John A Sellers v. Rancho Madera Condominium Association

Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.

Case Summary

Case ID 19F-H1918010-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2019-05-10
Administrative Law Judge Tammy L. Eigenheer
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John A Sellers Counsel
Respondent Rancho Madera Condominium Association Counsel Edward D. O'Brien, Edith I. Rudder

Alleged Violations

CC&Rs § 3.10, 3.10.2, 3.10.4

Outcome Summary

The Administrative Law Judge dismissed the petition following a rehearing, concluding that the Petitioner failed to meet the burden of proof by establishing that the Respondent HOA violated its CC&Rs. The governing documents grant the HOA the right, but not the obligation, to enforce maintenance duties specifically assigned to Unit Owners concerning the drainage easement.

Why this result: Petitioner failed to establish by a preponderance of the evidence that the Respondent violated the CC&Rs because the HOA was found to have a right to enforce maintenance of the drainage easement, but not a mandatory obligation to do so under the terms of the CC&Rs.

Key Issues & Findings

HOA failure to enforce unit owner maintenance obligations regarding stormwater drainage easement

Petitioner alleged that the Respondent HOA violated the CC&Rs by failing to enforce unit owner responsibility to keep the stormwater drainage area free of obstructions like vegetation and fencing materials, potentially causing a risk of flooding to his unit.

Orders: The petition was dismissed. The Administrative Law Judge determined that the CC&Rs assign Unit Owners the responsibility to clear the drainage area and grant the HOA the right, but not an obligation, to enforce this maintenance.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 32-2199.01
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
  • BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Lookout Mountain Paradise Hills Homeowners’ Ass’n v. Viewpoint Assocs., 867 P.2d 70, 75 (Colo. App. 1993)

Analytics Highlights

Topics: HOA, CC&Rs, Drainage Easement, Enforcement Obligation, Condominium Unit Owner
Additional Citations:

  • A.R.S. § 32-2199.01
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 41-1092.08(H)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Lookout Mountain Paradise Hills Homeowners’ Ass’n v. Viewpoint Assocs., 867 P.2d 70, 75 (Colo. App. 1993)

Video Overview

Audio Overview

Decision Documents

19F-H1918010-REL-RHG Decision – 706533.pdf

Uploaded 2025-10-09T03:33:29 (42.2 KB)

19F-H1918010-REL-RHG Decision – 707530.pdf

Uploaded 2025-10-09T03:33:29 (111.5 KB)

19F-H1918010-REL-RHG Decision – ../19F-H1918010-REL/667122.pdf

Uploaded 2026-01-20T13:48:43 (50.0 KB)

19F-H1918010-REL-RHG Decision – ../19F-H1918010-REL/678371.pdf

Uploaded 2026-01-20T13:48:45 (129.5 KB)





Briefing Doc – 19F-H1918010-REL-RHG


Dispute Analysis: Sellers vs. Rancho Madera Condominium Association

Executive Summary

This briefing document synthesizes the legal proceedings and outcomes of a dispute between homeowner John A. Sellers (Petitioner) and the Rancho Madera Condominium Association (Respondent). The core of the conflict was Mr. Sellers’ allegation that the Association violated its Covenants, Conditions, and Restrictions (CC&Rs) by failing to compel other homeowners to remove vegetation and fencing from a common stormwater drainage channel, thereby creating a flood risk to his property, Unit 12.

The case was adjudicated by the Arizona Office of Administrative Hearings (OAH) in a process that included an initial hearing, a decision, a granted request for rehearing, and a final binding decision. In both instances, the Administrative Law Judge ruled against the Petitioner.

The initial decision, issued in December 2018, concluded that Mr. Sellers failed to provide sufficient evidence that the materials in the channel actually impeded water flow or posed an unreasonable flood risk. The ruling highlighted that the channel had functioned as intended since 2012 without any flooding incidents. Following a rehearing in April 2019, the second and final decision in May 2019 reinforced this conclusion. It further clarified a crucial distinction in the CC&Rs: while the Association possesses the right to enforce maintenance rules upon homeowners, the governing documents do not impose an explicit obligation to do so proactively before any damage has occurred. The responsibility for maintaining the drainage area rests with the individual unit owners, and the Association’s primary duty is to repair damages after the fact, billing the responsible owner. The petition was ultimately dismissed.

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I. Case Overview

This case documents a formal complaint filed by a homeowner against his condominium association, which was resolved through the Arizona Department of Real Estate and the Office of Administrative Hearings.

Case Number: 19F-H1918010-REL

Petitioner: John A. Sellers, owner of Unit 12 in Rancho Madera

Respondent: Rancho Madera Condominium Association, a 46-unit development in Cave Creek, Arizona.

Venue: Arizona Office of Administrative Hearings (OAH)

Key Chronology of Events

Aug 23, 2018

Petitioner files a single-issue petition with the Arizona Department of Real Estate.

Oct 23, 2018

An OAH order vacates the initial hearing after the Petitioner indicates a wish to withdraw the petition.

Nov 5, 2018

The first evidentiary hearing convenes, indicating the withdrawal was rescinded.

Dec 12, 2018

The first evidentiary hearing concludes.

Dec 26, 2018

Administrative Law Judge Diane Mihalsky issues a decision denying the petition.

Feb 1, 2019

Petitioner files a Rehearing Request with the Commissioner of the Department of Real Estate.

Feb 22, 2019

The Commissioner grants the Rehearing Request.

Apr 15, 2019

The rehearing convenes and concludes before Administrative Law Judge Tammy L. Eigenheer.

May 7, 2019

OAH issues an order striking a supplemental, post-hearing filing by the Petitioner from the record.

May 10, 2019

Judge Eigenheer issues a final Administrative Law Judge Decision, again dismissing the petition.

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II. Petitioner’s Core Allegation

Mr. Sellers’ petition was based on a single issue: the alleged violation of Section 3.10 of the Association’s CC&Rs.

The Violation: The Petitioner claimed the Association failed in its duty to require owners of “Drainage Easement Units” to remove obstructions from a shared stormwater channel.

The Obstructions: The materials of concern included “large succulents, shrubs, and cacti” growing in the drainage area’s rip-rap, as well as chicken wire that at least one owner had installed to contain a pet.

The Perceived Risk: Mr. Sellers testified that these items “could catch storm debris and cause the drainage channel to become clogged,” leading to a risk of flooding for his Unit 12. He submitted videos of heavy rains and flooding in other parts of Cave Creek as evidence of the potential danger.

Financial Impact Claim: The Petitioner was undergoing a contentious divorce, and Unit 12, as a community asset, was for sale under a court order. He asserted that the unresolved drainage issue and his required disclosure of the dispute had reduced the unit’s market price by $40,000.

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III. Respondent’s Position and Actions

The Rancho Madera Condominium Association, represented by its President, Jeffrey Kaplan, denied any violation of the CC&Rs and presented a multi-faceted defense.

Lack of Historical Precedent: Mr. Kaplan, an owner since 2012, testified that water had never entered the property from the east, and Unit 12 had never sustained any damage from flooding. This held true even during a “100-year storm in 2014.” After a significant rainstorm in August 2018, he personally inspected the drainage easement and “did not see any water in it.”

Origin of Vegetation: Mr. Kaplan stated that the builder had originally planted the vegetation in the drainage easement that was shown in the Petitioner’s photographic evidence.

Proactive Communication: To address the Petitioner’s concerns, the Board instructed its management company to act. Letters were sent to the relevant homeowners on April 18, 2018, and July 19, 2018, reminding them of their responsibility to keep the easement free of obstructions.

Jurisdictional Confirmation: Mr. Kaplan contacted officials from the Maricopa County Flood Control District and the Town of Cave Creek. Both agencies confirmed the drainage area was not on any official floodplain map, and therefore, the Association was “solely responsible” for its maintenance and enforcement.

Contradictory Evidence: The Association submitted a June 22, 2018 email from the Petitioner’s wife, Debborah Sellers, which directly contradicted the Petitioner’s claims. She wrote, “There has never been any issue with the storm drain behind our house and it is not a major disclosure item… Stop making something out of nothing.” She also referred to his claims as “nonsense.”

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IV. Analysis of Governing CC&Rs

The dispute centered on the interpretation of specific sections of the Rancho Madera CC&Rs. The judges in both hearings analyzed these sections to determine the respective duties of the homeowners and the Association.

Section

Provision Summary

Key Language

Establishes a perpetual “Drainage Easement” over the eastern five feet of Units 9 through 18 for stormwater conveyance.

“…for the purpose of constructing, maintaining, repairing and replacing a drainage channel…”

3.10.2

Assigns the primary maintenance duty to the individual unit owners within the easement area.

“Each Unit Owner of a Drainage Easement Unit shall keep his Drainage Easement Area Free of weeds and other debris so that the stormwater can flow freely… No Improvement… shall be… allowed to grow… that may… impede the flow of water…”

3.10.4

Defines the Association’s role in the event of damage resulting from a unit owner’s failure to maintain the easement.

“If the failure of one Unit Owner to maintain his Drainage Easement Area… results in damage… the Association shall repair or replace such damage… and the cost… shall be paid by the Unit Owner that caused the damage…”

13.1.1

Grants the Association the power to enforce the CC&Rs.

