HOA - ALJDEC decisions

25F-LTA005-ADH · Arizona State Department of Housing - LTA · 2025-08-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jose L. Verdugo, Jr, et al.,

Petitioner,

Flowing Wells Mobile Home Gardens, et al.,

Respondent.

No. 25F-LTA005-ADH

ADMINISTRATIVE LAW JUDGE DECISION

HEARING SESSIONS: April 14, 2025 and April 28, 2025, followed by post-hearing review of Petitioner’s documents submissions.

APPEARANCES: Petitioner Jose Verdugo Jr. appeared as the lead Petitioner, and was assisted in representation by Raye Winch pursuant to Arizona Supreme Court Rule 31.3(e). Attorney Scott Baluha represented Respondent Flowing Wells Mobile Home Gardens. Monica Trujillo served as the Spanish interpreter for a witness and some residents.

ADMINISTRATIVE LAW JUDGE: Kay Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: ADH Notice of Hearing Packet (“Packet”). Petitioner’s Exhibits 1 through 5, supplemented by Power Point on April 14, 2025 with 47 screens, and Power Point on April 28, 2025 with 33 screens. Respondent’s Exhibits 1 through 42 were admitted into evidence.

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FINDINGS OF FACT

Flowing Wells Mobile Home Gardens (“Respondent” or “Park”) is a mobile home community located at 4439 N. Old Romero Rd. in Tucson, Arizona. There are approximately 60 homes in the Park. Park receives its power from Tucson Electric Power (“TEP”) through a Master Meter from which electricity runs to individual meters on tenant homes.

Tenants’ individual electricity meters are visually read by Park management. Park management then provides that numerical data to Spectrum Utility (“Spectrum”) which issues monthly-period billing statements to tenants.

For each Space in Park, the Spectrum billing statements contain “Previous” and “Ending” electrical, water, and sewer meter/usage readings and a rent amount, the total of which is due on the 1st of the next month.

The Spectrum billing statements set forth the amount of kilowatt hours (“kWh”) hours used, calculated from the Previous and Ending numbers, and the total amount of the electric charge for that time period. The billing statements contain a chart/list setting forth charges for: a customer basic charge; a TEP kWh usage rate; and, other miscellaneous amounts, such as taxes and any surcharges.

The Spectrum billing statements contain a notification that there are TEP “Winter” rates for October through April and “Summer” rates for May through September; further, that the May and November billings will reflect two different rates.

Some of the billings presented with the Petitioners’ Petition were issued by the Park and not by Spectrum.

The TEP rate sheet provided to the hearing record documents an “Energy” rate broken out into usage increments of 500 kWh: zero to 500; 501 to 1000; and Over 1000.

Regarding the July-August split and/or some successive splits, some Park tenants saw higher than their typical electrical charges on their September bills and October bills. Both full time and absent residents’ bills were so affected.

Petitioners organized a meeting and met on August 31, 2024 regarding their concerns with the higher electricity bills. Kim Lucas, a volunteer with AAMHO spoke with Petitioners at the meeting; Park Manager and other staff came to the meeting. On August 31, 2024, Petitioners signed the Petition list of concerned residents.

On or about September 25, 2024, Petitioners filed their Petition with the Arizona Department of Housing (“Department”) alleging that Park violated the Arizona Mobile Home Residential Landlord and Tenant Act, Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 33-1401 through 33-1501 (“LTA”).

Specifically, on behalf of multiple Park residents named in the Petition, Petitioner alleged violations of the following statutory provisions:

Issue #1. Ariz. Rev. Stat. § 33-1413.01(A), regarding utility bills and indicating that persons were not receiving their bills, or were receiving bills with no meter readings but only amounts due and, further, alleging “excessive” [electricity] charges;

Issue #2. Ariz. Rev. Stat. § 33-1413.01(B), regarding “inconsistent” electricity charges throughout Park;

Issue #3. Ariz. Rev. Stat. § 33-1452(A)(3), regarding residents not being treated fairly, and mentioning discrepancies in electricity bills;

Issue #4. Ariz. Rev. Stat. § 33-1452(A)(2) and (3), regarding limited access to the Clubhouse (not 24/7 access); and not all residents have the Clubhouse “code;”

Issue #5. Ariz. Rev. Stat. § 33-1414(C), regarding excessive rental late/penalty fees;

Issue #6. Ariz. Rev. Stat. § 33-1437(B), regarding qualifications of manager and manger not keeping office hours;

Issue #7. Ariz. Rev. Stat. § 33-1434(A)(3), regarding common areas (and renters’ yards) not being maintained or kept clean.

