Category Archives: HOA Cases

Thomas P. Satterlee vs. Green Valley Country Club Vistas II Property

Posted on July 6, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716018-REL, 17F-H1716022-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-07-07
Administrative Law Judge	Suzanne Marwil
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Thomas Satterlee	Counsel	—
Respondent	Green Valley Country Club Vistas II Property Owners Association	Counsel	James Robles

Alleged Violations

A.R.S. § 33-1802(4)

Outcome Summary

The Petitions were dismissed with prejudice because the Respondent, Green Valley Country Club Vistas II Property Owners Association, did not meet the statutory definition of a 'planned community' under A.R.S. § 33-1802(4), thereby denying the Office of Administrative Hearings and the Department of Real Estate subject matter jurisdiction.

Why this result: Lack of subject matter jurisdiction based on the statutory definition of a 'planned community'.

Key Issues & Findings

Subject Matter Jurisdiction regarding definition of Planned Community

The Respondent moved to vacate claiming the Office of Administrative Hearings lacked subject matter jurisdiction because the Association was not a planned community as defined by A.R.S. § 33-1802(4). The Respondent did not own or operate real estate or have a roadway easement or covenant. The ALJ agreed that OAH lacked jurisdiction.

Orders: The Petitions in these consolidated matters are recommended to be dismissed with prejudice. This recommendation was adopted as a Final Order by the Commissioner.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 33-1802(4)
• Ariz. Bd. of Regents for & on Behalf of Univ. of Ariz. v. State ex rel. State of Ariz. Pub. Safety Ret. Fund Manager Adm’r
• Swichtenberg v. Jack Brimer

Analytics Highlights

Topics: jurisdiction, planned community definition, A.R.S. 33-1802(4), dismissal with prejudice

Additional Citations:

• A.R.S. § 33-1802
• Sunrise Desert Vistas v. Salas

Audio Overview

Decision Documents

17F-H1716018-REL Decision – 574052.pdf

Uploaded 2025-10-08T06:49:57 (91.5 KB)

17F-H1716018-REL Decision – 575056.pdf

Uploaded 2025-10-08T06:49:57 (566.7 KB)

Briefing Document: Satterlee v. Green Valley Country Club Vistas II POA

Executive Summary

This briefing document analyzes the administrative legal proceedings in the case of Thomas Satterlee versus the Green Valley Country Club Vistas II Property Owners Association (POA). The central issue was a successful jurisdictional challenge by the Respondent POA, leading to the dismissal of petitions filed by Mr. Satterlee.

The Administrative Law Judge (ALJ) and the Arizona Department of Real Estate Commissioner concluded that they lacked subject matter jurisdiction because the Respondent POA does not meet the statutory definition of a “planned community” under Arizona Revised Statutes (A.R.S.) § 33-1802(4). This definition requires an association to own and operate real estate or hold an easement or covenant to maintain roadways. Both parties agreed that the Respondent POA did not meet these criteria.

The Petitioner’s arguments—that jurisdiction should be inferred from a prior case and from the Respondent’s own community documents—were rejected. The ALJ’s decision emphasized the legal principle that subject matter jurisdiction is dictated by statute, cannot be waived by parties, and cannot be conferred by estoppel or prior administrative oversight. The petitions were ultimately dismissed with prejudice, with the Petitioner retaining the right to pursue action in a court of competent jurisdiction.

Case Overview

This matter involves consolidated petitions brought before the Arizona Office of Administrative Hearings (OAH) and finalized by the Arizona Department of Real Estate.

Parties and Legal Representation

Representation

Petitioner

Thomas Satterlee

Represented himself

Respondent

Green Valley Country Club Vistas II Property Owners Association

Represented by James Robles, Esq.

Adjudicator

Administrative Law Judge Suzanne Marwil

Office of Administrative Hearings

Final Authority

Commissioner Judy Lowe

Department of Real Estate

Note: The Petitioner argued that Mr. Robles was not authorized to represent the Respondent. The ALJ determined that the filing of a Notice of Appearance was sufficient for the proceeding and that concerns over the propriety of the representation could be addressed in another forum.

Case Identification

Identifier

Details

Consolidated OAH Numbers

17F-H1716022-REL & 17F-H1716018-REL

Consolidated Dept. of Real Estate Docket Numbers

17F-H1716022-REL & 17F-H1716018-REL

Consolidated Dept. of Real Estate Case Numbers

HO 17-16/022 & HO 17-16/018

Key Dates

• March 15, 2017: Respondent files a motion to vacate, challenging subject matter jurisdiction.

• June 27, 2017: Oral argument held on the jurisdictional motion.

• July 6, 2017: ALJ Suzanne Marwil issues a decision recommending dismissal.

• July 7, 2017: Commissioner Judy Lowe issues a Final Order adopting the ALJ’s decision.

Jurisdictional Challenge and Arguments

The case pivoted from a substantive hearing to a dispositive oral argument focused exclusively on the OAH’s authority to hear the dispute.

Respondent’s Motion to Vacate

On March 15, 2017, the Respondent moved to vacate the proceedings, asserting that the OAH lacked subject matter jurisdiction. The core of this argument was that the Green Valley Country Club Vistas II POA did not qualify as a “planned community” under the definition provided in A.R.S. § 33-1802(4). The statute requires such a community’s association to either own and operate real estate or hold a roadway easement or covenant.

During the oral argument on June 27, 2017, a critical fact was established: both the Petitioner and the Respondent agreed that the association did not currently own or operate real estate or possess a roadway easement or covenant.

Petitioner’s Arguments for Jurisdiction

Despite agreeing with the central fact, the Petitioner urged the OAH to exercise jurisdiction based on two main arguments:

1. Prior Precedent: A former Administrative Law Judge, Douglas, had previously exercised jurisdiction over a petition filed by Mr. Satterlee against the same Respondent in docket number 15F-H1515008-BFS.

2. Community Documents: The Respondent’s own community documents contemplate being bound by the laws governing planned communities, which, the Petitioner argued, should confer jurisdiction upon the OAH.

Administrative Law Judge’s Decision and Rationale

ALJ Suzanne Marwil’s decision methodically dismantled the Petitioner’s arguments and affirmed that jurisdiction was statutorily barred.

Statutory Interpretation of “Planned Community”

The decision centered on the plain language of A.R.S. § 33-1802(4).

• The Definition: The statute defines a “planned community” as a development where an association of owners owns and operates real estate or holds an easement or covenant to maintain roadways for the purpose of managing or improving the property.

• Statutory History: The statute was amended in 2014. The ALJ noted that prior to the amendment, the definition only required ownership of real estate. However, the Respondent association failed to meet the definition under either the pre- or post-2014 versions of the law.

• Rejection of Flexible Interpretation: The ALJ rejected the Petitioner’s invitation to use the statute’s introductory phrase, “unless the context otherwise requires,” to expand the definition. Citing the appellate case Sunrise Desert Vistas v. Salas, the decision states that this phrase does not permit a court or agency to “disregard the language of a statute or the legislative intent embodied by that language.” Interpreting the statute to require ownership and operation of real property is “neither mechanical nor rigid” but simply an application of its plain meaning.

Rejection of Estoppel and Prior Case Jurisdiction

The ALJ addressed the Petitioner’s argument regarding the prior case and the non-waivable nature of subject matter jurisdiction.

• Analysis of Prior Decision: Upon reviewing the earlier decision by Judge Douglas (15F-1515008-BFS), ALJ Marwil found that while it contained “standard boilerplate language regarding jurisdiction,” the issue of subject matter jurisdiction was never raised by any party and, therefore, was not considered by the judge.

• Jurisdiction Cannot Be Waived: The decision strongly affirms a core legal doctrine: a lack of subject matter jurisdiction is a fatal flaw that cannot be waived by the parties or overlooked. The ALJ states, “Administrative decisions that reach beyond an agency’s statutory power are void.”

• Jurisdiction Cannot Be Conferred by Estoppel: Citing legal precedent (Swichtenberg v. Jack Brimer), the decision clarifies that jurisdiction cannot be conferred upon a court or agency by the estoppel of a party. The fact that the Respondent may have previously submitted to OAH jurisdiction does not grant the OAH authority where none exists by statute. As stated in the decision, “the statutes, not the parties, lay out the boundaries of administrative jurisdiction.”

Final Disposition and Order

Based on the finding that the OAH lacked jurisdiction, the following actions were taken:

• Recommendation: That the consolidated petitions be dismissed with prejudice.

• Petitioner’s Recourse: The decision explicitly noted that the Petitioner “remains free, however, to file an action in a court of competent jurisdiction as specified by Respondent’s community documents.”

• Effective Date: The order would become effective 40 days after certification by the Director of the OAH.

• Adoption of Decision: Pursuant to A.R.S. § 41-1092.08, Commissioner Judy Lowe adopted the ALJ’s decision in full.

• Final Action: The Commissioner accepted the recommendation and ordered that the petitions be dismissed with prejudice. This order constituted a final administrative action and was effective immediately.

• Further Action: The Final Order specified that it was binding unless a party requested a rehearing within 30 days. It also informed the parties of their right to appeal by filing a complaint for judicial review, noting that the order would not be stayed unless a stay was granted by the reviewing court.

Thomas P. Satterlee vs. Green Valley Country Club Vistas II Property

Posted on July 6, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716018-REL, 17F-H1716022-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-07-07
Administrative Law Judge	Suzanne Marwil
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Thomas Satterlee	Counsel	—
Respondent	Green Valley Country Club Vistas II Property Owners Association	Counsel	James Robles

Alleged Violations

A.R.S. § 33-1802(4)

Outcome Summary

The Petitions were dismissed with prejudice because the Respondent, Green Valley Country Club Vistas II Property Owners Association, did not meet the statutory definition of a 'planned community' under A.R.S. § 33-1802(4), thereby denying the Office of Administrative Hearings and the Department of Real Estate subject matter jurisdiction.

Why this result: Lack of subject matter jurisdiction based on the statutory definition of a 'planned community'.

Key Issues & Findings

Subject Matter Jurisdiction regarding definition of Planned Community

The Respondent moved to vacate claiming the Office of Administrative Hearings lacked subject matter jurisdiction because the Association was not a planned community as defined by A.R.S. § 33-1802(4). The Respondent did not own or operate real estate or have a roadway easement or covenant. The ALJ agreed that OAH lacked jurisdiction.

Orders: The Petitions in these consolidated matters are recommended to be dismissed with prejudice. This recommendation was adopted as a Final Order by the Commissioner.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 33-1802(4)
• Ariz. Bd. of Regents for & on Behalf of Univ. of Ariz. v. State ex rel. State of Ariz. Pub. Safety Ret. Fund Manager Adm’r
• Swichtenberg v. Jack Brimer

Analytics Highlights

Topics: jurisdiction, planned community definition, A.R.S. 33-1802(4), dismissal with prejudice

Additional Citations:

• A.R.S. § 33-1802
• Sunrise Desert Vistas v. Salas

Audio Overview

Decision Documents

17F-H1716018-REL Decision – 574052.pdf

Uploaded 2025-10-08T07:01:18 (91.5 KB)

17F-H1716018-REL Decision – 575056.pdf

Uploaded 2025-10-08T07:01:18 (566.7 KB)

Briefing Document: Satterlee v. Green Valley Country Club Vistas II POA

Executive Summary

This briefing document analyzes the administrative legal proceedings in the case of Thomas Satterlee versus the Green Valley Country Club Vistas II Property Owners Association (POA). The central issue was a successful jurisdictional challenge by the Respondent POA, leading to the dismissal of petitions filed by Mr. Satterlee.

The Administrative Law Judge (ALJ) and the Arizona Department of Real Estate Commissioner concluded that they lacked subject matter jurisdiction because the Respondent POA does not meet the statutory definition of a “planned community” under Arizona Revised Statutes (A.R.S.) § 33-1802(4). This definition requires an association to own and operate real estate or hold an easement or covenant to maintain roadways. Both parties agreed that the Respondent POA did not meet these criteria.

The Petitioner’s arguments—that jurisdiction should be inferred from a prior case and from the Respondent’s own community documents—were rejected. The ALJ’s decision emphasized the legal principle that subject matter jurisdiction is dictated by statute, cannot be waived by parties, and cannot be conferred by estoppel or prior administrative oversight. The petitions were ultimately dismissed with prejudice, with the Petitioner retaining the right to pursue action in a court of competent jurisdiction.

Case Overview

This matter involves consolidated petitions brought before the Arizona Office of Administrative Hearings (OAH) and finalized by the Arizona Department of Real Estate.

Parties and Legal Representation

Representation

Petitioner

Thomas Satterlee

Represented himself

Respondent

Green Valley Country Club Vistas II Property Owners Association

Represented by James Robles, Esq.

Adjudicator

Administrative Law Judge Suzanne Marwil

Office of Administrative Hearings

Final Authority

Commissioner Judy Lowe

Department of Real Estate

Note: The Petitioner argued that Mr. Robles was not authorized to represent the Respondent. The ALJ determined that the filing of a Notice of Appearance was sufficient for the proceeding and that concerns over the propriety of the representation could be addressed in another forum.

