HOA - ALJDEC decisions

25F-H072-REL · Department of Real Estate - H/C · 2025-11-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Timothy A Burke

Cortessa Community Association

No. 25F-H072-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: October 23, 2025

APPEARANCES:

Petitioner: Timothy A. Burke

Rockwell Kelly

Dara Chavez

Respondent: Edith Rudder, Esq.

Amber P. Li, Esq. (observing)

James Gallager

Michael Swift

Morgan Swanson (observing)

ADMINISTRATIVE LAW JUDGE: Nedra-Su Kawasaki

EXHIBITS ADMITTED INTO EVIDENCE: Notice of Hearing File, provided by the Department of Real Estate. Petitioner’s Exhibits 8 and 10. Respondent’s Exhibits 5, 6, 7, and 8.

_____________________________________________________________________

FINDINGS OF FACT

Petitioner’s Claim

Cortessa Community Association (Respondent) was a planned community association in Waddell, Arizona.

Timothy A. Burke (Petitioner) owned a home located at 18322 West Onyx Avenue and was a member of Respondent.

On or about July 21, 2025, Petitioner filed a Petition with the Arizona Department of Real Estate (Department) alleging that Respondent had violated Planned Community Statutes, A.R.S. § 33-1805. The issue identified in the Petition, for which Petitioner paid the requisite $500.00 filing fee, was as follows:

Requests have been made to the HOA community management company for financial information and records that are not being provided per A.R.S. 33-1805.

Respondent, through James (Jim) Gallagher, filed a written answer to the Petition, asserting that all of the complaint items had been resolved. An attached Addendum further asserted the following:

Petitioner is a Director on the Board of Directors for Respondent Cortessa Community Association.

The Documents that are the subject of this petition were requested in his role as Treasurer outside of a process established by the Board President and consequently not provided when first requested.

As part of a Board of Directors meeting held Tuesday, August 19, 2025, all of the subject documents were provided to Treasurer Burke, resolving the dispute as it relates to the current petition.

The Department referred the Petition to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

A hearing was held on October 23, 2025. Administrative Notice was taken of the agency record.

Referenced Bylaws

Article 3 provided in relevant part as follows:

§ 3.2 Powers and Duties. . . . To the extent permitted by law, the Board may delegate to one or more committees and to officers, employees or agents of the Association such duties and powers as appear to the Board to be in the best interests of the Association; provided, however, that no such delegation shall relieve the Board of its obligation to perform any delegated duty.

§ 3.15 Managing Agent. The Board may employ for the Association a “Managing Agent”. . . The Board may delegate to the Managing Agent all of the powers granted to the Board or the officers of the Association by the Declaration, Articles, or these Bylaws other than the power (i) to adopt the annual budget, any amendment thereto or to levy assessments; (ii) to adopt, repeal or amend Association Rules; (iii) to designate signatories on Association bank accounts; (iv) to borrow money on behalf of the Association; or (v) to acquire real property.

Referenced Statutes

A.R.S. § 33-1805 provides as follows:

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. The association shall not charge a member or any person designated by the member in writing for making material available for review. The association shall have ten business days to fulfill a request for examination. On request for purchase of copies of records by any member or any person designated by the member in writing as the member's representative, the association shall have ten business days to provide copies of the requested records. An association may charge a fee for making copies of not more than fifteen cents per page.

Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to any of the following:

1. Privileged communication between an attorney for the association and the association.

2. Pending litigation.

3. Meeting minutes or other records of a session of a board meeting that is not required to be open to all members pursuant to section 33-1804.

4. Personal, health or financial records of an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.

5. Records relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.

C. The association shall not be required to disclose financial and other records of the association if disclosure would violate any state or federal law.

Hearing Evidence

As a preliminary matter, prior to opening statements, Respondent raised objection to two of the issues brought forth by Petitioner in his submitted Hearing Summary. Specifically, the issues of the legitimacy of the duties of an HOA President to unilaterally establish protocols and processes to control community financial and other records of the community to the HOA Board of Directors (Board), and discussion of two active contracts the HOA held with outside providers as they related to whether the HOA Board was fulfilling its fiduciary responsibilities. The undersigned ALJ sustained the objection and limited the hearing to the issue as presented in the Petition.

