ALJDEC decisions subject to certification as final

24F-LTA016-ADH · Arizona State Department of Housing - LTA · 2025-02-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Linda Forgerty, et al.,

Petitioner,

vs.

Coyote Ranch Mobile Home Park et al.,

Respondent.

No. 24F-LTA016-ADH

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 23, 2025 at 1:00 PM.

APPEARANCES: Linda Forgerty (“Petitioner”) appeared on her own behalf with Judith Zauner as a witness. Scott Baluha, Esq. appeared on behalf of Coyote Ranch Mobile Home Park (“Park” and “Respondent”) with Wanda Fergoso as a witness. Kay Fischer observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the Arizona Department of Housing’s (“Department’s”) attached and supplemental agency files, Petitioner Exhibits 1-9, Respondent Exhibits 1-8, and Minute Entry – Granting Continuances dates July 22, 2024, and December 03, 2024 were 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 Recommended Order to the Director of the Department.

FINDINGS OF FACT

Background and Procedure

On May 06, 2024, the Department received a Complaint and Petition for Hearing (“Complaint”) from Petitioner against Respondent for alleged violation(s) of the Arizona Mobile Home Residential Landlord and Tenant Act (“LTA”); Ariz. Rev. Stat. §§ 33-1401 through 33-1501. Specifically, Petitioner alleged that on August 21, 2023, Respondent issued notice that, effective December 01, 2023, her monthly rental rate would increase. Petitioner also alleged that Respondent issued a notice to Park residents on December 13, 2023, that advised, effective February 01, 2024, their monthly refuse charge would be increased from $5.00 to $29.22. Petitioner alleged that the increase resulted from a determination Respondent’s new accounting firm made after discovering that fees collected by Respondent’s former accounting firm failed to cover the Park’s refuse costs. Petitioner further argued that Respondent’s planned refuse increase, tantamount to “accounting personnel mistakes,” was in violation of Ariz. Rev. Stat. §§ 33-1413.01(D), and that Respondent’s rental increase was in violation of 33-1411 and 33-1413(I).

On May 14, 2024, the Department provided notice of the petition to Respondent.

On May 15, 2024, Respondent submitted its timely reply to the Department.

On May 31, 2024, the Department provided Respondent’s reply to Petitioner.

On June 25, 2024, Petitioner advised the Department that she desired to move forward with an administrative hearing.

On June 27, 2024, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing to determine whether ground exist for the Department to find that Respondent violated Ariz. Rev. Stat. §§ 33-1413.01(D), 33-1411, and/or 33-1413(I).

On July 09, 2024, the Department issued a Notice of Hearing, setting a hearing on August 26, 2024, at 1:00 p.m.

Hearing Evidence

At the hearing, Petitioner testified on her own behalf and called Judith Zauner as a witness. Respondent called Wanda Fergoso as a witness. The substantive evidence of record is as follows:

The Park, which is privately held property, is a 55+ senior community that consists of 229 lots. The Park’s owner, Landlord, maintains multiple dumpsters on the property.

Ms. Fergoso has been the Park’s manager for the past five (5) years.

In December 2023, Petitioner discussed the refuse increase with Ms. Fergoso, and inquired why Landlord was not charging residents the single-family residential refuse rate for the City of Yuma.

In 2017, Petitioner purchased a manufactured residential home located at 9351 E. 28th St., Lot #223 Yuma, Arizona 85365, and has an active lease agreement for said lot with Respondent; which includes monthly fees for lot rent, water, sewer, trash, and taxes. Electric is billed separately.

Petitioner is also the Chairman of the Park’s Resident Committee. The Resident Committee is comprised of a small group of residents who meet monthly, and act as an intermediary or liaison between the greater residential population and Park management.

On or about August 21, 2023, Park residents received correspondence from Respondent that advised monthly rents would increase. At a subsequent resident meeting held September 12, 2023, Mr. Fergoso advised that she had been informed no lease contracts would be issued to Park residents by Landlord. As a result, on October 04, 2023, the Resident Committee issued a Demand Letter to Respondent pursuant to Ariz. Rev. Stat. § 33-1413(K) seeking an offer for a long-term rental renewal agreement. On October 18, 2023, Respondent replied that it would grant Park residents’ request, which it did on December 14, 2023.

Refuse removal options are limited in number near Petitioner’s residence. There are only three (3) service providers: C&D Disposal (“C&D”), Republic Services (“Republic”), and the City of Yuma. Upon investigation, Respondent determined that neither the City of Yuma nor Republic provided waste removal services the Park’s geographic location, only C&D at a single-family residential refuse rate of $29.22 monthly.

Petitioner opined that Landlord relied on C&D’s single-family residential refuse rate because Ms. Fergoso, who lives in a single-family residence near the Park, utilizes their services for her home.

When Petitioner contacted Republic she was advised that its single-family residential refuse rate was $29.88 monthly with recycling, or $23.65 without, but that individual service could not be performed at the Park because it was private property.

When Petitioner contacted the City of Yuma, she was advised that its single-family residential refuse rate was $15.70, but that they did not service the Park.

Petitioner presumes that Park resident’s refuse payments, including her own, go to Landlord, who Petitioner presumes pays a lower business rate, and that Landlord in turn makes a profits from whatever monies remain after payment.

Admittedly, the $5.00 refuse fee Petitioner had been charged prior to February 01, 2024, was less than what she should have been charged.