“The Association shall have the right to enforce, by any proceeding at law or in equity, all restrictions, conditions, covenants…”

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V. Administrative Law Judge Decisions and Rationale

The Petitioner’s case was heard twice and denied both times, with the second decision providing a definitive interpretation of the Association’s duties under the CC&Rs.

Initial Decision (December 26, 2018)

Presiding Judge: Diane Mihalsky

Conclusion: The Petitioner failed to meet his burden of proof “by a preponderance of the evidence.”

Rationale: The judge found a critical failure in the Petitioner’s evidence. While he successfully “established that there are some plants and chicken wire in the stormwater drainage canal,” he “did not establish that the plants or chicken wire impede the flow of water.” The Respondent, in contrast, successfully established that the channel had always “functioned as intended” and that “Unit 12 has never flooded.” The judge concluded there was “no unreasonable risk that Unit 12 will flood.”

Order: The petition was denied.

Rehearing and Final Decision (May 10, 2019)

Presiding Judge: Tammy L. Eigenheer

Context: The rehearing was granted based on the Petitioner’s claims of procedural irregularities and legal errors in the first hearing.

Petitioner’s Refined Argument: During the rehearing, the Petitioner argued that the Association’s right to enforce the CC&Rs (under Section 13.1.1) becomes an obligation when safety and property values are affected.

Conclusion: The petition was dismissed.

Rationale: The final decision hinged on a strict interpretation of the CC&Rs. The judge determined that the documents create a clear hierarchy of responsibility:

1. Unit Owners: Bear the primary responsibility for keeping the easement clear (Section 3.10.2).

2. The Association: Has a responsibility to act only after damage occurs due to an owner’s failure, at which point it must repair the damage and bill the responsible owner (Section 3.10.4).

Final Legal Interpretation: The judge concluded, “While Respondent has the right to enforce the requirements that the Unit Owners keep the Drainage Easement Area clear, nothing in the CC&Rs provides that Respondent has an obligation to do so.” The petition was dismissed because the Petitioner could not prove the Association had violated any actual obligation laid out in the governing documents. This decision was issued as final and binding on the parties.






Study Guide – 19F-H1918010-REL-RHG


Study Guide: Case No. 19F-H1918010-REL, Sellers v. Rancho Madera Condominium Association

This guide provides a detailed review of the administrative legal proceedings between Petitioner John A. Sellers and Respondent Rancho Madera Condominium Association. It is designed to assess comprehension of the case’s facts, legal arguments, and procedural history.

Short-Answer Quiz

Answer each question in 2-3 sentences based on the information provided in the source documents.

1. What was the central allegation John A. Sellers filed against the Rancho Madera Condominium Association on August 23, 2018?

2. Identify the specific sections of the Covenants, Conditions, and Restrictions (CC&Rs) that were central to the dispute.

3. Who is responsible for maintaining the Drainage Easement Area according to CC&R § 3.10.2?

4. What actions did the Association’s management company take in response to the Petitioner’s concerns?

5. What was the testimony of Jeffrey Kaplan, the Association’s President, regarding the history of flooding at Rancho Madera?

6. Why did the Commissioner of the Department of Real Estate grant the Petitioner’s request for a rehearing?

7. What was the procedural outcome of Petitioner Sellers’ attempt to submit supplemental arguments after the April 15, 2019, rehearing?

8. How did Administrative Law Judge Tammy L. Eigenheer distinguish between a “right to enforce” and an “obligation to enforce” in her final decision?

9. What evidence did the Petitioner present to support his claim that the drainage channel was at risk of clogging?

10. What was the final ruling in the Administrative Law Judge Decision dated May 10, 2019?

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Answer Key

1. Petitioner John A. Sellers alleged that the Association had violated its CC&Rs, specifically § 3.10, by failing to require condominium owners to remove vegetation and fencing materials from the stormwater channel. Sellers claimed this failure created a risk of flooding for his unit.

2. The central CC&R sections were § 3.10, which establishes the stormwater drainage easement; § 3.10.2, which outlines the maintenance responsibilities of Unit Owners; § 3.10.4, which details the Association’s role in repairing damages; and § 13.1.1, which grants the Association the right to enforce the CC&Rs.

3. According to CC&R § 3.10.2, each individual Unit Owner of a Drainage Easement Unit is responsible for keeping their respective Drainage Easement Area free of weeds and other debris. The text explicitly states that no improvements, including plants, should be allowed that might impede the flow of water.

4. To address the Petitioner’s concerns, the Association’s management company sent letters to the owners of the Drainage Easement Units on April 18, 2018, and July 19, 2018. These letters reminded the owners of their responsibility to keep the easement area clear of obstructions and debris.

5. Jeffrey Kaplan testified that he bought one of the first units in 2012 and that water has never entered Rancho Madera from the east. He specifically noted that no flooding occurred even during the 100-year storm in 2014, and that after a significant rainstorm in August 2018, he inspected the easement and saw no water in it.

6. The Commissioner granted the Rehearing Request “for the reasons outlined in the Petitioners’ Rehearing Request.” The request itself alleged irregularity in the proceedings, newly discovered evidence, errors in the admission of evidence, and that the original decision was arbitrary, capricious, or contrary to law.

7. After the rehearing concluded, the Petitioner submitted supplemental authority and argument. The Respondent argued this filing was untimely, and Administrative Law Judge Tammy L. Eigenheer ordered the filing to be stricken from the record and closed the record on May 7, 2019.

8. Judge Eigenheer’s decision concluded that while the Association has the right to enforce the CC&Rs under § 13.1.1, nothing in the documents creates an obligation for it to proactively do so regarding maintenance. The only obligation specified is to repair damage after it occurs, with the cost being billed to the responsible unit owner.

9. The Petitioner provided photographs showing large succulents, shrubs, and cacti growing in the rip rap of the Drainage Easement Area. He also showed at least one instance where chicken wire had been placed across the channel to contain a pet, testifying that these items could catch storm debris and cause a clog.

10. The final ruling, issued on May 10, 2019, was that the Petitioner failed to establish by a preponderance of the evidence that the Respondent violated Section 3.10 of the CC&Rs. Therefore, the petition was dismissed, and no action was required of the Respondent.

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Essay Questions

Construct detailed essay responses to the following prompts, drawing exclusively from the provided source documents to support your analysis.

1. Trace the complete procedural history of case No. 19F-H1918010-REL from the initial petition to the final order. Detail the key dates, presiding judges, significant filings, and the outcome of each stage of the proceedings.

2. Analyze the legal reasoning used by the Administrative Law Judges in both the initial decision (December 26, 2018) and the rehearing decision (May 10, 2019). Compare and contrast their interpretations of the CC&Rs and the standard of “preponderance of the evidence.”

3. Evaluate the evidence and arguments presented by both the Petitioner, John A. Sellers, and the Respondent, represented by Jeffrey Kaplan. What were the strengths and weaknesses of each party’s case as detailed in the hearing summaries?

4. Discuss the roles and responsibilities of the Unit Owners versus the Condominium Association as defined by CC&R Sections 3.10, 3.10.2, 3.10.4, and 13.1.1. How did the interpretation of these sections ultimately determine the outcome of the case?

5. Examine the external factors mentioned in the hearings, such as the Petitioner’s divorce, the market value of his unit, and communications with the Maricopa County Flood Control District. How did the Administrative Law Judge address these issues and determine their relevance (or irrelevance) to the central legal question?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An independent judge who presides over administrative hearings at the Office of Administrative Hearings. In this case, Diane Mihalsky presided over the initial hearing and Tammy L. Eigenheer presided over the rehearing.

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents that set forth the rules for the Rancho Madera condominium development.

Common Elements

Areas within the condominium development designed for common use, such as areas for stormwater conveyance mentioned in the CC&Rs.

Drainage Easement Area

The eastern five feet of Units 9 through 18, over which a perpetual non-exclusive drainage easement was created for the purpose of stormwater drainage.

Drainage Improvements

The drainage channel constructed within the Drainage Easement Area, which may consist of decomposed granite, rip rap (large stones), or concrete.

Office of Administrative Hearings (OAH)

An independent state agency in Arizona that conducts evidentiary hearings for other state agencies, such as the Department of Real Estate.

Petitioner

The party who files a petition initiating a legal case. In this matter, the Petitioner is John A. Sellers.

Preponderance of the Evidence

The standard of proof in this administrative hearing. It is defined as evidence that is sufficient to incline a fair and impartial mind to one side of an issue rather than the other, making the contention more probably true than not.

Respondent

The party against whom a petition is filed. In this matter, the Respondent is the Rancho Madera Condominium Association.

Restrictive Covenant

A provision in a deed or other legal document that limits the use of a property. The CC&Rs in this case are a form of restrictive covenant.

Unit Owner

An individual who owns a condominium unit within the development and is a member of the owners’ association.






Blog Post – 19F-H1918010-REL-RHG


I Read an Entire HOA Lawsuit. Here Are 4 Shocking Lessons About Power, Rules, and Reality.

The Anatomy of a Neighborhood War

Living under a Homeowner’s Association (HOA) often means navigating a complex world of rules, regulations, and neighborhood politics. For most, disagreements are minor annoyances. But sometimes, a seemingly small issue can escalate into a full-blown legal war.

