HOA - ALJDEC decisions

24F-H050-REL · Department of Real Estate - H/C · 2024-09-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Arroyo Mountain Estate Homeowners Association

Petitioner

Goebel, Rick Jr. & Elizabeth

Respondent

No. 24F-H050-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 28, 2024

APPEARANCES: Petitioner Arroyo Mountain Estate Homeowners Association (“Association”) was represented by Daniel S. Francom, Esq. Respondent Rick Goebel Jr., and Elizabeth Goebel appeared on their own behalf.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

EXHIBITS ADMITTED INTO EVIDENCE: Petitioner’s Exhibits A-K were admitted into evidence. Respondent’s Exhibits B-L and O-U were admitted into evidence. The Agency Record from the Department and Notice of Hearing were also admitted into the evidentiary record.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Order to the Commissioner of the Arizona Department of Real Estate (“Department”).

FINDINGS OF FACT

Background and Procedure

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

On or about June 3, 2024, Petitioner filed an Amended single-issue petition against the Respondent with the Department. Petitioner tendered $500.00 to the Department with its Petition.

On or about May 28, 2024, Respondent filed its Answer with the Department whereby it denied all complaint items in the petition.

Per the Notice of Hearing, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 28, 2024, regarding the following issues based on Petitioner’s petition:

Petitioner Arroyo Mountain Estates Homeowners Association, alleges the Respondent Rick Jr. & Elizabeth Goebel, is in violation of the following:

‘Respondent violated Article V, Section 5.22 of the CC&Rs based on Respondent's construction of unapproved structures on his property. Respondent violated Section 2.24 of the Association's Architectural and Landscape Design Guidelines by installing the unapproved patio walls on the property in excess of the permitted 42 inches.’

The Parties and Governing Documents

Petitioner is a homeowners’ association whose members own properties in a residential real estate development located in Litchfield Park, Arizona.

Respondent is a property owner and a member of the Association.

The Association is governed by its Covenants, Conditions, and Restrictions (“CC&Rs”), and overseen by a Board of Directors (“the Board”). The Association is also regulated by Title 33, Chapter 16, Article 1 of the Arizona Revised Statutes (“Ariz. Rev. Stat.”)

Hearing Evidence

Petitioner presented the testimony of John Consalvo and Judy Oliver. Respondent offered the testimony of Nancy Rozzo and the Goebel’s testified on their own behalf as well.

Jon Consalvo’s testimony

Mr. Consalvo was the current president of the Association’s Board. He testified that pursuant to Section 5.22 of the CC&Rs, all homeowners are to submit applications to the Architectural Committee (“ARC”) prior to commencing any projects.

Further, Mr. Consalvo testified that pursuant to section 2.24 of the Architectural and Landscape Design Guidelines (“Guidelines”), all “pony walls” were not to exceed 42 inches.

Mr. Consalvo testified that Respondent submitted plans for approval, however, the plans did not include information as to the height of the wall which was to be built. He also testified that Respondent never submitted a copy of the plans which were included in the request for a building permit.

Mr. Consalvo then testified that after the wall was constructed there were pictures taken which demonstrated that the height was around 8 feet which was against the Guidelines.

Next, Mr. Consalvo testified that based upon this, the property manager began to fine Respondent for being in violation of the Guidelines. He testified further, that the fines remain unpaid.

Judy Oliver

Ms. Oliver was a member of the ARC, however she was not the member who approved the plans. Ms. Oliver testified that she was aware that the ARC requested that Respondent submit separate proposals to the ARC for review rather than one all-encompassing application.

While examining the diagram, Ms. Oliver assumed that Respondent was asking for permission to construct the pony wall, as there were no details about an 8 foot high wall. Further, Ms. Oliver testified that the application would not have been approved if the diagram had the dimensions.

Rick Goebel Jr’s testimony

Mr. Goebel testified generally that he followed all of the Association’s procedures for this project.

Mr. Goebel testified that on December 30, 2022, he submitted his original application, but on January 3, 2023, he was told to submit separate applications.

Mr. Goebel testified that later on January 3, 2023, he submitted the separate applications, and again he received communications to make some further changes. He then made the changes and resubmitted the applications later on January 3, 2023.

Next, Mr. Goebel testified that as to the application in question, it was accepted on January 5, 2023. Based upon this acceptance, Mr. Goebel commenced work on the project.

Mr. Goebel testified that on April 15, 2023, the first 4 feet of the wall was constructed and by April 19, 2023, the wall was at its full height.

Further, Mr. Goebel testified that on May 12, 2023, he received a stop construction notice from the Association.

Mr. Goebel testified that he did not violate section 2.24 of the Guidelines because he did not build a pony wall, rather he built a wall according to section 2.9 of the Guidelines.

Finally, Mr. Goebel testified that he was unsure of what else he could have done as he followed all of the procedures and complied with all of the feedback he had received on his applications, and without further feedback he assumed the project was approved in full.

Elizabeth Goebel’s testimony

Ms. Goebel testified that the ARC approved the project with zero questions asked after they split up the applications as requested.

Nancy Rozzo

Ms. Rozzo was the ARC member who approved Respondent’s plans. She testified that she “just missed it”, when describing the plans for the walls. However Ms. Rozzo testified that she believed that since the application was approved, there was no action the Board could take. Ms. Rozzo also testified that there were other projects approved that had not met the Guidelines, but those projects were allowed to remain without any further litigation.

Conclusions of Law

This matter lies within the Department’s jurisdiction. Pursuant to Ariz. Rev. Stat. §§ 32-2102 and 32-2199 et al., 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(D), 32-2199.02, and 41-1092, OAH has the authority to hear and decide the contested case at bar.

In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 33-1803.

“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 this case, Petitioner has not met its burden. Respondent followed the process as laid out in section 5.22 of the CC&Rs, by submitting its Application to the ARC. The ARC had many opportunities thereafter to question Respondent about the project, and did so at least three times. Ms. Rozzo testified that while she may have “missed it”, the Application was nonetheless approved, and Respondent justifiably relied on the approval and moved ahead with construction. This was tantamount to an exception to the Guidelines as the project was approved. Moreover, for Petitioner to wait almost a month once the project was completed to provide a stop construction notice to Respondent was unreasonable. Further, as the evidence provided, this was not the first time the ARC had approved projects that were not within the Guidelines.

Based upon the foregoing, Petitioner did not meet its burden of proof in demonstrating that Respondent was in violation of section 4.22 of the Guidelines.

ORDER

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

IT IS FURTHER ORDERED pursuant to Ariz. Rev. Stat. § 32-2199.02(A), Respondent shall not reimburse Petitioner’s filing fee as required by Ariz. Rev. Stat. § 32-2199.01.

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, September 11, 2024.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile September 11, 2024 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Daniel S. Francom, Esq.

[email redacted]

Rick Goebel Jr. & Elizabeth Goebel

[email redacted]

By: OAH Staff