Petitioner testified that he sent three emails to Mike Swift at Kinney Management Services (KMS) on June 2 and 18, 2025, and July 9, 2025, requesting: (1) Caretaker’s current landscaping contract(s), (2) market study Mr. Swift mentioned during the May 20, 2025 meeting that was prepared versus an RFP process, (3) Waste Management’s current contract(s), and (4) market study that was prepared versus an open bid process. Petitioner further testified that he did not receive the requested information. On questioning, Petitioner testified that he was unaware of any email address set up to make records requests. Petitioner argued that the statute was directly for receiving copies of records, not examination. Additionally, Petitioner argued the statute did not limit the number of requests permitted.

Rockwell Kelly, a homeowner and member of Respondent, testified that on May 6, 2025, he emailed Mike Swift requesting a copy of the contract between KMS and Respondent. Mr. Kelly further testified that he did not hear from Mr. Swift until the May 20, 2025 Board meeting, at which time, Mr. Swift told Mr. Kelly he had received the request and it was being forwarded to “whoever was in charge of contracts,” and to date, Mr. Kelly had received no further response. On questioning, Mr. Kelly testified that he was not invited to examine the records and was unaware of any protocol for requesting records outside of emailing Mr. Swift.

Dara Chavez, a homeowner and member of Respondent, testified that on January 13, 2025, she sent Mr. Swift an email requesting a copy of Respondent’s financial statements for 2022-2024. On January 15, 2025, Mr. Swift responded, directing Ms. Chavez to send the request to “records request at Kinney Management” (Records Request). On January 16, 2025, Ms. Chavez sent her request to Records Request. On January 20, 2025, Records Request responded that it was the policy and position of Respondent that although the request was statutory, it was unreasonable. Thereafter, Ms. Chavez sent requests to Records Request on February 21 and 26, 2025; March 11, 12, and 13, 2025; and September 17, 2025 for the name of Respondent’s insurance company, name of the entity hired to perform HOA inspections and license plate runs, and an unredacted copy of the KMS contract, respectively. To these requests, Ms. Chavez testified, she received no response.

James Gallagher, a homeowner member, and President of Respondent, testified that Respondent had established protocols for requesting records either through the association president or through Records Request at KMS. Mr. Gallagher further testified that he had no reason to believe KMS was not responding to requests for records, no requests had been made to him directly, and it was not his intention to deny Petitioner access to records. Additionally, Mr. Gallagher testified that financial records were available to homeowners through Records Request at KMS.

Michael (Mike) Swift, Community Manager of Respondent, testified as to his duties. Mr. Swift testified KMS instituted the protocol for homeowner records requests for all communities under KMS management. Specifically, the protocol was to send an email to [email redacted] and were monitored by the KMS office in Tempe, Arizona, not Mr. Swift personally. Mr. Swift further testified that, due to KMS records retention policy, corporate records for Respondent were stored at the KMS Tempe office.

In closing, Petitioner argued that all homeowners should receive records timely and that Board members maintain status as homeowners as well as Board members. Petitioner requested relief such that Respondent would provide reassurance that moving forward homeowners would receive records within the allotted time period, clarification that Board members, as homeowners, were still provided the same rights and protections under the statute, a formal records request procedure be documented, and reimbursement of the ADRE filing fee.

In closing, Ms. Rudder argued that Respondent followed A.R.S. § 33-1805 and the established protocols for requesting records were not followed in this matter. All previous electronic copies of records in response to Petitioner’s requests were provided as a courtesy and not as a requirement of the statute. Additionally, the statute was not specific as to how and where records must be provided nor does it prevent a protocol from being established. Finally, Ms. Rudder argued no evidence was presented to demonstrate that records requests were not fulfilled.

CONCLUSIONS OF LAW

A.R.S. § 32-2199 authorizes the administrative law judge to “adjudicate complaints regarding and ensure compliance with . . . [t]itle 33, chapter 16 and planned community documents.”

A.R.S. § 32-2199.01 permits a member of a planned community to file a petition with the Department for a hearing concerning the planned community association’s alleged violations as set forth in Title 33, Chapter 16. This matter lies within the Department’s jurisdiction. That statute provides that such petitions will be heard before the Office of Administrative Hearings.

A.R.S. § 32-2199.02 authorizes the administrative law judge to “order any party to abide by the statute, condominium documents, community documents or contract provision at issue and may levy a civil penalty on the basis of each violation.” This Tribunal is not authorized to order other remediation or order civil penalties for other conduct.