This is the story of one homeowner’s single-minded crusade against his HOA over a stormwater drainage channel he believed was a serious flooding risk. After filing a formal petition, the dispute escalated into a multi-stage legal battle that spanned nearly a year. The official court documents reveal that even after a judge ruled decisively against him, the homeowner doubled down, demanding a rare rehearing.

A deep dive into this protracted case reveals a fascinating and cautionary tale. The legal reasoning that ultimately settled the matter highlights several surprising lessons that apply to anyone living in a planned community.

1. Proving a Rule Was Broken Isn’t the Same as Proving Harm

The initial hearing, held before Administrative Law Judge Diane Mihalsky in late 2018, centered on a seemingly straightforward argument from the petitioner, John Sellers. He pointed out that his neighbors had placed plants—including large succulents, shrubs, and cacti—as well as chicken wire in a stormwater drainage channel. This, he argued, was a clear violation of the community’s Covenants, Conditions, and Restrictions (CC&Rs), which stated that no improvement “shall be constructed, installed or allowed to grow… that may… impede the flow of water.”

But in her December 26, 2018 decision, the judge ruled against him. While Sellers successfully proved the obstructions existed, he failed to meet the legal burden of proof that they actually “impede the flow of water.” His claim was defeated by testimony from the HOA President, Jeffrey Kaplan, who stated that the unit had never sustained any flood damage, not even during a “100-year storm in 2014.”

The lesson from this first round is stark: in this legal context, simply pointing out a technical rule break was not enough. The petitioner had to prove that the violation was causing a tangible, negative impact. Without evidence of actual harm or impeded water flow, the theoretical risk was insufficient to win the case.

2. An HOA’s “Right” to Enforce Is Not an “Obligation”

After losing the first round on a question of evidence, Sellers’ argument evolved. He requested a rehearing, which was granted, and the case landed before a new judge, Tammy L. Eigenheer, in the spring of 2019. This shifted the legal focus from physical proof of impeded water flow to a more fundamental question of the HOA’s duties.

Sellers argued that because safety and property values were at stake, the association had a duty to enforce the CC&Rs and compel his neighbors to clear the drainage channel. He contended that at a certain point, an organization’s “right” to act becomes an “obligation.”

The judge’s final decision on May 10, 2019, was clear, absolute, and is where the most powerful lesson of the entire case lies.

“While Respondent has the right to enforce the requirements that the Unit Owners keep the Drainage Easement Area clear, nothing in the CC&Rs provides that Respondent has an obligation to do so.”

This distinction is critical for any homeowner. An HOA can possess the legal power to act but may not be legally compelled to use it. According to the judge’s interpretation, the governing documents placed the responsibility for keeping the channel clear on the individual unit owners. The association’s only stated obligation was to repair damage after it happened, with the cost being billed back to the responsible party.

3. Outside Conflicts Can Cast a Long Shadow

Legal disputes are rarely just about the facts of the case. During the initial hearing, it was revealed that the petitioner was going through a “contentious divorce” and that the condo unit at the center of the dispute was a community asset being sold by the court.

The most dramatic evidence, however, came from an email written by the petitioner’s own wife, Debborah Sellers. The email, submitted as evidence by the HOA, directly undermined his claims about the severity of the drainage issue.

“There has never been any issue with the storm drain behind our house and it is not a major disclosure item… Stop making something out of nothing. AND I HOPE YOU AREN[’]T FREAKING POTENTIAL BUYERS AND OTHER REALTORS WITH THIS NONSENSE.”

In her decision, Judge Mihalsky officially stated that the divorce was “not relevant” to the technical question of whether the HOA violated the CC&Rs. However, she immediately added that the situation “cast a long shadow over his administrative complaint,” suggesting that the personal context, and especially the damaging email, severely harmed the petitioner’s credibility.

4. Writing Letters Isn’t the Same as Being Heard

Throughout the dispute, the petitioner made his concerns known by writing “many letters” to the HOA president. He was persistent in his written communications, attempting to force the issue onto the association’s radar.

Yet, this effort was contrasted with a notable lack of direct participation. According to the testimony of HOA President Kaplan during the first hearing, Sellers “never attended any of Respondent’s noticed Board meetings” where his concerns could have been discussed among the board members.

The HOA’s response to his letters was limited; it sent two general reminder letters to all residents in the affected area but did not take direct enforcement action against any specific homeowner. The practical takeaway is that to effect change or be taken seriously in an HOA dispute, visibility and participation are critical. Writing letters is a start, but attending official meetings to present a case in person can be a more effective strategy for ensuring an issue is formally addressed.

A Cautionary Tale for Any Homeowner

What began as a seemingly straightforward complaint about drainage and rule enforcement devolved into a legal battle that consumed nearly a year, involving two multi-day hearings before two different administrative law judges. The petitioner lost his case on the evidence, then lost it again on the law.

It serves as a potent cautionary tale, demonstrating that in the world of HOA disputes, the obvious path is not always the winning one. It leaves every homeowner with a final, thought-provoking question to ponder: When you see a problem in your community, how do you decide if a fight is worth the cost—not just in money, but in time, credibility, and peace?


Case Participants

Petitioner Side

  • John A Sellers (petitioner)
    Appeared on his own behalf

Respondent Side

  • Edward D. O'Brien (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC/LLP
  • Edith I. Rudder (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC/LLP
  • Jeffrey Kaplan (board president/witness)
    Rancho Madera Condominium Association
    President of Respondent, testified

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
    ALJ for initial proceedings
  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
    ALJ for rehearing proceedings
  • Judy Lowe (commissioner (ADRE))
    Arizona Department of Real Estate
  • LDettorre (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • AHansen (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • djones (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • DGardner (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • ncano (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • c. serrano (clerk)
    Office of Administrative Hearings
    Transmittal/filing clerk
  • F. Del Sol (clerk)
    Office of Administrative Hearings
    Transmittal/filing clerk

Other Participants

  • Debborah Sellers (witness/spouse)
    Petitioner's wife, testimony via email submitted by Respondent

John A Sellers v. Rancho Madera Condominium Association

Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.

Case Summary

Case ID 19F-H1918010-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2019-05-10
Administrative Law Judge Tammy L. Eigenheer
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John A Sellers Counsel
Respondent Rancho Madera Condominium Association Counsel Edward D. O'Brien, Edith I. Rudder

Alleged Violations

CC&Rs § 3.10, 3.10.2, 3.10.4

Outcome Summary

The Administrative Law Judge dismissed the petition following a rehearing, concluding that the Petitioner failed to meet the burden of proof by establishing that the Respondent HOA violated its CC&Rs. The governing documents grant the HOA the right, but not the obligation, to enforce maintenance duties specifically assigned to Unit Owners concerning the drainage easement.

Why this result: Petitioner failed to establish by a preponderance of the evidence that the Respondent violated the CC&Rs because the HOA was found to have a right to enforce maintenance of the drainage easement, but not a mandatory obligation to do so under the terms of the CC&Rs.

Key Issues & Findings

HOA failure to enforce unit owner maintenance obligations regarding stormwater drainage easement

Petitioner alleged that the Respondent HOA violated the CC&Rs by failing to enforce unit owner responsibility to keep the stormwater drainage area free of obstructions like vegetation and fencing materials, potentially causing a risk of flooding to his unit.

Orders: The petition was dismissed. The Administrative Law Judge determined that the CC&Rs assign Unit Owners the responsibility to clear the drainage area and grant the HOA the right, but not an obligation, to enforce this maintenance.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 32-2199.01
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
  • BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Lookout Mountain Paradise Hills Homeowners’ Ass’n v. Viewpoint Assocs., 867 P.2d 70, 75 (Colo. App. 1993)

Analytics Highlights

Topics: HOA, CC&Rs, Drainage Easement, Enforcement Obligation, Condominium Unit Owner
Additional Citations:

  • A.R.S. § 32-2199.01
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 41-1092.08(H)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Lookout Mountain Paradise Hills Homeowners’ Ass’n v. Viewpoint Assocs., 867 P.2d 70, 75 (Colo. App. 1993)

Video Overview

Audio Overview

Decision Documents

19F-H1918010-REL-RHG Decision – 706533.pdf

Uploaded 2026-01-23T17:26:28 (42.2 KB)

19F-H1918010-REL-RHG Decision – 707530.pdf

Uploaded 2026-01-23T17:26:34 (111.5 KB)

19F-H1918010-REL-RHG Decision – ../19F-H1918010-REL/667122.pdf

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19F-H1918010-REL-RHG Decision – ../19F-H1918010-REL/678371.pdf

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Briefing Doc – 19F-H1918010-REL-RHG


Dispute Analysis: Sellers vs. Rancho Madera Condominium Association

Executive Summary

This briefing document synthesizes the legal proceedings and outcomes of a dispute between homeowner John A. Sellers (Petitioner) and the Rancho Madera Condominium Association (Respondent). The core of the conflict was Mr. Sellers’ allegation that the Association violated its Covenants, Conditions, and Restrictions (CC&Rs) by failing to compel other homeowners to remove vegetation and fencing from a common stormwater drainage channel, thereby creating a flood risk to his property, Unit 12.

The case was adjudicated by the Arizona Office of Administrative Hearings (OAH) in a process that included an initial hearing, a decision, a granted request for rehearing, and a final binding decision. In both instances, the Administrative Law Judge ruled against the Petitioner.

