Lawrence Stewart, Petitioner, vs. Canyon Gate Condominium Association, Inc., Respondent. - 18F-H1818

Описание: This is a summary of the administrative proceeding and subsequent rehearing in the matter of Lawrence M. Stewart v. Canyon Gate Condominium Association, Inc. (Case No. 18F-H1818052-REL-RHG).

Procedural History and Key Facts

Petitioner Lawrence M. Stewart filed a petition with the Arizona Department of Real Estate after the Canyon Gate Condominium Association Board of Directors denied his request for a variance,,,. Stewart, who was a Board member at the time of his request, had made unapproved changes to the common and/or limited common area around his unit, violating CC&Rs section 5.1,,,,. After submitting his variance request, Stewart resigned from the Board, and the two remaining members voted to deny the variance and require Stewart to restore the area to its original condition,,,.

The core legal claim in Stewart's petition was that the Association violated Bylaws section 5.4, arguing they acted in bad faith and that a fellow Board member, David Larson, was biased against him,,,. Stewart claimed he relied on Section 5.4 because it contained the only reference to a "good faith" requirement in the governing documents,,.

Original Hearing (September 6, 2018)

Issues and Arguments: Stewart argued the Board’s denial lacked good faith, citing their alleged cursory review of his changes and their stated fear of "opening a Pandora’s Box" of future variance requests,,,.

Legal Conclusions and Outcome: The Administrative Law Judge (ALJ) found that the Bylaws are a contract requiring the Association to act reasonably,. However, the ALJ concluded that Bylaws Section 5.4 was inapplicable because it serves as a "shield" to indemnify Board members from liability if they act in good faith, and it does not impose an affirmative duty on them or act as a "sword" for the owner,,,. The ALJ also found that the Board’s rationale for denial (avoiding a "Pandora’s Box") was not unreasonable,. Stewart failed to meet his burden of proving bad faith, bias, or unfair treatment by a preponderance of the evidence,.

Original Decision: Stewart's petition was dismissed,.

Rehearing (January 2, 2019)

Procedural Status: The matter was set for a rehearing (Case No. 18F-H1818052-REL-RHG),.

Key Arguments and Evidence: At the rehearing, Stewart acknowledged that the Board had not violated Bylaws Section 5.4,,,. To support his claims of bias and unfair treatment, he introduced new evidence, including a letter written by Mr. Larson urging members not to vote for Stewart in an upcoming election, and photographs of other units allegedly out of CC&R compliance,,,. Stewart admitted he did not know if the other non-compliant units had received older variances or had been granted preapproval, which would negate the need for a variance,.

Legal Conclusions and Final Decision: The ALJ reaffirmed the controlling legal point that Bylaws Section 5.4 does not impose a duty on the Board members but merely shields them from liability if they act in good faith,. Given Stewart's acknowledgment that the Association did not violate Section 5.4, the ALJ concluded the petition lacked merit,.

Final Outcome: Lawrence Stewart's petition was dismissed,. This administrative order, issued after a rehearing, was deemed binding on the parties, subject to judicial review,.

Case Details:
Case ID: 18F-H1818052-REL-RHG
Docket: 18F-H1818052-REL-RHG

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