Section 15 “Dwelling Unit” means any building or portion of a building situated upon a Lot designed and intended for use and occupancy as a Residence by a Single Family.
Section 29 “Residence” means any subdivided Lot shown on the Plat, together with the residential Dwelling Unit, garage, patio and other Improvements thereon and all rights and easements appurtenant thereto granted pursuant to this Declaration and to the deed of conveyance.
Closing Arguments
In closing, Respondent argued that, despite support that Petitioner had whipped from his neighbors, the ARC was unable to approve Petitioner’s project because the express language of the CC&Rs forbade the Association from concluding that a “Dwelling Unit” could include a portion of a building distinct from other structures and improvements, like garages and patios.
In closing, Petitioner argued that, per his lay interpretation of CC&Rs 7.7, it was reasonable to presume the square footage of a home includes patios and attached garages.
Conclusions of Law
This matter lies within the Department’s jurisdiction pursuant to Ariz. Rev. Stat. §§ 32-2102 and 32-2199 et seq., regarding a dispute between an owner and a planned community association. The owner or association may petition the Department for a hearing concerning violations of community documents or violations of the statutes that regulate planned communities as long as the petitioner has filed a petition with the Department and paid a filing fee as outlined in Ariz. Rev. Stat. § 32-2199.05.
Pursuant to Ariz. Rev. Stat. §§ 32-2199(2), 32-2199.01(A), 32-2199.01(D), 32-2199.02, and 41-1092 et seq., OAH has the authority to hear and decide the contested case at bar. OAH has the authority to interpret the contract between the parties.
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated one or more provisions of the Association’s community documents. Respondent bears the burden of establishing any affirmative defenses by the same evidentiary burden.
“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.”
Each word, phrase, clause, and sentence of a statute or rule must be given meaning so that no part will be void, inert, redundant, or trivial.
The issue to be addressed in this matter is whether the Association violated CC&Rs Article 7.7; a pure question of law as to the meaning and interpretation of the relevant provision, as the underlying facts are not in dispute between the parties.
Here, it is Petitioner’s position that his project, a 1,441 square foot detached garage, is permissible under CC&Rs Article 7.7 because his “main Dwelling unit” consists of the livable portions of his home as well as his attached garage and patios, totaling 4,438 square feet. In contrast, the Association takes the position that Petitioner’s “main Dwelling unit” only consists of the livable portions of his home, totaling 2,853 square feet, which would result in a maximum allowable detached garage totaling 1,128 square feet. Thus, the definition of “main Dwelling Unit” is determinative as to whether Petitioner’s proposed detached garage complies with CC&Rs Article 7.7.
Based upon a review of the credible and relevant evidence in the record, the undersigned concludes that Petitioner did not sustain his burden of proof.
It is clear from the record that a “Dwelling Unit” can only consist of a portion of a building that is distinct from other structures and improvements like garages and patios. Additionally, “Accessory Structures” are limited to 40% of the main Dwelling Unit, exclusive of a garage, porch, or patio. Hence, the calculation of the relevant square footage of a main Dwelling Unit under CC&Rs 7.7 excludes any non-livable portion of a building, structure, or improvement (attached or otherwise).
Because the livable portion of Petitioner’s home is 2,853, the maximum allowable square footage of an accessory structure is capped at 1,141.2 square feet under the applicable community document.
Therefore, the undersigned Administrative Law Judge must conclude that because Petitioner did not establish Respondent’s violation(s) of CC&Rs Article 7.7, his petition is denied.
ORDER
Based on the foregoing,
IT IS ORDERED that Petitioner’s petition is denied.
NOTICE
Pursuant to Ariz. Rev. Stat. §32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to Ariz. Rev. Stat. § 32-2199.04. Pursuant to Ariz. Rev. Stat. § 41-1092.09, a request for rehearing in this matter must be filed with the Commissioner of the Arizona Department of Real Estate within thirty (30) days of the service of this Order upon the parties.
Done this day, July 13, 2022.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Louis Dettorre, Commissioner
Arizona Department of Real Estate
100 N. 15th Ave., Ste. 201
Phoenix, AZ 85007
[email redacted] [email redacted]
[email redacted]
[email redacted]
Steven Schmidt, Petitioner
11039 N. Joy Faith Dr.
Oro Valley, AZ 85737
[email redacted]
Michael S. Shupe, Esq.
Goldschmidt Shupe, PLLC, Counsel for Respondent
6700 N. Oracle Rd., Ste. 240
Tucson, AZ 85704
[email redacted]
[email redacted]
By Miranda Alvarez
Legal Secretary