Case Summary
| Case ID | 18F-H1818050-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2018-10-11 |
| Administrative Law Judge | Tammy L. Eigenheer |
| Outcome | loss |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Brent J. Mathews | Counsel | — |
|---|---|---|---|
| Respondent | American Ranch Community Association | Counsel | Lynn Krupnik and Timothy Krupnik |
Alleged Violations
American Ranch Bylaws, Article 3.11
Outcome Summary
The Administrative Law Judge dismissed the Petition because the Petitioner failed to prove the Respondent Board violated the Bylaws. The Board was found to have the necessary authority under Bylaws Section 3.11 to enter into the Well Agreement 2 as a variance, and this action did not constitute an improper amendment of the CC&Rs.
Why this result: The Board was authorized to grant a variance to the CC&Rs regarding the well on Lot 2, a power delegated to the Association, meaning the Board did not exceed its authority under the Bylaws.
Key Issues & Findings
Alleged violation of the American Ranch Bylaws, Article 3.11, when the Board entered into the 'Well Agreement' (Well Agreement 2).
Petitioner asserted that the Board violated the Bylaws by entering into Well Agreement 2, claiming the Board lacked the authority to grant exceptions or variances to the CC&Rs regarding the use of a private water well on Lot 2. The Board agreed the well existed in violation of CC&Rs Section 3.26, but argued Well Agreement 2 constituted a variance, not an amendment.
Orders: The Petition was dismissed.
Filing fee: $500.00, Fee refunded: No
Disposition: petitioner_loss
- 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)
- A.A.C. R2-19-119(B)(2)
- A.R.S. § 32-2199.02(B)
- A.R.S. § 32-2199.04
- A.R.S. § 41-1092.09
Analytics Highlights
- 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)
- A.A.C. R2-19-119(B)(2)
- A.R.S. § 32-2199.02(B)
- A.R.S. § 32-2199.04
- A.R.S. § 41-1092.09
Audio Overview
Decision Documents
18F-H1818050-REL Decision – 664186.pdf
Briefing Document: Analysis of Administrative Law Judge Decision in Mathews vs. American Ranch Community Association
Executive Summary
This document provides a comprehensive analysis of the Administrative Law Judge (ALJ) Decision in case number 18F-H1818050-REL, a dispute between Petitioner Brent J. Mathews and the Respondent, American Ranch Community Association. The petition, filed on May 16, 2018, was ultimately dismissed by the ALJ on October 11, 2018.
The core of the dispute was the American Ranch Board of Directors’ authority to enter into a “Well Agreement” on August 9, 2016, with the owners of Lot 2. This agreement permitted the continued use of a private well for irrigation, an activity explicitly prohibited by the community’s Covenants, Conditions, and Restrictions (CC&Rs). The Petitioner argued that this agreement constituted an unauthorized amendment to the CC&Rs, an action requiring a 75% vote of the membership, and therefore violated the Board’s powers as defined in the community’s Bylaws.
The ALJ’s decision hinged on the critical legal distinction between a “variance” and an “amendment.” The Judge concluded that the Board’s action was not an amendment but a variance granted to an individual owner. The ruling established that the community’s governing documents delegate the power to grant variances to the Architectural Review Committee. According to the Bylaws, the Board of Directors is empowered to exercise any authority delegated to the Association that is not exclusively reserved for the membership. As the power to grant variances was not reserved for the membership, the Board acted within its authority. Consequently, the Petitioner failed to meet the burden of proof, leading to the dismissal of the case.
Case Overview
Case Name
Brent J. Mathews vs. American Ranch Community Association
Case Number
18F-H1818050-REL
Arizona Office of Administrative Hearings
Presiding Judge
Administrative Law Judge Tammy L. Eigenheer
Petitioner
Brent J. Mathews (representing himself)
Respondent
American Ranch Community Association (represented by Lynn Krupnik and Timothy Krupnik)
Hearing Date
September 21, 2018
Decision Date
October 11, 2018
Final Ruling
The Petition is dismissed.
The Central Dispute: The Well Agreement for Lot 2
The conflict originated from a water well installed on Lot 2 of the American Ranch community around 2007. This installation was in direct violation of the CC&Rs.
• CC&R Section 3.26 (Water Wells): This section explicitly states, “The placement, drilling and operation of water wells is prohibited on all Lots except Equestrian Lots.” The use of any approved well on an Equestrian Lot is further restricted to irrigating pasture land and providing drinking water for horses.
To address the existing violation, the Association’s Board entered into two separate agreements over several years.
