HOA - ALJDEC decisions

23F-H034-REL · Department of Real Estate - H/C · 2023-04-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Senol Pekin

Petitioner

Artesian Ranch Community Association

Respondent

No. 23F-H034-REL

No. 23F-H037-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 20, 2023

APPEARANCES: Petitioner Senol Pekin appeared on behalf of himself. Ashley Moscarello, Esq. appeared on behalf of Respondent Artesian Ranch Community Association.

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

_____________________________________________________________________

FINDINGS OF FACT

1. The Arizona Department of Real Estate (Department) is authorized by statute to receive and to decide Petitions for Hearings from members of homeowners’ associations and from homeowners’ associations in Arizona. Homeowners’ associations and their members are governed by the Chapter 16 of Title 33, the Planned Communities Act, A.R.S. §§ 33-1801 to 33-1818 (“the Act”).

2. On January 25, 2023, the Department of Real Estate issued Notices of Hearing setting the above-captioned matters for hearing on March 20, 2023, at the Office of Administrative Hearings in Phoenix, Arizona. Although each hearing was originally set to begin at a different time on March 20, 2023, the matters were consolidated on February 28, 2023, and the hearing convened at 9:00 a.m. on March 20, 2023. The Notices of Hearing provided that the five (5) issues set for determination were Petitioner’s allegations that Respondent committed the following violations:

1. “....violates Bylaws Article II Paragraph 2.3 Annual Meetings on an ongoing basis by not holding its annual meeting as required by its Bylaws; the specific violation given herein is the Annual Meeting in 2022.”

2. “...does not elect officers in an exclusively and timely scheduled Organizational Meeting as required by its Bylaws....” Petitioner states that this action is in violation of Bylaws Article III Section A Paragraph 3.5, Sections B Paragraph 3.7, and Article IV Paragraph 4.2.

3. “...held a Board Meeting on 9/22/2022 not called or scheduled by the Board of members, but was organized by the HOA Manager who is not authorized to call a board meeting.” Petitioner states that this action is in violation of Bylaws Article III Section B. Article IV Section 6.7(b), Article I Paragraph 1.3.”

4. “violated ARS 33-1804 A by prohibiting the recording of open session 6:30-7:30 PM on October 24th, 2022.”

5. “In the Open Board Meeting at 6:30-7:30 PM on October 24th, which was held through Zoom videoconferencing, the HOA didn’t allow the opposing side of the issues to be spoken as they muted in the videoconference.” Petitioner states that this action is in violation of ARS§ 33-1804.

3. Petitioner Senol Pekin testified on his own behalf and presented the testimony of Julie Willowby, Shelly Nelson, and Sherry Swanson. Respondent Artisan Ranch Community Association presented the testimony of Susanne Easterday Roskens, the Director of Respondent’s Board, and Mandy Rogers, an employee of Respondent’s Community Manager, AAM, LLC.

4. Respondent’s Bylaws Article II, Section 2.3 provide, in relevant part, as follows:

The first meeting of the Association, whether a regular or special meeting, shall be held within one year after incorporation of the Association. Subsequent regular annual meetings shall be held on the second Wednesday of April of each year.

5. Respondent’s Bylaws Article III, Section B. 3.7 provide, in relevant part, as follows:

Organizational Meetings.

Each Board shall hold an organizational meeting within a reasonable time after newly-elected or newly-appointed directors take office.

6. Respondent’s Bylaws, Article IV 4.2 provide, in relevant part, as follows:

The officers of the Association shall be elected by the Board at an organizational meeting of the Board taking place pursuant to Section 3.5

7. The evidence presented at hearing shows that Respondent failed to hold its regular annual meeting on the second Wednesday of April 2022 as required under Respondent’s Bylaws Article II Paragraph 2.3. Instead, Respondent held its regular annual meeting in May of 2022.

8. In August of 2022, Respondent conducted an organizational meeting during its board of directors meeting where the Board appointed officers of the Association. See Respondent’s Exhibit D. Respondent contended at hearing that the Bylaws not require that the organizational meeting be held separate from any other board meeting.

9. In September of 2022, the Board’s president, Susanne Roskens requested that Mandy Rogers organize a board meeting, because the Board was unable to obtain a sufficient amount of votes regarding a landscaping issue related to over seeding, and it was important to make a prompt decision. Accordingly, Ms. Rogers organized a board meeting for September 22, 2022.

