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Often times, community association board members have to make difficult decisions.  Sometimes, their decisions affect the entire community equally, and at other times, decisions made by the board may negatively affect only a few or even just one member.  As a result, and even in the best of times, not everyone is always happy. Unhappy association members can express themselves in several different ways. If it’s close to election time, unhappy members might decide to challenge the incumbent board members. But, if the next election is months away, a board member, or even the entire board, may find itself subject to a “recall” petition.  When the result of a recall action is approved by the association’s board or by the Division of Florida Condominiums (the “Division”), it is referred to as “certified”.

Any condominium or homeowners’ association board member may be recalled and removed from office, with or without cause, during a special members meeting by the vote of a majority of all the members who were entitled to vote the member into office. In its “Recall Guide” the Division explains that “the procedural requirements for a recall at a meeting are challenging and complex. Therefore, a recall at a meeting is seldom successful and owners are strongly discouraged from attempting a recall in this manner.” With that in mind, another method to carry out a recall is by a written agreement signed by a majority of all the members who were entitled to vote the member onto the board.  However, in both instances, there are unique and technical requirements that must be followed. Failure to do so will result in a failed recall, meaning that the recall action will not be certified.

BOARD MEMBERS BEWARE:  Interestingly, even if the recall action would have failed, if the board fails to follow the unique and technical requirements as set out in both Florida Statutes and the Florida Administrative Code, then even what would have led to a failed recall could  end up being certified (approved) by the Division.

The key to avoid such a result is for the association’s board to understand its need to act with a real sense of urgency. An association’s board of directors must hold a duly noticed board meeting within five (5) full business days after adjournment of the special members meeting or within five (5) full business days after the service of the written recall agreement upon the board. The purpose of this board meeting is to determine whether to certify or not to certify (approve or not approve) the recall.  Failure of the board to follow this extremely important step will lead to a technical default and the recall will be certified. If the recall is certified, then the recalled board member must turn over to the board any and all records and property of the association in their possession.

Alternatively, if the board determines not to certify the alleged victorious result of the recall, the board MUST, within five (5) full business days after the board meeting, file a recall petition (technically called a “Petition for Arbitration”)  with the Division. Failure to do so could again likely lead to a successful recall, even when the recall action would have otherwise failed! If the arbitrator certifies the recall as successful, the recall will be effective upon mailing of the final order of arbitration to the association.

If the recall of a board member is certified, that board member is removed from office. If a majority of the board members are successfully recalled, the replacement candidates are elected by the unit owners during the recall process.  If less than a majority of the board members are recalled, then the association’s members do not elect replacements, but rather the remaining board members fill the vacancies created by the recall by appointing replacement board members of their choice.

Recalling an officer of the association is a whole different story.  What can a board do when it’s unhappy with its president, or any other officer? Must the entire community be involved in the recall process? The answer to this inquiry is a simple and resounding, “NO” (most of the time).  Typically, and subject to the association’s governing documents, each officer serves at the pleasure of the board. In those instances, it is the board members of the association  who decide the association’s officers at a properly noticed board meeting. When a community, or its board, is unhappy with an officer’s job performance, then the association’s board can vote the officer out of office. Of course, that person is still a voting member of the board, but their role as officer of the association has changed.

While the ink in the Third District Court of Appeal’s December 12, 2012 opinion in Coronado Condominium Association vs. La Corte  is still wet and the Court’s decision is not final until disposition of any timely motions for rehearing,  this case will be of great interest to managers and board members alike as it clearly suggests that a community association should not be subjected to a claim for punitive damages for acts committed by the association’s manager when that manager is acting pursuant to a contract between the management company and the association.

In this case, La Corte was the plaintiff in the underlying litigation who alleged all sorts of misdeeds were committed by the association’s manager. In his proposed third amended complaint, La Corte added a verified motion for leave to add a claim for punitive damages against the association. According to the Court, La Corte described “numerous alleged misrepresentations, acts, and omissions on the part of the employees serving as the property manager for the Association and others working for a contractor performing balcony work at the Coronado Condominium.