Case Identification

Identifier

Details

Consolidated OAH Numbers

17F-H1716022-REL & 17F-H1716018-REL

Consolidated Dept. of Real Estate Docket Numbers

17F-H1716022-REL & 17F-H1716018-REL

Consolidated Dept. of Real Estate Case Numbers

HO 17-16/022 & HO 17-16/018

Key Dates

• March 15, 2017: Respondent files a motion to vacate, challenging subject matter jurisdiction.

• June 27, 2017: Oral argument held on the jurisdictional motion.

• July 6, 2017: ALJ Suzanne Marwil issues a decision recommending dismissal.

• July 7, 2017: Commissioner Judy Lowe issues a Final Order adopting the ALJ’s decision.

Jurisdictional Challenge and Arguments

The case pivoted from a substantive hearing to a dispositive oral argument focused exclusively on the OAH’s authority to hear the dispute.

Respondent’s Motion to Vacate

On March 15, 2017, the Respondent moved to vacate the proceedings, asserting that the OAH lacked subject matter jurisdiction. The core of this argument was that the Green Valley Country Club Vistas II POA did not qualify as a “planned community” under the definition provided in A.R.S. § 33-1802(4). The statute requires such a community’s association to either own and operate real estate or hold a roadway easement or covenant.

During the oral argument on June 27, 2017, a critical fact was established: both the Petitioner and the Respondent agreed that the association did not currently own or operate real estate or possess a roadway easement or covenant.

Petitioner’s Arguments for Jurisdiction

Despite agreeing with the central fact, the Petitioner urged the OAH to exercise jurisdiction based on two main arguments:

1. Prior Precedent: A former Administrative Law Judge, Douglas, had previously exercised jurisdiction over a petition filed by Mr. Satterlee against the same Respondent in docket number 15F-H1515008-BFS.

2. Community Documents: The Respondent’s own community documents contemplate being bound by the laws governing planned communities, which, the Petitioner argued, should confer jurisdiction upon the OAH.

Administrative Law Judge’s Decision and Rationale

ALJ Suzanne Marwil’s decision methodically dismantled the Petitioner’s arguments and affirmed that jurisdiction was statutorily barred.

Statutory Interpretation of “Planned Community”

The decision centered on the plain language of A.R.S. § 33-1802(4).

• The Definition: The statute defines a “planned community” as a development where an association of owners owns and operates real estate or holds an easement or covenant to maintain roadways for the purpose of managing or improving the property.

• Statutory History: The statute was amended in 2014. The ALJ noted that prior to the amendment, the definition only required ownership of real estate. However, the Respondent association failed to meet the definition under either the pre- or post-2014 versions of the law.

• Rejection of Flexible Interpretation: The ALJ rejected the Petitioner’s invitation to use the statute’s introductory phrase, “unless the context otherwise requires,” to expand the definition. Citing the appellate case Sunrise Desert Vistas v. Salas, the decision states that this phrase does not permit a court or agency to “disregard the language of a statute or the legislative intent embodied by that language.” Interpreting the statute to require ownership and operation of real property is “neither mechanical nor rigid” but simply an application of its plain meaning.

Rejection of Estoppel and Prior Case Jurisdiction

The ALJ addressed the Petitioner’s argument regarding the prior case and the non-waivable nature of subject matter jurisdiction.

• Analysis of Prior Decision: Upon reviewing the earlier decision by Judge Douglas (15F-1515008-BFS), ALJ Marwil found that while it contained “standard boilerplate language regarding jurisdiction,” the issue of subject matter jurisdiction was never raised by any party and, therefore, was not considered by the judge.

• Jurisdiction Cannot Be Waived: The decision strongly affirms a core legal doctrine: a lack of subject matter jurisdiction is a fatal flaw that cannot be waived by the parties or overlooked. The ALJ states, “Administrative decisions that reach beyond an agency’s statutory power are void.”

• Jurisdiction Cannot Be Conferred by Estoppel: Citing legal precedent (Swichtenberg v. Jack Brimer), the decision clarifies that jurisdiction cannot be conferred upon a court or agency by the estoppel of a party. The fact that the Respondent may have previously submitted to OAH jurisdiction does not grant the OAH authority where none exists by statute. As stated in the decision, “the statutes, not the parties, lay out the boundaries of administrative jurisdiction.”

Final Disposition and Order

Based on the finding that the OAH lacked jurisdiction, the following actions were taken:

• Recommendation: That the consolidated petitions be dismissed with prejudice.

• Petitioner’s Recourse: The decision explicitly noted that the Petitioner “remains free, however, to file an action in a court of competent jurisdiction as specified by Respondent’s community documents.”

• Effective Date: The order would become effective 40 days after certification by the Director of the OAH.

• Adoption of Decision: Pursuant to A.R.S. § 41-1092.08, Commissioner Judy Lowe adopted the ALJ’s decision in full.

• Final Action: The Commissioner accepted the recommendation and ordered that the petitions be dismissed with prejudice. This order constituted a final administrative action and was effective immediately.

• Further Action: The Final Order specified that it was binding unless a party requested a rehearing within 30 days. It also informed the parties of their right to appeal by filing a complaint for judicial review, noting that the order would not be stayed unless a stay was granted by the reviewing court.

Thomas P. Satterlee vs. Green Valley Country Club Vistas II Property

Posted on July 6, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716018-REL, 17F-H1716022-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-07-07
Administrative Law Judge	Suzanne Marwil
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Thomas Satterlee	Counsel	—
Respondent	Green Valley Country Club Vistas II Property Owners Association	Counsel	James Robles

Alleged Violations

A.R.S. § 33-1802(4)

Outcome Summary

The Petitions were dismissed with prejudice because the Respondent, Green Valley Country Club Vistas II Property Owners Association, did not meet the statutory definition of a 'planned community' under A.R.S. § 33-1802(4), thereby denying the Office of Administrative Hearings and the Department of Real Estate subject matter jurisdiction.

Why this result: Lack of subject matter jurisdiction based on the statutory definition of a 'planned community'.

Key Issues & Findings

Subject Matter Jurisdiction regarding definition of Planned Community

The Respondent moved to vacate claiming the Office of Administrative Hearings lacked subject matter jurisdiction because the Association was not a planned community as defined by A.R.S. § 33-1802(4). The Respondent did not own or operate real estate or have a roadway easement or covenant. The ALJ agreed that OAH lacked jurisdiction.

Orders: The Petitions in these consolidated matters are recommended to be dismissed with prejudice. This recommendation was adopted as a Final Order by the Commissioner.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 33-1802(4)
• Ariz. Bd. of Regents for & on Behalf of Univ. of Ariz. v. State ex rel. State of Ariz. Pub. Safety Ret. Fund Manager Adm’r
• Swichtenberg v. Jack Brimer

Analytics Highlights

Topics: jurisdiction, planned community definition, A.R.S. 33-1802(4), dismissal with prejudice

Additional Citations:

• A.R.S. § 33-1802
• Sunrise Desert Vistas v. Salas

Audio Overview

Decision Documents

17F-H1716018-REL Decision – 574052.pdf

Uploaded 2025-10-08T06:57:06 (91.5 KB)

17F-H1716018-REL Decision – 575056.pdf

Uploaded 2025-10-08T06:57:07 (566.7 KB)

Briefing Document: Satterlee v. Green Valley Country Club Vistas II POA

Executive Summary

This briefing document analyzes the administrative legal proceedings in the case of Thomas Satterlee versus the Green Valley Country Club Vistas II Property Owners Association (POA). The central issue was a successful jurisdictional challenge by the Respondent POA, leading to the dismissal of petitions filed by Mr. Satterlee.

The Administrative Law Judge (ALJ) and the Arizona Department of Real Estate Commissioner concluded that they lacked subject matter jurisdiction because the Respondent POA does not meet the statutory definition of a “planned community” under Arizona Revised Statutes (A.R.S.) § 33-1802(4). This definition requires an association to own and operate real estate or hold an easement or covenant to maintain roadways. Both parties agreed that the Respondent POA did not meet these criteria.

The Petitioner’s arguments—that jurisdiction should be inferred from a prior case and from the Respondent’s own community documents—were rejected. The ALJ’s decision emphasized the legal principle that subject matter jurisdiction is dictated by statute, cannot be waived by parties, and cannot be conferred by estoppel or prior administrative oversight. The petitions were ultimately dismissed with prejudice, with the Petitioner retaining the right to pursue action in a court of competent jurisdiction.

Case Overview

This matter involves consolidated petitions brought before the Arizona Office of Administrative Hearings (OAH) and finalized by the Arizona Department of Real Estate.

Parties and Legal Representation

Representation

Petitioner

Thomas Satterlee

Represented himself

Respondent

Green Valley Country Club Vistas II Property Owners Association

Represented by James Robles, Esq.

Adjudicator

Administrative Law Judge Suzanne Marwil

Office of Administrative Hearings

Final Authority

Commissioner Judy Lowe

Department of Real Estate

Note: The Petitioner argued that Mr. Robles was not authorized to represent the Respondent. The ALJ determined that the filing of a Notice of Appearance was sufficient for the proceeding and that concerns over the propriety of the representation could be addressed in another forum.

Case Identification

Identifier

Details

Consolidated OAH Numbers

17F-H1716022-REL & 17F-H1716018-REL

Consolidated Dept. of Real Estate Docket Numbers

17F-H1716022-REL & 17F-H1716018-REL

Consolidated Dept. of Real Estate Case Numbers

HO 17-16/022 & HO 17-16/018

Key Dates

• March 15, 2017: Respondent files a motion to vacate, challenging subject matter jurisdiction.

• June 27, 2017: Oral argument held on the jurisdictional motion.

• July 6, 2017: ALJ Suzanne Marwil issues a decision recommending dismissal.

• July 7, 2017: Commissioner Judy Lowe issues a Final Order adopting the ALJ’s decision.

Jurisdictional Challenge and Arguments

The case pivoted from a substantive hearing to a dispositive oral argument focused exclusively on the OAH’s authority to hear the dispute.

Respondent’s Motion to Vacate

On March 15, 2017, the Respondent moved to vacate the proceedings, asserting that the OAH lacked subject matter jurisdiction. The core of this argument was that the Green Valley Country Club Vistas II POA did not qualify as a “planned community” under the definition provided in A.R.S. § 33-1802(4). The statute requires such a community’s association to either own and operate real estate or hold a roadway easement or covenant.

During the oral argument on June 27, 2017, a critical fact was established: both the Petitioner and the Respondent agreed that the association did not currently own or operate real estate or possess a roadway easement or covenant.

Petitioner’s Arguments for Jurisdiction

Despite agreeing with the central fact, the Petitioner urged the OAH to exercise jurisdiction based on two main arguments:

1. Prior Precedent: A former Administrative Law Judge, Douglas, had previously exercised jurisdiction over a petition filed by Mr. Satterlee against the same Respondent in docket number 15F-H1515008-BFS.

2. Community Documents: The Respondent’s own community documents contemplate being bound by the laws governing planned communities, which, the Petitioner argued, should confer jurisdiction upon the OAH.

Administrative Law Judge’s Decision and Rationale

ALJ Suzanne Marwil’s decision methodically dismantled the Petitioner’s arguments and affirmed that jurisdiction was statutorily barred.

Statutory Interpretation of “Planned Community”

The decision centered on the plain language of A.R.S. § 33-1802(4).

• The Definition: The statute defines a “planned community” as a development where an association of owners owns and operates real estate or holds an easement or covenant to maintain roadways for the purpose of managing or improving the property.

• Statutory History: The statute was amended in 2014. The ALJ noted that prior to the amendment, the definition only required ownership of real estate. However, the Respondent association failed to meet the definition under either the pre- or post-2014 versions of the law.

• Rejection of Flexible Interpretation: The ALJ rejected the Petitioner’s invitation to use the statute’s introductory phrase, “unless the context otherwise requires,” to expand the definition. Citing the appellate case Sunrise Desert Vistas v. Salas, the decision states that this phrase does not permit a court or agency to “disregard the language of a statute or the legislative intent embodied by that language.” Interpreting the statute to require ownership and operation of real property is “neither mechanical nor rigid” but simply an application of its plain meaning.

Rejection of Estoppel and Prior Case Jurisdiction

The ALJ addressed the Petitioner’s argument regarding the prior case and the non-waivable nature of subject matter jurisdiction.

• Analysis of Prior Decision: Upon reviewing the earlier decision by Judge Douglas (15F-1515008-BFS), ALJ Marwil found that while it contained “standard boilerplate language regarding jurisdiction,” the issue of subject matter jurisdiction was never raised by any party and, therefore, was not considered by the judge.

• Jurisdiction Cannot Be Waived: The decision strongly affirms a core legal doctrine: a lack of subject matter jurisdiction is a fatal flaw that cannot be waived by the parties or overlooked. The ALJ states, “Administrative decisions that reach beyond an agency’s statutory power are void.”

