HOA - ALJDEC decisions

23F-H053-REL · Department of Real Estate - H/C · 2023-07-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Deborah L. Masear,

Petitioner

Paradise Park Condominiums Phase II Homeowners Association,

Respondent

No. 23F-H053-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: June 19, 2023

APPEARANCES: Deborah Masear appeared on her own behalf. Ashley Moscarello appeared on behalf of Respondent. Carl Westlund was a witness on behalf of Respondent.

ADMINISTRATIVE LAW JUDGE: Brian Del Vecchio

FINDINGS OF FACT

Background and Procedure

The Arizona Department of Real Estate (Department) is authorized by statute to receive petitions for hearings from members of homeowners’ associations and from homeowners’ associations in Arizona.

On or about April 10, 2023, Deborah Masear (Petitioner) filed a single issue petition with the Department which alleged that the Paradise Park Condominiums Phase II Homeowners Association (Respondent) failed to hold an annual meeting as required by Respondent’s bylaws Article II Section 3.

On or about April 27, 2023, Respondent submitted its Answer to the Department whereby it denied Petitioner’s claim.

On or about May 1, 2023, the Department referred this matter to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing on June 19, 2023, to determine whether the alleged violation of Article II Section 3 of Respondent’s bylaws occurred.

The Parties and Governing Documents

Respondent is an association of condominium owners whose members own properties in the Paradise Park Condominiums residential real estate development located in Phoenix, Arizona. Membership for the Association is compromised of the Paradise Park Condominiums subdivision.

Petitioner is a Paradise Park Condominiums property owner and a member of the Association.

Hearing Evidence

Petitioner testified on her own behalf. Respondent submitted Exhibits A through F. Respondent called Carl Westlund 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:

Respondent’s bylaws originally required an annual meeting to be held on the second Wednesday in March.

Notice of all meetings of the members must be given no less than 10 days and no more than 50 days prior to the meeting.

In December of 1996, the relevant section of Respondent’s bylaws regarding the annual meeting was amended requiring the annual meeting to be held on the second Monday in March each year at 7:00 PM, Mountain Standard Time.

The date the 2023 annual meeting was supposed to be held on was March 13, 2023. Notice for said meeting must have been given no later than March 3, 2023 and no earlier than January 22, 2023.

On April 20, 2023, a notice of the 2023 annual meeting of the Respondent was sent to its members. The notice indicated the annual meeting was scheduled for May 8, 2023.

In order to hold the annual meeting quorum must be met. In the case of the Respondent, 25% of members must be present to meet quorum.

Arguments

Petitioner’s argument

Petitioner argued Respondent’s bylaws expressly state the annual meeting must be held on the second Monday of March each year at 7:00 PM Mountain Standard Time, unless that date is a legal holiday. March 13, 2023 was not a legal holiday and the annual meeting was neither noticed nor scheduled in compliance with Respondent’s bylaws.

On March 13, 2023, the annual meeting was not held.

Carl Westlund’s testimony

Mr. Westlund testified the annual meeting was in fact noticed and held. The notice of the annual meeting was sent on April 6, 2023, and a second notice was sent on April 20, 2023. Both notices set the annual meeting for May 8, 2023, at 3:00 PM.

Mr. Westlund further testified in order to meet quorum a minimum of 35 members must be present either in person or by mail. On May 8, 2023, quorum was not met. Because quorum was not met, the annual meeting could not be conducted.

Respondent’s argument

Respondent asserted while it may be true the annual meeting was not held on March 13, 2023 the annual meeting was attempted to be held on May 8, 2023, and but for the lack of quorum, the annual meeting would have been held.

Ultimately, Respondent requested that the Tribunal dismiss 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 II Section 3 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 II Section 3 of Respondent’s bylaws as amended in 1996 provides as follows:

Meetings. The Annual meeting of the Members shall be held at the office of the Association on the second Monday in March of each year at 7:00 P.M., Mountain Standard Time.

In this case, there was no dispute that the annual meeting was attempted to be held; however, a plain reading of Article II Section 3 as amended in 1996 explicitly states the meeting must be held on the second Monday of March. Respondent attempted to hold an annual meeting on May 8, 2023, and but for the lack of quorum, the meeting was not held.

Respondent’s Bylaws state, “[t]he annual meeting of the members shall be held,” at the designated date and time annually. The phrase “shall be held” is not permissive; there is no changing the date of the annual meeting. Respondent was obligated to hold the meeting on March 13, 2023. Respondent admitted they failed to schedule the annual meeting for March 13, 2023. May 8, 2023, is 56 days late in violation of Article II Section 3 of Respondent’s bylaws.

Based upon a review of the credible and relevant evidence in the record, Petitioner sustained her burden of proof.

Therefore, the Administrative Law Judge concludes that Respondent’s conduct, as outlined above, was in violation of Article II Section 3 of Respondent’s bylaws.

ORDER

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

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

IT IS FURTHER ORDERED Respondent shall reimburse Petitioner’s filing fee of $500.00 pursuant to Ariz. Rev. Stat. § 32-2199.02(A).

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, July 10, 2023.

/s/ Brian Del Vecchio

Administrative Law Judge

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

Susan Nicolson

Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Ashley N. Moscarello

Goodman Law Group

[email redacted]

Deborah Masear

[email redacted]

By: OAH Staff