The initial decision, issued in December 2018, concluded that Mr. Sellers failed to provide sufficient evidence that the materials in the channel actually impeded water flow or posed an unreasonable flood risk. The ruling highlighted that the channel had functioned as intended since 2012 without any flooding incidents. Following a rehearing in April 2019, the second and final decision in May 2019 reinforced this conclusion. It further clarified a crucial distinction in the CC&Rs: while the Association possesses the right to enforce maintenance rules upon homeowners, the governing documents do not impose an explicit obligation to do so proactively before any damage has occurred. The responsibility for maintaining the drainage area rests with the individual unit owners, and the Association’s primary duty is to repair damages after the fact, billing the responsible owner. The petition was ultimately dismissed.

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I. Case Overview

This case documents a formal complaint filed by a homeowner against his condominium association, which was resolved through the Arizona Department of Real Estate and the Office of Administrative Hearings.

Case Number: 19F-H1918010-REL

Petitioner: John A. Sellers, owner of Unit 12 in Rancho Madera

Respondent: Rancho Madera Condominium Association, a 46-unit development in Cave Creek, Arizona.

Venue: Arizona Office of Administrative Hearings (OAH)

Key Chronology of Events

Aug 23, 2018

Petitioner files a single-issue petition with the Arizona Department of Real Estate.

Oct 23, 2018

An OAH order vacates the initial hearing after the Petitioner indicates a wish to withdraw the petition.

Nov 5, 2018

The first evidentiary hearing convenes, indicating the withdrawal was rescinded.

Dec 12, 2018

The first evidentiary hearing concludes.

Dec 26, 2018

Administrative Law Judge Diane Mihalsky issues a decision denying the petition.

Feb 1, 2019

Petitioner files a Rehearing Request with the Commissioner of the Department of Real Estate.

Feb 22, 2019

The Commissioner grants the Rehearing Request.

Apr 15, 2019

The rehearing convenes and concludes before Administrative Law Judge Tammy L. Eigenheer.

May 7, 2019

OAH issues an order striking a supplemental, post-hearing filing by the Petitioner from the record.

May 10, 2019

Judge Eigenheer issues a final Administrative Law Judge Decision, again dismissing the petition.

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II. Petitioner’s Core Allegation

Mr. Sellers’ petition was based on a single issue: the alleged violation of Section 3.10 of the Association’s CC&Rs.

The Violation: The Petitioner claimed the Association failed in its duty to require owners of “Drainage Easement Units” to remove obstructions from a shared stormwater channel.

The Obstructions: The materials of concern included “large succulents, shrubs, and cacti” growing in the drainage area’s rip-rap, as well as chicken wire that at least one owner had installed to contain a pet.

The Perceived Risk: Mr. Sellers testified that these items “could catch storm debris and cause the drainage channel to become clogged,” leading to a risk of flooding for his Unit 12. He submitted videos of heavy rains and flooding in other parts of Cave Creek as evidence of the potential danger.

Financial Impact Claim: The Petitioner was undergoing a contentious divorce, and Unit 12, as a community asset, was for sale under a court order. He asserted that the unresolved drainage issue and his required disclosure of the dispute had reduced the unit’s market price by $40,000.

——————————————————————————–

III. Respondent’s Position and Actions

The Rancho Madera Condominium Association, represented by its President, Jeffrey Kaplan, denied any violation of the CC&Rs and presented a multi-faceted defense.

Lack of Historical Precedent: Mr. Kaplan, an owner since 2012, testified that water had never entered the property from the east, and Unit 12 had never sustained any damage from flooding. This held true even during a “100-year storm in 2014.” After a significant rainstorm in August 2018, he personally inspected the drainage easement and “did not see any water in it.”

Origin of Vegetation: Mr. Kaplan stated that the builder had originally planted the vegetation in the drainage easement that was shown in the Petitioner’s photographic evidence.

Proactive Communication: To address the Petitioner’s concerns, the Board instructed its management company to act. Letters were sent to the relevant homeowners on April 18, 2018, and July 19, 2018, reminding them of their responsibility to keep the easement free of obstructions.

Jurisdictional Confirmation: Mr. Kaplan contacted officials from the Maricopa County Flood Control District and the Town of Cave Creek. Both agencies confirmed the drainage area was not on any official floodplain map, and therefore, the Association was “solely responsible” for its maintenance and enforcement.

Contradictory Evidence: The Association submitted a June 22, 2018 email from the Petitioner’s wife, Debborah Sellers, which directly contradicted the Petitioner’s claims. She wrote, “There has never been any issue with the storm drain behind our house and it is not a major disclosure item… Stop making something out of nothing.” She also referred to his claims as “nonsense.”

——————————————————————————–

IV. Analysis of Governing CC&Rs

The dispute centered on the interpretation of specific sections of the Rancho Madera CC&Rs. The judges in both hearings analyzed these sections to determine the respective duties of the homeowners and the Association.

Section

Provision Summary

Key Language

Establishes a perpetual “Drainage Easement” over the eastern five feet of Units 9 through 18 for stormwater conveyance.

“…for the purpose of constructing, maintaining, repairing and replacing a drainage channel…”

3.10.2

Assigns the primary maintenance duty to the individual unit owners within the easement area.

“Each Unit Owner of a Drainage Easement Unit shall keep his Drainage Easement Area Free of weeds and other debris so that the stormwater can flow freely… No Improvement… shall be… allowed to grow… that may… impede the flow of water…”

3.10.4

Defines the Association’s role in the event of damage resulting from a unit owner’s failure to maintain the easement.

“If the failure of one Unit Owner to maintain his Drainage Easement Area… results in damage… the Association shall repair or replace such damage… and the cost… shall be paid by the Unit Owner that caused the damage…”

13.1.1

Grants the Association the power to enforce the CC&Rs.

“The Association shall have the right to enforce, by any proceeding at law or in equity, all restrictions, conditions, covenants…”

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V. Administrative Law Judge Decisions and Rationale

The Petitioner’s case was heard twice and denied both times, with the second decision providing a definitive interpretation of the Association’s duties under the CC&Rs.

Initial Decision (December 26, 2018)

Presiding Judge: Diane Mihalsky

Conclusion: The Petitioner failed to meet his burden of proof “by a preponderance of the evidence.”

Rationale: The judge found a critical failure in the Petitioner’s evidence. While he successfully “established that there are some plants and chicken wire in the stormwater drainage canal,” he “did not establish that the plants or chicken wire impede the flow of water.” The Respondent, in contrast, successfully established that the channel had always “functioned as intended” and that “Unit 12 has never flooded.” The judge concluded there was “no unreasonable risk that Unit 12 will flood.”

Order: The petition was denied.

Rehearing and Final Decision (May 10, 2019)

Presiding Judge: Tammy L. Eigenheer

Context: The rehearing was granted based on the Petitioner’s claims of procedural irregularities and legal errors in the first hearing.

Petitioner’s Refined Argument: During the rehearing, the Petitioner argued that the Association’s right to enforce the CC&Rs (under Section 13.1.1) becomes an obligation when safety and property values are affected.

Conclusion: The petition was dismissed.

Rationale: The final decision hinged on a strict interpretation of the CC&Rs. The judge determined that the documents create a clear hierarchy of responsibility:

1. Unit Owners: Bear the primary responsibility for keeping the easement clear (Section 3.10.2).

2. The Association: Has a responsibility to act only after damage occurs due to an owner’s failure, at which point it must repair the damage and bill the responsible owner (Section 3.10.4).

Final Legal Interpretation: The judge concluded, “While Respondent has the right to enforce the requirements that the Unit Owners keep the Drainage Easement Area clear, nothing in the CC&Rs provides that Respondent has an obligation to do so.” The petition was dismissed because the Petitioner could not prove the Association had violated any actual obligation laid out in the governing documents. This decision was issued as final and binding on the parties.






Study Guide – 19F-H1918010-REL-RHG


Study Guide: Case No. 19F-H1918010-REL, Sellers v. Rancho Madera Condominium Association

This guide provides a detailed review of the administrative legal proceedings between Petitioner John A. Sellers and Respondent Rancho Madera Condominium Association. It is designed to assess comprehension of the case’s facts, legal arguments, and procedural history.

Short-Answer Quiz

Answer each question in 2-3 sentences based on the information provided in the source documents.

1. What was the central allegation John A. Sellers filed against the Rancho Madera Condominium Association on August 23, 2018?

2. Identify the specific sections of the Covenants, Conditions, and Restrictions (CC&Rs) that were central to the dispute.

3. Who is responsible for maintaining the Drainage Easement Area according to CC&R § 3.10.2?

4. What actions did the Association’s management company take in response to the Petitioner’s concerns?

5. What was the testimony of Jeffrey Kaplan, the Association’s President, regarding the history of flooding at Rancho Madera?

6. Why did the Commissioner of the Department of Real Estate grant the Petitioner’s request for a rehearing?

7. What was the procedural outcome of Petitioner Sellers’ attempt to submit supplemental arguments after the April 15, 2019, rehearing?

8. How did Administrative Law Judge Tammy L. Eigenheer distinguish between a “right to enforce” and an “obligation to enforce” in her final decision?

9. What evidence did the Petitioner present to support his claim that the drainage channel was at risk of clogging?

10. What was the final ruling in the Administrative Law Judge Decision dated May 10, 2019?

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Answer Key

1. Petitioner John A. Sellers alleged that the Association had violated its CC&Rs, specifically § 3.10, by failing to require condominium owners to remove vegetation and fencing materials from the stormwater channel. Sellers claimed this failure created a risk of flooding for his unit.

