HOA - ALJDEC decisions

23F-H056-REL · Department of Real Estate - H/C · 2023-08-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Richard K. Morris

The Townes at Paradise Valley Landings

No. 23F-H056-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 14, 2023

APPEARANCES: Richard K. Morris appeared on his own behalf. Joelle Lever, represented The Townes at Paradise Valley Landings.

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 May 1, 2023, Richard K. Morris (Petitioner) filed a single issue petition with the Department which alleged that The Townes at Paradise Valley Landings (Respondent or Association) was required to permanently remove a pre-approved security light in violation of Section 9.2 of the Association’s covenants, conditions, and restrictions (CC&Rs).

On or about May 17, 2023, Respondent submitted its Answer to the Department whereby it denied Petitioner’s claim.

On or about May 19, 2023, the Department referred this matter to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing on July 14, 2023, to determine whether the alleged violation of Section 9.2 of the CC&Rs occurred.

The Parties and Governing Documents

Respondent is an association of townhome owners whose members own properties in The Townes at Paradise Valley Landings residential real estate development located in Phoenix, Arizona. Membership for the Association is compromised of The Townes at Paradise Valley Landings subdivision.

Petitioner is a Townes at Paradise Valley Landings Townhome property owner and a member of the Association.

Hearing Evidence

Petitioner testified on his own behalf. Petitioner’s Exhibits A through E were admitted. Respondent’s Exhibits 1 through 10A, 10B, 10C, 10E, 10F, 11B, 11C, 11D, 11E, 11F, 11G, and 12 were admitted. The Department’s electronic file and Notice of Hearing were also admitted into the record. The substantive evidence of record is as follows:

On June 1, 2010, Petitioner submitted a Request for Architectural Approval form to install a motion sensing security light to the shed fascia. Petitioner’s request was approved by the Architectural Review Committee on June 25, 2010.

On February 7, 2023, Respondent hired a contractor to remove the roofing system, flashings, inspect decking for damaged plywood, remove and replace all fascia and shingle molding, install new peel and stick modified base sheet and drip edge to shed roof, install counterflashing at wall, seal top joint with urethane sealant, and warrantee all of said work for 5 years.

On April 7, 2023, Respondent emailed a notice to all homeowners, including Petitioner, to remove anything hanging on the fascia including security lights. The letter also stated, “You will not be able to hang anything on the new fascia.” Petitioner complied with Respondent’s request and removed the security light from the shed fascia.

On April 27, 2023, the contracted roofing company submitted a note to Respondent which suggested the best practice was to keep fascia clean and clear of all objects including lights.

On July 12, 2023, the contracted roofing company emailed Respondent indicating the warranty would be voided if any damage, alterations, or additions are made to the fascia.

Arguments

Petitioner’s argument

Petitioner testified he followed the appropriate steps to obtain approval from Respondent to install a security light on the fascia of the shed at the front of his property. Petitioner argued the Architectural Review Committee approval letter did not have a sunset provision nor did it grant Respondent the ability to revoke his approval in the future.

Respondent’s argument

Respondent argued the Board had a fiduciary duty to all the homeowners, not just Petitioner, to maintain the roofs and fascia. Respondent argued this fiduciary duty ought to extinguish Petitioner’s prior approval as it was necessary to preserve the 5 year warranty granted by the roofing contractor.

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 Ariz. Rev. Stat. § 33-1804.

“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.”

Section 9.2 of the CC&Rs provides, in pertinent part, as follows:

Plans and specifications showing the nature, kind, shape, color, size, materials and location of such improvements or alterations shall be submitted to the Committee for approval as to quality of workmanship, design and harmony of external design with existing structures and as to location in relation to surrounding structures, topography and finished grade elevation. No permission or approval shall be required to rebuild in accordance with plans and specifications previously approved by the Committee.

In this case, Petitioner met his burden. Section 9.2 of the CC&Rs authorizes homeowners to obtain an exception to the CC&Rs restrictions against improvements or alterations of common areas. The method of obtaining said exception is supplying “plans, specifications, showing the nature, kind, shape, color, size materials, and location of such improvements or alterations to the [Architectural Review] Committee for approval.” Petitioner submitted his request to install a security light on the fascia of the shed located in a common area near his property. The Architectural Review Committee approved Petitioner’s request granting him an exception the CC&Rs restriction against alterations or improvements of common areas. Thirteen years later Respondent alleged, without providing evidence, the 2010 Architectural Review Committee approval letter was revoked. Respondent mistakenly believed the fiduciary responsibility owed to the homeowners ought to trump Petitioner’s prior authorization. Nothing in the CC&Rs, the Architectural Review Committee approval letter, or any other document submitted by Respondent supports Respondent’s contention. Furthermore, Respondent admitted no due diligence was performed regarding the existence of Architectural Review Committee approvals which would conflict with potential roof work before a contract was signed. While it may be true Respondent had a fiduciary duty to all the homeowners to protect their investment in maintenance of the common area roofs, this does not entitle Respondent to fail to do their due diligence and disavow prior agreements.

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

Therefore, the Administrative Law Judge concludes that Respondent’s conduct, as outlined above, was a violation of the Association’s Section 9.2 of the CC&Rs.

ORDER

IT IS ORDERED that Petitioner’s petition in this matter be affirmed. Respondent is directed to comply with the provisions of Section 9.2 of the CC&Rs.

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, August 7, 2023.

/s/ Brian Del Vecchio

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile August 7, 2023 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Richard K. Morris

[email redacted]

The Management Trust Arizona

[email redacted]

By: OAH Staff