The Petition presents the names of thirty-eight (38) persons including Jose L. Verdugo Jr. The Petition listed the following Space numbers: #1, #5, #10, # 18, #19, #20, #23, #24, #25, #26, #28, #29, #31, #32, #33, #34, #38, #40, #45, #46, #48, #49, #50, #52, #56, #57, #58, #61, #63, #65, #66. On the Petition, two names are stated to occupy Space #18, two names are stated to occupy Space #25, two names are stated to occupy Space #48, three names are stated to occupy Space #54, and two names are stated to occupy Space #61.

Jose L. Verdugo, Jr. was a resident in Park, he and his wife [Brenda Brisco] were renting Space #45. On the Petition resident list, Mr. Verdugo also listed occupancy in Space #20; however, at hearing, it was indicated the Space #20 tenant had been in the hospital and had passed away on July 18, 2024.

On or about October 29, 2024, Park filed its Answer to the Petition, simply denying the allegations. Park included a short statement on which Mike Hall, Park Manager, wrote that the matter was “Resolved” and “All meters checked and working properly. Several older meters changed out as a precaution.”

Legal counsel for Park filed a second answer on or about November 6, 2024.

Thereafter, the Department referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing in December 2024.

Multiple continuances ensued while subpoena processes occurred as well as informal discussions; on January 13, 2025, the Tribunal conducted a pre-hearing conference.

At the January 13, 2025 pre-hearing conference, during discussion of the parties’ positions, Mr. Roy stated that the residents were not disputing the TEP rates but were disputing the meter readings that Park wrote down during those disputed periods for which they believe residents were being overcharged. Mr. Roy expressed the residents’ concern (as far back as the August 31, 2024 meeting) being that the Park was insisting the meter reads were correct but the Park had stated during the Sanchez eviction proceedings that the meter reads could have been wrong due to human error.

The matter was not resolved informally between the parties and the matter was subsequently rescheduled for hearing on April 14, 2025.

At hearing, Petitioners specified they intended to proceed with the allegations in Petition Issues #1, #2, #3, and #4. Petitioners withdrew the Petition Issues #5, #6, and #7.

During the months of August, September, and October of 2024, Park replaced twelve meters through NRG Industrial Electrical Services (NRG). Meters were replaced at Spaces #2, #33, #35, #38, #43, #45, #48, #49, #59, #61, #65, and #66.

Petitioners allege that they were overcharged for electricity in a variety of ways by Park in violation of Ariz. Rev. Stat. § 33-1413.01(A) and (B). Petitioners’ position is that beginning in August 2024, the tenants experienced exceptionally high, and out of the ordinary, electricity bills. Petitioners argue they were being charged multiple times for the same kWh usage or received bills that did not indicate any change in the usage. Petitioners alleged that Park was pushing/moving kWh usage from one month to the next month. Petitioners allege that when the kWh usage numbers are wrong, the result is that Park is charging more than the prevailing basic single family residential rate. Petitioners argued that the Park was unresponsive to their concerns or complaints about the high bills and that Park refused to come to any accommodations or agreements with regard to making partial payments of high bills, or possible credits if the bills were found to be erroneous.

Space #65 was stated to be the residence of a “snowbird” who was not in the home after May 1, 2024. The Spectrum bills for Space #65 demonstrate consistency in the manner in which electricity charges were calculated, based on the Opening and Closing amount of kWh hours, in that from the January-June month-split, the TEP rate is “.12635” and, from then until the October-November split, the TEP rate is “.13043.” The Space #65 average kWh usage for the December–January split to the May-June split was 204.20 kWh. The June-July split and July-August split demonstrated an average kWh usage of 454 kWh use during a time when no one was residing at the home.

Space #48 is the residence for a full-time resident couple. The Spectrum bills for Space #48 demonstrate consistency in the manner electricity charges were calculated, based on the Opening and Closing amount of kWh hours, in that from the January-June month-split, the TEP rate is “0.12635” and, from then until the October-November split, the TEP rate is “0.13043.” The Space #48 average kWh usage for the December-January split to the May-June split was 493 kWh. The July-August split and August-September split demonstrated an average kWh usage of 1085 kWh use. The September-October split demonstrated a kWh usage of 179 kWh; the Space #48 electric meter was replaced on or about October 11, 2024.

Space #45 was the residence for a full-time resident couple. The Spectrum bills for Space #45 demonstrate consistency in the manner electricity charges were calculated, based on the Opening and Closing amount of kWh hours, in that from the January-June month-split, the TEP rate is “0.12635” and, from then until the October-November split, the TEP rate is “0.13043.” The Space #45 average kWh usage for the December–January split to the May-June split was 260 kWh. The July-August split demonstrated a kWh usage of 2248 kWh. The August –September split demonstrated Zero kWh usage; Space 45 electric meter was replaced on or about September 6, 2024.

