HOA - ALJDEC decisions

22F-H2222048-REL · Department of Real Estate - H/C · 2022-10-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Robert C. Ochs,

Petitioner,

vs.

The Camelview Greens Homeowners Association,

Respondent.

No. 22F-H2222048-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 19, 2022 at 9:00 AM.

APPEARANCES: Robert Ochs (“Petitioner”) appeared on his own behalf. Ashley Moscarello, Esq. appeared on behalf of The Camelview Greens Homeowners Association (“Respondent” and “Association”) with Carl Westlund as a witness.

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

The Parties and Governing Documents

Respondent is a homeowners’ association whose members own properties in the Camelview Greens residential real estate development located in Scottsdale, Arizona. Membership for the Association is comprised of Camelview Greens homeowners.

Petitioner is a Camelview Greens subdivision property owner and member of the Association.

The Association is governed by its Covenants, Conditions, and Restrictions (“CC&Rs”), and overseen by a Board of Directors (“the Board”). The Association is also regulated by Title 33, Chapter 16, Article 1 of the Ariz. Rev. Stat.

Respondent’s CC&Rs were originally recorded by the Maricopa County Recorder’s Office on July 25, 1984. They were amended for the first time on November 30, 1984, and then later amended for a second time on May 31, 1988.

Since 2018 Respondent has been managed by The Management Trust, LLC (“TMT”).

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 or about April 24, 2022, Petitioner filed a single issue petition with the Department which alleged that the Association failed to comply with a February 27, 2022, request for “materials list and specifications as it relates to the most recent roof replacement; materials list and specifications utilized for any past replacement and/or repairs from when the Certificate of Occupancy was issued from 1986 up to the present” pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) § 33-1805.

On or about May 11, 2022, Respondent returned its Answer to the Department whereby it denied Petitioner’s claim(s).

On May 17, 2022, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 15, 2022, to determine whether a violation of Ariz. Rev. Stat. § 33-1805 occurred.

Hearing Evidence

Petitioner testified on his own behalf and submitted Exhibits 1-8. Respondent called Carl Westlund as a witness and submitted Exhibits A-D. The Department’s electronic files and Agency File were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Petitioner has owned residential property located at 7801 E. Joshua Tree Ln. Scottsdale, AZ 85250 since December 2015. Petitioner uses the property as an investment; specifically, for short term rentals.

In late July 2021, there was a storm that caused considerable destruction to Petitioner’s property, including the roof and related interior damage.

Pursuant to a preexisting agreement with the Association, on September 07, 2021, the Association had repairs to Petitioner’s roof completed by a local roofer (“Roofer”). At that time, Petitioner’s tenant (“Tenant”) was present for the repairs, whereby Tenant was subjection to accusations by Roofer that Roofer had not originally installed the roof and that Petitioner had made poor “improvements” to the work. As a result, Petitioner submitted a complaint to the Association, and the Association sent Roofer back to the property whereby he admitted performing the original scope of work. Roofer alleged, however, that the crew who performed the work had since been fired, but agreed to bring new trades to make necessary repairs or replacements to address the leaks and other damage from the storm. Roofer’s subsequent repairs did not prove successful, as Tenant reported further leaks to Petitioner on or about February 24, 2022.

On February 27, 2022, Petitioner submitted the following 2-part records request to the Association:

(1) [M]aterials list and specifications as it relates to the most recent roof replacement, and (2) materials list and specifications utilized for any past replacement and/or repairs from when the Certificate of Occupancy was issued from 1986 up to the present.

On March 03, 2022, Shawnna Carr, TMT’s executive community association manager, replied to Petitioner on behalf of the Association that she was “working on” Petitioner’s request and “working on putting together a structural engineer to do a property walk.”

On April 21, 2022, Petitioner asked Ms. Carr for an update regarding his records requests.

On May 11, 2022, Petitioner received a response letter from the Association’s legal counsel, Dameon Cons, Esq. of Goodman Holmgren, which noted, in pertinent part, that the Association was “finalizing a response” to the underlying hearing petition. Attached, Mr. Cons included a “document which was requested by the Association from a roofing vendor and relates to your document request.” The letter went on to allege that “the Association did not have any ‘materials list’ as your request demanded at the time” and “the Association did not have any documentation as described at the time of your request.” The letter concluded by offering that “the Association is more than willing to work with you on collecting the relevant documents in order to satisfy your documents request.”

The one page attachment dated September 07, 2021, was from I Deal Roofing Co., doing business as I-Do-Dealings Roofing LLC (“Ideal”), out of Glendale, AZ. ROC License No. 277795. Petitioner’s residence was listed as the project site for “roof replacement of damaged roof membrane.”

The exact date TMT and/or the Association obtained this document from Ideal is unknown.