• Jurisdiction Cannot Be Conferred by Estoppel: Citing legal precedent (Swichtenberg v. Jack Brimer), the decision clarifies that jurisdiction cannot be conferred upon a court or agency by the estoppel of a party. The fact that the Respondent may have previously submitted to OAH jurisdiction does not grant the OAH authority where none exists by statute. As stated in the decision, “the statutes, not the parties, lay out the boundaries of administrative jurisdiction.”

Final Disposition and Order

Based on the finding that the OAH lacked jurisdiction, the following actions were taken:

• Recommendation: That the consolidated petitions be dismissed with prejudice.

• Petitioner’s Recourse: The decision explicitly noted that the Petitioner “remains free, however, to file an action in a court of competent jurisdiction as specified by Respondent’s community documents.”

• Effective Date: The order would become effective 40 days after certification by the Director of the OAH.

• Adoption of Decision: Pursuant to A.R.S. § 41-1092.08, Commissioner Judy Lowe adopted the ALJ’s decision in full.

• Final Action: The Commissioner accepted the recommendation and ordered that the petitions be dismissed with prejudice. This order constituted a final administrative action and was effective immediately.

• Further Action: The Final Order specified that it was binding unless a party requested a rehearing within 30 days. It also informed the parties of their right to appeal by filing a complaint for judicial review, noting that the order would not be stayed unless a stay was granted by the reviewing court.

Jason West vs. Desert Sage Two Homeowners Association

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716031-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-28
Administrative Law Judge	Diane Mihalsky
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Jason West	Counsel	—
Respondent	Desert Sage Two Homeowners Association	Counsel	Stewart F. Salwin, Esq.

Alleged Violations

Bylaw § 3.6

Outcome Summary

The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.

Why this result: Respondent established that the Board performed all reasonable actions to fill vacancies, but no eligible members were willing to serve, in part due to Petitioner's obstructionist tactics, rendering enforcement of the Bylaw impossible as it would lead to an absurdity.

Key Issues & Findings

Refusing to fill vacancies on Respondent’s Board of Directors

Petitioner alleged Respondent violated Bylaw § 3.6 by refusing to fill vacancies on the Board of Directors. The Administrative Law Judge determined that the Board had done all it could to fill vacancies, but no eligible members were willing to serve, and Bylaw § 3.6 does not empower the Board to conscript unwilling members.

Orders: Petitioner's petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
• Mail Boxes v. Industrial Comm’n of Arizona, 181 Ariz. 119, 122, 888 P.2d 777, 780 (1995)
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Analytics Highlights

Topics: HOA Board Vacancies, Bylaw 3.6, Obstructionist Tactics, Refusal to Serve

Additional Citations:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY
• Mail Boxes v. Industrial Comm’n of Arizona
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Audio Overview

Decision Documents

17F-H1716031-REL Decision – 572314.pdf

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17F-H1716031-REL Decision – 576049.pdf

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Briefing Document: West v. Desert Sage Two Homeowners Association (Case No. 17F-H1716031-REL)

Executive Summary

This briefing document analyzes the administrative hearing and final order concerning a petition filed by homeowner Jason West (“Petitioner”) against the Desert Sage Two Homeowners Association (“Respondent”). The Petitioner alleged that the HOA’s Board of Directors violated its own Bylaw § 3.6 by failing to fill vacant board positions.

The Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted as a Final Order by the Commissioner of the Arizona Department of Real Estate. The central finding was that the Respondent had made repeated and reasonable efforts to fill the vacancies but was unsuccessful due to a lack of willing and eligible candidates. The ALJ concluded that the governing bylaw mandates the appointment of willing members but does not grant the power to conscript individuals to serve against their will. Furthermore, the decision determined that the shortage of volunteers was attributable, in part, to the Petitioner’s own “obstructionist tactics,” which created a hostile and dysfunctional environment, leading to a series of board member resignations and deterring potential candidates.

Case Overview

• Case Number: 17F-H1716031-REL

• Petitioner: Jason West, a homeowner and member of the Desert Sage Two Homeowners Association.

• Respondent: Desert Sage Two Homeowners Association, representing a small community of approximately 40 homes.

• Core Allegation: On April 10, 2017, the Petitioner filed a single-issue petition alleging the Respondent violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

• Hearing Date: June 21, 2017, before Administrative Law Judge Diane Mihalsky.

• Final Disposition: The Petitioner’s petition was denied in a decision dated June 28, 2017. This decision was adopted as a Final Order by the Arizona Department of Real Estate on July 12, 2017, making it binding on the parties.

Governing Bylaw in Dispute

The central issue revolved around the interpretation of Section 3.6 of the HOA’s Bylaws, which states:

Vacancies. Vacancies on the Board caused by any reason other than the removal of a director in accordance with the provisions of Section 3.3 of these Bylaws shall be filled by a majority vote of the remaining directors at the first regular or special meeting of the Board held after the occurrence of such vacancy, even though the directors present at such meeting may constitute less than a quorum. Each person so elected shall serve the unexpired portion of the prior director’s term.

Key Parties and Witnesses

Role / Affiliation

Key Testimony / Actions

Jason West

Petitioner, Homeowner, Former Board President

Filed the petition alleging bylaw violation. Previously filed recall petitions against other board members, resigned from the board himself, and proposed a bylaw amendment that disqualified newly elected members.

Eugenia (“Gina”) Murray

Respondent’s Board President

Testified that the board made repeated efforts to find volunteers, but no one was willing to serve, citing the Petitioner’s behavior as a major cause for resignations and lack of interest.

Edward (“Eddie”) Padilla

Community Manager, National Property Service (NPS)

Testified about sending multiple email requests for board candidates on behalf of the board, which yielded no interested parties other than those who would later be disqualified.

Christina Van Soest

Former Board Member

Resigned on Feb. 8, 2017, stating, “I have found the direction of some of the board does not appear to be in the best interest of the community as a whole.” Testified she was uncomfortable with the Petitioner.

Elizabeth Mayhew

Former Board Member

Resigned on Apr. 4, 2017, citing stress directly related to the Petitioner: “I have enough stress daily with my job and cannot handle this or him. It is making me physically ill and he is not worth that.”

Myron (“Ray”) Elmer

Former Board Member

Resigned on Apr. 5, 2017, with the stated reason: “[d]ue to continued problems Jason etc.”

Korey Hjelmeir & Debra Epstein

Former Board Members

Testified for the Petitioner’s rebuttal. Both had previously resigned in June 2016 in response to the Petitioner’s recall petitions and were later disqualified from serving by a bylaw amendment he proposed.

Chronology of Board Destabilization and Resignations

The hearing evidence established a pattern of significant board turnover and dysfunction between June 2016 and June 2017.

• June 23, 2016: Board members Adrian Justiniano, Debra Epstein, and Korey Hjelmeir resigned after the Petitioner filed recall petitions against them.

• August 3, 2016: The Petitioner, June Thompson, and Christina Van Soest were elected to the Board. The Petitioner served as president.

• August 18, 2016: The Board expanded from 3 to 5 members, appointing Gina Murray and Ray Elmer.

• August 29, 2016: June Thompson resigned.

• February 8, 2017: Christina Van Soest resigned, citing the board’s direction and her discomfort with the Petitioner’s “research into members’ backgrounds and history, and the way he was making Board decisions.”

• February 18, 2017: The Petitioner resigned from the Board because he had “more important things to worry about than the management of this dysfunctional community.”

• April 4, 2017: Elizabeth Mayhew resigned, stating she could not handle the stress caused by the Petitioner and his “verbal assaults, constant lashing out, and personal attacks.”

• April 5, 2017: Ray Elmer resigned, attributing his departure to “continued problems Jason etc.” This left Gina Murray as the sole remaining board member.

Respondent’s Efforts to Fill Vacancies

The Respondent provided evidence of multiple, documented attempts to recruit new board members.

• February 23, 2017: Following the resignations of Ms. Van Soest and the Petitioner, Community Manager Eddie Padilla sent an email requesting “motivated and dedicated individuals” to serve on the Board. No one responded.

• March 31, 2017: At an open Board Meeting with “Board appointments” on the agenda, Gina Murray asked for volunteers and nominations from the floor. No one responded.

• April 4 & 18, 2017: Mr. Padilla sent two further emails requesting members interested in serving on the board to submit biographies for an upcoming annual meeting. The only individuals to respond and submit biographies were Mr. Justiniano and Ms. Hjelmeir.

• May 15, 2017: At the annual meeting, Ms. Murray again accepted nominations from the floor. Debra Epstein was nominated.

• June 5, 2017: After the newly elected board was disqualified, Mr. Padilla sent another email asking for volunteers.

Petitioner’s Actions and Their Consequences

The Administrative Law Judge’s decision identified the Petitioner’s own actions as a primary cause for the board’s inability to fill vacancies.

• Instigation of Resignations: The Petitioner’s recall petitions in June 2016 and behavior cited in the 2017 resignation letters from Van Soest, Mayhew, and Elmer directly contributed to the board vacancies.

• Contradictory Claims: The Petitioner testified that four individuals (Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti) were interested in serving. However, the sign-in sheet for the March 31, 2017 meeting, where appointments were to be made, showed none of these individuals were present.

• Disqualifying Bylaw Amendment: The Petitioner proposed a new bylaw, § 3.12, which was passed at the May 15, 2017 meeting. It stated:

• Attempted Removal of Remaining Director: On June 12, 2017, the Petitioner submitted a petition to remove Gina Murray, the last remaining original board member, which would have left the board entirely vacant.

Administrative Law Judge’s Findings and Decision

The ALJ’s conclusions of law were decisive in denying the petition.

1. Burden of Proof: The Petitioner bore the burden of proving by a preponderance of the evidence that the Respondent had violated its bylaws.

2. Interpretation of Bylaw § 3.6: The Judge ruled that while the bylaw requires the Board to appoint members to fill vacancies, “it does not empower the Board to conscript members who are not willing to serve on the Board.”

3. Principle of Absurdity: Citing legal precedent, the decision stated that bylaws must be construed to avoid an absurd result. Forcing an HOA to operate without a board because no eligible members are willing to serve, especially when the situation is exacerbated by the Petitioner, would be such an absurdity.

4. Respondent’s Due Diligence: The Judge found that “Respondent established that the Board has done all it could to fill vacancies.”

5. Petitioner’s Culpability: The final conclusion explicitly states that “at this time, no eligible members are willing to serve, in part due to Petitioner’s obstructionist tactics, including Petitioner and his claimed supporters.”

Based on these findings, the ALJ ordered that the Petitioner’s petition be denied. The order became final and binding upon adoption by the Arizona Department of Real Estate on July 12, 2017.

Mark Virden vs. Lakeside Ski Village HOA

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1717027-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-27
Administrative Law Judge	Tammy L. Eigenheer
Outcome	loss
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Mark Virden	Counsel	—
Respondent	Lakeside Ski Village HOA	Counsel	Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 33-1811
• A.R.S. § 32-2199 et seq.
• A.A.C. R2-19-119
• A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs

Additional Citations:

• A.R.S. § 33-1811
• A.R.S. § 32-2199 et seq.
• A.A.C. R2-19-119
• A.R.S. § 33-1804

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

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17F-H1717027-REL Decision – 575046.pdf

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Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.

Jason West vs. Desert Sage Two Homeowners Association

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716031-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-28
Administrative Law Judge	Diane Mihalsky
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Jason West	Counsel	—
Respondent	Desert Sage Two Homeowners Association	Counsel	Stewart F. Salwin, Esq.

Alleged Violations

Bylaw § 3.6

Outcome Summary

The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.

Why this result: Respondent established that the Board performed all reasonable actions to fill vacancies, but no eligible members were willing to serve, in part due to Petitioner's obstructionist tactics, rendering enforcement of the Bylaw impossible as it would lead to an absurdity.

Key Issues & Findings

Refusing to fill vacancies on Respondent’s Board of Directors

Petitioner alleged Respondent violated Bylaw § 3.6 by refusing to fill vacancies on the Board of Directors. The Administrative Law Judge determined that the Board had done all it could to fill vacancies, but no eligible members were willing to serve, and Bylaw § 3.6 does not empower the Board to conscript unwilling members.

Orders: Petitioner's petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
• Mail Boxes v. Industrial Comm’n of Arizona, 181 Ariz. 119, 122, 888 P.2d 777, 780 (1995)
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Analytics Highlights

Topics: HOA Board Vacancies, Bylaw 3.6, Obstructionist Tactics, Refusal to Serve

Additional Citations:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY
• Mail Boxes v. Industrial Comm’n of Arizona
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Video Overview

Audio Overview

Decision Documents

17F-H1716031-REL Decision – 572314.pdf

Uploaded 2025-10-09T03:31:24 (137.9 KB)

17F-H1716031-REL Decision – 576049.pdf

Uploaded 2025-10-09T03:31:24 (1160.4 KB)

Briefing Document: West v. Desert Sage Two Homeowners Association (Case No. 17F-H1716031-REL)

Executive Summary

This briefing document analyzes the administrative hearing and final order concerning a petition filed by homeowner Jason West (“Petitioner”) against the Desert Sage Two Homeowners Association (“Respondent”). The Petitioner alleged that the HOA’s Board of Directors violated its own Bylaw § 3.6 by failing to fill vacant board positions.

The Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted as a Final Order by the Commissioner of the Arizona Department of Real Estate. The central finding was that the Respondent had made repeated and reasonable efforts to fill the vacancies but was unsuccessful due to a lack of willing and eligible candidates. The ALJ concluded that the governing bylaw mandates the appointment of willing members but does not grant the power to conscript individuals to serve against their will. Furthermore, the decision determined that the shortage of volunteers was attributable, in part, to the Petitioner’s own “obstructionist tactics,” which created a hostile and dysfunctional environment, leading to a series of board member resignations and deterring potential candidates.

Case Overview

• Case Number: 17F-H1716031-REL

• Petitioner: Jason West, a homeowner and member of the Desert Sage Two Homeowners Association.

• Respondent: Desert Sage Two Homeowners Association, representing a small community of approximately 40 homes.

• Core Allegation: On April 10, 2017, the Petitioner filed a single-issue petition alleging the Respondent violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

• Hearing Date: June 21, 2017, before Administrative Law Judge Diane Mihalsky.

• Final Disposition: The Petitioner’s petition was denied in a decision dated June 28, 2017. This decision was adopted as a Final Order by the Arizona Department of Real Estate on July 12, 2017, making it binding on the parties.

Governing Bylaw in Dispute

The central issue revolved around the interpretation of Section 3.6 of the HOA’s Bylaws, which states:

Vacancies. Vacancies on the Board caused by any reason other than the removal of a director in accordance with the provisions of Section 3.3 of these Bylaws shall be filled by a majority vote of the remaining directors at the first regular or special meeting of the Board held after the occurrence of such vacancy, even though the directors present at such meeting may constitute less than a quorum. Each person so elected shall serve the unexpired portion of the prior director’s term.

Key Parties and Witnesses

Role / Affiliation

Key Testimony / Actions

Jason West

Petitioner, Homeowner, Former Board President

Filed the petition alleging bylaw violation. Previously filed recall petitions against other board members, resigned from the board himself, and proposed a bylaw amendment that disqualified newly elected members.

Eugenia (“Gina”) Murray

Respondent’s Board President

Testified that the board made repeated efforts to find volunteers, but no one was willing to serve, citing the Petitioner’s behavior as a major cause for resignations and lack of interest.

Edward (“Eddie”) Padilla

Community Manager, National Property Service (NPS)

Testified about sending multiple email requests for board candidates on behalf of the board, which yielded no interested parties other than those who would later be disqualified.

Christina Van Soest

Former Board Member

Resigned on Feb. 8, 2017, stating, “I have found the direction of some of the board does not appear to be in the best interest of the community as a whole.” Testified she was uncomfortable with the Petitioner.

Elizabeth Mayhew

Former Board Member

Resigned on Apr. 4, 2017, citing stress directly related to the Petitioner: “I have enough stress daily with my job and cannot handle this or him. It is making me physically ill and he is not worth that.”

Myron (“Ray”) Elmer

Former Board Member

Resigned on Apr. 5, 2017, with the stated reason: “[d]ue to continued problems Jason etc.”

Korey Hjelmeir & Debra Epstein

Former Board Members

Testified for the Petitioner’s rebuttal. Both had previously resigned in June 2016 in response to the Petitioner’s recall petitions and were later disqualified from serving by a bylaw amendment he proposed.

Chronology of Board Destabilization and Resignations

The hearing evidence established a pattern of significant board turnover and dysfunction between June 2016 and June 2017.

• June 23, 2016: Board members Adrian Justiniano, Debra Epstein, and Korey Hjelmeir resigned after the Petitioner filed recall petitions against them.

• August 3, 2016: The Petitioner, June Thompson, and Christina Van Soest were elected to the Board. The Petitioner served as president.

• August 18, 2016: The Board expanded from 3 to 5 members, appointing Gina Murray and Ray Elmer.

• August 29, 2016: June Thompson resigned.

• February 8, 2017: Christina Van Soest resigned, citing the board’s direction and her discomfort with the Petitioner’s “research into members’ backgrounds and history, and the way he was making Board decisions.”

• February 18, 2017: The Petitioner resigned from the Board because he had “more important things to worry about than the management of this dysfunctional community.”

• April 4, 2017: Elizabeth Mayhew resigned, stating she could not handle the stress caused by the Petitioner and his “verbal assaults, constant lashing out, and personal attacks.”

• April 5, 2017: Ray Elmer resigned, attributing his departure to “continued problems Jason etc.” This left Gina Murray as the sole remaining board member.

Respondent’s Efforts to Fill Vacancies

The Respondent provided evidence of multiple, documented attempts to recruit new board members.

• February 23, 2017: Following the resignations of Ms. Van Soest and the Petitioner, Community Manager Eddie Padilla sent an email requesting “motivated and dedicated individuals” to serve on the Board. No one responded.

• March 31, 2017: At an open Board Meeting with “Board appointments” on the agenda, Gina Murray asked for volunteers and nominations from the floor. No one responded.

• April 4 & 18, 2017: Mr. Padilla sent two further emails requesting members interested in serving on the board to submit biographies for an upcoming annual meeting. The only individuals to respond and submit biographies were Mr. Justiniano and Ms. Hjelmeir.

• May 15, 2017: At the annual meeting, Ms. Murray again accepted nominations from the floor. Debra Epstein was nominated.

• June 5, 2017: After the newly elected board was disqualified, Mr. Padilla sent another email asking for volunteers.

Petitioner’s Actions and Their Consequences

The Administrative Law Judge’s decision identified the Petitioner’s own actions as a primary cause for the board’s inability to fill vacancies.

• Instigation of Resignations: The Petitioner’s recall petitions in June 2016 and behavior cited in the 2017 resignation letters from Van Soest, Mayhew, and Elmer directly contributed to the board vacancies.

• Contradictory Claims: The Petitioner testified that four individuals (Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti) were interested in serving. However, the sign-in sheet for the March 31, 2017 meeting, where appointments were to be made, showed none of these individuals were present.

• Disqualifying Bylaw Amendment: The Petitioner proposed a new bylaw, § 3.12, which was passed at the May 15, 2017 meeting. It stated:

• Attempted Removal of Remaining Director: On June 12, 2017, the Petitioner submitted a petition to remove Gina Murray, the last remaining original board member, which would have left the board entirely vacant.

Administrative Law Judge’s Findings and Decision

The ALJ’s conclusions of law were decisive in denying the petition.

1. Burden of Proof: The Petitioner bore the burden of proving by a preponderance of the evidence that the Respondent had violated its bylaws.

2. Interpretation of Bylaw § 3.6: The Judge ruled that while the bylaw requires the Board to appoint members to fill vacancies, “it does not empower the Board to conscript members who are not willing to serve on the Board.”

3. Principle of Absurdity: Citing legal precedent, the decision stated that bylaws must be construed to avoid an absurd result. Forcing an HOA to operate without a board because no eligible members are willing to serve, especially when the situation is exacerbated by the Petitioner, would be such an absurdity.

4. Respondent’s Due Diligence: The Judge found that “Respondent established that the Board has done all it could to fill vacancies.”

5. Petitioner’s Culpability: The final conclusion explicitly states that “at this time, no eligible members are willing to serve, in part due to Petitioner’s obstructionist tactics, including Petitioner and his claimed supporters.”

Based on these findings, the ALJ ordered that the Petitioner’s petition be denied. The order became final and binding upon adoption by the Arizona Department of Real Estate on July 12, 2017.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

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Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

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Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

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

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

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Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

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Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

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

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Case Participants

Petitioner Side

• Jason West (petitioner)
  Appeared on his own behalf; testified on his own behalf
• Linda Siedler (witness, member)
  Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
• Teresa Price (witness, member)
  Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
• Bret Morse (witness, member)
  Allegedly interested in serving on the Board; submitted absentee ballot; signed petition to remove Ms. Murray
• Bryan Brunatti (witness, member)
  Allegedly interested in serving on the Board; attended meeting and counted ballots; signed petition to remove Ms. Murray

Respondent Side

• Stewart F. Salwin (HOA attorney)
  Carpenter, Hazlewood, Delgado & Bolen, PLC
  Represented the Respondent
• Eugenia Murray (board president, witness)
  Only current Board member at the time of hearing; testified for Respondent
• Edward Padilla (property manager, witness)
  National Property Service (NPC)
  Community Manager; testified for Respondent

Neutral Parties

• Diane Mihalsky (ALJ)
• Judy Lowe (Commissioner)
  Arizona Department of Real Estate
  ADRE Commissioner who adopted the ALJ Decision

Other Participants

• Korey Hjelmeir (witness, former board member)
  Testified for Petitioner as former Board member; resigned and later sought re-election
• Debra Epstein (witness, former board member)
  Testified for Petitioner as former Board member; resigned and later sought re-election; appeared via Skype at a meeting
• Adrian Justiniano (former board member)
  Resigned and later sought re-election
• June Thompson (former board member)
  Elected and resigned in 2016
• Christina Van Soest (former board member)
  Elected and resigned in 2017
• Myron Elmer (former board member)
  Appointed and resigned in 2017
• Elizabeth Mayhew (former board member)
  Appointed and resigned in 2017
• David Epstein (member)
  Appeared via Skype at a meeting; expressed interest in serving on Board
• Abby Hansen (HOA coordinator)
  Individual to whom requests for rehearing should be addressed

Mark Virden vs. Lakeside Ski Village HOA

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1717027-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-27
Administrative Law Judge	Tammy L. Eigenheer
Outcome	loss
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Mark Virden	Counsel	—
Respondent	Lakeside Ski Village HOA	Counsel	Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 33-1811
• A.R.S. § 32-2199 et seq.
• A.A.C. R2-19-119
• A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs

Additional Citations:

• A.R.S. § 33-1811
• A.R.S. § 32-2199 et seq.
• A.A.C. R2-19-119
• A.R.S. § 33-1804

Video Overview

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

Uploaded 2025-10-09T03:31:29 (82.2 KB)

17F-H1717027-REL Decision – 575046.pdf

Uploaded 2025-10-09T03:31:29 (736.4 KB)

Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.

Study Guide: Virden v. Lakeside Ski Village HOA

This guide provides a comprehensive review of the administrative case between Petitioner Mark Virden and Respondent Lakeside Ski Village HOA, concerning the construction of an internet service tower. It includes a quiz with an answer key to test factual recall, essay questions for deeper analysis, and a glossary of key terms found in the legal documents.

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Short-Answer Quiz

Instructions: Answer the following ten questions in 2-3 sentences each, based on the provided source documents.

1. Who were the primary parties involved in this case, and what was the central dispute?

2. What specific Arizona Revised Statute did the Petitioner allege was violated, and what does this statute govern?

3. Describe the unique governance structure of the Lakeside Ski Village HOA as noted in the hearing’s findings of fact.

4. What was the arrangement between AireBeam, Lou Talarico, and Carl Rygg that led to the construction of the internet tower?

5. According to the HOA’s governing documents (CC&Rs), what specific authority was granted to its Architectural Committee?

6. On what key legal basis did the Administrative Law Judge reject the Petitioner’s claim of a conflict of interest violation?

7. What was the Petitioner’s alternative argument regarding the tower not being for the “benefit of all or portions” of the HOA, and how did the Judge rule on it?

8. Define the “preponderance of the evidence” standard and identify which party had the burden of meeting this standard.

9. What was the final outcome of Mark Virden’s petition, as determined by the Administrative Law Judge and subsequently adopted?

10. After the Final Order was issued on July 10, 2017, what were the potential next steps for a party wishing to challenge the decision?

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Answer Key

1. The primary parties were Mark Virden (Petitioner) and the Lakeside Ski Village HOA (Respondent). The central dispute was Virden’s allegation that the HOA improperly allowed the construction of an internet service tower on common property due to an undisclosed conflict of interest involving board members.

2. The Petitioner alleged a violation of A.R.S. § 33-1811. This statute governs contracts and conflicts of interest for an HOA’s board of directors, requiring a board member to declare a conflict in an open meeting if a decision would benefit them or a close family member.

3. The Lakeside Ski Village HOA does not have a traditional board of directors. Instead, its Bylaws state that the affairs of the Association are managed directly by the members, who are authorized to exercise all powers normally held by a board.

4. After the HOA failed to secure enough subscribers for AireBeam to build the tower, Lou Talarico offered to pay the upfront cost. In exchange for his payment, AireBeam agreed to provide free internet service to Mr. Talarico and HOA Vice President Carl Rygg for as long as the tower was operational.

5. The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants the Architectural Committee the authority to “permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

6. The Judge rejected the claim because the HOA’s CC&Rs empowered the Architectural Committee to approve the tower directly, without needing ratification from the members acting as a board. Therefore, the disclosure requirements of A.R.S. § 33-1811, which apply to actions taken “by or on behalf of the board of directors,” were not applicable to the Committee’s decision.

7. The Petitioner argued that because people outside the HOA could subscribe to the service, the tower was not for the “benefit of all or portions” of the HOA, meaning the Architectural Committee exceeded its authority. The Judge ruled that the language of the CC&Rs does not require that the system exclusively benefit the HOA.