Space #66 appears to be the residence of a single person. The Spectrum bills for Space #66 demonstrate consistency in the manner electricity charges were calculated, based on the Opening and Closing amount of kWh hours, in that from the January-June month-split, the TEP rate is “0.12635” and, from then until the October-November split, the TEP rate is “0.13043.” The Space #66 average kWh usage for the December–January split to the May-June split was 373.5 kWh. The July-August split and August-September split demonstrated an average kWh usage of 3151 kWh use. The Space #66 electric meter was replaced on or about October 9, 2024.

The Spectrum bills provided by Park of some other residents for the periods under dispute also demonstrate some usage that is similarly atypical than for the respective prior usages, as were stated on those bills; those residents were at Space 20, Space 26, Space 37, Space 50, and Space 69. The hearing record does not demonstrate whether the electrical meters for those residents were ever replaced.

Summer Franks, an electrical engineer generally familiar with all types of meters, testified on behalf of Petitioners that electrical meters cannot run backwards. Ms. Franks opined that any such recorded readings on billings, which back track in the next month to a prior meter read number, must have been erroneously recorded through human error.

Brianna Hall, Park’s onsite property manager since March of 2024, testified that she had been trained in how to read the meters and that she had read the meters in July 2024. Ms. Hall testified she did not receive any written notifications from resident regarding issues with the electrical bills and/or metering; however, she acknowledged that Mr. Verdugo came to see her a few days after he received the September bill. Ms. Hall indicated that Mr. Verdugo requested to have a payment arrangement to be able to pay the high September bill over time. Ms. Hall testified that she was onsite when NRG was working on meters and was replacing meters; she indicated she was told by NRG that some meters were not working and some were in need of replacement.

Petitioners argued that Park did not provide the necessary tenant billings and records for Petitioners to be able to prove Park’s alleged intentional overcharging. Petitioners argued that the meter readings by which Spectrum calculated the electricity charges were inaccurate or incorrect and, therefore, Park is responsible for the overcharging based on the inaccurate meter readings. Petitioners argued fervently that Park was in violation of Ariz. Rev. Stat. § 33-1413.01(A) and (B) and should be required to reimburse residents for the alleged overcharges.

Park argued that Petitioners have not demonstrated, by a preponderance of the evidence, any violations of the alleged statutory provisions Ariz. Rev. Stat. § 33-1413.01(A) and (B). Park argued that, pursuant to Ariz. Rev. Stat. § 33-1413.01(A), Park bills residents separately, pursuant to the separate meters for every resident, and states thereon, the opening and closing meter readings. Park further argued that, pursuant to Ariz. Rev. Stat. § 33-1413.01(B), the Park did “not charge more than the prevailing basic single family residential rates charged by the serving utility.” Park argued that Petitioners failed to provide any written notice, pursuant to Ariz. Rev. Stat. § 33-1471, of the issues raised in the Petition. While Park reluctantly acknowledged that there may have been some mistakes in the meter readings, Park argued that there was no fraud by Park. Park argued that the Petition should be dismissed.

CONCLUSIONS OF LAW

The Department has jurisdiction to determine whether Park’s actions or inactions were in violation of the LTA as had been alleged in Petitioner’s Petition.

Pursuant to Ariz. Rev. Stat. § 41-4062(D), after receiving a response from a named respondent to a petition, the Department may refer the matter to the Office of Administrative Hearings for conducting an administrative hearing.

Pursuant to Ariz. Rev. Stat. § 41-4063(A), the Administrative Law Judge may order any party to abide by the statute or contract provision at issue and may levy a civil penalty, not exceeding $500.00, on the basis of the violation. If a petitioner prevails, the Administrative Law Judge shall order the respondent to pay to the petitioner the $50.00 filing fee. No other powers or authorizations are given to the Administrative Law Judge.

In these matters, Petitioner bears the burden of proof to establish that Respondent violated the LTA in the manner alleged in the Petition and that standard of proof is by a preponderance of the evidence. Park bears the burden to establish affirmative defenses by the same evidentiary standard.

A preponderance of the evidence means ‘proof which leads the [trier of fact] to find that the existence of the contested fact is more probable than its nonexistence.’ In re William L., 211 Ariz. 236, 238 (App. 2005) (quoting Matter of Appeal in Maricopa Juv. Action No. J84984, 138 Ariz. 282, 283 (1983)). See also Morris K. Udall, ARIZONA LAW OF EVIDENCE § 5 (1960).