In mid-July 2022, Ms. Carr left TMT for reasons unrelated to this matter. Per Ms. Carr’s former manager at TMT, Carl Westlund, neither the Association nor TMT possessed any of the information Petitioner requested in its possession at the time his request was submitted, as the Association’s prior management company had not provided TMT with any related records when TMT became the Association’s property manager.

Closing Arguments

In closing, Respondent argued that the documents Petitioner requested were not “Association records” that were required to be kept per statute or in the ordinary course of business as a nonprofit company. Respondent also argued that its facilitation of repairs to Petitioner’s roof did not create a duty or reasonable expectation that the Association was required to keep a materials list and/or specifications for Petitioner’s September 2021 roof replacement, and argued further that it was never in possession of any materials list and/or specifications utilized for past replacement(s)/repair(s) for Petitioner’s residence from 1986 through February 27, 2022. Respondent opined that because Petitioner did not satisfy his burden of proof, his petition should be dismissed.

In closing, Petitioner argued that the “and other records” portion of Ariz. Rev. Stat. § 33-1805 required Respondent to maintain the records in his request, and provide them to him, or grant him access to examine them, within 10 business days from the date of his request. Petitioner opined that he sustained his burden of proof because Respondent failed to adhere to his request in a timely manner. Thus, Petitioner beseeched the tribunal to issue a decision in his favor and impose a civil penalty against Respondent.

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 Ariz. Rev. Stat. § 33-1805. 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.”

In Arizona, when construing statutes, we look first to a statute's language as the best and most reliable index of its meaning. If the statute's language is clear and unambiguous, we give effect to that language and apply it without using other means of statutory construction, unless applying the literal language would lead to an absurd result. Words should be given “their natural, obvious, and ordinary meaning."

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona; see also State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

When the legislature uses a word or words in one section of a statute, but not another, the tribunal may not read those words into the section where the legislature did not include them. Unless defined by the legislature, words in statutes are given their ordinary meanings.

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.

Ariz. Rev. Stat. § 33-1805 provides, in relevant parts, as follows:

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.

(Emphasis added.)

“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).

Here, the material facts are clear.

On February 27, 2022, Petitioner submitted 2 request to TMT: (1) a materials list and specifications for the underlying property’s September 2021 roof replacement, and (2) a materials list and specifications for all prior authorized replacement(s)/repair(s) since 1986.

Here, TMT has only been the Association’s community manager since 2018. Petitioner’s secondary request for 35 years’ worth records was unreasonable, as uncontroverted testimony established that TMT did not obtain any records from its predecessor upon the commencement of its position. Therefore, the Association did not possess the requested records at issue from 2018 to April 2022 either.

While Petitioner’s primary request for documents related to his roof replacement, which took place approximately 5 months prior his request, was not unreasonable, the request was not for records kept in the ordinary course of business. Per the record, Ms. Carr had to reach out to Ideal to get a copy of a document TMT did not have in its possession. Neither party established when Ideal supplied the document to TMT, so it cannot be successfully argued that the record should have been supplied to Petitioner on or before March 11, 2022.

Notably, Ariz. Rev. Stat. § 33-1805 does not require a Homeowner’s Association to provide copies of records upon request of a homeowner. Rather, the statute requires only that the association reasonably permit a homeowner to examine records. Petitioner did not establish that the documents in his records request were “financial” or constituted “other records of the association” as required by law. What the record reflects is that TMT was never in possession of the documents in Petitioner’s request. While TMT could have provided notice of such within 10 business days, they were under no legal obligation to do so. No statutory violation(s) exist.

Based upon a review of the credible and relevant evidence in the record, Petitioner did not sustain his burden of proof.

Therefore, the Administrative Law Judge concludes that the Association’s conduct, as outlined above, was not in violation of the charged provision of Ariz. Rev. Stat. § 33-1805.

ORDER

IT IS ORDERED that Petitioner’s petition in this matter be denied.

IT IS FURTHER ORDERED that Petitioner’s request to levy a civil penalty against Respondent is denied.

IT IS FURTHER ORDERED Respondent shall not reimburse Petitioner’s filing fee pursuant to Ariz. Rev. Stat. § 32-2199.02(A).

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 Department of Real Estate within thirty (30) days of the service of this Order upon the parties.

Done this day, October 04, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile October 04, 2022, to:

Louis Dettorre, Commissioner

Arizona Department of Real Estate

100 N. 15th Ave., Ste. 201

Phoenix, AZ 85007

[email redacted]

[email redacted]

Robert C. Ochs, Petitioner

2502 Forest Pkwy.

Westlake, OH, 44107

[email redacted]

Mark A. Holmgren, Esq.

Ashley N. Moscarello, Esq.

Goodman Holmgren, Counsel for Respondent

3654 N. Power Rd., Ste. 132

Mesa, AZ 85215

[email redacted]

By: Miranda Alvarez

Legal Secretary