HOA - ALJDEC decisions
24F-H047-REL · Department of Real Estate - H/C · 2024-11-05
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of
AZNH Revocable Trust,
Petitioner,
v.
Sunland Springs Village Homeowners Association,
Respondent.
No. 24F-H047-REL
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: September 18, 2024
APPEARANCES: Attorney John F. Sullivan represented AZNH Revocable Trust (Petitioner). Attorney Chad M. Gallacher represented Sunland Springs Village Homeowners Association (Association).
ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn
EXHIBITS ADMITTED INTO EVIDENCE: Department’s electronical file; Petitioner Exhibits 1 through 15; Association Exhibits 1 through 15.
_____________________________________________________________________
FINDINGS OF FACT
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 the State of Arizona.
On or about April 20, 2024, Petitioner filed a single issue petition (Petition) with the Department which alleged that, pursuant to Arizona Revised Statutes (Ariz. Rev. Stat.) § 33-1812(A)(7), the Association had failed to comply with Petitioner’s February 28, 2024, voting records inspection request to inspect “all ballots, envelopes, related materials and sign-in sheets” with regard to an election that had taken place on February 27, 2024. Petitioner indicated the Association failed to produce all voting materials, noting that “about 1500 ballots” had not been produced.
On or about May 13, 2024, Association returned its Answer to the Department wherein it denied Petitioner’s claim.
On May 15, 2024, the Department referred this matter to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing on July 12, 2024 to determine whether a violation of Ariz. Rev. Stat. § 33-1812(A)(7) occurred.
Association ByLaws Section 3.2 provides that the Board of Directors (Board) may be elected through paper or electronic ballots pursuant to procedures set forth in the ByLaws. Those procedures in Section 3.3.3 require that the Board provide each member of the Association 30-day notice of the ballot, either by mail or electronically, for the election of the Directors. Further, Section 3.3.3 requires that “[v]oting shall be by “secret ballot.”
In preparation for the February 27, 2024 election at the Annual Meeting, Association arranged with a company, Vote HOA Now, to conduct electronic balloting.
A paper ballot was created for members to cast in-person at the Annual Meeting or by mail (i.e., in absentia).
Association members were voting on several items: on Directors; on a proposed amendment to the Association ByLaws; on a resolution that the Association act in accordance with an IRS Revenue Ruling regarding excess income; and to approve the Minutes from the 2023 Annual Meeting.
Vote HOA Now was given the Association’s “ballot” information and the member and member property information necessary for Vote HOA Now to provide electronic ballots to members for the election voting. Vote HOA Now created the electronic ballet.
Association members received multiple email reminders regarding the upcoming election; the emails contained a link to the online voting website. The email reminders contained specific instructions about how to vote:
Please CLICK HERE to go to the online voting website
(your personal registration code [number redacted] will prefill)
Make your choices on the electronic ballot and submit
(once your vote is submitted it is final)
A confirmation of your vote will appear onscreen and
be sent to your email
Association also created instructions about the options: to vote electronically, and how to accomplish online voting; by submitting a paper ballot, dropping it off at the office; or in person at the meeting.
Kathy Fowers, the General Manager of Association and the Custodian of Records, approved the “proof” of the electronic ballot created by Vote HOA Now after she determined that the Vote HOA Now-created electronic ballot matched the paper ballot.
Eighteen (18) members cast votes at the Annual Meeting. One hundred fifty four (155) members cast absentee ballots. Fourteen hundred sixty-one (1,461) members cast electronic votes.
Petitioner cast an absentee ballot.
After the election, Ms. Fowers received the electronic voting results from Vote HOA Now.
Vote HOA Now provided the following documents to Association:
A tally report of the votes for Directors, for the Revenue Ruling, for approval of the 20213 Minutes, and for the ByLaws amendment.
A listing verification of the homeowners (with property addresses) who voted electronically.
A listing of the member votes cast for Directors.
A listing of the member votes for the ByLaws amendment.
A listing of the member votes for the Revenue Ruling.
A listing of the member votes for the 2023 Minutes.
Association retained the following:
Two sign-in sheets used at the Annual Meeting.
Ballots cast in person at the Annual Meeting.
Envelopes which contained the absentee ballots received.
The Association Board created the following:
An affidavit of the election results.
A tally sheet of the election results.
Petitioner has received the Vote HOA Now documents and the documents created and retained by Association regarding the election.
Petitioner’s argument is that Petitioner has not received all of the voting documents because Petitioner has not received an image of each of the actual online ballots as were posted by Vote HOA Now and, thus, as were voted on by any/each member. Petitioner also argued that there was no mechanism to check whether the voting results were accurate because, without seeing the image of each ballot, it could not be determined if the electronic ballot met the requirements.
Petitioner’s position is that those actual online ballots are, in fact, Association records required to be kept by the Association and, to be available to members for inspection, arguing that Vote HOA Now is required to retain images of those actual online ballots for “recount, inspection and review purposes” pursuant to Ariz. Rev. Stat. § 10-3708(F).