The Court pointed out that the individual employee was a licensed property (community association) manager, but not a controlling officer, director, or “manager” of the association as a corporate entity. Similarly, La Corte’s allegations regarding his  balcony repair, trespass claims, use of his bathroom, damage to the walls of his unit, and removal of carpeting and plumbing parts, did not involve active, knowing participation by, or the consent or gross negligence of the Association as an entity.  The Court held that La Corte’s pleadings did not meet the specific and heightened rules established by the Legislature in Section 768.72(3) of the Florida Statutes, necessary to bring a claim for punitive damages against the association based upon the acts of its manager.

Section 768.72(3), Florida Statutes, provides, that,  “in the case of an employer, principal, corporation, or other legal entity, punitive damages may be imposed for the conduct of an employee or agent only if the conduct of the employee or agent meets the criteria specified in subsection (2) of the Statute that defines the requirements for “intentional misconduct” and “gross negligence” and:

“(a)      The employer, principal, corporation, or other legal entity actively and knowingly participated in such conduct;

(b)       The officers, directors, or managers of the employer, principal, corporation, or other legal entity knowingly condoned, ratified, or consented to such conduct; or

(c)       The employer, principal, corporation, or other legal entity engaged in conduct that constituted gross negligence and that contributed to the loss, damages, or injury suffered by the claimant.”

La Corte mistakenly assumed that the alleged misconduct of the individual property manager was akin to acts of misconduct committed by the Association. The Third DCA noted that the manager was not an officer or director and that La Corte’s allegations did not comply with the statutory procedure to impute the alleged misconduct to the Association as employer of the alleged tortfeasors (or as a corporate defendant) for purposes of the punitive damage claim. To decide otherwise, the court continued “would be contrary to the plain language of the statute”.

This case makes clear that a manager must control the corporation for the entity to be subject to punitive damages for the acts of its manager.  Remember, a community association manager manages the association’s property, but it is the association’s board and officers that control and manage the corporate entity which we affectionately refer to as the “association”.

In Garvin v. Tidwell, decided in October, 2012, Florida’s 4th District Court of Appeals had the opportunity to review a settlement agreement successfully negotiated by the parties during a mediation that took place during trial. This case was about a horse who allegedly bucked and caused injuries to its fallen rider. But, it’s not the facts of the underlying action that are of interest. Rather, this case explains what can happen after a settlement is reached, when it is learned by one of the parties that the other party failed to disclose relevant information during the “discovery” stage of the trial court proceedings.

After reaching the settlement, Garvin argued that Tidwell failed to provide full disclosure during the lower court’s discovery stages. But, for that failure to disclose key facts, a settlement may not have been reached at all, and minimally can cause the other party to undervalue the worthiness of their own claim. In Garvin v. Tidwell, during “discovery”, an “interrogatory” (a fancy legal term that, in simple terms, means a written question asked by one party to be answered in writing by the other party) asked for the names of persons and any documents concerning the care, maintenance, and training of the horse including medical issues. Tidwell had described the horse as a “gentleman” and “lazy”. After settlement, Garvin learned of an advertisement that, as it would turn out, was a “smoking gun” type of document.

The advertisement quoted Tidwell as saying that she decided to give the  medication “Ex Stress” to her horse, Buster, because he “can be a little difficult at times”, she said. During depositions Tidwell failed to mention that she gave Buster the calming supplements and failed to mention Buster’s “difficult” behavior. After learning of this new information, Garvin sought to have the settlement agreement voided. The trial court initially sided with the horse’s owner, but the 4th District Court of Appeal reversed in favor of Garvin, the deceived party.

