HOA - ALJDEC decisions

25F-H049-REL · Department of Real Estate - H/C · 2025-12-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Jeremy Whittaker

Petitioner

Val Vista Lakes Community Association

Respondent

No. 25F-H049-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: November 18, 2025

APPEARANCES: Petitioner Jeremy Whittaker appeared on his own behalf. Respondent Val Vista Lakes Community Association was represented by B. Austin Baillio.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

EXHIBITS ADMITTED INTO EVIDENCE: Petitioner’s Exhibits I, G, K, N, AG, AS, AT, AV, AW, AX, BD, BG, BI, BS, BT, and BU.

_____________________________________________________________________

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.

2. Respondent Val Vista Lakes Community Association (“Val Vista Lakes”) is a homeowners’ association whose members own single-family houses on lots in Gilbert, Arizona.

3. Petitioner Jeremy Whittaker owns a house in and is a member of Val Vista Lakes.

4. On or about March 31, 2025, Mr. Whittaker filed a petition with the Department that alleged that Val Vista Lakes had violated A.R.S. §33-1811 and paid a filing fee of $500.00.

The hearing occurred on November 18, 2025.

Mr. Whittaker represented himself and called Mark Thompson, Sharon Maiden, Brodie Hurtado, Bill Suttell, and Diana Ebersthauser as witnesses. Respondent did not call any witnesses.

In opening arguments, Mr. Whittaker argued that any contract entered into by Val Vista Lakes with CHDB Law, was void as two Board of Directors (“Board”) members had a conflict of interest and failed to disclose the same in open meetings.

Mr. Baillio argued that there was no duty to disclose any potential conflict as there was no financial benefit derived from the engagement of CHDB Law.

Mr. Thompson served on the Board with Ms. Ebertshsuser and Mr. Hurtado, and testified that they had never disclosed that Jonathan Ebertshauser was their son and husband, respectively. Further, Mr. Thompson testified that during his tenure on the Board, CHDB Law handled nearly all of the community legal issues.

Ms. Maiden testified that she served on the Board from November 2020 until November 2024 and that with Ms. Ebertshsuser and Mr. Hurtado never disclosed the potential conflict of interest in retaining CHDB Law. Ms. Maiden testified further that when Val Vista Lakes was engaged in the “Brown” lawsuit, CHDB Law initially was retained to handle the same, however, the Board decided to use its insurance policy to defend the same. Based upon this, the insurance company then hired CHDB Law for representation of Val Vista Lakes.

Mr. Hurtado testified that his husband, Jonathan Ebertshauser is a partner at CHDB Law, but was not a shareholder. He testified that Mr. Ebersthauser does not directly represent Val Vista Lakes, and only receives a salary based upon his billable hours for his clients. Further, Mr. Hurtado testified that while he did not believe that he had a conflict of interest, he nonetheless disclosed the same multiple times.

Mr. Suttell served on the Board from November 2008 until November 2022. He testified that while he was on the Board, the predecessor firm to CHDB Law was general counsel, however, the Board then switched several times to other law firms for that work, and that once that occurred, CHDB Law’s contract with Val Vista Lakes was superseded. Further, Mr. Suttell testified that he believed that under the statute the “benefit” did not have to be purely financial, it could also include a benefit to the firm’s reputation.

Ms. Ebertshauser testified that her son is Jonathan Ebertshauser. She testified that she disclosed any potential conflicts in an open board meetings, but could not recall the specific meetings. Ms. Ebertshauser also testified that there was no question in the community who her son was. In addition, Ms. Ebertshauser testified that she did not disclose a potential conflict when she applied for the Board, as Val Vista Lakes was represented by a different law firm at the time.

CONCLUSIONS OF LAW

1. 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.

2. Petitioner bears the burden of proof to establish that Respondent violated A.R.S. § 33-1811 by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

3. “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.”

4. A.R.S. § 33-1811 states:

If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors or any person who is a parent, grandparent, spouse, child or sibling of a member of the board of directors or a parent or spouse of any of those persons, that member of the board of directors shall declare a conflict of interest for that issue. The member shall declare the conflict in an open meeting of the board before the board discusses or takes action on that issue and that member may then vote on that issue. Any contract entered into in violation of this section is void and unenforceable.

5. Mr. Whittaker would like this Tribunal to believe that “contract” in the statute does not have to involve compensation. The Tribunal respectfully disagrees. Perhaps if the statute were written, “if any contact, decision, or action for compensation...”, Mr. Whittaker may be correct. However, the word “other” would indicate that the contract or decision would involve compensation. Mr. Whittaker did not present any evidence that Mr. Ebertshauser received any additional compensation such as a raise, a bonus or other incentive from CHDB Law once they were hired by Val Vista Lakes. Further, the fact that a law firm pays for malpractice insurance, or an office space, is not compensation, rather it is a benefit. If Mr. Ebertshauser was a sole practitioner and/or a true shareholder with profit sharing, there would absolutely be a conflict of interest which would need to be disclosed by Ms. Ebertshauser and Mr. Hurtado. However, there was no persuasive evidence presented indicating the same. Admittedly, the best practice of a Board member would be to abstain from voting, however, the statute does not require the same. Therefore, the Tribunal finds that Mr. Whittaker has not sustained his burden in demonstrating that Val Vista Lakes violated A.R.S. § 33-1811.

ORDER

IT IS ORDERED that Petitioners’ petition is denied as to a violation of A.R.S. 33-1811, and Petitioner is not entitled to his filing fee of $500.00. Finally, the Tribunal declines to award a civil penalty 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, December 2, 2025.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile December 2, 2025 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

[email redacted]

B. Austin Baillio

Maxwell & Morgan, P.C.

[email redacted]

Jeremy Whittaker

[email redacted]

By: OAH Staff