8. “Preponderance of the evidence” is defined as evidence that is more convincing and shows that the fact sought to be proved is more probable than not. In this proceeding, the Petitioner, Mark Virden, bore the burden of proving his allegations by this standard.

9. The Administrative Law Judge ordered that the Petitioner’s petition be denied, concluding that the Architectural Committee’s approval of the tower was proper. This decision was adopted by the Commissioner of the Department of Real Estate, making it the Final Order.

10. A dissatisfied party could request a rehearing within thirty (30) days for specific causes, such as procedural irregularity, misconduct, or newly discovered evidence. Alternatively, a party could appeal the final administrative decision by filing a complaint for judicial review in court.

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Essay Questions

Instructions: The following questions are designed for longer, more analytical responses. Do not provide answers.

1. Analyze the central conflict between the requirements of A.R.S. § 33-1811, which governs board actions, and the specific powers granted to the Architectural Committee in the Lakeside Ski Village HOA’s CC&Rs. Explain in detail how this conflict, and its interpretation by the Judge, determined the outcome of the case.

2. Discuss the concept of “conflict of interest” as presented in the Petitioner’s complaint. Evaluate whether the actions of the Talaricos and Carl Rygg constituted a conflict of interest, and explain why the Administrative Law Judge’s decision did not ultimately hinge on this point, referencing the use of the term arguendo in the Conclusions of Law.

3. Explain the procedural journey of this case, from the initial petition filing on or about March 23, 2017, to the Final Order issued on July 10, 2017. Identify the key bodies and officials involved at each stage (e.g., Department of Real Estate, Office of Administrative Hearings, Administrative Law Judge, Commissioner).

4. The Petitioner’s complaint details his frustration with a perceived lack of transparency from board members regarding their compensation agreement with AireBeam. Despite these ethical concerns, the petition failed. Based on the “Conclusions of Law,” explain the legal reasoning that rendered the Petitioner’s arguments about transparency and fairness insufficient to prove a violation under the cited statute.

5. The Final Order outlines eight specific causes for which a rehearing or review could be granted. Choose two of these causes (e.g., “The findings of fact or decision is arbitrary, capricious, or an abuse of discretion,” or “Newly discovered material evidence that could not with reasonable diligence have been discovered and produced at the original hearing”) and construct a hypothetical argument that Mark Virden could have made for a rehearing based on them, using the facts presented in the case documents.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official who presides over the administrative hearing, reviews evidence, makes findings of fact, draws conclusions of law, and issues a decision. In this case, Tammy L. Eigenheer.

A.R.S. (Arizona Revised Statutes)

The collection of all the laws passed by the Arizona legislature. The statute at the center of this case was A.R.S. § 33-1811.

Arguendo

A Latin term meaning “for the sake of argument.” The Judge used this to temporarily accept a point as true (that the free service was compensation) in order to show that even if it were true, the Petitioner’s argument would still fail on other legal grounds.

An acronym for Declaration of Covenants, Conditions, Restrictions and Easements. These are the governing legal documents that establish the rules and operational framework for a homeowners association.

Common Area

Property within the HOA, such as land for a community tower, that is owned and shared by all members of the association.

Department of Real Estate

The Arizona state agency that has jurisdiction to hear certain disputes between property owners and their homeowners associations.

HOA (Homeowners Association)

An organization in a planned community or subdivision that creates and enforces rules for the properties within its jurisdiction. In this case, the Lakeside Ski Village HOA.

Petitioner

The party who initiates a legal action by filing a petition. In this case, Mark Virden.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It means the evidence presented must be of greater weight or more convincing than the opposing evidence, showing a fact is more probable than not.

Respondent

The party against whom a petition is filed and who must respond to the allegations. In this case, the Lakeside Ski Village HOA.

How Two HOA Insiders Got Free Internet For Life—And Why the Law Couldn’t Stop Them

Introduction: The Rules Aren’t Always What They Seem

For many homeowners, the relationship with their Homeowner Association (HOA) is built on a simple assumption: while the rules can be strict, they exist to protect the community from abuses of power. We trust that state laws and an HOA’s own documents prevent board members from using their position for personal enrichment. The concept of a “conflict of interest” seems straightforward—board members can’t vote on deals that benefit themselves or their families.

But what if a deal that looks like a textbook conflict of interest was found to be perfectly legal? This is the cautionary tale of Mark Virden v. Lakeside Ski Village HOA, a shocking case from Arizona that turns our assumptions on their head. It’s a story where insiders secured a deal for free lifetime internet service, and despite a homeowner’s legitimate outrage, the law was powerless to stop them. The case wasn’t decided on fairness or ethics, but on the fine print buried in the HOA’s governing documents.

This case is a crucial lesson for every homeowner. It reveals how seemingly innocuous clauses can be weaponized to bypass transparency laws, effectively legalizing what would otherwise be considered a blatant conflict of interest. It demonstrates that in the world of community associations, power doesn’t always reside where you think it does, and the only thing protecting you is a deep understanding of your own community’s rules.

Takeaway 1: A Committee’s Power Can Sidestep Conflict-of-Interest Laws

The petitioner’s argument was simple and seemed like a slam dunk. An internet company needed to build a service tower on HOA common property but lacked enough subscribers to fund it. Lou Talarico, whose wife Susan was on the HOA’s Architectural Committee, offered to pay the upfront installation costs. In exchange, Mr. Talarico and the HOA’s Vice President, Carl Rygg, would receive free internet service for life.

This arrangement reeks of a conflict of interest, and on its face, appears to be a direct violation of Arizona’s statute (A.R.S. § 33-1811). The law requires that if an action “taken by or on behalf of the board of directors” would benefit a board member’s spouse, the conflict must be declared in an open meeting. Here, no such declaration was made.

But here is the stunning legal twist: the Administrative Law Judge found that the decision to approve the tower was made not by the “board,” but exclusively by the “Architectural Committee.” The HOA’s governing documents explicitly granted this committee the power to approve communication systems. Because the state’s conflict-of-interest law applies specifically to actions taken by the board, it had no jurisdiction over a decision made independently by the committee. In essence, the state law was watching the front door (the board), but the HOA’s documents gave the Architectural Committee a back door—one with no legal supervision for conflicts of interest. This technicality meant the deal, and the conflict of interest at its core, was entirely proper under the law.

Takeaway 2: An HOA ‘Board’ Might Not Be a Board at All

The second critical fact that enabled this outcome was the highly unusual structure of the Lakeside Ski Village HOA itself. The judge noted that the association “does not have a traditional Board.” Instead, all the members collectively act as the board.

The HOA’s Bylaws lay out this unique governance model:

“[t]he affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

This structure is fundamentally important. State laws governing HOAs are written with a traditional model in mind—a small group of elected directors making decisions for the community. But at Lakeside Ski Village, the power of the “members acting as a board” was limited by specific authority delegated to other entities, most notably the Architectural Committee. This decentralized structure created a loophole the state’s conflict-of-interest law was not designed to close.

The lesson for homeowners is that you can never assume all HOAs are structured alike. The very definition of the “board” and the scope of its power can be radically different from one community to another. Here, that unique structure was the key that unlocked the committee’s unchecked power.

Takeaway 3: The Fine Print Is All That Matters

Ultimately, this entire dispute was decided not by broad principles of transparency or fiduciary duty, but by specific phrases written in the HOA’s founding documents years ago. The petitioner, Mark Virden, expressed understandable outrage that the insiders involved refused to be transparent.

He recounted a particularly telling exchange with the association’s Vice President when he asked about the terms of the internet deal:

When we initially asked the VP what their compensation was, he stated “it’s none of your business”.

While this response would infuriate any homeowner, the court’s final decision effectively proved it right. Because the Architectural Committee was acting within its sole authority, the details of its agreement were not subject to the disclosure rules that govern the board. The response, “it’s none of your business,” turned out to be legally correct.

The petitioner’s frustration was compounded by the professional background of the committee member at the center of the conflict. In his filing, he wrote: “To make things worse, the board member whose spouse paid the upfront fee to the tower company is a licensed realtor, Susan Talarico. If anyone should understand the fiduciary responsibility to owners of a HOA, it’s a realtor serving on a Board of that HOA.” His belief that a real estate professional should have known better underscores the feeling of betrayal.

And in a final, dramatic turn that reinforces the theme of insiders benefiting, the petitioner noted what happened after the deal was done: “She has since resigned but her husband has taken her place on the board.” This illustrates the most vital lesson of all: your sense of what is “fair” is legally irrelevant if the governing documents allow for a specific action. The CC&Rs and Bylaws are the ultimate source of truth and power in any HOA dispute.

Conclusion: Are You Sure You Know Your Rules?

The case of Virden v. Lakeside Ski Village HOA serves as a stark reminder that HOA governance is a world of legal technicalities, where the written word of the founding documents is supreme. It shows how specific, delegated authority can create outcomes that defy the spirit, if not the letter, of the law. What appears to be a clear-cut case of self-dealing can be rendered perfectly permissible by a few key sentences in the bylaws or CC&Rs.

This case was decided on the specific authority granted to a single committee—do you know which committees in your HOA have the power to make decisions without board approval?

Case Participants

Petitioner Side

• Mark Virden (petitioner)

Respondent Side

• Stewart F. Salwin (attorney)
  Lakeside Ski Village HOA
• Susan Talarico (board member)
  Lakeside Ski Village HOA
  Licensed realtor; spouse of Lou Talarico; resigned but husband took her place on the board
• Lou Talarico (board member)
  Lakeside Ski Village HOA
  Spouse of Susan Talarico; paid upfront tower cost; received free internet service; referred to as Treasurer in petition excerpt
• Carl Rygg (board member)
  Lakeside Ski Village HOA
  Vice President; received free internet service
• Emmett Mitchell (board member)
  Lakeside Ski Village HOA
  President

Neutral Parties

• Tammy L. Eigenheer (ALJ)
  Office of Administrative Hearings
• Judy Lowe (Commissioner)
  Arizona Department of Real Estate
• Abby Hansen (HOA Coordinator)
  Addressee for rehearing requests

Jason West vs. Desert Sage Two Homeowners Association

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716031-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-28
Administrative Law Judge	Diane Mihalsky
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Jason West	Counsel	—
Respondent	Desert Sage Two Homeowners Association	Counsel	Stewart F. Salwin, Esq.

Alleged Violations

Bylaw § 3.6

Outcome Summary

The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.

Why this result: Respondent established that the Board performed all reasonable actions to fill vacancies, but no eligible members were willing to serve, in part due to Petitioner's obstructionist tactics, rendering enforcement of the Bylaw impossible as it would lead to an absurdity.

Key Issues & Findings

Refusing to fill vacancies on Respondent’s Board of Directors

Petitioner alleged Respondent violated Bylaw § 3.6 by refusing to fill vacancies on the Board of Directors. The Administrative Law Judge determined that the Board had done all it could to fill vacancies, but no eligible members were willing to serve, and Bylaw § 3.6 does not empower the Board to conscript unwilling members.

Orders: Petitioner's petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
• Mail Boxes v. Industrial Comm’n of Arizona, 181 Ariz. 119, 122, 888 P.2d 777, 780 (1995)
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Analytics Highlights

Topics: HOA Board Vacancies, Bylaw 3.6, Obstructionist Tactics, Refusal to Serve

Additional Citations:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY
• Mail Boxes v. Industrial Comm’n of Arizona
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Video Overview

Audio Overview

Decision Documents

17F-H1716031-REL Decision – 572314.pdf

Uploaded 2026-01-23T17:19:29 (137.9 KB)

17F-H1716031-REL Decision – 576049.pdf

Uploaded 2026-01-23T17:19:32 (1160.4 KB)

Briefing Document: West v. Desert Sage Two Homeowners Association (Case No. 17F-H1716031-REL)

Executive Summary

This briefing document analyzes the administrative hearing and final order concerning a petition filed by homeowner Jason West (“Petitioner”) against the Desert Sage Two Homeowners Association (“Respondent”). The Petitioner alleged that the HOA’s Board of Directors violated its own Bylaw § 3.6 by failing to fill vacant board positions.

The Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted as a Final Order by the Commissioner of the Arizona Department of Real Estate. The central finding was that the Respondent had made repeated and reasonable efforts to fill the vacancies but was unsuccessful due to a lack of willing and eligible candidates. The ALJ concluded that the governing bylaw mandates the appointment of willing members but does not grant the power to conscript individuals to serve against their will. Furthermore, the decision determined that the shortage of volunteers was attributable, in part, to the Petitioner’s own “obstructionist tactics,” which created a hostile and dysfunctional environment, leading to a series of board member resignations and deterring potential candidates.

Case Overview

• Case Number: 17F-H1716031-REL

• Petitioner: Jason West, a homeowner and member of the Desert Sage Two Homeowners Association.

• Respondent: Desert Sage Two Homeowners Association, representing a small community of approximately 40 homes.

• Core Allegation: On April 10, 2017, the Petitioner filed a single-issue petition alleging the Respondent violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

• Hearing Date: June 21, 2017, before Administrative Law Judge Diane Mihalsky.