2. The central CC&R sections were § 3.10, which establishes the stormwater drainage easement; § 3.10.2, which outlines the maintenance responsibilities of Unit Owners; § 3.10.4, which details the Association’s role in repairing damages; and § 13.1.1, which grants the Association the right to enforce the CC&Rs.

3. According to CC&R § 3.10.2, each individual Unit Owner of a Drainage Easement Unit is responsible for keeping their respective Drainage Easement Area free of weeds and other debris. The text explicitly states that no improvements, including plants, should be allowed that might impede the flow of water.

4. To address the Petitioner’s concerns, the Association’s management company sent letters to the owners of the Drainage Easement Units on April 18, 2018, and July 19, 2018. These letters reminded the owners of their responsibility to keep the easement area clear of obstructions and debris.

5. Jeffrey Kaplan testified that he bought one of the first units in 2012 and that water has never entered Rancho Madera from the east. He specifically noted that no flooding occurred even during the 100-year storm in 2014, and that after a significant rainstorm in August 2018, he inspected the easement and saw no water in it.

6. The Commissioner granted the Rehearing Request “for the reasons outlined in the Petitioners’ Rehearing Request.” The request itself alleged irregularity in the proceedings, newly discovered evidence, errors in the admission of evidence, and that the original decision was arbitrary, capricious, or contrary to law.

7. After the rehearing concluded, the Petitioner submitted supplemental authority and argument. The Respondent argued this filing was untimely, and Administrative Law Judge Tammy L. Eigenheer ordered the filing to be stricken from the record and closed the record on May 7, 2019.

8. Judge Eigenheer’s decision concluded that while the Association has the right to enforce the CC&Rs under § 13.1.1, nothing in the documents creates an obligation for it to proactively do so regarding maintenance. The only obligation specified is to repair damage after it occurs, with the cost being billed to the responsible unit owner.

9. The Petitioner provided photographs showing large succulents, shrubs, and cacti growing in the rip rap of the Drainage Easement Area. He also showed at least one instance where chicken wire had been placed across the channel to contain a pet, testifying that these items could catch storm debris and cause a clog.

10. The final ruling, issued on May 10, 2019, was that the Petitioner failed to establish by a preponderance of the evidence that the Respondent violated Section 3.10 of the CC&Rs. Therefore, the petition was dismissed, and no action was required of the Respondent.

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Essay Questions

Construct detailed essay responses to the following prompts, drawing exclusively from the provided source documents to support your analysis.

1. Trace the complete procedural history of case No. 19F-H1918010-REL from the initial petition to the final order. Detail the key dates, presiding judges, significant filings, and the outcome of each stage of the proceedings.

2. Analyze the legal reasoning used by the Administrative Law Judges in both the initial decision (December 26, 2018) and the rehearing decision (May 10, 2019). Compare and contrast their interpretations of the CC&Rs and the standard of “preponderance of the evidence.”

3. Evaluate the evidence and arguments presented by both the Petitioner, John A. Sellers, and the Respondent, represented by Jeffrey Kaplan. What were the strengths and weaknesses of each party’s case as detailed in the hearing summaries?

4. Discuss the roles and responsibilities of the Unit Owners versus the Condominium Association as defined by CC&R Sections 3.10, 3.10.2, 3.10.4, and 13.1.1. How did the interpretation of these sections ultimately determine the outcome of the case?

5. Examine the external factors mentioned in the hearings, such as the Petitioner’s divorce, the market value of his unit, and communications with the Maricopa County Flood Control District. How did the Administrative Law Judge address these issues and determine their relevance (or irrelevance) to the central legal question?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An independent judge who presides over administrative hearings at the Office of Administrative Hearings. In this case, Diane Mihalsky presided over the initial hearing and Tammy L. Eigenheer presided over the rehearing.

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents that set forth the rules for the Rancho Madera condominium development.

Common Elements

Areas within the condominium development designed for common use, such as areas for stormwater conveyance mentioned in the CC&Rs.

Drainage Easement Area

The eastern five feet of Units 9 through 18, over which a perpetual non-exclusive drainage easement was created for the purpose of stormwater drainage.

Drainage Improvements

The drainage channel constructed within the Drainage Easement Area, which may consist of decomposed granite, rip rap (large stones), or concrete.

Office of Administrative Hearings (OAH)

An independent state agency in Arizona that conducts evidentiary hearings for other state agencies, such as the Department of Real Estate.

Petitioner

The party who files a petition initiating a legal case. In this matter, the Petitioner is John A. Sellers.

Preponderance of the Evidence

The standard of proof in this administrative hearing. It is defined as evidence that is sufficient to incline a fair and impartial mind to one side of an issue rather than the other, making the contention more probably true than not.

Respondent

The party against whom a petition is filed. In this matter, the Respondent is the Rancho Madera Condominium Association.

Restrictive Covenant

A provision in a deed or other legal document that limits the use of a property. The CC&Rs in this case are a form of restrictive covenant.

Unit Owner

An individual who owns a condominium unit within the development and is a member of the owners’ association.






Blog Post – 19F-H1918010-REL-RHG


I Read an Entire HOA Lawsuit. Here Are 4 Shocking Lessons About Power, Rules, and Reality.

The Anatomy of a Neighborhood War

Living under a Homeowner’s Association (HOA) often means navigating a complex world of rules, regulations, and neighborhood politics. For most, disagreements are minor annoyances. But sometimes, a seemingly small issue can escalate into a full-blown legal war.

This is the story of one homeowner’s single-minded crusade against his HOA over a stormwater drainage channel he believed was a serious flooding risk. After filing a formal petition, the dispute escalated into a multi-stage legal battle that spanned nearly a year. The official court documents reveal that even after a judge ruled decisively against him, the homeowner doubled down, demanding a rare rehearing.

A deep dive into this protracted case reveals a fascinating and cautionary tale. The legal reasoning that ultimately settled the matter highlights several surprising lessons that apply to anyone living in a planned community.

1. Proving a Rule Was Broken Isn’t the Same as Proving Harm

The initial hearing, held before Administrative Law Judge Diane Mihalsky in late 2018, centered on a seemingly straightforward argument from the petitioner, John Sellers. He pointed out that his neighbors had placed plants—including large succulents, shrubs, and cacti—as well as chicken wire in a stormwater drainage channel. This, he argued, was a clear violation of the community’s Covenants, Conditions, and Restrictions (CC&Rs), which stated that no improvement “shall be constructed, installed or allowed to grow… that may… impede the flow of water.”

But in her December 26, 2018 decision, the judge ruled against him. While Sellers successfully proved the obstructions existed, he failed to meet the legal burden of proof that they actually “impede the flow of water.” His claim was defeated by testimony from the HOA President, Jeffrey Kaplan, who stated that the unit had never sustained any flood damage, not even during a “100-year storm in 2014.”

The lesson from this first round is stark: in this legal context, simply pointing out a technical rule break was not enough. The petitioner had to prove that the violation was causing a tangible, negative impact. Without evidence of actual harm or impeded water flow, the theoretical risk was insufficient to win the case.

2. An HOA’s “Right” to Enforce Is Not an “Obligation”

After losing the first round on a question of evidence, Sellers’ argument evolved. He requested a rehearing, which was granted, and the case landed before a new judge, Tammy L. Eigenheer, in the spring of 2019. This shifted the legal focus from physical proof of impeded water flow to a more fundamental question of the HOA’s duties.

Sellers argued that because safety and property values were at stake, the association had a duty to enforce the CC&Rs and compel his neighbors to clear the drainage channel. He contended that at a certain point, an organization’s “right” to act becomes an “obligation.”

The judge’s final decision on May 10, 2019, was clear, absolute, and is where the most powerful lesson of the entire case lies.

“While Respondent has the right to enforce the requirements that the Unit Owners keep the Drainage Easement Area clear, nothing in the CC&Rs provides that Respondent has an obligation to do so.”

This distinction is critical for any homeowner. An HOA can possess the legal power to act but may not be legally compelled to use it. According to the judge’s interpretation, the governing documents placed the responsibility for keeping the channel clear on the individual unit owners. The association’s only stated obligation was to repair damage after it happened, with the cost being billed back to the responsible party.

3. Outside Conflicts Can Cast a Long Shadow

Legal disputes are rarely just about the facts of the case. During the initial hearing, it was revealed that the petitioner was going through a “contentious divorce” and that the condo unit at the center of the dispute was a community asset being sold by the court.

The most dramatic evidence, however, came from an email written by the petitioner’s own wife, Debborah Sellers. The email, submitted as evidence by the HOA, directly undermined his claims about the severity of the drainage issue.

“There has never been any issue with the storm drain behind our house and it is not a major disclosure item… Stop making something out of nothing. AND I HOPE YOU AREN[’]T FREAKING POTENTIAL BUYERS AND OTHER REALTORS WITH THIS NONSENSE.”

In her decision, Judge Mihalsky officially stated that the divorce was “not relevant” to the technical question of whether the HOA violated the CC&Rs. However, she immediately added that the situation “cast a long shadow over his administrative complaint,” suggesting that the personal context, and especially the damaging email, severely harmed the petitioner’s credibility.