Petitioner bears the burden of proof to establish that Respondent violated applicable statutes, CC&Rs, and/or Bylaws 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.”

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.”

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.

Statutes should be interpreted to provide a fair and sensible result.

A.R.S. § 33-1805 provides an association “ten business days to fulfill a request for examination” and on request for purchase, an association “shall have ten business days to provide copies of the requested records.”

A.R.S. § 33-1805 does not define “homeowner” or “board member” nor does it explicitly differentiate between the two terms. However, subsection A addresses requests only from “[association] members” and states it applies “[e]xcept as provided in subsection B . . . ”; whereas, subsection B provides, “Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to” (1) privileged communication between an association attorney and the association; (2) pending litigation; (3) minutes or other records of a board meeting that are not required to be open to all members; and (4) personal information of an individual member, association employee, or contractor employee. As subsection A addresses only members and applies an exception as to subsection B, and subsection B specifically addresses “board” and “association” duties and functions as separate from “all” members, the undersigned ALJ concludes that as it pertains to the instant matter, A.R.S. § 33-1805 recognizes that board members are also homeowner members and differentiates records requests made by and on behalf of a homeowner member and requests made by and on behalf of a board member for board purposes.

Petitioner’s emails dated June 2 and 18, 2025, and July 9, 2025, were sent from an email address, self-identified by Petitioner as “Tim Cortessa HOA Board Member,” copied to all Respondent’s board members, and requested the documents be provided to “the entire HOA board of directors.” Thus, Petitioner made the referenced requests in his capacity as Treasurer and board member of Respondent and not as a homeowner member. As such, the undersigned ALJ finds that A.R.S. § 33-1805(A) does not apply to Petitioner’s June 2, 18, 2025, and July 9, 2025, emails; therefore, Respondent did not violate the statute as to these requests. The undersigned ALJ makes no determination as to whether Petitioner was entitled to the requested documents in his capacity as a board member of Respondent.

Mr. Kelly requested a copy of the contract between KMS and Respondent, via email to Mr. Swift on May 6, 2025, and though he did receive a timely verbal acknowledgement of receipt from Mr. Swift on May 20, 2025, he did not, at any time thereafter, receive an invitation to examine the document nor receive a copy thereof.

Between January 13, 2025, and September 17, 2025, Ms. Chavez requested copies of financial statements, the names of Respondent’s insurance carrier and entity hired to perform inspections and license plate runs, and a copy of the KMS contract. To the request made in January, Ms. Chavez received a timely response advising her of the proper contact for records requests. Ms. Chavez then made her request and those thereafter to the proper contact as advised. In response to the January request for financial records, Ms. Chavez received a timely response advising that although the request was statutory, it was unreasonable, and no invitation to examine the documents nor copies thereof were received. As to Ms. Chavez’s subsequent requests, as of the date of hearing she had received no response.

Ms. Rudder argued that Respondent followed the statute by establishing a records request protocol, which was not followed, therefore, the evidence did not demonstrate that requests were not fulfilled in violation of A.R.S. § 33-1805. Although Respondent employed and delegated to KMS its responsibility to take such actions necessary to comply with A.R.S. § 33-1805, no such delegation relieved the Board of its obligation to perform the delegated duty. Mr. Kelly and Ms. Chavez submitted records requests subject to A.R.S. § 33-1805. The requests were not denied as an exception under subsections B or C. Therefore, Respondent violated A.R.S. § 33-1805 when it failed to timely make the requested records reasonably available for examination or provide copies thereof.

order

IT IS ORDERED that Petitioner be deemed the prevailing party in this matter only as it relates to homeowner member requests for records.

IT IS ORDERED that Respondent pay Petitioner the filing fee of $500.00, to be paid directly to Petitioner within thirty (30) days of this Order.

IT IS ORDERED Respondent is directed to comply with the requirements of A.R.S. § 33-1805 as to homeowner member requests for records going forward.

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, November 28, 2025.

/s/ Nedra-Su Kawasaki

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile November 28, 2025 to:

Susan Nicolson, Commissioner

Arizona Department of Real Estate

Cortessa Community Association

[email redacted]

Timothy Burke

[email redacted]

Edith I. Rudder

CHDB LAW LLP

[email redacted]

By: OAH Staff