The Association position is that it has provided all of the election documents created and retained by the Association. Further, that the Association has provided all of the electronic documents received from Vote HOA Now. The Association argues that the Vote HOA Now electronic documents which Association received, specifically its Exhibits 3, 14 and 15, represent the electronic information version of the electronic votes cast in the election and demonstrate, electronically, the same information for each vote as would have been demonstrated to have been cast on a paper ballot.
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. An owner or an 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. § 33-1812(A)(7). Respondent bears the burden of establishing any affirmative defenses by the same evidentiary burden.
“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, when construing statutes, we look first to a statute's language as the best and most reliable index of its meaning. If the statute's language is clear and unambiguous, we give effect to that language and apply it without using other means of statutory construction, unless applying the literal language would lead to an absurd result. Words should be given “their natural, obvious, and ordinary meaning."
Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona; see also State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").
When the legislature uses a word or words in one section of a statute, but not another, the tribunal may not read those words into the section where the legislature did not include them. Unless defined by the legislature, words in statutes are given their ordinary meanings.
Each word, phrase, clause, and sentence of a statute or rule must be given meaning so that no part will be void, inert, redundant, or trivial.
Ariz. Rev. Stat. § 10-3708(F), Action by written ballot; online voting provides that if a vote is to be conducted by electronic means, the written ballot may be delivered through an online voting system that does all of the following:
Authenticates the member's identity;
Authenticates the validity of each electronic vote to ensure that the vote is not altered in transit;
Transmits a receipt to each member who casts an electronic vote; and
Stores electronic votes for recount, inspection and review purposes.
Emphasis added here.
Ariz. Rev. Stat. § 33-1812, Proxies; absentee ballots; definition provides, in relevant parts, as follows:
A. Notwithstanding any provision in the community documents, after termination of the period of declarant control, votes allocated to a unit may not be cast pursuant to a proxy. The association shall provide for votes to be cast in person and by absentee ballot and, in addition, the association may provide for voting by some other form of delivery, including the use of e-mail and fax delivery. Notwithstanding section 10-3708 or the provisions of the community documents, any action taken at an annual, regular or special meeting of the members shall comply with all of the following if absentee ballots or ballots provided by some other form of delivery are used:
.................
6. The completed ballot shall contain the name, address and signature of the person voting, except that if the community documents permit secret ballots, only the envelope shall contain the name, address and signature of the voter.
7. Ballots, envelopes and related materials, including sign-in sheets if used, shall be retained in electronic or paper format and made available for member inspection for at least one year after completion of the election.
Emphasis added here.
Ariz. Rev. Stat § 33-1258 provides, in pertinent part, as follows:
A. Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member or any person designated by the member in writing as the member's representative.
In the instant case, the Association has provided to Petitioner electronic or paper copies of all of the Vote HOA Now records it received regarding the electronic voting process as well as the Association meeting sign-in sheets, the paper ballots received in absentia and at the meeting, the envelopes for the absentee ballots received, and the association created tally sheet and election results affidavit.
Petitioner’s argument that the Association must provide an image of each “electronic ballot”, as was voted by each member, is not well supported by Ariz. Rev. Stat. § 10-3708(F). Ariz. Rev. Stat. § 10-3708(F)(4) requires an online voting system to perform certain actions, one of which is that the online voting system “stores electronic votes for recount, inspection and review purposes.” There is no evidence that Vote HOA Now either retains or “stores electronic votes” in any form other than the data list format that was received by the Association, specifically as was documented in Association Exhibits 3, 14 and 15. Those Vote HOA Now data lists, taken as a whole, document each vote for each member for each election item, in identifiable ways. Ariz. Rev. Stat. § 10-3708(F)(4) requires storage of “electronic votes” not electronic ballots.
Petitioner’s argument fails that without seeing an image of each electronic ballot, it was not possible to determine whether the election results were accurate. The online voting system allowed only one vote per election item per personal registration number, and the Vote HOA Now data lists demonstrate that, per each IP addresses and the personal registration number, only one electronic vote per election item was cast by that member.
Based on the foregoing, the Administrative Law Judge concludes that Association is in compliance with Ariz. Rev. Stat. § 33-1812(7) by retaining the Vote HOA Now data lists which demonstrate the electronic ballots “in electronic ... format.” Further, that Petitioner has received from Association, pursuant to his February 28, 2024 request, “all ballots, envelopes, related materials and sign-in sheets.”
Based on the foregoing, the Administrative Law Judge concludes that Petitioner did not sustain the burden of proof that the Association committed a violation of Ariz. Rev. Stat. § 33-1812(A)(7) and, therefore, the Petition must be denied.
FINAL ORDER
Based on the foregoing,
IT IS ORDERED that Petitioner’s petition is denied.
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.
Done this day, November 5, 2024
/s/ Kay A. Abramsohn
Administrative Law Judge
Transmitted electronically November 5, 2024 to:
Susan Nicolson, Commissioner
Arizona Department of Real Estate
Chad Gallacher
[email redacted]
John F. Sullivan
[email redacted]
By: OAH Staff