Скачать или смотреть Kathy J. Green v. Cross Creek Ranch Community Association - 22F-H2222064-REL

This summary concerns the administrative hearing held on September 16, 2022, regarding the matter of Kathy J. Green (Petitioner) versus Cross Creek Ranch Community Association (Respondent), Docket No. 22F-H2222064-REL.

Key Facts and Legal Issue

The dispute centered on whether the Respondent Homeowners Association (HOA) violated Arizona Revised Statute (A.R.S.) § 33-1804 by holding a closed executive session on June 9, 2022. A.R.S. § 33-1804 establishes the state policy that all meetings of a planned community association's board of directors must be conducted openly and that any provisions of the statute must be construed in favor of open meetings. A meeting may only be closed if the portion is strictly limited to specific exceptions, such as legal advice (A.R.S. § 33-1804(A)(1)) or pending or contemplated litigation (A.R.S. § 33-1804(A)(2)).

The meeting was held to discuss 72 comments solicited from homeowners regarding proposed revisions to the Architectural Review Committee (ARC) Design Guidelines.

Key Arguments

Petitioner's Position:
The Petitioner, Kathy Green, alleged that the closed session was improper because it was noticed under A.R.S. § 33-1804(A)(1) (legal advice), yet the Board stipulated that no legal advice was given during the session. Evidence showed the Board President had emailed management prior to the meeting asking, "I don't want this to be an open meeting. Can we classify it under ARC Legal Review and keep it closed?". Petitioner argued that the meeting unlawfully conducted association business, noting that minutes showed a review of owner comments, non-board ARC members were present, and the minutes did not show discussion of legal advice or pending litigation. Furthermore, emails demonstrated that the Board later attempted to retroactively justify the meeting under A.R.S. § 33-1804(A)(2) (contemplated litigation).

Respondent's Position:
The Respondent, Cross Creek Ranch Community Association, argued that the closure was justified under A.R.S. § 33-1804(A)(2) because certain owner comments, including those from the Petitioner and her husband, were perceived as threats of litigation concerning the design guidelines. The Board testified that it met to holistically consider the risk of litigation, gauge membership sentiment, and conduct a cost-benefit analysis regarding the threatened lawsuits.

Final Decision and Outcome

Administrative Law Judge (ALJ) Sondra J. Vanella found that the Petitioner established by a preponderance of the evidence that Respondent violated A.R.S. § 33-1804.
Violation of A.R.S. § 33-1804(A)(1): The stipulation that no legal advice was given established that the meeting did not meet the requirement for closure under the section for which it was noticed.
Violation of A.R.S. § 33-1804(A)(2): The ALJ found the argument for "pending or contemplated litigation" to be "tenuous at best". The discussion primarily involved 72 homeowner comments, and the ALJ concluded that none of the comments could be "reasonably construed as contemplating litigation".
ALJ Finding: The ALJ noted that the Board acknowledged it could have held a separate executive session to discuss the one comment that copied an attorney while holding an open meeting for the majority of the solicited comments. The issue discussed did not fall under the statutory exceptions.

The ALJ affirmed the Petitioner's petition and ordered the Respondent to reimburse the Petitioner the $500.00 filing fee. The Respondent was also directed to comply with the requirements of A.R.S. § 33-1804 moving forward. No civil penalty was found appropriate.

Case Details:
Case ID: 22F-H2222064-REL
Docket: 22F-H2222064-REL

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