Case No.: 07F-H067035-BFS

Complaint:                    Terravita voting delegate system violates AZ law prohibiting proxy voting;

 Source of Law:             ARS 33-1812; governing documents

Discussion:                   Respondent [HOA] also argues that prohibiting delegate voting would be an unconstitutional impairment of the contractual rights of the Association and its Members.  Setting aside the obvious fact that an association’s governing documents are hardly products of the typical give-and-take contract negotiation that ordinarily occurs between a buyer and seller, it is nevertheless difficult to argue that a ruling that expands a member’s right to participate in his association impairs the contractual rights of either the association or its members.  The association is its members.  The association and its members both possess the same rights and, presumably, the same interests.  How could those rights and interests be compromised by requiring important association decisions to be based on a vote of all of its members?

Respondent’s attempt to differentiate the delegate voting system from the use of proxies is a classic “distinction without a difference.”  The voting delegates were “proxies,” and, as such, violate the clear language and intent of A.R.S. §33-1812A. (p.6).

 Holding:                       Based upon the foregoing,             IT IS ORDERED that Respondent abide by A.R.S. §33-1812A, which prohibits votes cast pursuant to a proxy.  IT IS FURTHER ORDERED that Respondent reimburse the filing fee paid by Petitioner in the amount of $550.

In footnote 5 to this order: “Pursuant to A.R.S. §41-2198.04A, this Order is the final administrative decision and is not subject to a request for a rehearing.  It is enforceable through contempt of court proceedings pursuant to A.R.S. §41-2198.02B.”  [Emphasis added].

 Comments:                   This case reflects the extent to which CAI member attorneys will go to back their HOA client regardless of R. of Civil P. 11(a) that requires that “and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law . . . and is not inter-posed for any improper purpose“.  I believe that the HOA law firm, Ekmark, had to defend its decisions to allow or not oppose the HOA’s decision to proceed with the election in question in spite of its public statements concerning proxy voting. 

At the hearing, there were 4 HOA attorneys present, and 2 management firm employees, although only one attorney ever spoke to the judge.  Did the HOA foot the bill for these attendees?

The homeowner complaint simply stated: After termination of the period of declarant control, votes allocated to a unit (Lot) were cast in the association’s election for 3 board members were cast pursuant to a (one or more) proxy.  HOA attorneys responded with a 2-¾ inch filing with the captioned case number relating to another OAH case.

Questionable actions related to delayed and incorrect OAH postings. HOA filed papers with BFLS department rather than with OAH, yet they were forwarded to OAH.  HOA used long-term resident petitioner’s incorrect zip code.  HOA’s motion for summary judgment was entered as “motion for summary suspension” and petitioner did not receive the document for over 2 weeks.  Other filings by Ekmark law firm had to be requested by petitioner at the hearing since he had not received them.

The Terravita HOA President was twice subpoenaed to appear, but failed to appear.  Court action for the failure was avoided by the ALJ declaring that her testimony was not really needed.  Petitioner, Bill Brown, filed his objection to not being able to having this witness not testify.  When questioned by the ALJ, the HOA attorney merely replied, “She’s his witness not ours. It’s his responsibility.”  The attorney did not offer any excuse that they were aware of the witness’ reluctance to appear and had homeowner failed to maintain her yard — gazebo strongly advised her to appear.

As occurred in other cases, the HOA attorney filed, at the end of the hearing, a legal memorandum with the ALJ to help him understand the issues. Petitioner also received the 9-page memorandum at this time, but he insisted on time to respond to the memo before the judge decided.  He was granted 20 days.

 On any appeal, whether at OAH or in Superior Court, the trial record is sent to the appeals court to be used in its determination of the appeal. In its determination, the appeals process will examine whether or not parties raised or objected to issues at the trial court that are now being raised in the appeal court, and if not, they cannot be considered on appeal.  Homeowners must respond in answer to any HOA filing. 

The ALJ decision is must reading since the judge, in my opinion, is wondering why the attorneys did not concede, as a matter of straightforward law, that the election violated the law.  And why the HOA spent this time and money on such a case.  See Discussion above for examples of such analysis by the judge.

HOA attorneys were from the Ekmark law firm – Krupnick was not the lead attorney.