4. Writing Letters Isn’t the Same as Being Heard

Throughout the dispute, the petitioner made his concerns known by writing “many letters” to the HOA president. He was persistent in his written communications, attempting to force the issue onto the association’s radar.

Yet, this effort was contrasted with a notable lack of direct participation. According to the testimony of HOA President Kaplan during the first hearing, Sellers “never attended any of Respondent’s noticed Board meetings” where his concerns could have been discussed among the board members.

The HOA’s response to his letters was limited; it sent two general reminder letters to all residents in the affected area but did not take direct enforcement action against any specific homeowner. The practical takeaway is that to effect change or be taken seriously in an HOA dispute, visibility and participation are critical. Writing letters is a start, but attending official meetings to present a case in person can be a more effective strategy for ensuring an issue is formally addressed.

A Cautionary Tale for Any Homeowner

What began as a seemingly straightforward complaint about drainage and rule enforcement devolved into a legal battle that consumed nearly a year, involving two multi-day hearings before two different administrative law judges. The petitioner lost his case on the evidence, then lost it again on the law.

It serves as a potent cautionary tale, demonstrating that in the world of HOA disputes, the obvious path is not always the winning one. It leaves every homeowner with a final, thought-provoking question to ponder: When you see a problem in your community, how do you decide if a fight is worth the cost—not just in money, but in time, credibility, and peace?


Case Participants

Petitioner Side

  • John A Sellers (petitioner)
    Appeared on his own behalf

Respondent Side

  • Edward D. O'Brien (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC/LLP
  • Edith I. Rudder (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC/LLP
  • Jeffrey Kaplan (board president/witness)
    Rancho Madera Condominium Association
    President of Respondent, testified

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
    ALJ for initial proceedings
  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
    ALJ for rehearing proceedings
  • Judy Lowe (commissioner (ADRE))
    Arizona Department of Real Estate
  • LDettorre (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • AHansen (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • djones (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • DGardner (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • ncano (ADRE staff)
    Arizona Department of Real Estate
    Recipient of official orders
  • c. serrano (clerk)
    Office of Administrative Hearings
    Transmittal/filing clerk
  • F. Del Sol (clerk)
    Office of Administrative Hearings
    Transmittal/filing clerk

Other Participants

  • Debborah Sellers (witness/spouse)
    Petitioner's wife, testimony via email submitted by Respondent

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Decision Documents

19F-H1919044-REL-RHG Decision – 733509.pdf

Uploaded 2026-01-09T17:24:55 (38.6 KB)

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Pointe Tapatio Community Association v. Lanye C. and Devin E. Willey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Pointe Tapatio Community Association vs. Lanye C. and Devin E. Wilkey

Case Summary

Case ID 19F-H1919044-REL
Agency ADRE
Tribunal OAH
Decision Date 2019-05-07
Administrative Law Judge Thomas Shedden
Outcome partial
Filing Fees Refunded $0.00
Civil Penalties $500.00

Parties & Counsel

Petitioner Pointe Tapatio Community Association Counsel Lauren Vie
Respondent Lanye C. Wilkey and Devin E. Wilkey Counsel Joseph Velez

Alleged Violations

CC&R Article 3, section 3.1

Outcome Summary

The ALJ found that the Respondents violated the CC&Rs by operating a business that created traffic and parking. The Respondents were ordered to cease business operations and pay a $500.00 civil penalty. The Petitioner's request for a refund of its filing fee was denied.

Why this result: Petitioner's request for refund of the filing fee was denied because they cited no authority showing that the refund was within the tribunal’s authority.

Key Issues & Findings

Violation of Residential Use covenant prohibiting traffic/parking generation by business

The Petitioner HOA alleged that the Respondents, co-owners of the unit, violated CC&Rs Article 3, section 3.1 by operating a payroll processing company out of the unit. The ALJ found that the business required two employees to drive to the unit daily, thereby creating traffic and parking, which clearly and unambiguously violates the CC&R provision prohibiting non-residential use that creates traffic or parking.

Orders: Respondents were ordered to cease business operations at the unit (720 E. North Lane, Unit 1) within thirty-five days to comply with CC&R Article 3, section 3.1, and pay a civil penalty of $500.00 to the Department of Real Estate within sixty days. The Petitioner's request for refund of the filing fee was denied.

Filing fee: $0.00, Fee refunded: No, Civil penalty: $500.00

Disposition: petitioner_win

Cited:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Analytics Highlights

Topics: HOA, CC&Rs, Business Use, Home Business, Parking, Traffic, Civil Penalty
Additional Citations:

  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)
  • Johnson v. The Pointe Community Association, 205 Ariz. 485, 73 P.3d 616 (App. 2003)
  • Powell v. Washburn, 211 Ariz. 553, 556 ¶ 9, 125 P.3d 373, 376 (2006)
  • Grubb & Ellis Management Services, Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 138 P.3d 1210 (App. 2006)
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. section 32-2199.04
  • ARIZ. REV. STAT. section 41-1092.09

Video Overview

Audio Overview

Decision Documents

19F-H1919044-REL Decision – 706518.pdf

Uploaded 2025-10-09T03:34:04 (36.5 KB)

19F-H1919044-REL Decision – 706560.pdf

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Briefing Doc – 19F-H1919044-REL


Administrative Hearing Briefing: Pointe Tapatio Community Association vs. Wilkey

Executive Summary

This document details the findings and decision of an administrative law judge in the case of Pointe Tapatio Community Association versus residents Layne C. and Devin E. Wilkey. The core issue was the operation of a payroll processing company, Devau Human Resources, from the Wilkeys’ residential unit. The Association alleged this violated community CC&Rs, which prohibit non-residential uses that create traffic or parking. The Wilkeys admitted that two employees commuted to the unit daily but argued they had received permission from a former property manager.

The judge found in favor of the Association, concluding that the daily commute of two employees constituted the creation of “traffic and parking,” a direct and unambiguous violation of the CC&Rs. The judge deemed the residents’ claims of verbal permission to be unsubstantiated and irrelevant, as the covenant’s language was clear. Consequently, the judge ordered the Wilkeys to cease all business operations at the unit within 35 days and imposed a civil penalty of $500.

——————————————————————————–

Case Overview

Case Name

Pointe Tapatio Community Association, Petitioner, vs. Lanye C. Wilkey and Devin E. Wilkey, Respondent.

Case Number

19F-H1919044-REL

Jurisdiction

Office of Administrative Hearings (Arizona Department of Real Estate)

Hearing Date

April 26, 2019

Decision Date

May 7, 2019

Administrative Law Judge

Thomas Shedden

Petitioner’s Counsel

Lauren Vie, Esq.

Respondent’s Counsel

Joseph Velez, Esq.

——————————————————————————–

Central Allegation and Governing Covenant

The Pointe Tapatio Community Association (Petitioner) alleged that Layne C. Wilkey and Devin E. Wilkey (Respondents) violated the community’s Covenants, Conditions, and Restrictions (CC&Rs) by using their residential unit as an office for their business.

The specific provision at issue is Article 3, Section 3.1 of the CC&Rs, which states:

“Residential. Each Residence shall be used, improved, and devoted exclusively to first class residential use, and no gainful occupation, profession, trade, business, religion, or other non-residential use which creates traffic [or] parking … shall be conducted from any Residence [or part thereof.]”

——————————————————————————–

Key Findings of Fact

The Business Operation

Respondents: Layne C. Wilkey (mother) and Devin E. Wilkey (son) are co-owners of the unit at 720 E. North Lane, Unit 1 (Lot 50).

Company: They own and operate Devau Human Resources, a payroll processing company, from this unit. The business also operates from a second, commercial site in Tempe.

History: The business was moved into the residential unit from a commercial location in late 2009.

Public Presence: Devau’s website and Google Maps both list the 720 E. North Lane address as an office location, with stated office hours from 9:00 a.m. to 5:00 p.m., Monday through Friday. The website notes it is a “mailing address only.”

Admission: Ms. Wilkey acknowledged during testimony that they consider the unit to be an office.

Employee Activity and Impact

• The Wilkeys acknowledged that two Devau employees commute to the unit to work.

• One employee works from 9:30 a.m. to 4:00 p.m., Monday through Thursday.

• A second employee works from 9:30 a.m. to 5:00 p.m., Monday through Friday.

• These employees at times park their vehicles on the community’s streets.

• The business does not have clients or customers who visit the unit.

The Dispute Over Permission

Respondents’ Claim: The Wilkeys asserted they had permission to operate the business from Howard Flisser, a former property manager. They admitted they had no written confirmation and had never spoken to Mr. Flisser directly about it.

◦ Ms. Wilkey testified that in 2009, she asked her husband, who asked a salesperson, who then allegedly asked Mr. Flisser and relayed that it was permissible.

◦ Mr. Wilkey testified that his now-deceased father would not have taken the risk of moving the business without permission.

Petitioner’s Rebuttal: Board member Paula Duistermars testified that Mr. Flisser stated a few days before the hearing that he could not recall giving permission and, on two occasions during the conversation, volunteered that he had never given permission.

Authority: Ms. Duistermars also testified that Mr. Flisser lacked the authority to grant such permission; only the Board of Directors could do so.

Association’s Stance and Actions

Notification: Through a letter dated August 8, 2018, the Association informed the Wilkeys of the violation and required compliance by August 31, 2018.

