HOA - ALJDEC decisions

23F-H031-REL · Department of Real Estate - H/C · 2023-04-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Clifford S Burnes

Petitioner

Saguaro Crest Homeowners' Association

Respondent

No. 23F-H031-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 29, 2023

APPEARANCES: Petitioner Clifford (Norm) Burnes appeared via Google Meet on his own behalf. Respondent Saguaro Crest Homeowners Association was represented by John T. Crotty who appeared via Google Meet.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

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 or about December 12, 2022, Petitioner filed a single issue petition with the Arizona Department of Real Estate (Department) which alleged that the Association failed to hold Board of Directors elections in violation Saguaro Crest Homeowners Association (SCHA) Bylaws Article 2.1.

On or about January 10, 2023, Respondent submitted its Answer to the Department whereby it denied Petitioner’s claim.

On or about February 7, 2023, the Department referred this matter to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing on March 29, 2023, to determine whether the alleged violation of Article 2.1 of the SCHA Bylaws occurred.

The Parties and Governing Documents

Respondent is a homeowners’ association whose members own properties in the Saguaro Crest residential real estate development located in Tucson, Arizona. Membership for the Association is compromised of the Saguaro Crest subdivision.

Petitioner is a Saguaro Crest subdivision property owner and a member of the Association.

Hearing Evidence

Petitioner testified on his own behalf and submitted exhibits A through G. Respondent did not submitted any exhibits and called Esmerelda Martinez as a witness. The Department’s electronic file and Notice of Hearing were also admitted into the record. The substantive evidence of record is as follows:

On December 11, 2021, SCHA held its annual meeting.

At the meeting, the voting members of SCHA, properly voted to dissolve the SCHA.

The Board President, Esmerelda Martinez, and well as the Board’s Vice President, Dave Madill, offered to volunteer to remain in their respective positions to assist with the dissolution process, although their terms were ending on December 31, 2021.

There were no elections held for the 2022 calendar year.

There were no objections noted to Ms. Martinez and Mr. Madill remaining in their respective positions until the dissolution occurred.

Petitioner was present at the meeting, and abstained from the dissolution vote and did not voice an objection to Ms. Martinez and Mr. Madill’s offer to assist with the dissolution.

As of the date of the hearing, the dissolution was still not completed.

Arguments

Petitioner’s argument

Petitioner argued that the SCHA failed to hold elections as required, and therefore was in violation of the SCHA Bylaws.

Petitioner argued that he did not object at the meeting because he did not know of the potential violation of the bylaws.

Ultimately, Petitioner asked the Tribunal to issue an order granting his petition, including requiring the Association to comply with the Bylaws. Petitioner also asked his filing fee be reimbursed, and that a civil fine be imposed against Respondent if it was held in violation.

Esmerelda Martinez’s testimony

Ms. Martinez stated that once the vote for the dissolution passed, she and Mr. Madill offered to remain in their respective positions to assist with the dissolution process. Further Ms. Martinez testified that nobody, including Petitioner, objected.

In addition, Ms. Martinez testified that had the vote for the dissolution not passed, there would have been an election as her term was ending.

Further, Ms. Martinez testified that in 2018 there were no elections held as there were no open positions at that time.

Ms. Martinez also testified that Petitioner was very familiar with the Bylaws and the voting of the same as he previously ran for a Board position in 2020 and previously served as a member of the Architectural Committee.

Respondent’s argument

Respondent asserted that it there was nothing in the Bylaws which required the Board to hold elections at the annual meeting. Further, Petitioner “waived” his claim of violation of the Bylaws because he did not object at the meeting, it was only sometime later.

Ultimately, Respondent requested that the Tribunal deny Petitioner’s appeal.

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 Article 2.1 of the Bylaws.

“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.”

Article 2.1 of the SCHA Bylaws provides as follows:

Annual meeting. An annual meeting of the Members of the Association shall be held at least once every twelve (12) months at a date and time determined by the Board of Directors for the purpose of electing or announcing the results of the election of Directors and transacting such other business as may properly come before the meeting.

In this case, there was no dispute that the annual meeting was held, however, Petitioner has not met his burden proving that it was required to hold elections at the meeting. As written, there was no requirement that the elections be held because according to the language the election could have occurred earlier with the results being announced at the meeting. Further, the voting members clearly approved the dissolution vote, so there would not be a need for the Board once that had passed. Perhaps most harmful to Petitioner, was that he failed to place an objection or even raise the issue at the meeting. Based upon the evidence presented, the tribunal finds that Petitioner was aware or should have been aware of the Bylaws and while Petitioner may have been concerned with perceived time-limits on objections or in the “new business” section of the meeting, there was no record of him objecting to Ms. Martinez and/or Mr. Madill remaining on the Board to oversee the dissolution.

Therefore, the undersigned Administrative Law Judge concludes that Petitioner has not sustained his burden of proof that Respondent violated Article 2.1 of the SCHA Bylaws.

Consequently, Petitioner’s petition should be dismissed and Respondent be deemed the prevailing party in this matter

ORDER

IT IS ORDERED that Petitioners’ petition be denied.

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, April 13, 2023.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile April 13, 2023 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

John T. Crotty

[email redacted]

Clifford (Norm) S. Burnes

[email redacted]

By: OAH Staff