In Garvin, the 4th DCA explained, “Florida courts have long recognized that one of the primary functions of ‘discovery’ is to enable parties to enter settlement negotiations with an understanding of their chances of success at trial. A primary purpose in the adoption of the Florida Rules of Civil Procedure is to prevent the use of surprise, trickery, bluff and legal gymnastics. Revelation through discovery procedures of the strength and weaknesses of each side before trial encourages settlement of cases and avoids costly litigation. Each side can make an intelligent evaluation of the entire case and may better anticipate the ultimate results… ‘Evasive or incomplete’ answers can amount to a failure to answer and may also warrant the imposition of sanctions.”

In making its point, the 4th DCA looked to a 2001, Third District Court of Appeal case, Leo’s Gulf Liquors v. Lakhani.  In that case, the 3d DCA discussed the importance of “honesty” in discovery. The court explained that, “[w]itnesses who give sworn testimony by way of interrogatories, at depositions, pretrial hearings and trial, swear or affirm to tell the truth, the whole truth, and nothing but the truth. We expect and will settle for nothing less. Lawyers who advise their clients and/or witnesses to mince words, hold back on necessary clarifications, or otherwise obstruct the truth-finding process, do so at their own, and the clients’ peril.” The Third District also made clear that a witness’ oath to tell the truth is equally demanding at depositions.   In the end, the 4th DCA found that Tidwell violated her discovery obligations by failing to disclose the Ex Stress advertisement and information known to her about her horse, Buster’s, behavior which prompted the use of Ex Stress.

The lesson to be learned today is one we all learned in kindergarten so long ago, “liars never prosper”.

Recently, an interesting case was decided by Florida’s Second District Court of Appeal. The Court determined the liability of a valet parking service when returning keys to an “obviously intoxicated customer.” In Weber v. Marino Parking Systems, a November, 2012 case, the Second DCA held that the valet parking service does not owe a duty to third parties to refrain from returning the car keys to a car’s owner, even when the valet parking service knows the driver is intoxicated!

In Weber, a wrongful death action was filed against Marino Parking Systems by the mother of a young woman killed as a passenger in an automobile accident. The driver was found to have been intoxicated.  The girl’s mother accused Marino Parking Systems, a valet company, of improperly handing the keys over to an obviously intoxicated driver.

In rendering its decision, the Court referred to another case where a bailor/bailee relationship existed.  In that case, it was held, “because the customer already owned the car, a repair shop could not be liable for negligently entrusting the car back to its owner.”  In simple terms, the “bailor” gives a personal item of theirs to the “bailee” to hold in trust. Similarly, in Weber, the Court found that the valet cannot be liable for negligently entrusting the car back to its rightful owner.

The Court found that a “bailor/ bailee” relationship existed between the car’s owner and Marino Parking Systems. It used that relationship as the primary reason to rule in favor of the valet company. Essentially, the Court’s decision had more to do with legal theory and prior case law rather than simple common sense.

The Court even noted that a valet parking service could be liable for “conversion” had it not returned the car to its [intoxicated] rightful owner. The term “conversion” refers to the situation where a person exerts unauthorized use or control of another’s property to such a degree that it creates a legal obligation to compensate the aggrieved party for the unauthorized use of their property.

Too many moms, dads, sisters, brothers, family members and friends are painfully aware of the consequences of drunk driving. In rendering future decisions, the courts would be wise to put more emphasis on protection of society and our loved ones rather than outdated principles of law.  In addition, Florida legislature could enact new legislation providing protection to a valet service who withholds a driver’s keys when a driver is clearly intoxicated.

Unless you share similar political views, your neighbor’s front yard sign supporting their favorite political candidate may be upsetting, but, that alone is not a reason for the board to demand the sign’s removal.  However, a well-crafted and properly adopted rule prohibiting all signs is likely lawful and enforceable.  Today’s issue de jure is, “Can a homeowner or condominium association prohibit the display of political yard signs?”  In short, “yes, it likely can.”  The reason the word “likely” is used is due to the fact that, as yet, there is no Florida case law which directly answers this inquiry.  But, given other existing cases, such a rule is more likely than not, enforceable.

