HOA - ALJDEC decisions

24F-H030-REL · Department of Real Estate - H/C · 2024-04-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Michael J. Morris

Petitioner,

vs.

StarPass Master Homeowner Association, Inc.

Respondent.

No. 24F-H030-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 6, 2024 with the record held open until April 3, 2024, for the sole purpose of receiving written closing arguments.

APPEARANCES: Petitioner Michael J. Morris (Petitioner) appeared on behalf of himself. F. Christopher Ansley appeared on behalf of Respondent StarPass Master Homeowner Association, Inc. (Respondent).

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

EXHIBITS ADMITTED INTO EVIDENCE: Petitioner’s Exhibits A through C. Respondent’s Exhibits 1 through 15.

_____________________________________________________________________

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, Arizona Revised Statutes (A.R.S.) §§ 33-1801 to 33-1818 (the Act).

2. Respondent is a homeowners’ association whose members own single-family houses or lots in the StarPass development in Tucson, Arizona.

3. Petitioner is a member of Respondent.

4. F. Christopher Ansley is the current and only President of Respondent’s Board of Directors. Mr. Ansley is one of the original developers of StarPass and the Declarant.

5. On or about November 17, 2023, Petitioner filed and paid for a single-issue petition with the Arizona Department of Real Estate (Department) alleging that Respondent violated A.R.S. §§ 33-1804, 1810, and 1817; Respondent’s Bylaws Article 3, Section 1; Respondent’s Covenants, Codes, and Restrictions (CC&R)s Article III, Sec. 2(b), Article III, Sec. 5, and Article XI, Section 8(b). The petition provided, in relevant part, as follows:

The Board of Directors for the Starr Pass Master HOA (BOD) has for years been operating autonomously as an appointed BOD with the Declarant serving as the current and only President of the BOD by asserting that the Declarant has the complete and sole authority to appoint the Board Members without notice, meeting and/or vote of the Membership of the Starr pass Master HOA with total indifference to the Laws of the State of Arizona and total disregard of the Managing Documents for the Starr Pass Master HOA including but not limited to Arizona Laws A.R.S. 33-1804, A.R.S 33-1810, A.R.S. 33-1817; Bylaws for the Starr Pass Master HOA including but not limited to Article III, Section 1 and Article III Section 2; and the Master Declaration creating Covenants, Conditions, Restrictions, and Easements for Starr Pass Master HOA including but not limited to Article III, Section 2(b), Article III, Section 5, and Article XI, Section 8(b)....”

Errors in original.

Emphasis in bold.

6. On February 1, 2024, the Department issued a Notice of Hearing (NOH) setting the petition for hearing on March 6, 2024.

7. The NOH provided that the issue set for determination was, “Petitioner alleges Respondent of violating ARS § 33-1804, 33-1810, 33-1817, Bylaw Article Section 1, CC&Rs Article 3 Section 2(b), Section 5, and Article 11, Section 8, by, operating autonomously with the Declarant serving as the current and only President of the [Board of Directors].”

8. A hearing was held on March 6, 2024.

9. At hearing, Petitioner testified on behalf of himself. Mr. Ansley testified on behalf of Respondent.

10. Mr. Ansley admitted that he failed to notice or hold annual homeowners association members meetings since 2010. Mr. Ansley stated that stopped holding annual meetings because he tried several times to reach a quorum but was unsuccessful.

11. Mr. Ansley contended that he properly acted as the sole person to elect the Board members because he is a Type B member of Respondent. Ms. Ansley contended that the Sixth Amendment to the CC&Rs was appropriately adopted and thereby extended his Type B membership.

12. Petitioner contended that Mr. Ansley’s Type B membership lapsed in 2012 pursuant to the CC&Rs. Petitioner also contended that Mr. Ansley’s power to appoint the Board of Directors without a meeting and without a vote of the Members expired in 2012.

13. Petitioner contended that Mr. Ansley’s Type B membership was not renewed because in 2012, Mr. Ansley backdated the “Sixth Amendment” to 2007.

14. Although Petitioner argued in his written closing argument that as of November 18, 2012, elections should have begun by the membership under Article 5 of Respondent’s Bylaws, Petitioner did not submit a copy of Respondent’s Bylaws into evidence, nor was section 5 of the Bylaws submitted with the petition.

Relevant CC&Rs

15. Under Article III, Section 2 of the CC&Rs, Declarant has a Type B membership consisting of three (3) votes for each lot owned by the Declarant and three (3) votes for each planned lot; Type A owners have one vote for each lot owned. Furthermore, Article III, Section 2 of the CC&Rs provided that Type B membership would terminate and convert to Type A the earlier of (i) the time at which the total outstanding votes of Type A equal the total outstanding votes of Type B, or (ii) December 31, 2010.

16. Under Article III, Section 5 of the CC&Rs, from November 18, 1992 for a period pf ten years, Declarant had the right to appoint the members of the Board of Directors without a meeting and without a vote of the Members. The Fourth Amendment to the CC&Rs extended the Declarant’s power of appointment to 20 years following November 18, 1992.

CONCLUSIONS OF LAW

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.

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

“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.”

In Arizona, if a restrictive covenant is unambiguous, it is enforced to give effect to the intent of the parties. “Restrictive covenants must be construed as a whole and interpreted in view of their underlying purposes, giving effect to all provisions contained therein.”

It is undisputed that Respondent has not noticed or held an annual meeting of Respondent’s members from 2010 until the current time.

The undisputed evidence established that Respondent violated A.R.S. § 33-1804(B).

Regarding the remaining alleged violations, the statutes listed in the petition do no bar Mr. Ansley from appointing the Board members or operating as the President of the Board. Additionally, there was no written evidence presented to establish that Respondent’s Bylaws prohibit such actions.

Therefore, the Administrative Law Judge concludes that Respondent has not violated the statutes listed in the petition, other than A.R.S. § 33-1804(B).

The Administrative Law Judge concludes that Petitioner has failed to establish that Respondent violated its CC&Rs or Bylaws.

order

IT IS ORDERED that Petitioner be deemed the prevailing party in this matter. IT IS FURTHER ORDERED that Respondent pay Petitioner his filing fee of $500.00, to be paid directly to Petitioner within thirty (30) days of this Order.

IT IS FURTHER ORDERED Respondent is directed ordered to comply with the

requirements of A.R.S. § 33-1804 going forward.

No Civil Penalty is found to be appropriate in this matter.

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 23, 2024.

/s/ Velva Moses-Thompson

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile April 23, 2024 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

Attn:

[email redacted]

Michael J. Morris

[email redacted]

F. Christopher Ansley

[email redacted]

By: OAH Staff