HOA - ALJDEC decisions

23F-H064-REL · Department of Real Estate - H/C · 2023-08-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

R.L. Whitmer

Hilton Casitas Council of Homeowners

No. 23F-H052-REL

No. 23F-H064-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 11, 2023

APPEARANCES: R.L. Whitmer appeared on his own behalf. Sedack Eli was a witness on behalf of Appellant. Robert Westbrook was called as a witness by both parties.

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 March 27, 2023, R.L. Whitmer (Petitioner) filed a single issue petition with the Department which alleged that the Hilton Casitas Council of Homeowners Association, Inc. (Respondent or Association) failed to hold the annual meeting prior to March 31, 2023, as required by Article III Section 3 of the Bylaws of Hilton Casitas Council of Co-owners (“Bylaws”). Said petition was assigned matter number 23F-H052-REL.

On or about May 1, 2023, Petitioner filed another single issue petition with the Department which alleged Respondent allowed voting to take place through video conferencing over the internet which allegedly violated Ariz. Rev. Stat. § 33-1250(C). Said petition was assigned matter number 23F-H064-REL.

On or about March 4, 2023, Respondent submitted its Answer to the Department in matter number 23F-H052-REL whereby it denied Petitioner’s claim.

On or about March 15, 2023, the Department referred matter number 23F-H052-REL to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing on July 13, 2023.

On or about June 14, 2023, Respondent submitted its Answer to the Department in matter number 23F-H064-REL whereby it denied Petitioner’s claim.

On or about June 15, 2023, the Department referred matter number 23F-H064-REL to the OAH for an evidentiary hearing on August 11, 2023.

On June 26, 2023, Respondent filed a Motion to Consolidate matter numbers 23F-H052-REL and 23F-H064-REL.

On July 5, 2023, Respondent’s Motion to Consolidate was granted and the matters were scheduled for hearing on August 11, 2023, to determine whether the Association violated Article III Section 3 of the Bylaws and whether the Association violated Ariz. Rev. Stat. § 33-1250(C).

The Parties and Governing Documents

Respondent is an association of townhome owners whose members own properties in the Hilton Casitas Condominiums real estate development located in Scottsdale, Arizona. Membership for the Association is compromised of the Hilton Casitas subdivision.

Petitioner is a Hilton Casitas Condominiums property owner and a member of the Association.

Hearing Evidence

Petitioner testified on his own behalf. Respondent’s Exhibits A through H were admitted. Petitioner called Robert Westbrook and Sebeck Eli as witnesses. The Department’s electronic files and Notice of Hearing in both matters were also admitted into the record. The substantive evidence of record is as follows:

Pursuant to by Article III Section 3 of the Bylaws, annual meetings of the Association’s membership are to be held “within three months after the end of each accounting year”. The end of each accounting year is December 31. The Annual Meeting of the Members must take place each year, on or before March 31.

On March 31, 2023, Respondent notified the Membership of the 2023 Annual Meeting.

On April 27, 2023, the Annual Meeting was held. It is undisputed the Annual Meeting was not held by the date required by the Bylaws.

Mr. Westbrook testified there were two reasons the Annual Meeting was held late. First, the Association hired a new management company and the transition to the new management company was taking longer than anticipated due to COVID. Second, there was a calendaring error by the new management company. Mr. Westbrook further testified the Annual Meeting allowed voting by mail/email or video conference. Mr. Westbrook testified he encouraged Members who were unable to attend the meeting digitally to mail in ballots.

Mr. Eli testified he was unable to attend the meeting because he was not given an option to attend the meeting in person. Because the meeting was only held via online video conference, Mr. Eli testified he was not tech savvy, so he could not attend the meeting.

Arguments

Petitioner’s argument

Petitioner argued the intent of the board was to prevent people like Mr. Eli from attending the Annual Meeting. Petitioner argued the Association was aware of people like Mr. Eli but failed to accommodate them.

Respondent’s argument

Respondent stipulated the Annual Meeting was held late in violation of the Bylaws. Respondent argued the reason the Annual Meeting was held via Zoom for two reasons. First, the Annual Meeting was held virtually for the convenience of the Members, a majority of which lived out of town. Second, Zoom meetings did not cost money, but to hold a meeting in person the Association had to pay to rent space in order to hold said meeting. Respondent argued the intent of the Association was not to discriminate, rather it was to be more accommodating for out of town Members and fiscally responsible.

Ultimately, Respondent requested that the Tribunal dismiss Petitioner’s appeals.

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 10 Section 4 of the CC&Rs.

“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.”

Respondent stipulated it failed to adhere to Article III Section 3 of the Bylaws when it held the Annual Meeting on April 27, 2023, 27 days after the deadline. Thus, Petitioner met their burden in matter number 23F-H052-REL. Because Petitioner met their burden they sought civil penalties, pursuant to Ariz. Rev. Stat. § 32-2199.02. Here, the evidence did not give rise to the awarding of civil penalties.

Based upon a review of the credible and relevant evidence in the record, Petitioner failed to meet his burden of proof in matter number 23F-H064-REL. Petitioner claimed the Association violated Ariz. Rev. Stat. § 33-1250(C) when it failed to allow voting to occur in person at the April 27, 2023, Annual Meeting.

Petitioner’s argument depends on a narrow interpretation of the phrase “in person.” According to Petitioner “in person” excluded remote video attendance. However, Petitioner failed to provide sufficient evidence said interpretation ought to be employed. One example of an alternative interpretation of the phrase “in person” was utilized throughout the COVID-19 pandemic. Social distancing required all “in person” meetings be conducted remotely thus expanding the interpretation of “in person.” Homeowners association meetings were held remotely in compliance with Ariz. Rev. Stat. § 33-1250(C) at the time. While “in person” could be interpreted as corporeal presence in a defined space, Petitioner failed to provide sufficient evidence said definition ought to be used, not the COVID-19 social distancing definition of “in person,” or some other definition of the phrase “in person.” Thus, Petitioner failed to meet his burden in docket number 23F-H052-REL.

Therefore, the Administrative Law Judge concludes that Respondent did violate Article III Section 3 of the Bylaws.

Therefore, the Administrative Law Judge concludes that Respondent did not violate Ariz. Rev. Stat. § 33-1250(C).

ORDER

IT IS ORDERED that Petitioner’s petition in matter 23F-H064-REL be dismissed.

IT IS FURTHER ORDERED that Petitioner’s petition in matter 23F-H052-REL is affirmed.

IT IS FURTHER ORDERED that Respondent reimburse Petitioner his $500.00 filing fee for the issue on which he prevailed.

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

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

-137160-45720000 Done this day, August 28, 2023.

/s/ Brian Del Vecchio

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile August 31, 2023 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Emily H. Mann

Phillips, Maceyko & Battock, PLLC

[email redacted]

R.L. Whitmer

[email redacted]