• Final Disposition: The Petitioner’s petition was denied in a decision dated June 28, 2017. This decision was adopted as a Final Order by the Arizona Department of Real Estate on July 12, 2017, making it binding on the parties.

Governing Bylaw in Dispute

The central issue revolved around the interpretation of Section 3.6 of the HOA’s Bylaws, which states:

Vacancies. Vacancies on the Board caused by any reason other than the removal of a director in accordance with the provisions of Section 3.3 of these Bylaws shall be filled by a majority vote of the remaining directors at the first regular or special meeting of the Board held after the occurrence of such vacancy, even though the directors present at such meeting may constitute less than a quorum. Each person so elected shall serve the unexpired portion of the prior director’s term.

Key Parties and Witnesses

Role / Affiliation

Key Testimony / Actions

Jason West

Petitioner, Homeowner, Former Board President

Filed the petition alleging bylaw violation. Previously filed recall petitions against other board members, resigned from the board himself, and proposed a bylaw amendment that disqualified newly elected members.

Eugenia (“Gina”) Murray

Respondent’s Board President

Testified that the board made repeated efforts to find volunteers, but no one was willing to serve, citing the Petitioner’s behavior as a major cause for resignations and lack of interest.

Edward (“Eddie”) Padilla

Community Manager, National Property Service (NPS)

Testified about sending multiple email requests for board candidates on behalf of the board, which yielded no interested parties other than those who would later be disqualified.

Christina Van Soest

Former Board Member

Resigned on Feb. 8, 2017, stating, “I have found the direction of some of the board does not appear to be in the best interest of the community as a whole.” Testified she was uncomfortable with the Petitioner.

Elizabeth Mayhew

Former Board Member

Resigned on Apr. 4, 2017, citing stress directly related to the Petitioner: “I have enough stress daily with my job and cannot handle this or him. It is making me physically ill and he is not worth that.”

Myron (“Ray”) Elmer

Former Board Member

Resigned on Apr. 5, 2017, with the stated reason: “[d]ue to continued problems Jason etc.”

Korey Hjelmeir & Debra Epstein

Former Board Members

Testified for the Petitioner’s rebuttal. Both had previously resigned in June 2016 in response to the Petitioner’s recall petitions and were later disqualified from serving by a bylaw amendment he proposed.

Chronology of Board Destabilization and Resignations

The hearing evidence established a pattern of significant board turnover and dysfunction between June 2016 and June 2017.

• June 23, 2016: Board members Adrian Justiniano, Debra Epstein, and Korey Hjelmeir resigned after the Petitioner filed recall petitions against them.

• August 3, 2016: The Petitioner, June Thompson, and Christina Van Soest were elected to the Board. The Petitioner served as president.

• August 18, 2016: The Board expanded from 3 to 5 members, appointing Gina Murray and Ray Elmer.

• August 29, 2016: June Thompson resigned.

• February 8, 2017: Christina Van Soest resigned, citing the board’s direction and her discomfort with the Petitioner’s “research into members’ backgrounds and history, and the way he was making Board decisions.”

• February 18, 2017: The Petitioner resigned from the Board because he had “more important things to worry about than the management of this dysfunctional community.”

• April 4, 2017: Elizabeth Mayhew resigned, stating she could not handle the stress caused by the Petitioner and his “verbal assaults, constant lashing out, and personal attacks.”

• April 5, 2017: Ray Elmer resigned, attributing his departure to “continued problems Jason etc.” This left Gina Murray as the sole remaining board member.

Respondent’s Efforts to Fill Vacancies

The Respondent provided evidence of multiple, documented attempts to recruit new board members.

• February 23, 2017: Following the resignations of Ms. Van Soest and the Petitioner, Community Manager Eddie Padilla sent an email requesting “motivated and dedicated individuals” to serve on the Board. No one responded.

• March 31, 2017: At an open Board Meeting with “Board appointments” on the agenda, Gina Murray asked for volunteers and nominations from the floor. No one responded.

• April 4 & 18, 2017: Mr. Padilla sent two further emails requesting members interested in serving on the board to submit biographies for an upcoming annual meeting. The only individuals to respond and submit biographies were Mr. Justiniano and Ms. Hjelmeir.

• May 15, 2017: At the annual meeting, Ms. Murray again accepted nominations from the floor. Debra Epstein was nominated.

• June 5, 2017: After the newly elected board was disqualified, Mr. Padilla sent another email asking for volunteers.

Petitioner’s Actions and Their Consequences

The Administrative Law Judge’s decision identified the Petitioner’s own actions as a primary cause for the board’s inability to fill vacancies.

• Instigation of Resignations: The Petitioner’s recall petitions in June 2016 and behavior cited in the 2017 resignation letters from Van Soest, Mayhew, and Elmer directly contributed to the board vacancies.

• Contradictory Claims: The Petitioner testified that four individuals (Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti) were interested in serving. However, the sign-in sheet for the March 31, 2017 meeting, where appointments were to be made, showed none of these individuals were present.

• Disqualifying Bylaw Amendment: The Petitioner proposed a new bylaw, § 3.12, which was passed at the May 15, 2017 meeting. It stated:

• Attempted Removal of Remaining Director: On June 12, 2017, the Petitioner submitted a petition to remove Gina Murray, the last remaining original board member, which would have left the board entirely vacant.

Administrative Law Judge’s Findings and Decision

The ALJ’s conclusions of law were decisive in denying the petition.

1. Burden of Proof: The Petitioner bore the burden of proving by a preponderance of the evidence that the Respondent had violated its bylaws.

2. Interpretation of Bylaw § 3.6: The Judge ruled that while the bylaw requires the Board to appoint members to fill vacancies, “it does not empower the Board to conscript members who are not willing to serve on the Board.”

3. Principle of Absurdity: Citing legal precedent, the decision stated that bylaws must be construed to avoid an absurd result. Forcing an HOA to operate without a board because no eligible members are willing to serve, especially when the situation is exacerbated by the Petitioner, would be such an absurdity.

4. Respondent’s Due Diligence: The Judge found that “Respondent established that the Board has done all it could to fill vacancies.”

5. Petitioner’s Culpability: The final conclusion explicitly states that “at this time, no eligible members are willing to serve, in part due to Petitioner’s obstructionist tactics, including Petitioner and his claimed supporters.”

Based on these findings, the ALJ ordered that the Petitioner’s petition be denied. The order became final and binding upon adoption by the Arizona Department of Real Estate on July 12, 2017.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

——————————————————————————–

Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

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

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Study Guide: West v. Desert Sage Two Homeowners Association

This study guide provides a review of the administrative hearing case No. 17F-H1716031-REL, Jason West v. Desert Sage Two Homeowners Association. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

Short-Answer Quiz

Answer the following questions in 2-3 sentences each, based on the information in the case documents.

1. What was the specific allegation made by the Petitioner, Jason West, in his April 10, 2017 petition?

2. According to the text of Bylaw § 3.6, how are vacancies on the Board of Directors supposed to be filled?

3. Who was the sole remaining member of the Board of Directors at the time of the mass resignations in April 2017, and what was her stated reason for not resigning?

4. Describe the circumstances that led to the resignations of board members Christina Van Soest and Jason West in February 2017.

5. What was the immediate and paradoxical outcome of the May 15, 2017 annual meeting election?

6. Explain the purpose and effect of the proposed Bylaw § 3.12, which was sponsored by the Petitioner.

7. What efforts did the Respondent’s management company, National Property Service (NPS), make to recruit new board members?

8. On what grounds did Administrative Law Judge Diane Mihalsky deny the Petitioner’s petition?

9. According to the Petitioner’s testimony, why were certain individuals he named hesitant to volunteer for the Board?

10. What action did the Commissioner of the Arizona Department of Real Estate take regarding the Administrative Law Judge’s decision?

——————————————————————————–

Answer Key

1. Jason West’s single-issue petition alleged that the Desert Sage Two Homeowners Association (the Respondent) had violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

2. Bylaw § 3.6 states that vacancies on the Board (for reasons other than removal) shall be filled by a majority vote of the remaining directors at the next meeting. The person elected serves the unexpired portion of the prior director’s term.

3. Eugenia (“Gina”) Murray was the sole remaining board member. She stated she had no intention of resigning because it was important for someone to serve the community’s interests, such as negotiating the insurance contract and handling other community affairs.

4. Christina Van Soest resigned on February 8, 2017, stating the board’s direction was not in the community’s best interest and she was uncomfortable with the Petitioner’s methods. On February 18, 2017, Jason West resigned, citing his belief that he had “more important things to worry about than the management of this dysfunctional community.”

5. At the May 15, 2017 meeting, Eugenia Murray, Debra Epstein, Adrian Justiniano, and Korey Hjelmeir were elected to the Board. However, a bylaw amendment proposed by the Petitioner also passed at the same meeting, which made Epstein, Justiniano, and Hjelmeir ineligible to serve because they had resigned within the previous year.

6. The proposed Bylaw § 3.12 was designed to ban any director who resigns or is removed from serving on the board again for one year. Its passage at the May 15, 2017 meeting had the immediate effect of disqualifying three of the four newly elected board members.

7. NPS, through Community Manager Edward Padilla, sent out multiple emails requesting that interested individuals submit biographies to be considered for board positions. These requests were sent on February 23, April 4, April 18, and June 5, 2017.

8. Judge Mihalsky denied the petition because the Respondent had established that the Board did all it could to fill the vacancies. The judge concluded that the Bylaws cannot be construed to empower the Board to conscript unwilling members and that the lack of volunteers was due in part to the Petitioner’s own “obstructionist tactics.”

9. The Petitioner testified that Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti were interested but had two conditions. They were concerned about serving with certain other members (Murray, Hjelmeir, Justiniano, or the Epsteins) and wanted assurance that the directors’ insurance policy would be renewed, which was questionable due to petitions filed by West himself.

10. On July 12, 2017, the Commissioner of the Department of Real Estate, Judy Lowe, issued a Final Order adopting the Administrative Law Judge’s decision. This order made the denial of the Petitioner’s petition binding on the parties.

——————————————————————————–

Suggested Essay Questions

The following questions are designed for a more in-depth analysis of the case. No answers are provided.

1. Analyze the role of Jason West in the series of board resignations and the difficulty in finding new board members, citing specific evidence presented by the Respondent and testimony from former board members.

2. Discuss the Administrative Law Judge’s interpretation of Bylaw § 3.6. How does the judge balance the literal requirement to fill vacancies with the practical realities faced by the Board, and what legal principles support this interpretation?

3. Trace the timeline of board membership from March 2016 to May 2017. What patterns emerge regarding appointments, resignations, and elections, and how do these events illustrate the internal conflict within the Desert Sage Two community?

4. Evaluate the effectiveness of the Bylaw amendment (§ 3.12) proposed by Jason West. Did it achieve its likely intended purpose, and what were its immediate, perhaps unintended, consequences for the governance of the homeowners’ association?

5. Based on the evidence presented, construct an argument for why the Respondent, Desert Sage Two Homeowners Association, successfully defended itself against the Petitioner’s claim. Your answer should focus on the actions taken by the Board and its management company and the legal conclusions drawn by the judge.

——————————————————————————–

Glossary of Key Terms

Term / Entity

Definition

Administrative Law Judge (ALJ)

The official, in this case Diane Mihalsky, who presides over an administrative hearing at the Office of Administrative Hearings and issues a decision.

Arizona Department of Real Estate (“the Department”)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations.

Bylaw § 3.12 (Proposed)

An amendment proposed by the Petitioner that would ban any director who resigns or is removed from the board from serving again for a period of one year. This amendment was passed at the May 15, 2017 annual meeting.

Bylaw § 3.6

The section of the Respondent’s bylaws that was the central issue of the petition. It requires the remaining directors to fill board vacancies by a majority vote at the next regular or special meeting.

Desert Sage Two Homeowners Association

The Respondent in the case; a small homeowners’ association for a development of approximately 40 condominium homes.

Final Order

The binding decision issued by the Commissioner of the Department of Real Estate, which formally adopts the ALJ’s decision. This order makes the ruling effective and outlines the process for requesting a rehearing.

Jason West

The Petitioner in the case. He is a homeowner and member of the Respondent association who filed a petition alleging the Board violated Bylaw § 3.6.

National Property Service (NPS)

The management company employed by the Respondent, represented in the hearing by Community Manager Edward (“Eddie”) Padilla.

Office of Administrative Hearings

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

Petitioner

The party who files a petition initiating a legal action. In this case, Jason West.

Preponderance of the evidence

The standard of proof required for the Petitioner to win the case. It is defined as evidence that is more convincing and has the greater weight, inclining an impartial mind to one side of the issue rather than the other.

Respondent

The party against whom a petition is filed. In this case, the Desert Sage Two Homeowners Association.