Prior to February 01, 2024, all Park resident $5.00 refuse payments were made directly to the Park. After that date, all increased Park resident refuse payments were still made directly to the Park. Neither the number of dumpsters nor the number of waste removals increased after February 01, 2024.

Additional Evidence

Petitioner testified that she submitted the underlying petition in the hopes that the Tribunal could negotiate or otherwise mandate lower utility costs for Park residents, as her Landlord’s actions felt “unfair, retaliatory, and unconscionable” to do to senior citizens on limited income.

Closing Arguments

In closing, Respondent argued that there was no mandate in existence that required a political subdivision to select the cheapest utility provider, or one that was the closest in proximity. Respondent argued that C&D was its only option for refuse removal, and that its monthly single-family residential refuse rate was comparable to Republic’s and therefore reasonable. Respondent also denied Petitioner’s allegation of retaliation, noting that it complied with the Resident Committee’s request for a long-term rental agreement. Per Respondent, because Petitioner failed to address its contention that Respondent’s January 19, 2024, notice to Park residents that they would be charged for utilities year-round, effective February 2024, violated one or more provisions of the LTA, it was waived and rendered moot. Overall, Respondent opined that Petitioner had failed to sustain her burden of proof in the matter and asked that the underlying petition be dismissed with prejudice, that Petitioner’s filing fee not be returned, and that no civil penalty be issued against Respondent.

Petitioner declined to provide a closing argument.

CONCLUSIONS OF LAW

The Department has jurisdiction to determine whether Respondent violated the LTA, as alleged in Petitioner’s petition. The matter was properly brought before OAH for adjudication.

Petitioner bears the burden of proof to establish Respondent’s alleged statutory violation(s) by a preponderance of the evidence. Respondent bears the burden of persuasion 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.”

Ariz. Rev. Stat. § 33-1413.01(D) provides that while a landlord may charge separately for removal of refuse, any charges for removal may not exceed the prevailing single family residential rate for said services levied by the political subdivision or provider.

Ariz. Rev. Stat. § 33-1411 provides that a hearing officer or court finds that a rental agreement or any provision thereof was unconscionable when made, they may refuse to enforce the agreement, enforce the remainder of the agreement without the unconscionable provision, or limit the application of any unconscionable provision to avoid an unconscionable result.

Ariz. Rev. Stat. § 41-4064(A) provides that an Administrative Law Judge (“ALJ”) may hear and adjudicate all matters relating to the LTA, except that the ALJ may not hear matters pertaining to rental increases pursuant to section 33-1413(G) or (I).

Ariz. Rev. Stat. § 33-1413(I) provides that in addition to any other rental provisions, a landlord is entitled to increase rent upon the expiration or renewal of any rental agreement, with written notice.

Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.”

Statutes should be interpreted to provide a fair and sensible result. “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.

The crux of the issue in this matter is whether Respondent’s August 21, 2023, notice of utility increase, and Respondent’s response to Petitioner’s October 04, 2023, Demand Letter were in violation of the LTA.

In the case at bar, the material facts in the record are clear.

The record reflects that on the Resident Committee issued a Demand Letter to Respondent on October 04, 2023, and that Respondent complied on December 14, 2023, prior to the expiration of Petitioner’s rental agreement, by issuing Park residents 1-year and 4-year lease agreements. The record also reflects that of the three (3) refuse removal providers in the area, only a single provider, C&D, was able to service the Park and provide a single-family residential refuse rate. Notably, although Republics was not able to service the Park its rate was comparable to C&D’s.

No credible evidence exists in the record to establish that Landlord or the Park receive a “kick-back” or make a profit from monthly resident utility payments. Moreover, no authority was presented that would require or otherwise compel Respondent to adopt the City of Yuma’s $15.70 single-family residential refuse rate. The record is devoid of any evidence that would tend to establish that Respondent acted unfairly, in a retaliatory manner, or unconscionably towards Petitioner by increasing the monthly refuse utility charge or in its response to the Demand Letter.

The Tribunal has no jurisdiction to hear Petitioner’s rental increase complaint, therefore it will not be addressed.

Because Petitioner has failed to sustain her burden of proof in this matter, the undersigned has no alternative than to conclude that her petition must be dismissed. The Department has no grounds to discipline Respondent based on alleged violations of Ariz. Rev. Stat. §§ 33-1413.01(D), 33-1411, and/or 33-1413(I) filed in this matter.

Recommended Order

Based on the foregoing,

IT IS ORDERED that the Director of the Department dismiss Petitioner’s Complaint and Petition against Respondent.

IT IS FURTHER ORDERED that Respondent shall not be required to reimburse Petitioner’s filing fee.

IT IS FURTHER ORDERED that Respondent shall not be assessed a civil penalty in this matter.

NOTICE

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five days from the date of that certification.

Done this day, February 07, 2025.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Joan Serviss, Director

Arizona Department of Housing

Attn: Evelyn Estrella and Jeff Jacobs

1110 W. Washington St., Ste. 280

Phoenix, AZ 85007

[email redacted]

[email redacted]

[email redacted]

Linda Fogerty, Petitioner

9351 E. 28th St., #223

Yuma, AZ 85365

[email redacted]

Scott E. Williams, Esq.

Mark B. Zinman, Esq.

Scott A. Baluha, Esq.

Zona Law Group P.C., Counsel for Respondent

7701 E. Indian School Rd., Ste. J

Scottsdale, AZ 85251

[email redacted]

[email redacted]

By: OAH Staff