1. Well Agreement 1 (June 2011): The Board and the then-owners of Lot 2 entered into an agreement that allowed the continued use of the well for irrigation. A key provision required the owners to install a water meter and pay the Association a per-gallon charge equivalent to the local water district’s rate. The Board later determined it lacked the authority to bill homeowners for water from a private well, viewing this function as the responsibility of the water district, which rendered this agreement problematic.
2. Well Agreement 2 (August 9, 2016): This agreement, the subject of the legal dispute, was executed with new prospective buyers, Mark and Diane Kaplan. The Kaplans, upon discovering Well Agreement 1 during escrow, expressed concerns and stated they would be “unable to proceed with the purchase” without clarification. Under time pressure, the Board executed Well Agreement 2, which invalidated the first agreement. The new agreement permitted the well’s continued use for irrigation purposes but stipulated that “the owners would not be billed for the water used.”
Petitioner’s Position and Arguments
After initially alleging multiple violations, including an “Open Meeting Violation,” Petitioner Brent J. Mathews was directed to clarify his claim to a single issue. His final argument focused on a specific alleged violation of the Association’s governing documents.
• Clarified Single Issue: The Petitioner asserted that the Board violated American Ranch Bylaws, Article 3.11, which outlines the Board’s powers and duties. His formal clarification stated: “When the Board entered into the ‘Well Agreement’ they may have assumed they had the power to grant exceptions to the CC&R’s. The American Ranch Community Association Bylaws do not empower the Board to grant exceptions to the CC&R’s.”
• Core Argument: The Petitioner contended that Well Agreement 2 was not merely an exception but an effective amendment of the CC&Rs.
• Supporting Rationale: Citing CC&R Section 9.3.1, which requires the “written approval or affirmative vote of 75 percent of the total owners” to amend the CC&Rs, the Petitioner argued the Board acted unilaterally and without the necessary membership approval.
• Conclusion: By entering into the agreement without a membership vote, the Board exceeded the powers granted to it by the Bylaws.
Respondent’s Position and Justification
The American Ranch Community Association presented its actions as a necessary and reasonable response to a complex situation, grounded in its interpretation of its duties and authority.
• Immediate Justification: The Board’s decision was prompted by an urgent request from the Kaplans on July 30, 2016. The pending sale of Lot 2 was at risk due to concerns over the validity of Well Agreement 1.
• Rationale for New Agreement: The Board determined that Well Agreement 1 was likely unenforceable because the Association lacked the “ability or authority to bill the owners of the lot for water used.” The Board concluded that entering into a new agreement to invalidate the first one was the “best course of action.”
• Nature of the Action: The Respondent’s defense implicitly framed Well Agreement 2 not as a permanent change to the community rules (an amendment), but as a specific, situational resolution (a variance) to a long-standing issue inherited from a previous Board.
The Administrative Law Judge’s Findings and Legal Conclusions
The ALJ’s decision provides a clear legal analysis that ultimately led to the petition’s dismissal. The ruling affirmed the Board’s authority by interpreting the Well Agreement as a variance rather than an amendment.
The decision first established that the Petitioner “bears the burden of proof to establish that Respondent committed the alleged violations by a preponderance of the evidence.” The ALJ concluded that the Petitioner failed to meet this standard.
The central point of the ruling was the rejection of the Petitioner’s primary argument. The Judge found the argument that the agreement constituted an amendment to be “faulty.”
• Direct Ruling on the Issue: “A variance granted to an individual owner from a restriction under the CC&Rs does not constitute an amendment of the CC&Rs.”
The ALJ outlined a clear hierarchy of power derived from the Association’s own governing documents to demonstrate that the Board acted within its purview.
1. Power to Grant Variances: CC&R Section 3.31 explicitly grants the Architectural Review Committee (ARC) the authority to grant variances from restrictions in “extenuating circumstances” if the variance does not have a “substantial adverse effect on the Owners.”
2. Delegation of Power to the Board: Bylaw Section 3.11, and specifically Section 3.11.8, grants the Board the power to “exercise for the Association all powers, duties and authority vested in or delegated to the Association and not reserved to the membership.”
3. Conclusion on Authority: The ALJ connected these two provisions directly, stating: “As the power to grant variances was delegated to the Architectural Review Committee and was not reserved to the membership, the Board had the authority to grant such a variance.”
Based on this legal reasoning, the ALJ issued a definitive order.
• Final Conclusion: “Petitioner failed to establish by a preponderance of the evidence that the Board of Directors lacked the authority to enter into Well Agreement 2. Thus, Petitioner failed to sustain his burden to establish a violation of Section 3.11 of the Bylaws.”
• Order: “In view of the foregoing, IT IS ORDERED that the Petition be dismissed.”