Regarding Petition Issue #3 and #4, Petitioner has failed to demonstrate any violation by Park of Ariz. Rev. Stat. § 33-1452(A)(2) or (3). Ariz. Rev. Stat. § 33-1452 requires a landlord to adopt rules regarding tenant’s “use and occupancy of the premises.” The hearing record does not include a copy of Park Rules. Petitioners did not present any evidence at hearing regarding a violation by Park regarding any Park-promulgated rules about the tenants’ use and occupancy of Park premises.

Petitioners made no arguments in regard to Clubhouse access as was stated in Issue #4. Therefore, Petitioners have failed to demonstrate a violation regarding Clubhouse access.

Issue #3 mentioned allegations about electrical bills and possible manipulative meter reading. Those allegations were addressed through Issues #1 and #2.

The stated allegation in Issue #3 that Park was unfairly charging $15.00 to read the meters is clearly erroneous. TEP basic residential service sets forth, and Park is allowed to bill for, the basic $15.00 service charge for all residents. The Administrative Law Judge concludes that Petitioners have failed to demonstrate any violation by Park of Ariz. Rev. Stat. § 33-1452(A)(2) or (3).

Ariz. Rev. Stat. § 33-1413.01 provides as follows:

A. If a landlord charges separately for gas, water or electricity there shall be a separate meter for every user. For each billing period the cost of the charges for the period shall be separately stated, along with the opening and the closing meter readings and the dates of the meter readings. Each bill shall show the computation of the charge generally in accordance with the serving utility company billing format for individual service supplied through a single service meter.

B. If the landlord separately charges for utilities, the landlord shall not charge more than the prevailing basic service single family residential rate charged by the serving utility or provider.

11. At hearing, the crux of Petitioners’ issues, allegations, and arguments was that, for multiple residents during the disputed billing periods, the Park’s meter readings were inaccurate resulting in Park “overcharging” or making “excessive” charges for electricity and, thus violating Ariz. Rev. Stat. § 33-1413.01(A) and (B).

Based on the hearing record, the Administrative Law Judge concludes that Park bills residents separately, pursuant to the separate meters for every resident, and states thereon, opening and closing meter readings. Therefore, Park was in compliance with Ariz. Rev. Stat. § 33-1413.01(A).

12. Based on the hearing record, and pursuant to Ariz. Rev. Stat. § 33-1413.01(B), the Park did not charge for electricity at a rate more than the prevailing basic single family residential rate that is allowed by the serving utility to be charged.” The meter usage is multiplied by the allowed prevailing basic single family residential rate. Petitioner has failed to demonstrate that Park is using a rate other than the allowed prevailing basic single family residential rate.

13. Regarding other statements in Petition Issue #1 and #2. Petitioners alleged that not all residents are getting their bills. No evidence was presented at hearing regarding any resident not receiving a billing statement. Petitioner alleged that “many bills do not have meter readings, only single copy with total due.” No evidence was presented at hearing regarding bills without meter readings and/or containing only an amount due.

14. In Issue #2, Petitioners alleged that there were “inconsistent charges for electricity throughout the Park.” The hearing record demonstrated that, more likely than not, meter readings on some residents’ meters were inaccurate due to problems with the meters. That conclusion is made based on the admission that there may have been human error in entering the meter readings on which Spectrum was relying and on the replacement of meters after which those residents did not experience unusual meter readings.

15. The Administrative Law Judge has no jurisdiction to award the damages that were alleged by Petitioners as to the alleged overcharges. Therefore, based on the foregoing, the Administrative Law Judge concludes that Petitioner’s Petition should be dismissed.

RECOMMENDED ORDER

IT IS ORDERED that the Director of the Department dismiss Petitioner’s petition against Respondent.

IT IS ORDERED Petitioners bear the cost of their filing fee.

NOTICE

Pursuant to Ariz. Rev. Stat. § 41-4063(B), this Order is binding on the parties unless a rehearing is granted pursuant to Ariz. Rev. Stat. § 41-4065. Pursuant to Ariz. Rev. Stat. § 41-1092.09, a request for rehearing in this matter must be filed with the Director of the Department of Housing within 30 days of the service of this Order upon the parties.

-54864001

001

-137160-45720000Done this day, August 5, 2025.

/s/ Kay Abramsohn

Administrative Law Judge

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

Ruby Dhillon-Williams

Interim Director

Arizona Department of Housing

[email redacted]

Raye Winch

[email redacted]

Scott A. Baluha

Zona Law Group P.C.

[email redacted]

By: OAH Staff