Complaint:
Numerous (13): Board spent HOA money for personal benefit of board members without holding meetings, without a vote, and without proper authority.
Source of Law: statutes (ARS 33-1248); governing documents
Discussion:
Based on the Findings of Fact set forth above, the Administrative Law Judge concludes that Mr. Swinehart met his burden to prove that the Association violated statute and/or Spanishbrook’s governing documents with respect to petition items 3, 4, 5, 6, 7, and 8. Conversely, Mr. Swinehart failed to demonstrate that the Association violated statute and/or Spanishbrook’s governing documents with respect to petition items 1, 2, 9, 10, 11, 12, and 13. In the instant matter, the Administrative Law Judge concludes that Mr. Swinehart prevailed with respect to the most significant set of issues presented, and therefore is entitled to an award of his filing fee. The Board’s repeated failure to have conducted open meetings in compliance with statute, the Declaration, and the Bylaws warrants the imposition of a civil penalty under A.R.S. § 41-2198.02.
Holding:
IT IS ORDERED that Mr. Swinehart’s petition is granted in part. Not later than sixty (60) days from the date of this Order, the Board shall, in compliance with all applicable statutes and the Association’s governing documents, meet and address the outstanding issues of the sprinkler repair, the special assessment, and the delegation of authority to Colby.
IT IS FURTHER ORDERED that not later than forty-five (45) days from the date of this Order, Spanishbrook shall pay to the Department a civil penalty in the amount of $500.00.
IT IS FURTHER ORDERED that not later than forty-five (45) days from the date of this Order, Spanishbrook shall pay $550.00 to Mr. Swinehart as and for his filing fee.
Comments:
Although this was a split decision on all the claims, the ALJ awarded the homeowner his fees and a penalty against the HOA (second against an HOA); therefore, I consider this another win for the homeowner. That’s 8 wins for homeowners, 6 for HOAs and 2 split. Again, although we will not win every case, the OAH adjudication process has brought justice to homeowners, and validates our claims of abuse by HOAs who have been previously unaccountable under the laws of the land.
ALJ stated that damages are not awarded by OAH.
Must read ALJ detailed discussion of the issues in his decision.
The HOA (condo) representative is allowed to remain for the entire hearing even though he will be called as a witness. He can be anyone so appointed by the HOA. Evidence can only be presented with respect to claims stated in the petition, and no new claims asserted by new evidence.
AG opinion as to what constitutes a meeting was introduced, because directors met with the Chairman of the committee and discussed business, but HOA alleged “not a meeting.” HOA argued that these closed meetings fell within statutory exceptions – emergency meetings. Importantly, the HOA attorney maintains that although a meeting was not held as required, a notice of assessment increases was mailed to each member as a “ballot”, and is therefore a valid increase. He suggested that to avoid a troublesome, contested meeting that would require police enforcement to attend, the board decided not to hold the meeting.
Board spent some $2,800 on a project, which decided on in a closed meeting. Money was paid to a board member who did not do the work, violating the governing documents. Petitioner tried to call a meeting for the board to answer questions. Bylaws required a vote of the members for amendments and rules.
Petitioner appears to have failed to link incidents, the facts, to any claimed violation in the petition to support his arguments by a burden of the evidence. Petitioner must substantiate his claims that the acts and incidents presented show a violation of a statute or governing document provision. Petitioner demonstrated a misinterpretation of the statutes and governing documents.
In closing arguments, petitioner argued an intentional infliction of emotional distress, which is a tort, seeking damages. ALJ stated that this is outside OAH jurisdiction. He also argued mismanagement by the board, which in itself is not actionable.
HOA argued that the statutes cited by petitioner did not apply to the condo since it was formed prior to the cited statutes.
This was a 6-½ hour hearing.