In examining an association’s “no sign” rule, let us first address the argument heard every four years, “This is America!  The First Amendment protects the right of all homeowners to display political signs.”  Wishing this to be true will not help.  In fact, the First Amendment concepts of freedom of speech and freedom of expression apply to governmental settings.  As such, they act as both a shield and a sword to prevent the government from stifling your free speech rights.

In contrast, homeowner or condominium associations are not governmental entities (though admittedly they govern, they have no nexus to local or federal government).  In 1987, the Florida Supreme Court held, in Quail Creek POA v. Hunter, that neither a homeowners’ association’s recordation of its covenants in the public records, nor the enforcement of its covenants in state court, created a sufficient nexus to evidence “state action” such that the First and Fourteenth Amendment would apply. With that in mind, any homeowner would be hard pressed to argue otherwise.  Admittedly, there are occasions when the Florida Supreme Court applies other rights set out in our Federal Constitution, but not in this instance.  (Then again, at times, the courts are not as predictable as we might otherwise like to think.)

Courts have long since held that owners give up certain liberties when living in an association.  In 2002, the Florida Supreme Court held, in Woodside Village v. Jahren, that certain individual rights must be compromised when one chooses to live in a condominium association.

With that as our backdrop, any “no-sign” rule should be artfully drafted to help ensure enforceability. There is no margin for error. The dispositive court cases regarding rule enforceability make clear that a sign restriction must be “clear and unambiguous” to be enforceable against an owner. Remember, a basic principal of contract interpretation is that ambiguous terms are held against the drafting party.  As a practical matter, in plain English, this means that in the event the rule is even slightly confusing, then the homeowner will receive the benefit of the doubt.  Also, any covenant or rule must be applied fairly to avoid selective enforcement rebuttals; so, if Dorothy the Democrat is told to remove her lawn sign, so too must Roger the Republican be similarly told.

Thus, a homeowners’ association could, more likely than not, enforce its no-sign policy which includes prohibiting political signs.  Also, as a general rule, courts favor covenants adopted by the membership over rules adopted by the board; meaning, the former serves to increase the association’s chances of prevailing.

Upon legal challenge, a court might be more inclined to uphold a no-sign rule that does not include an absolute prohibition, but rather, that regulates the length of time the sign can be displayed, its size, where it can displayed, and by when it must be removed, too.  Before demanding that an owner remove their political sign, the board should review its homeowners’ association’s “signage” rules.  If the rule at issue is not patently clear, then it is likely time to consider amendment before enforcement.  Consider, too, election season is short.  By the time a lawsuit for an injunction to enforce the “no-sign” covenant is fully resolved, it might be time to consider the next presidential candidate!

Did you know that, for the most part, the State of Florida holds title to lands under navigable waters and a part of the foreshore  (which, in plain English, means the land between the high and low watermarks). This land is held in trust for all of us to enjoy, but the State is free to dispose of it, too, so long as certain protections are in place. One such protection is the right of an upland owner to an unobstructed view of the Channel (meaning a navigable waterway). What started out as common law rights, are codified in Chapter 271, Florida Statutes.

With that in mind, let us examine the story of Joe who purchases a condominium 20 stories high on the beach. From his gorgeous unit, there are spectacular views. He can look east, northeast, and southeast.  He can enjoy unobstructed views across the ocean’s expanse. From a different balcony, he looks out to the west, northwest and southwest. From this position, he can see the beautiful downtown skyline. Then, Joe’s worst fear comes to life when he learns that two new buildings, taller and wider than his condominium, are proposed.  The first building will be built on the property next door that is adjacent to his condominium, and the other will be built across the street, to the west, directly behind his condominium. When that building is completed, Joe’s view of the lovely downtown skyline will be forever gone.  What rights does Joe have? Sadly, not much when it comes to the view of the skyline, but it is a different story looking east.  Let us first examine the loss of the skyline view.