Petition: The Association filed the petition that initiated the hearing on or about January 17, 2019.

Other Businesses: The Association permits certain home-based businesses that do not generate traffic or parking, such as telecommuting and online teaching, without requiring Board permission.

Complaints: Ms. Duistermars acknowledged she was unaware of any specific complaints regarding traffic, parking, or noise from the Wilkeys’ unit. However, she testified that the Board was first made aware of the business operation when another resident brought the issue to its attention.

——————————————————————————–

Legal Analysis and Conclusions

Standard of Proof: The judge determined all issues based on a “preponderance of the evidence,” defined as evidence with the most convincing force.

CC&Rs as Contract: The CC&Rs are a legally binding contract between the Association and the residents.

Unambiguous Language: The judge found the language in CC&R Article 3, Section 3.1 to be clear and unambiguous. Such covenants must be enforced to give effect to the parties’ original intent.

Direct Violation: The judge concluded that the evidence overwhelmingly showed the Wilkeys were operating a business from their unit. The admission that two employees drive to the unit and park on the street proves that the business creates both traffic and parking.

Violation Trigger: The creation of any traffic or parking by the business is sufficient to constitute a violation. The CC&R does not require that the traffic or parking cause a secondary violation or generate resident complaints. Therefore, the lack of other complaints was deemed to have little probative value.

Final Conclusion: Based on the facts, the Wilkeys are in clear violation of CC&R Article 3, Section 3.1.

——————————————————————————–

Final Order and Penalties

Based on the findings of fact and conclusions of law, the Administrative Law Judge issued the following orders:

1. Compliance Order: Respondent Layne C. Wilkey and Devin E. Wilkey must cease all business operations at 720 E. North Lane, Unit 1 (Lot 50) within thirty-five (35) days of the Order’s effective date.

2. Civil Penalty: The Respondents must pay a civil penalty of $500.00 to the Department of Real Estate within sixty (60) days of the Order’s effective date. Payment must be made by cashier’s check or money order.

3. Filing Fee: The Petitioner’s request for a refund of its filing fee was denied, as the judge found no legal authority to grant it.

The Order is binding unless a request for rehearing is filed with the Commissioner of the Department of Real Estate within 30 days of service.






Study Guide – 19F-H1919044-REL


Study Guide:Pointe Tapatio Community Association v. Wilkey

This guide provides a comprehensive overview of the administrative law case Pointe Tapatio Community Association v. Wilkey, Case No. 19F-H1919044-REL, heard before the Arizona Office of Administrative Hearings. It details the central conflict, the arguments presented by both parties, the legal standards applied, and the final judgment.

Case Summary

The Pointe Tapatio Community Association (Petitioner) filed a complaint against homeowners Layne C. Wilkey and Devin E. Wilkey (Respondent), alleging that they were violating the community’s Covenants, Conditions, and Restrictions (CC&Rs) by operating a business, Devau Human Resources, from their residential unit. The Association argued that the business, which employed two individuals who commuted to the property, generated traffic and parking, explicitly prohibited by the CC&Rs for non-residential activities. The Wilkeys contended they had received verbal permission years prior and that the business was not disruptive. The Administrative Law Judge found in favor of the Association, ruling that the Wilkeys were in clear violation of the community’s governing documents.

Key Parties & Entities

Name / Entity

Key Actions & Involvement

Pointe Tapatio Community Association

Petitioner

The homeowners’ association that filed the petition alleging a CC&R violation. Represented by Lauren Vie, Esq.

Layne C. Wilkey & Devin E. Wilkey

Respondent

Mother and son, co-owners of the unit at 720 E. North Lane, Unit 1. Operators of Devau Human Resources. Represented by Joseph Velez, Esq.

Thomas Shedden

Administrative Law Judge (ALJ)

Presided over the hearing, made findings of fact, drew conclusions of law, and issued the final order.

Arizona Department of Real Estate

Regulatory Body

Issued the initial Notice of Hearing and has legal authority over such disputes under ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11.

Paula Duistermars

Board Member, Pointe Tapatio

Testified on behalf of the Association, detailing the Board’s position and interactions regarding the violation.

Howard Flisser

Property Manager (Former or Current)

Named by the Wilkeys as the source of verbal permission to operate their business; Flisser denied recalling this.

Devau Human Resources

Business Entity

A payroll processing company owned by the Wilkeys, operating out of the residential unit and a commercial site in Tempe.

Office of Administrative Hearings

Adjudicative Body

The venue for the hearing, located at 1740 West Adams Street, Lower Level, in Phoenix, Arizona.

Case Timeline

Late 2009: The Wilkeys move their business, Devau Human Resources, from a commercial location into their unit at Pointe Tapatio.

August 8, 2018: Pointe Tapatio sends a letter informing the Wilkeys they are out of compliance with the CC&Rs and must comply by August 31, 2018.

January 17, 2019 (approx.): Pointe Tapatio files a petition with the Arizona Department of Real Estate.

February 28, 2019: The Arizona Department of Real Estate issues a Notice of Hearing.

April 26, 2019: The administrative hearing is held before ALJ Thomas Shedden.

May 7, 2019: ALJ Thomas Shedden issues the final decision and order.

Central Conflict: CC&R Article 3, Section 3.1

The core of the dispute revolved around the interpretation and enforcement of a specific restrictive covenant within the community’s governing documents.

The Allegation: Pointe Tapatio alleged that the Wilkeys were using their unit as an office for a “gainful occupation,” which is not a “first class residential use.”

The Specific Provision: Article 3, Section 3.1 of the CC&Rs states:

The Triggering Condition: The prohibition is not absolute. It applies specifically to non-residential uses that create traffic or parking.

Arguments and Evidence

Arguments & Evidence Presented

Petitioner (Pointe Tapatio)

  • Employee Activity: The Wilkeys acknowledged two employees drive to the unit to work Monday through Friday, creating traffic and parking on community streets.
  • Public Information: Devau’s website and Google Maps listed the residential unit as an office address with set business hours (9:00 a.m. to 5:00 p.m.).
  • Owner Admission: Ms. Wilkey acknowledged during testimony that they consider the unit to be an office.
  • Lack of Authority: Board member Paula Duistermars testified that property manager Howard Flisser did not have the authority to grant permission for a business; only the Board could. She also testified that Flisser could not recall giving permission and had volunteered that he never did.

Respondent (The Wilkeys)

  • Verbal Permission: The Wilkeys claimed they received verbal permission from property manager Howard Flisser in 2009. They admitted they never spoke to him directly and had nothing in writing.
  • Implied Permission: Mr. Wilkey argued his father would not have taken the risk of moving the payroll business without permission, implying it must have been granted.
  • No Direct Complaints: It was acknowledged that the Association was not aware of specific complaints filed against the Wilkeys for traffic, parking, or noise issues.
  • Residential Use: Mr. Wilkey testified that he considers the unit one of his two primary residences, though he did not provide a responsive answer when asked how often he stayed there.

The Judge’s Decision & Legal Reasoning

ALJ Thomas Shedden concluded that the Wilkeys were in violation of the CC&Rs based on a “preponderance of the evidence.”

• The Wilkeys operate Devau Human Resources, a payroll processing company, from the unit.

• Two employees commute to the unit for work and sometimes park on community streets.

• The business is publicly listed at the residential address.

• The Wilkeys’ claim of verbal permission from Howard Flisser was not substantiated. Testimony from Paula Duistermars indicated Flisser could not recall, and in fact denied, giving such permission.

• The Association does permit some home businesses (e.g., telecommuting, online teaching) that do not create traffic or parking and do not require Board permission.

1. CC&Rs as a Contract: The CC&Rs constitute a binding contract between the homeowners and the Association.

2. Unambiguous Language: The language in Article 3, section 3.1 is clear and unambiguous. It prohibits businesses that create traffic or parking.

3. Violation Proven: The evidence clearly showed the Wilkeys’ business created both traffic and parking due to its two commuting employees. This is a direct violation of the unambiguous terms of the CC&R.

4. No Other Violation Needed: The fact that no other rules (e.g., specific parking ordinances) were broken is irrelevant. The creation of any traffic or parking by the business is sufficient to trigger the violation as written.

1. Cease Operations: The Wilkeys were ordered to comply with CC&R Article 3, section 3.1 by ceasing business operations at the unit within 35 days.

2. Civil Penalty: The Wilkeys were ordered to pay a civil penalty of $500.00 to the Department of Real Estate within 60 days.

3. Filing Fee Request Denied: The Association’s request to have its filing fee refunded was denied because it cited no legal authority showing the judge had the power to grant it.

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Answer the following questions in 2-3 complete sentences based on the information in the case file.

1. Who were the petitioner and the respondents in this case, and what was their relationship?

2. What specific activity led the petitioner to claim the respondents were violating the CC&Rs?

3. According to Article 3, section 3.1, what condition makes a non-residential use of a property a violation?

4. What was the respondents’ primary defense for operating their business from the unit?

5. Why did the Administrative Law Judge find the respondents’ primary defense unconvincing?

6. What two specific pieces of evidence demonstrated that the business created traffic and parking?

7. What is the legal standard of proof required in this type of administrative hearing, and what does it mean?

8. What two penalties were imposed on the Wilkeys in the final order?

9. Does the Pointe Tapatio Community Association prohibit all home-based businesses? Explain.

10. Who was Howard Flisser, and what was his significance to the respondents’ case?

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Answer Key

1. The petitioner was the Pointe Tapatio Community Association. The respondents were Layne C. Wilkey and Devin E. Wilkey, who were homeowners within the community and co-owners of the unit in question.

