Briefing Doc – 18F-H1818054-REL-RHG
Briefing Document: Stevens v. Mogollon Airpark, Inc. (Case No. 18F-H1818054-REL-RHG)
Executive Summary
This document summarizes the Administrative Law Judge (ALJ) Decision in the matter of Brad W. Stevens versus Mogollon Airpark, Inc., a case centered on the legality of a homeowner association (HOA) assessment increase. The ALJ, Thomas Shedden, ultimately dismissed the petition filed by Mr. Stevens, finding he failed to prove by a preponderance of the evidence that Mogollon Airpark violated Arizona state law.
The core of the dispute was a $325 increase to the annual assessment for 2018, which represented a 39.4% increase over the previous year’s $825 fee. The petitioner alleged this violated ARIZ. REV. STAT. § 33-1803(A), which prohibits HOAs from increasing a “regular assessment” by more than 20% without member approval. The respondent, Mogollon Airpark, argued the increase was composed of two distinct parts: a 14.1% ($116) increase to the regular assessment to cover a budget shortfall, and a separate $209 one-time “special assessment” to replenish a reserve fund.
The ALJ’s decision rested on a critical interpretation of statutory language, concluding that “regular assessments” and “special assessments” are legally distinct categories. The judge rejected the petitioner’s argument that “regular” refers to the process of an assessment rather than its type, deeming this interpretation contrary to principles of statutory construction and nonsensical. Furthermore, the judge found the petitioner’s legal citations to be inapplicable and confirmed that the scope of the hearing was limited strictly to the alleged violation of the 20% rule, not the HOA’s general authority to levy special assessments.
Case Background and Procedural History
• Parties:
◦ Petitioner: Brad W. Stevens
◦ Respondent: Mogollon Airpark, Inc. (HOA)
• Adjudicating Body: Arizona Office of Administrative Hearings, on behalf of the Arizona Department of Real Estate.
• Presiding Judge: Administrative Law Judge Thomas Shedden.
• Timeline:
◦ June 7, 2018: Mr. Stevens files a single-issue petition with the Department of Real Estate.
◦ September 28, 2018: An initial hearing is conducted on the matter, consolidated with two others.
◦ January 2, 2019: The Department of Real Estate issues a Notice of Rehearing.
◦ February 11, 2019: The rehearing is conducted.
◦ March 1, 2019: The Administrative Law Judge Decision is issued, dismissing the petition.
The matter came before the Office of Administrative Hearings for a rehearing after Mr. Stevens alleged errors of law and an abuse of discretion in the original hearing’s decision.
The Core Dispute: The 2018 Assessment Increase
The central facts of the case revolve around a decision made at a Mogollon Airpark board meeting in November 2017. To address a shortage in its operating budget and to replenish approximately $53,000 borrowed from its reserve fund, the Board approved a two-part increase to its annual fees.
Assessment Component
Previous Year (2017)
2018 Increase
Justification
Percentage Increase
Regular Assessment
+ $116
Cover operating budget shortfall
Special Assessment
+ $209
Replenish reserve fund
Total Assessment
+ $325
Total for 2018
This total 39.4% increase formed the basis of Mr. Stevens’s legal challenge under A.R.S. § 33-1803(A), which limits increases to “regular assessments” to 20% over the preceding fiscal year.
Analysis of Arguments
Petitioner’s Position (Brad W. Stevens)
Mr. Stevens’s case was built on the assertion that the entire $325 increase constituted a single “regular assessment” and was therefore illegal. His key arguments were:
• Definition of “Regular”: He contended that “regular” in the statute refers to the process by which an assessment is created—i.e., one that is “according to rule.” He argued that it does not denote a type of assessment (e.g., recurring vs. one-time).
• Lack of Authority for Special Assessments: Mr. Stevens argued that Mogollon Airpark has no authority to issue special assessments. Therefore, any assessment it imposes, regardless of its label, must legally be considered a “regular assessment.”
• Legal Precedent: He cited Northwest Fire District v. U.S. Home of Arizona to define a “special assessment,” arguing that the $209 charge did not qualify because he received no “particularized benefit” as required by that case. He also presented definitions from Black’s Law Dictionary.
Respondent’s Position (Mogollon Airpark, Inc.)
Mogollon Airpark’s defense was straightforward and relied on the distinction between the two components of the assessment increase:
• Statutory Limitation: The respondent argued that A.R.S. § 33-1803(A) applies only to “regular assessments.”
• Compliance with Statute: The increase to the regular assessment was $116, a 14.1% rise over the previous year’s $825 fee. This amount is well within the 20% statutory limit.
• Distinct Nature of Assessments: The $209 charge was a separate, one-time “special assessment” intended for a specific purpose (replenishing the reserve fund) and is not subject to the 20% limitation governing regular assessments.
Administrative Law Judge’s Findings and Conclusions
The ALJ systematically dismantled the petitioner’s arguments, finding they were not supported by evidence or principles of statutory construction.
Rejection of Petitioner’s Statutory Interpretation
• The ALJ found that Mr. Stevens’s definition of “regular” as referring to the assessment process was an insupportable interpretation. If all validly passed assessments were “regular,” the word “regular” in the statute would be “void, inert, redundant, or trivial.”
• To support this conclusion, the decision points to A.R.S. § 33-1806, where the legislature explicitly references “regular assessments” and “special assessment[s],” demonstrating a clear intent to treat them as different types of assessments.
• The judge characterized the petitioner’s logic as leading to a “nonsensical result.” Under Mr. Stevens’s reasoning, an unauthorized special assessment would become a valid regular assessment, a position deemed not to be a “sensible interpretation of the statute.” A more reasonable conclusion, the judge noted, would be that an unauthorized assessment is simply void.
Misapplication of Legal Precedent
• The petitioner’s reliance on Northwest Fire District was deemed “misplaced.” The judge clarified that this case applies to special taxing districts created under ARIZ. REV. STAT. Title 48, a legal framework that does not govern an HOA like Mogollon Airpark.
Scope of the Hearing and Burden of Proof
• The ALJ emphasized that the hearing was limited by the petitioner’s “single-issue petition.” The only question properly before the tribunal was whether A.R.S. § 33-1803(A) had been violated.
• Consequently, the broader question of whether Mogollon Airpark’s bylaws grant it the authority to impose special assessments was “not at issue.” This rendered the various definitions of “special assessment” offered by Mr. Stevens as having “no substantial probative value” to the case at hand.
• The final legal conclusion was that Mr. Stevens, who bore the burden of proof, failed to show by a “preponderance of the evidence” that Mogollon Airpark violated the statute.
Final Order and Disposition
Based on the findings and conclusions, the Administrative Law Judge ordered the following:
• Order: The petition of Brad W. Stevens is dismissed.
• Prevailing Party: Mogollon Airpark, Inc. is deemed the prevailing party.
• Binding Nature: The decision, issued as a result of a rehearing, is binding on the parties.
• Appeal Process: Any appeal must be filed for judicial review with the superior court within thirty-five days from the date the order was served.