10. The Board conducted a board meeting on October 24, 2022, Ms. Rogers informed the homeowners that they were not allowed to record the board meeting, without admonishing participants that the prohibition only applied to closed sessions. Ms. Rogers placed Petitioner on mute at different times during the board meeting. At hearing, Ms. Rogers explained that she placed Petitioner on mute because he was generally aggressive. However, the evidence shows that Petitioner had several times to speak during the board meeting and even suggested that he could discuss one of the board meeting items with another Board member after the meeting. Ms. Rogers also stated at hearing that the Board required advanced notice of anyone recording the board meeting.

CONCLUSIONS OF LAW

1. A.R.S. § 32-2199(B) permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents under the authority Title 33, Chapter 16. Such petitions will be heard before the Office of Administrative Hearings, an independent state agency,

2. Petitioners bear the burden of proof to establish that Respondent violated the Act or Respondent’s Bylaws by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

3. “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.”

4. A.R.S. §1804 (A) provides:

A. Notwithstanding any provision in the declaration, bylaws or other documents to the contrary, all meetings of the members' association and the board of directors, and any regularly scheduled committee meetings, are open to all members of the association or any person designated by a member in writing as the member's representative and all members or designated representatives so desiring shall be permitted to attend and speak at an appropriate time during the deliberations and proceedings. The board may place reasonable time restrictions on those persons speaking during the meeting but shall permit a member or member's designated representative to speak once after the board has discussed a specific agenda item but before the board takes formal action on that item in addition to any other opportunities to speak. The board shall provide for a reasonable number of persons to speak on each side of an issue. Persons attending may audiotape or videotape those portions of the meetings of the board of directors and meetings of the members that are open. The board of directors of the association shall not require advance notice of the audiotaping or videotaping and may adopt reasonable rules governing the audiotaping and videotaping of open portions of the meetings of the board and the membership, but such rules shall not preclude such audiotaping or videotaping by those attending, unless the board audiotapes or videotapes the meeting and makes the unedited audiotapes or videotapes available to members on request without restrictions on its use as evidence in any dispute resolution process. Any portion of a meeting may be closed only if that closed portion of the meeting is limited to consideration of one or more of the following:

Emphasis in bold.

5. Respondent did not dispute that it failed to hold an annual board meeting in April of 2022. However, Respondent contends that it was simply a technical violation and there was no harm to Petitioner. Respondent argued that such violations are permitted under A.R.S. § 10-4701(e).

6. Upon consideration of the written evidence and testimony provided at hearing, the Administrative Law Judge concludes that the preponderance of the evidence shows that Respondent violated Respondent’s Bylaws Article II Paragraph 2.3 when it failed to hold an annual meeting in April of 2022. While A.R.S. § 10-3701(e) provides that the failure of to hold an annual meeting at the time prescribed in the Bylaws does not affect the validity of a corporate action, the section does not provide an exception to the adherence to Bylaws that require a set time for an annual meeting.

7. The preponderance of the evidence shows that Respondent violated A.R.S. § 33-1804 when it informed the homeowners that they were not allowed to record the board meeting.

8. Petitioner failed to establish by a preponderance of the evidence that Respondent didn’t allow the opposing side of the issues to be spoken at the October 24, 2022 board meeting.

9. Petitioner failed to establish by a preponderance of the evidence that Respondent violated Bylaws Article III Section A Paragraph 3.5, Sections B Paragraph 3.7, and Article IV Paragraph 4.2, Bylaws Article III Section B. Article IV Section 6.7(b), Article I Paragraph 1.3, as alleged in issues 2 and 3 in Finding of Fact #2. Respondent’s Bylaws do not require that the organizational meeting be held separate from a board meeting and Ms. Rogers, an employee of the Community Manager, may act as an agent of the Board.

order

IT IS ORDERED that Petitioner be deemed the prevailing party regarding issues 1 and 4 as described in Finding of Fact #2.

IT IS FURTHER ORDERED that Respondent pay Petitioner his filing fee of

$1,000 for issues 1 and 4 as described in Finding of Fact #2.

IT IS FURTHER ORDERED that Respondent be deemed the prevailing party regarding issues 2, 3, and 5 as described in Finding of Fact #2.

IT IS FURTHER ORDERED that a civil penalty is not appropriate in these matters.

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 10, 2023.

/s/ Velva Moses-Thompson

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile April 10, 2023 to:

Susan Nicolson

Commissioner

[email redacted]

Senol Pekin

[email redacted]

Ashley N. Moscarello

[email redacted]

By: OAH Staff