2. The Wilkeys were operating their payroll processing company, Devau Human Resources, out of their residential unit. This included having two employees commute to the property to work during business hours.

3. A non-residential use becomes a violation if it “creates traffic [or] parking.” The rule does not require a certain amount of traffic or parking, only that it is created by the business activity.

4. The respondents’ primary defense was that they had received verbal permission to operate the business from the community’s property manager, Howard Flisser, back in 2009.

5. The judge found the defense unconvincing because the Wilkeys had no written proof, had not spoken to Mr. Flisser directly, and testimony from a board member indicated Mr. Flisser could not recall—and later denied—ever giving such permission. Furthermore, the property manager likely lacked the authority to grant it.

6. The evidence was the Wilkeys’ own acknowledgement that two of their employees drive to the unit to work on a weekly basis. This commuting by non-resident employees necessarily creates traffic and, at times, requires them to park on community streets.

7. The standard of proof is a “preponderance of the evidence.” This means the greater weight of the evidence must be sufficient to incline a fair and impartial mind to one side of the issue over the other, even if it does not remove all reasonable doubt.

8. The Wilkeys were ordered to cease all business operations at the unit within 35 days. They were also ordered to pay a civil penalty of $500.00 to the Department of Real Estate within 60 days.

9. No, the association does not prohibit all home-based businesses. It allows for activities like telecommuting and teaching online classes, which do not require board permission because they do not create traffic or parking.

10. Howard Flisser was the property manager whom the Wilkeys claimed gave them verbal permission to run their business. His significance was central to their defense, but his alleged permission was unsubstantiated and contradicted by later testimony.

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Essay Questions

The following questions are designed for longer-form analysis. No answers are provided.

1. Analyze the concept of “preponderance of the evidence” as applied in this case. How did the evidence presented by Pointe Tapatio meet this standard, while the Wilkeys’ evidence did not?

2. Discuss the legal principle that CC&Rs are treated as contracts. Explain how Judge Shedden applied contract law principles, particularly regarding “unambiguous” language, to reach his conclusion.

3. Evaluate the Wilkeys’ defense strategy, focusing on their claim of verbal permission from Howard Flisser. Why was this argument legally insufficient? What kind of evidence would have been necessary to make it successful?

4. Examine the distinction the Pointe Tapatio Community Association makes between permissible home-based businesses (like telecommuting) and impermissible ones (like Devau Human Resources). What is the key factor in this distinction according to the CC&Rs, and how does it relate to the core purpose of residential covenants?

5. Based on the judge’s order, discuss the remedies available to a homeowner’s association in Arizona when a CC&R violation is proven. What penalties were imposed, and what penalty was requested but denied?

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Glossary of Key Terms

Administrative Law Judge (ALJ): A judge and trier of fact who presides over administrative hearings, such as disputes handled by the Office of Administrative Hearings. The ALJ renders decisions, called orders, based on evidence and legal arguments.

CC&Rs (Covenants, Conditions, and Restrictions): The governing legal documents that set out the rules for a planned community or subdivision. In this case, they are treated as a legally binding contract between the association and the homeowners.

Civil Penalty: A monetary fine levied by a government agency or administrative court for a violation of a statute or rule. In this case, a $500 penalty was imposed on the Wilkeys for violating the community documents.

Conclusions of Law: The section of a judicial decision where the judge applies legal principles and statutes to the established facts of the case to reach a judgment.

Findings of Fact: The section of a judicial decision that formally lists the factual determinations made by the judge based on the evidence presented at the hearing.

Order: The final ruling or judgment issued by an Administrative Law Judge that directs the parties on what actions they must take.

Petitioner: The party who initiates a legal action or files a petition seeking a legal remedy. In this case, the Pointe Tapatio Community Association.

Preponderance of the Evidence: The standard of proof in most civil and administrative cases. It requires the trier of fact to believe that it is more likely than not that a claim is true, based on the evidence presented.

Respondent: The party against whom a petition is filed or an appeal is brought. In this case, Layne C. Wilkey and Devin E. Wilkey.






Blog Post – 19F-H1919044-REL


4 Surprising Lessons from an HOA Lawsuit That Shut Down a 10-Year-Old Home Business

Introduction: The Rise of the Home Office and the Rules You Didn’t Know Existed

In an age where the line between the living room and the corner office has all but vanished, millions of us have embraced working from home. But as we settle into our home-based routines, a critical question often goes unasked: Are you truly familiar with your homeowner’s association (HOA) rules regarding home-based businesses?

For the Wilkey family, owners of Devau Human Resources, the answer to that question proved to be a costly one. After operating their payroll processing company from their home for nearly a decade without a single complaint, they found themselves in a legal battle that ultimately shut them down. Their case serves as a powerful cautionary tale about what can happen when long-standing home businesses collide with the fine print of HOA rules.

1. It’s Not About Complaints, It’s About the Contract

One of the most chilling lessons from the Wilkey case is that the HOA’s action wasn’t triggered by angry neighbors complaining about noise or traffic. In fact, Board member Paula Duistermars testified that she was unaware of any such complaints. The issue arose simply because “a resident brought the issue to [the Board’s] attention.”

This reveals a crucial legal reality: your business’s existence, not its impact, can be the sole trigger for enforcement. It doesn’t take a chorus of angry neighbors—just one person notifying the Board of a potential rule violation is enough. The Covenants, Conditions, and Restrictions (CC&Rs) are a legally binding contract, and the court’s decision was not based on whether the business was a nuisance, but simply whether it complied with the contract’s terms. Your takeaway: You must operate as if the rulebook will be enforced literally, because it can be.

2. The Deciding Factor: A Single Clause About “Traffic and Parking”

The entire legal dispute hinged on the precise wording of one specific rule. The HOA wasn’t enforcing a vague, blanket ban on all home businesses; its power came from a single, carefully worded clause in the CC&Rs.

The relevant section, Article 3, section 3.1, stated:

“Each Residence shall be used, improved, and devoted exclusively to first class residential use, and no gainful occupation, profession, trade, business, religion, or other non-residential use which creates traffic [or] parking … shall be conducted from any Residence [or part thereof.]”

As a legal analyst, I can tell you why this clause was so powerful: its focus on a tangible impact (“creates traffic [or] parking”) made it highly defensible. A blanket prohibition on “all businesses” might be open to challenge, but this specific, impact-based rule was nearly impossible to argue against once the facts were established. The Wilkeys’ business was found in violation specifically because it created traffic and parking, which is also why the HOA permitted other home businesses, like telecommuting, that did not.

3. Your Two-Person TeamIsa Traffic Problem

Many homeowners assume that business traffic rules are meant to prevent a steady stream of clients visiting a residential property. The Wilkeys had no clients come to their unit. However, this did not protect them.

The undisputed fact that proved decisive was that two of the company’s employees commuted to the home to work—one from Monday to Thursday and the other from Monday to Friday. The judge concluded that this daily employee commute constituted the creation of “traffic and parking” as prohibited by the CC&Rs. The employees at times parking on the community’s common streets provided concrete, undeniable evidence of this. This case sets a precedent that a micro-business with just one or two employees commuting to the home can be deemed in violation—a scenario many entrepreneurs wouldn’t even consider a “traffic” issue.

4. “He Said We Could” Is Not a Legal Defense

The Wilkeys asserted that they had received verbal permission to operate their business from the property manager back in 2009. This defense completely fell apart under legal scrutiny.

Courts prioritize written agreements and official board actions over “he said/she said” accounts, especially when they involve multi-level hearsay (in this case, a husband asking a salesperson who asked the manager). The defense failed for several clear reasons: the Wilkeys had no written proof, the manager denied recalling or ever giving such permission, and most importantly, a Board member testified that the manager lacked the authority to grant this permission anyway. Only the Board could.

The takeaway is unambiguous: Never rely on verbal assurances. Get all permissions from your HOA Board in writing, or they do not legally exist.

Conclusion: Know Your Rules Before You Unpack Your Desk

The story of the Wilkey family is a stark reminder that HOA documents are not mere suggestions; they are legally binding contracts where every word matters. The Wilkeys’ experience is a costly lesson for every home-based professional. Proactive compliance is your only true protection. The final outcome was an order for them to cease all business operations from their home within 35 days and pay a $500 civil penalty.

You might have been working from home for years without a problem, but have you ever read the fine print on what your community actually allows?


Case Participants

Petitioner Side

  • Lauren Vie (HOA attorney)
    Attorney for Petitioner
  • Paula Duistermars (board member)
    Pointe Tapatio Community Association
    Presented testimony for Petitioner
  • Beth Mulchay (HOA attorney)
    Mulchay Law Firm, P.C.
    Listed on transmission list

Respondent Side

  • Layne C. Wilkey (respondent)
  • Devin E. Wilkey (respondent)
  • Joseph A Velez (respondent attorney)
    For Respondent

Neutral Parties

  • Thomas Shedden (ALJ)
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate

Other Participants

  • Howard Flisser (property manager)
    Statements regarding alleged business permission were discussed
  • Felicia Del Sol (unknown)