Case Participants

Petitioner Side

• Jason West (petitioner)
  Appeared on his own behalf; testified on his own behalf
• Linda Siedler (witness, member)
  Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
• Teresa Price (witness, member)
  Allegedly interested in serving on the Board; signed petition to remove Ms. Murray
• Bret Morse (witness, member)
  Allegedly interested in serving on the Board; submitted absentee ballot; signed petition to remove Ms. Murray
• Bryan Brunatti (witness, member)
  Allegedly interested in serving on the Board; attended meeting and counted ballots; signed petition to remove Ms. Murray

Respondent Side

• Stewart F. Salwin (HOA attorney)
  Carpenter, Hazlewood, Delgado & Bolen, PLC
  Represented the Respondent
• Eugenia Murray (board president, witness)
  Only current Board member at the time of hearing; testified for Respondent
• Edward Padilla (property manager, witness)
  National Property Service (NPC)
  Community Manager; testified for Respondent

Neutral Parties

• Diane Mihalsky (ALJ)
• Judy Lowe (Commissioner)
  Arizona Department of Real Estate
  ADRE Commissioner who adopted the ALJ Decision

Other Participants

• Korey Hjelmeir (witness, former board member)
  Testified for Petitioner as former Board member; resigned and later sought re-election
• Debra Epstein (witness, former board member)
  Testified for Petitioner as former Board member; resigned and later sought re-election; appeared via Skype at a meeting
• Adrian Justiniano (former board member)
  Resigned and later sought re-election
• June Thompson (former board member)
  Elected and resigned in 2016
• Christina Van Soest (former board member)
  Elected and resigned in 2017
• Myron Elmer (former board member)
  Appointed and resigned in 2017
• Elizabeth Mayhew (former board member)
  Appointed and resigned in 2017
• David Epstein (member)
  Appeared via Skype at a meeting; expressed interest in serving on Board
• Abby Hansen (HOA coordinator)
  Individual to whom requests for rehearing should be addressed

Jason West vs. Desert Sage Two Homeowners Association

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1716031-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-28
Administrative Law Judge	Diane Mihalsky
Outcome	loss
Filing Fees Refunded	$0.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Jason West	Counsel	—
Respondent	Desert Sage Two Homeowners Association	Counsel	Stewart F. Salwin, Esq.

Alleged Violations

Bylaw § 3.6

Outcome Summary

The Administrative Law Judge denied the homeowner’s petition alleging the HOA failed to fill board vacancies (Bylaw § 3.6 violation), finding that the HOA had made reasonable efforts, but vacancies could not be filled because no eligible members were willing to serve, partly due to the Petitioner's actions.

Why this result: Respondent established that the Board performed all reasonable actions to fill vacancies, but no eligible members were willing to serve, in part due to Petitioner's obstructionist tactics, rendering enforcement of the Bylaw impossible as it would lead to an absurdity.

Key Issues & Findings

Refusing to fill vacancies on Respondent’s Board of Directors

Petitioner alleged Respondent violated Bylaw § 3.6 by refusing to fill vacancies on the Board of Directors. The Administrative Law Judge determined that the Board had done all it could to fill vacancies, but no eligible members were willing to serve, and Bylaw § 3.6 does not empower the Board to conscript unwilling members.

Orders: Petitioner's petition is denied.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952)
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999)
• Mail Boxes v. Industrial Comm’n of Arizona, 181 Ariz. 119, 122, 888 P.2d 777, 780 (1995)
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Analytics Highlights

Topics: HOA Board Vacancies, Bylaw 3.6, Obstructionist Tactics, Refusal to Serve

Additional Citations:

• A.R.S. § 41-2198.01
• A.R.S. § 41-1092.07(G)(2)
• A.A.C. R2-19-119(A)
• A.A.C. R2-19-119(B)(1)
• Vazanno v. Superior Court
• A.A.C. R2-19-119(B)(2)
• MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960)
• BLACK’S LAW DICTIONARY
• Mail Boxes v. Industrial Comm’n of Arizona
• A.R.S. § 32-2199.02(B)
• A.R.S. § 32-2199.04

Audio Overview

Decision Documents

17F-H1716031-REL Decision – 572314.pdf

Uploaded 2025-10-08T07:01:42 (137.9 KB)

17F-H1716031-REL Decision – 576049.pdf

Uploaded 2025-10-08T07:01:43 (1160.4 KB)

Briefing Document: West v. Desert Sage Two Homeowners Association (Case No. 17F-H1716031-REL)

Executive Summary

This briefing document analyzes the administrative hearing and final order concerning a petition filed by homeowner Jason West (“Petitioner”) against the Desert Sage Two Homeowners Association (“Respondent”). The Petitioner alleged that the HOA’s Board of Directors violated its own Bylaw § 3.6 by failing to fill vacant board positions.

The Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted as a Final Order by the Commissioner of the Arizona Department of Real Estate. The central finding was that the Respondent had made repeated and reasonable efforts to fill the vacancies but was unsuccessful due to a lack of willing and eligible candidates. The ALJ concluded that the governing bylaw mandates the appointment of willing members but does not grant the power to conscript individuals to serve against their will. Furthermore, the decision determined that the shortage of volunteers was attributable, in part, to the Petitioner’s own “obstructionist tactics,” which created a hostile and dysfunctional environment, leading to a series of board member resignations and deterring potential candidates.

Case Overview

• Case Number: 17F-H1716031-REL

• Petitioner: Jason West, a homeowner and member of the Desert Sage Two Homeowners Association.

• Respondent: Desert Sage Two Homeowners Association, representing a small community of approximately 40 homes.

• Core Allegation: On April 10, 2017, the Petitioner filed a single-issue petition alleging the Respondent violated Bylaw § 3.6 by refusing to fill vacancies on its Board of Directors.

• Hearing Date: June 21, 2017, before Administrative Law Judge Diane Mihalsky.

• Final Disposition: The Petitioner’s petition was denied in a decision dated June 28, 2017. This decision was adopted as a Final Order by the Arizona Department of Real Estate on July 12, 2017, making it binding on the parties.

Governing Bylaw in Dispute

The central issue revolved around the interpretation of Section 3.6 of the HOA’s Bylaws, which states:

Vacancies. Vacancies on the Board caused by any reason other than the removal of a director in accordance with the provisions of Section 3.3 of these Bylaws shall be filled by a majority vote of the remaining directors at the first regular or special meeting of the Board held after the occurrence of such vacancy, even though the directors present at such meeting may constitute less than a quorum. Each person so elected shall serve the unexpired portion of the prior director’s term.

Key Parties and Witnesses

Role / Affiliation

Key Testimony / Actions

Jason West

Petitioner, Homeowner, Former Board President

Filed the petition alleging bylaw violation. Previously filed recall petitions against other board members, resigned from the board himself, and proposed a bylaw amendment that disqualified newly elected members.

Eugenia (“Gina”) Murray

Respondent’s Board President

Testified that the board made repeated efforts to find volunteers, but no one was willing to serve, citing the Petitioner’s behavior as a major cause for resignations and lack of interest.

Edward (“Eddie”) Padilla

Community Manager, National Property Service (NPS)

Testified about sending multiple email requests for board candidates on behalf of the board, which yielded no interested parties other than those who would later be disqualified.

Christina Van Soest

Former Board Member

Resigned on Feb. 8, 2017, stating, “I have found the direction of some of the board does not appear to be in the best interest of the community as a whole.” Testified she was uncomfortable with the Petitioner.

Elizabeth Mayhew

Former Board Member

Resigned on Apr. 4, 2017, citing stress directly related to the Petitioner: “I have enough stress daily with my job and cannot handle this or him. It is making me physically ill and he is not worth that.”

Myron (“Ray”) Elmer

Former Board Member

Resigned on Apr. 5, 2017, with the stated reason: “[d]ue to continued problems Jason etc.”

Korey Hjelmeir & Debra Epstein

Former Board Members

Testified for the Petitioner’s rebuttal. Both had previously resigned in June 2016 in response to the Petitioner’s recall petitions and were later disqualified from serving by a bylaw amendment he proposed.

Chronology of Board Destabilization and Resignations

The hearing evidence established a pattern of significant board turnover and dysfunction between June 2016 and June 2017.

• June 23, 2016: Board members Adrian Justiniano, Debra Epstein, and Korey Hjelmeir resigned after the Petitioner filed recall petitions against them.

• August 3, 2016: The Petitioner, June Thompson, and Christina Van Soest were elected to the Board. The Petitioner served as president.

• August 18, 2016: The Board expanded from 3 to 5 members, appointing Gina Murray and Ray Elmer.

• August 29, 2016: June Thompson resigned.

• February 8, 2017: Christina Van Soest resigned, citing the board’s direction and her discomfort with the Petitioner’s “research into members’ backgrounds and history, and the way he was making Board decisions.”

• February 18, 2017: The Petitioner resigned from the Board because he had “more important things to worry about than the management of this dysfunctional community.”

• April 4, 2017: Elizabeth Mayhew resigned, stating she could not handle the stress caused by the Petitioner and his “verbal assaults, constant lashing out, and personal attacks.”

• April 5, 2017: Ray Elmer resigned, attributing his departure to “continued problems Jason etc.” This left Gina Murray as the sole remaining board member.

Respondent’s Efforts to Fill Vacancies

The Respondent provided evidence of multiple, documented attempts to recruit new board members.

• February 23, 2017: Following the resignations of Ms. Van Soest and the Petitioner, Community Manager Eddie Padilla sent an email requesting “motivated and dedicated individuals” to serve on the Board. No one responded.

• March 31, 2017: At an open Board Meeting with “Board appointments” on the agenda, Gina Murray asked for volunteers and nominations from the floor. No one responded.

• April 4 & 18, 2017: Mr. Padilla sent two further emails requesting members interested in serving on the board to submit biographies for an upcoming annual meeting. The only individuals to respond and submit biographies were Mr. Justiniano and Ms. Hjelmeir.

• May 15, 2017: At the annual meeting, Ms. Murray again accepted nominations from the floor. Debra Epstein was nominated.

• June 5, 2017: After the newly elected board was disqualified, Mr. Padilla sent another email asking for volunteers.

Petitioner’s Actions and Their Consequences

The Administrative Law Judge’s decision identified the Petitioner’s own actions as a primary cause for the board’s inability to fill vacancies.

• Instigation of Resignations: The Petitioner’s recall petitions in June 2016 and behavior cited in the 2017 resignation letters from Van Soest, Mayhew, and Elmer directly contributed to the board vacancies.

• Contradictory Claims: The Petitioner testified that four individuals (Linda Siedler, Teresa Price, Bret Morse, and Bryan Brunatti) were interested in serving. However, the sign-in sheet for the March 31, 2017 meeting, where appointments were to be made, showed none of these individuals were present.

• Disqualifying Bylaw Amendment: The Petitioner proposed a new bylaw, § 3.12, which was passed at the May 15, 2017 meeting. It stated:

• Attempted Removal of Remaining Director: On June 12, 2017, the Petitioner submitted a petition to remove Gina Murray, the last remaining original board member, which would have left the board entirely vacant.

Administrative Law Judge’s Findings and Decision

The ALJ’s conclusions of law were decisive in denying the petition.

1. Burden of Proof: The Petitioner bore the burden of proving by a preponderance of the evidence that the Respondent had violated its bylaws.

2. Interpretation of Bylaw § 3.6: The Judge ruled that while the bylaw requires the Board to appoint members to fill vacancies, “it does not empower the Board to conscript members who are not willing to serve on the Board.”

3. Principle of Absurdity: Citing legal precedent, the decision stated that bylaws must be construed to avoid an absurd result. Forcing an HOA to operate without a board because no eligible members are willing to serve, especially when the situation is exacerbated by the Petitioner, would be such an absurdity.

4. Respondent’s Due Diligence: The Judge found that “Respondent established that the Board has done all it could to fill vacancies.”

5. Petitioner’s Culpability: The final conclusion explicitly states that “at this time, no eligible members are willing to serve, in part due to Petitioner’s obstructionist tactics, including Petitioner and his claimed supporters.”

Based on these findings, the ALJ ordered that the Petitioner’s petition be denied. The order became final and binding upon adoption by the Arizona Department of Real Estate on July 12, 2017.

Mark Virden vs. Lakeside Ski Village HOA

Posted on June 27, 2017 by jeremy@yourazhoaattorney.com

Case Summary

Case ID	17F-H1717027-REL
Agency	ADRE
Tribunal	OAH
Decision Date	2017-06-27
Administrative Law Judge	Tammy L. Eigenheer
Outcome	loss
Filing Fees Refunded	$500.00
Civil Penalties	$0.00

Parties & Counsel

Petitioner	Mark Virden	Counsel	—
Respondent	Lakeside Ski Village HOA	Counsel	Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

• A.R.S. § 33-1811
• A.R.S. § 32-2199 et seq.
• A.A.C. R2-19-119
• A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs

Additional Citations:

• A.R.S. § 33-1811
• A.R.S. § 32-2199 et seq.
• A.A.C. R2-19-119
• A.R.S. § 33-1804

Video Overview

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

Uploaded 2026-01-23T17:19:48 (82.2 KB)

17F-H1717027-REL Decision – 575046.pdf

Uploaded 2026-01-23T17:19:52 (736.4 KB)

Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.

