Administrative Hearing Briefing: Kelly vs. Cortez Canyon Unit Owners Association

Executive Summary

This document summarizes the Administrative Law Judge Decision in case number 19F-H1919060-REL, a dispute between Petitioner John H. Kelly and the Respondent, Cortez Canyon Unit Owners Association (“the Association”). The core issue was whether the Association violated Arizona state law by refusing to call a special meeting to remove a board member, as demanded by a petition initiated by Mr. Kelly.

The Association’s bylaws require a petition signed by at least 25% of eligible voting members—in this case, 21 of the 84 unit owners—to compel such a meeting. Mr. Kelly submitted a petition with 36 signatures. However, upon review, the Association invalidated 23 signatures for specific reasons: 11 were from non-owner renters, 6 were duplicate signatures from units that had already signed, and 6 were from owners whose voting rights were suspended due to being over 15 days delinquent on payments.

This left only 13 valid signatures, well short of the 21 required. The Administrative Law Judge, Jenna Clark, concluded that the Petitioner failed to meet the burden of proof. The evidence clearly demonstrated that the number of valid signatures was insufficient to legally compel the Association to call a special meeting. Consequently, the judge ruled that the Association did not violate Arizona statute § 33-1243 and denied Mr. Kelly’s petition.

Case Overview

Parties Involved

Name / Entity

Details

Petitioner

John H. Kelly

A condominium owner and member of the Cortez Canyon Unit Owners Association. Appeared on his own behalf.

Respondent

Cortez Canyon Unit Owners Association

The homeowners’ association for the Cortez Canyon condominium development in Phoenix, AZ. Represented by Jonathan A. Dessaules, Esq.

Witness

Saundra Garcia

President of the Association’s Board of Directors.

Adjudicator

Jenna Clark

Administrative Law Judge, Arizona Office of Administrative Hearings.

Core Dispute

The central issue adjudicated was whether the Cortez Canyon Unit Owners Association violated Arizona Revised Statute § 33-1243 by failing to call a special meeting for the purpose of removing a board member after receiving a petition from unit owners. The Petitioner alleged that the required number of signatures had been collected, while the Respondent denied this claim, asserting that the petition lacked the requisite number of valid signatures from eligible voters.

Legal and Governance Framework

The dispute was governed by Arizona state law and the Association’s own internal documents.

• Arizona Revised Statute § 33-1243(H)(4): This statute mandates that an association with 1,000 or fewer members must call a special meeting to remove a board member upon receipt of a petition signed by at least 25% of the eligible voters in the association.

• Association Bylaws, Article II, Section 2: Mirrors the state statute, stipulating that a special meeting may be called by unit owners holding at least 25% of the votes in the Association.

• Association Bylaws, Article II, Section 7: Critically, this section states that a unit owner’s right to vote is automatically suspended if they are in arrears on payments (assessments, penalties, etc.) for a period of 15 days. This suspension remains until all payments are brought current.

Petitioner’s Position and Evidence (John H. Kelly)

Mr. Kelly initiated the petition to recall an Association board member. His position and the evidence he presented are summarized as follows:

• Petition Submission: Mr. Kelly, with assistance from others, collected 36 signatures and submitted them to the Association’s then-property management group, Golden Valley.

• Initial Confirmation: He testified that Golden Valley initially informed him that he had secured enough signatures to compel the special meeting.

• Reversal by New Management: A short time later, after the Association’s contract with Golden Valley expired on June 1, 2019, a new property management company informed him that the petition did not meet the signature threshold.

• Key Admission: Mr. Kelly testified that neither he nor his assistants verified whether the signatories were unit owners eligible to vote prior to submitting the petition.

• Argument at Hearing: Mr. Kelly argued that he had submitted a minimum of 23 valid signatures. This included the signature of Jeffery Law, an owner of six units, which Mr. Kelly contended should be counted six times. However, it was established that Mr. Law’s signature was secured after the initial submission and was never provided to the management company.

• Formal Allegation: In his April 29, 2019, filing with the Department, Mr. Kelly stated: “Cortez Canyon has 84 units and 25% is 21 units. Homeowners have collected more than the required 21 home-owner’s signatures. The Cortez Canyon HOA board has stated that they will not schedule the required special meeting.”

Respondent’s Position and Evidence (Cortez Canyon Association)

The Association, represented by its Board President Saundra Garcia, presented a detailed rebuttal based on a thorough review of the submitted petition.

• Receipt of Petition: The Association received the petition with 36 purported unit owner signatures on or about April 19, 2019.

• Signature Verification Process: Upon review, the Association determined that a significant number of signatures were invalid based on the community’s governing documents.

• Disqualification of Signatures: The Association provided a specific breakdown of the 23 signatures it disqualified:

◦ 11 signatures were removed because they were from non-owner renters or occupants.

◦ 6 signatures were removed because they were from units for which another owner’s signature had already been collected (only one vote is permitted per unit).

◦ 6 signatures were removed because the unit owner was ineligible to vote, being more than 15 days delinquent on fines, fees, or dues owed to the Association, as stipulated in the Bylaws.

• Final Tally: After removing the 23 invalid signatures from the 36 submitted, the Association concluded that the petition contained only 13 valid signatures.

• Conclusion: Since 13 signatures is below the required threshold of 21, the Association determined it was not obligated by law or its bylaws to call the special meeting. The signature from the multi-unit owner, Jeffrey Law, was not part of the petition received by the Association and was therefore not considered in its count.

Administrative Law Judge’s Findings and Ruling

The Administrative Law Judge, Jenna Clark, reviewed the evidence and testimony from both parties and issued a decision decisively in favor of the Respondent.

Conclusions of Law

• Burden of Proof: The Judge established that the Petitioner, John H. Kelly, bore the burden of proving by a “preponderance of the evidence” that the Association had violated the statute. A preponderance of evidence is defined as proof that convinces the trier of fact that a contention is more probably true than not.

• Undisputed Facts: The material facts of the case were not at issue. Both parties agreed that 21 valid signatures were required to compel the special meeting.

• Evidence of Record: The Judge found that the evidence presented demonstrated the Petitioner’s failure to meet the required threshold. The decision states, “While Petitioner is correct that he submitted more than twenty-one signatures to the Association, he is incorrect that all of signatures provided were valid.”

• Final Determination on Signatures: The ruling affirmed the Association’s count, concluding, “What the evidence of record reflects is that Petitioner only provided thirteen valid signatures along with his petition to the Association, which was not enough to compel the Association to call a special meeting.”

Final Order

Based on the failure of the Petitioner to sustain his burden of proof, the Administrative Law Judge issued the following order on September 13, 2019:

IT IS ORDERED that Petitioner’s petition be denied.