HOA - ALJDEC decisions

23F-H004-REL · Department of Real Estate - H/C · 2022-12-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Randall White,

Petitioner,

vs.

Quail Creek Villas Association Inc.,

Respondent.

No. 23F-H004-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 12, 2022 at 1:30 PM.

APPEARANCES: Randall White (“Petitioner”) appeared on his own behalf. Carolyn Goldschmidt appeared on behalf of Quail Creek Villas Association Inc. (“Respondent”) with Lori Wuollet, John Messner, and Robert Jelen as witnesses.

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 Quail Creek Villas residential real estate development located in Tucson, Arizona. Membership for the Association is comprised of Quail Creek Villas homeowners. The Association is governed by its Covenants, Conditions, and Restrictions (“CC&Rs”), Bylaws, 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 is managed by Cadden Community Management (“Cadden”).

Petitioner is a Quail Creek Villas subdivision property owner and member of the Association.

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 July 14, 2022, Petitioner filed a single issue petition with the Department which alleged, overall, that the Association “interfered with the legitimate and accepted request for Wildfire Risk Assessment by the Green Valley Fire Department” in violation of Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 33-9 and 33-16 and the Quail Creek Villas Association Inc. Bylaws Art. III sec. 2.

On July 15, 2022, the Department issued a HOA Petition – Deficiency Notice to Petitioner whereby the petition was returned as unprocessed because it was deemed outside the jurisdiction of the Department’s HOA petition process, the Respondent had been incorrectly listed, Petitioner’s identifying information was missing, the property at issue was not listed, Petitioner’s narrative was deemed insufficient, Petitioner failed to remit payment for the petition, and the petitioner was deemed incomplete overall.

On or about July 15, 2022, Petitioner resubmitted his petition in the substantially same manner, save the inclusion of a $500.00 filing fee.

On July 21, 2022, the Department returned the petition to Petitioner as deficient, noting that the petition “references two Arizona Revised Statutes that are not identifiable within our jurisdiction” and that Petitioner “failed to specify a one sentence statement that directly connects your allegation to a specific statute/law/bylaw/CC&R.” Petitioner was also advised that his petition could not be made against specific Board Members.

On or about July 21, 2022, Petitioner resubmitted his petition for a third time in the substantially same manner. On July 22, 2022, the Department processed Petitioner’s $500.00 filing fee.

On July 22, 2022, the Department issued a HOA Notice of Petition to Respondent.

On August 11, 2022, Respondent returned its Answer to the Department whereby it denied Petitioner’s claim(s) and requested dismissal “because [the petition] fails to state a claim upon which relief may be granted” and because “Petition lacks standing” to make a claim.

On August 24, 2022, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on October 21, 2020. Per the Notice of Hearing the issue(s) to be determined at hearing are as follows:

Petitioner states that Respondent has violated Quail Creek Villas Association Inc ByLaws Article III Section 2 and Arizona Revised Statute § 10-3842. The Petitioner has explained that “[Respondent] stopped [Green Valley Fire Department] in progress Wildfire risk Assessment. ... To interfere and cause cessation of a [Green Valley Fire Department] Wildfire Risk Assessment is NOT good faith... nor in the best interests of the Corporation...”

(All errors in original.)

Hearing Evidence

Petitioner testified on his own behalf. Lori Wuollet, John Messner, and Robert Jelen testified on behalf of Respondent.

The Department’s electronic file, including the Notice of Hearing, and September 27, 2022, Minute Entry – Granting Continuance were all admitted into the hearing record as exhibits. The substantive evidence of record is as follows:

After being afforded a brief recess after the commencement of hearing, Petitioner testified that he believed the Association was in violation of Ariz. Rev. Stat. § 33-1802, though he did not specify which subsection.

Per Petitioner, his dispute arose out of his need for homeowner’s insurance for secondary residential property he purchased in the Quail Creek Villas subdivision. At that time Petitioner had great difficulties finding an insurance agency to provide coverage due to alleged concerns regarding fire hazards in the area. Nevertheless, he was ultimately able to locate a carrier.

On an unknown date Petitioner broached the subject wild fire hazards to a Board Member, Matt Tittle. Mr. Tittle expressed a personal interest to Petitioner in obtaining further information on the issue.

On or about April 21, 2022, Petitioner contacted John O’Campo, Fire Inspector (“Inspector O’Campo”) of the Green Valley Fire Department (“GVFD”) to perform a fire inspection for the entirety of the Quail Creek Villas subdivision, because Petitioner opined that his property could and inevitably would be impacted by neighboring properties in the subdivision due to wildfire(s).

On April 28, 2022, Inspector O’Campo agreed to perform a complimentary fire inspection the following week of “the south side on N Broken Hills Dr west of the arroyo bridge ... all way to the Labyrinth in the wash” per Petitioner’s request.

Though an the inspection had yet to commence, on May 03, 2022, Inspector O’Campo notified Petitioner that a Board Member had informed him that “this and other such issues should be addressed to the management company of the Villas.”