Study Guide: Virden v. Lakeside Ski Village HOA

This guide provides a comprehensive review of the administrative case between Petitioner Mark Virden and Respondent Lakeside Ski Village HOA, concerning the construction of an internet service tower. It includes a quiz with an answer key to test factual recall, essay questions for deeper analysis, and a glossary of key terms found in the legal documents.

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Short-Answer Quiz

Instructions: Answer the following ten questions in 2-3 sentences each, based on the provided source documents.

1. Who were the primary parties involved in this case, and what was the central dispute?

2. What specific Arizona Revised Statute did the Petitioner allege was violated, and what does this statute govern?

3. Describe the unique governance structure of the Lakeside Ski Village HOA as noted in the hearing’s findings of fact.

4. What was the arrangement between AireBeam, Lou Talarico, and Carl Rygg that led to the construction of the internet tower?

5. According to the HOA’s governing documents (CC&Rs), what specific authority was granted to its Architectural Committee?

6. On what key legal basis did the Administrative Law Judge reject the Petitioner’s claim of a conflict of interest violation?

7. What was the Petitioner’s alternative argument regarding the tower not being for the “benefit of all or portions” of the HOA, and how did the Judge rule on it?

8. Define the “preponderance of the evidence” standard and identify which party had the burden of meeting this standard.

9. What was the final outcome of Mark Virden’s petition, as determined by the Administrative Law Judge and subsequently adopted?

10. After the Final Order was issued on July 10, 2017, what were the potential next steps for a party wishing to challenge the decision?

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Answer Key

1. The primary parties were Mark Virden (Petitioner) and the Lakeside Ski Village HOA (Respondent). The central dispute was Virden’s allegation that the HOA improperly allowed the construction of an internet service tower on common property due to an undisclosed conflict of interest involving board members.

2. The Petitioner alleged a violation of A.R.S. § 33-1811. This statute governs contracts and conflicts of interest for an HOA’s board of directors, requiring a board member to declare a conflict in an open meeting if a decision would benefit them or a close family member.

3. The Lakeside Ski Village HOA does not have a traditional board of directors. Instead, its Bylaws state that the affairs of the Association are managed directly by the members, who are authorized to exercise all powers normally held by a board.

4. After the HOA failed to secure enough subscribers for AireBeam to build the tower, Lou Talarico offered to pay the upfront cost. In exchange for his payment, AireBeam agreed to provide free internet service to Mr. Talarico and HOA Vice President Carl Rygg for as long as the tower was operational.

5. The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants the Architectural Committee the authority to “permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

6. The Judge rejected the claim because the HOA’s CC&Rs empowered the Architectural Committee to approve the tower directly, without needing ratification from the members acting as a board. Therefore, the disclosure requirements of A.R.S. § 33-1811, which apply to actions taken “by or on behalf of the board of directors,” were not applicable to the Committee’s decision.

7. The Petitioner argued that because people outside the HOA could subscribe to the service, the tower was not for the “benefit of all or portions” of the HOA, meaning the Architectural Committee exceeded its authority. The Judge ruled that the language of the CC&Rs does not require that the system exclusively benefit the HOA.

8. “Preponderance of the evidence” is defined as evidence that is more convincing and shows that the fact sought to be proved is more probable than not. In this proceeding, the Petitioner, Mark Virden, bore the burden of proving his allegations by this standard.

9. The Administrative Law Judge ordered that the Petitioner’s petition be denied, concluding that the Architectural Committee’s approval of the tower was proper. This decision was adopted by the Commissioner of the Department of Real Estate, making it the Final Order.

10. A dissatisfied party could request a rehearing within thirty (30) days for specific causes, such as procedural irregularity, misconduct, or newly discovered evidence. Alternatively, a party could appeal the final administrative decision by filing a complaint for judicial review in court.

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Essay Questions

Instructions: The following questions are designed for longer, more analytical responses. Do not provide answers.

1. Analyze the central conflict between the requirements of A.R.S. § 33-1811, which governs board actions, and the specific powers granted to the Architectural Committee in the Lakeside Ski Village HOA’s CC&Rs. Explain in detail how this conflict, and its interpretation by the Judge, determined the outcome of the case.

2. Discuss the concept of “conflict of interest” as presented in the Petitioner’s complaint. Evaluate whether the actions of the Talaricos and Carl Rygg constituted a conflict of interest, and explain why the Administrative Law Judge’s decision did not ultimately hinge on this point, referencing the use of the term arguendo in the Conclusions of Law.

3. Explain the procedural journey of this case, from the initial petition filing on or about March 23, 2017, to the Final Order issued on July 10, 2017. Identify the key bodies and officials involved at each stage (e.g., Department of Real Estate, Office of Administrative Hearings, Administrative Law Judge, Commissioner).

4. The Petitioner’s complaint details his frustration with a perceived lack of transparency from board members regarding their compensation agreement with AireBeam. Despite these ethical concerns, the petition failed. Based on the “Conclusions of Law,” explain the legal reasoning that rendered the Petitioner’s arguments about transparency and fairness insufficient to prove a violation under the cited statute.

5. The Final Order outlines eight specific causes for which a rehearing or review could be granted. Choose two of these causes (e.g., “The findings of fact or decision is arbitrary, capricious, or an abuse of discretion,” or “Newly discovered material evidence that could not with reasonable diligence have been discovered and produced at the original hearing”) and construct a hypothetical argument that Mark Virden could have made for a rehearing based on them, using the facts presented in the case documents.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official who presides over the administrative hearing, reviews evidence, makes findings of fact, draws conclusions of law, and issues a decision. In this case, Tammy L. Eigenheer.

A.R.S. (Arizona Revised Statutes)

The collection of all the laws passed by the Arizona legislature. The statute at the center of this case was A.R.S. § 33-1811.

Arguendo

A Latin term meaning “for the sake of argument.” The Judge used this to temporarily accept a point as true (that the free service was compensation) in order to show that even if it were true, the Petitioner’s argument would still fail on other legal grounds.

An acronym for Declaration of Covenants, Conditions, Restrictions and Easements. These are the governing legal documents that establish the rules and operational framework for a homeowners association.

Common Area

Property within the HOA, such as land for a community tower, that is owned and shared by all members of the association.

Department of Real Estate

The Arizona state agency that has jurisdiction to hear certain disputes between property owners and their homeowners associations.

HOA (Homeowners Association)

An organization in a planned community or subdivision that creates and enforces rules for the properties within its jurisdiction. In this case, the Lakeside Ski Village HOA.

Petitioner

The party who initiates a legal action by filing a petition. In this case, Mark Virden.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It means the evidence presented must be of greater weight or more convincing than the opposing evidence, showing a fact is more probable than not.

Respondent

The party against whom a petition is filed and who must respond to the allegations. In this case, the Lakeside Ski Village HOA.

How Two HOA Insiders Got Free Internet For Life—And Why the Law Couldn’t Stop Them

Introduction: The Rules Aren’t Always What They Seem

For many homeowners, the relationship with their Homeowner Association (HOA) is built on a simple assumption: while the rules can be strict, they exist to protect the community from abuses of power. We trust that state laws and an HOA’s own documents prevent board members from using their position for personal enrichment. The concept of a “conflict of interest” seems straightforward—board members can’t vote on deals that benefit themselves or their families.

But what if a deal that looks like a textbook conflict of interest was found to be perfectly legal? This is the cautionary tale of Mark Virden v. Lakeside Ski Village HOA, a shocking case from Arizona that turns our assumptions on their head. It’s a story where insiders secured a deal for free lifetime internet service, and despite a homeowner’s legitimate outrage, the law was powerless to stop them. The case wasn’t decided on fairness or ethics, but on the fine print buried in the HOA’s governing documents.

This case is a crucial lesson for every homeowner. It reveals how seemingly innocuous clauses can be weaponized to bypass transparency laws, effectively legalizing what would otherwise be considered a blatant conflict of interest. It demonstrates that in the world of community associations, power doesn’t always reside where you think it does, and the only thing protecting you is a deep understanding of your own community’s rules.

Takeaway 1: A Committee’s Power Can Sidestep Conflict-of-Interest Laws

The petitioner’s argument was simple and seemed like a slam dunk. An internet company needed to build a service tower on HOA common property but lacked enough subscribers to fund it. Lou Talarico, whose wife Susan was on the HOA’s Architectural Committee, offered to pay the upfront installation costs. In exchange, Mr. Talarico and the HOA’s Vice President, Carl Rygg, would receive free internet service for life.

This arrangement reeks of a conflict of interest, and on its face, appears to be a direct violation of Arizona’s statute (A.R.S. § 33-1811). The law requires that if an action “taken by or on behalf of the board of directors” would benefit a board member’s spouse, the conflict must be declared in an open meeting. Here, no such declaration was made.

But here is the stunning legal twist: the Administrative Law Judge found that the decision to approve the tower was made not by the “board,” but exclusively by the “Architectural Committee.” The HOA’s governing documents explicitly granted this committee the power to approve communication systems. Because the state’s conflict-of-interest law applies specifically to actions taken by the board, it had no jurisdiction over a decision made independently by the committee. In essence, the state law was watching the front door (the board), but the HOA’s documents gave the Architectural Committee a back door—one with no legal supervision for conflicts of interest. This technicality meant the deal, and the conflict of interest at its core, was entirely proper under the law.

Takeaway 2: An HOA ‘Board’ Might Not Be a Board at All

The second critical fact that enabled this outcome was the highly unusual structure of the Lakeside Ski Village HOA itself. The judge noted that the association “does not have a traditional Board.” Instead, all the members collectively act as the board.

The HOA’s Bylaws lay out this unique governance model:

“[t]he affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

This structure is fundamentally important. State laws governing HOAs are written with a traditional model in mind—a small group of elected directors making decisions for the community. But at Lakeside Ski Village, the power of the “members acting as a board” was limited by specific authority delegated to other entities, most notably the Architectural Committee. This decentralized structure created a loophole the state’s conflict-of-interest law was not designed to close.

The lesson for homeowners is that you can never assume all HOAs are structured alike. The very definition of the “board” and the scope of its power can be radically different from one community to another. Here, that unique structure was the key that unlocked the committee’s unchecked power.

Takeaway 3: The Fine Print Is All That Matters

Ultimately, this entire dispute was decided not by broad principles of transparency or fiduciary duty, but by specific phrases written in the HOA’s founding documents years ago. The petitioner, Mark Virden, expressed understandable outrage that the insiders involved refused to be transparent.

He recounted a particularly telling exchange with the association’s Vice President when he asked about the terms of the internet deal:

When we initially asked the VP what their compensation was, he stated “it’s none of your business”.

While this response would infuriate any homeowner, the court’s final decision effectively proved it right. Because the Architectural Committee was acting within its sole authority, the details of its agreement were not subject to the disclosure rules that govern the board. The response, “it’s none of your business,” turned out to be legally correct.

The petitioner’s frustration was compounded by the professional background of the committee member at the center of the conflict. In his filing, he wrote: “To make things worse, the board member whose spouse paid the upfront fee to the tower company is a licensed realtor, Susan Talarico. If anyone should understand the fiduciary responsibility to owners of a HOA, it’s a realtor serving on a Board of that HOA.” His belief that a real estate professional should have known better underscores the feeling of betrayal.

And in a final, dramatic turn that reinforces the theme of insiders benefiting, the petitioner noted what happened after the deal was done: “She has since resigned but her husband has taken her place on the board.” This illustrates the most vital lesson of all: your sense of what is “fair” is legally irrelevant if the governing documents allow for a specific action. The CC&Rs and Bylaws are the ultimate source of truth and power in any HOA dispute.

Conclusion: Are You Sure You Know Your Rules?

The case of Virden v. Lakeside Ski Village HOA serves as a stark reminder that HOA governance is a world of legal technicalities, where the written word of the founding documents is supreme. It shows how specific, delegated authority can create outcomes that defy the spirit, if not the letter, of the law. What appears to be a clear-cut case of self-dealing can be rendered perfectly permissible by a few key sentences in the bylaws or CC&Rs.

This case was decided on the specific authority granted to a single committee—do you know which committees in your HOA have the power to make decisions without board approval?

Case Participants

Petitioner Side

• Mark Virden (petitioner)

Respondent Side

• Stewart F. Salwin (attorney)
  Lakeside Ski Village HOA
• Susan Talarico (board member)
  Lakeside Ski Village HOA
  Licensed realtor; spouse of Lou Talarico; resigned but husband took her place on the board
• Lou Talarico (board member)
  Lakeside Ski Village HOA
  Spouse of Susan Talarico; paid upfront tower cost; received free internet service; referred to as Treasurer in petition excerpt
• Carl Rygg (board member)
  Lakeside Ski Village HOA
  Vice President; received free internet service
• Emmett Mitchell (board member)
  Lakeside Ski Village HOA
  President

Neutral Parties

• Tammy L. Eigenheer (ALJ)
  Office of Administrative Hearings
• Judy Lowe (Commissioner)
  Arizona Department of Real Estate
• Abby Hansen (HOA Coordinator)
  Addressee for rehearing requests