On or about May 12, 2022, Petitioner emailed the Board to inquire why the fire inspection had been halted.

On or about May 18, 2022, Petitioner emailed the master developer with his concerns.

On an unknown date Petitioner formed an Ad Hoc Committee of homeowners to discuss potential wildfire hazards within the subdivision. Petitioner also uploaded a “video study” he conducted to a popular social media platform for public viewing.

At a Board meeting held June 20, 2022, Petitioner had raised his concerns regarding potential wildfire hazards within the subdivision. Due to insufficient time remaining in the meeting, Petitioner’s concerns were not addressed by the Board or any other Association member(s).

Additional Evidence

On an unknown date the Board asked the master developer to thin and/or remove any vegetation in an effort to perform fire abatement within the Quail Creek Villas subdivision. The master developer declined.

Later, on or about November 03, 2022, the Association had the Arizona State Department of Forestry & Fire Management perform an assessment through its Firewise program, led by inspector Corey Guerin (“Inspector Guerin”).

It is unclear whether, and to what extent, the Association has made Inspector Guerin’s findings available to its members.

Closing Arguments

Respondent’s closing argument

In closing, Respondent argued that Petitioner did not have the authority to request GVFD to perform a fire inspection in the Quail Creek Villas subdivision, and that the community documents had not granted any such authority to Petitioner.

Petitioner’s closing argument

In closing, Petitioner argued that he acted, in large part, due to his belief that his property could be adversely impacted by a neighbor’s home should it fall victim to a wild fire, and that he did so knowing he had Mr. Tittle’s support. Petitioner asked that an order be issued instructing Respondent to abide by state law and community documents, and that a civil penalty be imposed 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. § 10-3842, Corporations and Association – Standards of Conduct for Officers, is outside the jurisdiction of the Department and inapplicable to this matter.

Ariz. Rev. Stat. § 33-9 does not exist.

Ariz. Rev. Stat. § 33-16 does not exist.

Ariz. Rev. Stat. § 33-1802(1) defines Association, in pertinent part, as ““[A] nonprofit corporation or unincorporated association of owners that is created pursuant to a declaration to own and operate portions of a planned community and that has the power under the declaration to assess association members to pay the costs and expenses incurred in the performance of the association's obligations under the declaration.”

Ariz. Rev. Stat. § 33-1802(2) defines Community documents as an Association’s “declaration, bylaws, articles of incorporation, if any, and rules, if any.”

Ariz. Rev. Stat. § 33-1802(3) defines Declaration as “any instruments, however denominated, that establish a planned community and any amendment to those instruments.”

Ariz. Rev. Stat. § 33-1802(4) defines Planned community, in pertinent part, as “a real estate development that includes real estate owned and operated by a nonprofit corporation that is created for the purpose of managing, maintaining or improving the property and in which the declaration expressly states both that the owners of separately owned lots, parcels or units are mandatory members and that the owners are required to pay assessments to the association for these purposes.”

Association Bylaws Art. III, Board of Directors, Section 2. Powers and Duties, provide, in pertinent part, that the Board shall have the powers and duties necessary for the administration of the affairs of the Corporation, and may exercise and perform all of the rights, duties, privileges, obligations and responsibilities of the Board and/or the extent permitted by law, the Board may delegate to one or more committees, officers, employees, managers, agent or other persons such duties and powers as appears, to the Board, to be in the best interest of the Corporation.

The conundrum of Petitioner’s confusing reliance on statutes that do not exist and/or are outside the jurisdiction of the Department is solved, in large part, based on the substantive evidence of record. Accordingly, the undersigned finds that Petitioner has failed to sustain his burden of proof in this matter.

Here, the record reflects that Petitioner did not have the authority or permission to act on behalf of the Association to request that GVFD perform a wild fire inspection in and for the Quail Creek Villas subdivision. More importantly, Petitioner conceded that Inspector O’Campo had not commenced any such inspection by May 03, 2022, when he was instructed not to by the Board. Lastly, Petitioner has not established any dereliction of duty on the Board’s part regarding wild fire abatement, as the record also establishes that the Association had the State perform an inspection last month.

Because Petitioner did not establish a statutory and/or community document violation by a preponderance of the evidence, the underlying petition must be denied as Petitioner did no sustain his burden of proof.

ORDER

Based on the foregoing,

IT IS ORDERED that Petitioners’ petition be denied.

IT IS FURTHER ORDERED all pending post-hearing motions are denied as moot.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five days from the date of that certification.

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 30 days of the service of this Order upon the parties.

Done this day, December 29, 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]

Randall White, Petitioner

535 Cobble Dr.

Montrose, CO 81403

[email redacted]

Carolyn Goldschmidt, Esq.

c/o Quail Creek Villas Association Inc., Respondent

Goldschmidt | Shupe LLC, Counsel for Respondent

7100 N. Oracle Rd., Ste. 240

Tucson, AZ 85704

[email redacted]

By: Miranda Alvarez

Legal Secretary