Florida law disdains negative easements.  A negative easement is a promise not to do something with a certain piece of property, such as not building a structure more than one story high or not blocking a skyline view by constructing a building. A negative easement is sometimes referred to as an easement of light and air. Simply put, there is no right to a negative easement unless such a requirement is set out in a recorded deed restriction.  Therefore, if Joe wants to continue to enjoy his view of the downtown skyline, he might consider buying a unit in the new condominium. However, the same is not true for Joe’s view of the ocean. In this instance, Joe is likely to fare a whole lot better as the body of “riparian law” extends certain protections to owners of “upland” property. Such rights include “the right to an unobstructed view of the channel”. But, does “unobstructed” mean the same thing as “unencumbered”?

When it comes to Joe’s right to view the ocean, there is no bright-line test used to measure when his view is unreasonably impaired. In a 1957, Florida Supreme Court case, Hayes. v. Bowman, the existing owner argued that his neighbor’s project should not be allowed to proceed because it would unreasonably interfere with his existing view of the ocean. The homeowner argued that he should be free from all interference to his view of the ocean.  He argued that his viewing rights should extend diagonally from the corners of his property line, while the developer owner of the adjacent property argued that the homeowner’s right to an unobstructed view of the ocean should only extend directly east from the corners of the property line. The Court rejected both of these arguments and held that “in any given case, the riparian rights of an upland owner must be preserved over an area “as nearest practicable” in the direction of the Channel so as to distribute equitably the submerged lands between the upland and the Channel. In making such “equitable distribution” the court must give due consideration to the lay of the upland shoreline, direction of the Channel and the correlative rights of the adjoining upland owners.

Therefore, Joe’s continued right to view the ocean will require judicial determination. Is Joe’s view unreasonably obstructed or merely encumbered?   In the Hayes case, the Court upheld the lower Court’s ruling in favor of the developer because it found that the lower Court decision in the developer’s favor “did no violence” to the right of the appellant. In other words, while the view might have been encumbered, it was not found to be unreasonably obstructed.  However, it should be noted that the Court’s decision was made based on the evidence presented. With this in mind, it should be mentioned that, had the party who complained about their diminished view presented more substantial evidence to document their situation, perhaps a different result would have been achieved.

The other day, board member Earl P. asked if a clause in his association’s declaration was enforceable. The clause provided that “before an owner can sell their unit, the association, in its sole unfettered discretion, must approve the transaction.” Well Earl, if that is the entirety of the clause, then it is very likely this type of approval clause does not pass muster. For reasons more fully explained below, the clause will not withstand judicial challenge.

There is a long standing legal concept that prohibits “unreasonable restraints on alienation”. In an overly simplistic sense, it means that restrictions on the transfer of property must be reasonable. Absolute restrictions on the transfer of real property are not considered reasonable and are disdained by the courts. The term “alienation” is nothing more than a fancy legal word that means “transfer.” Whenever the term or a variation of it appears, just substitute the word “transfer” in its place.

In 1984, the 3rd District Court of Appeal held in Aquarian  Foundation v. Sholom House,  “a condominium association’s board of directors may have considerable latitude in withholding its consent to a unit owner’s transfer, [however] the resulting restraint on alienation (transfer) must be reasonable.” In this manner, the court continued, “the balance between the right of the association to maintain its homogeneity and the right of the individual to alienate (transfer) his property is struck.” The association argued its right to deny the purchase was balanced by a different provision in the declaration known as a “reverter”. (A “reverter clause” means the deed reverts back to a specific party upon the occurrence of specific events.) However, the court did not agree and found that the reverter clause only created a veiled obligation of the association to purchase the unit upon its denial. But, the court reasoned, if upon denial, it was mandatory for the association to provide a substitute buyer, then the restriction could have been valid.

In 1993, in Camino Gardens Ass’n Inc. v. McKim, the 4th District Court of Appeal reviewed a case where the association’s declaration was amended to provide that the prohibition on the sale, lease, or occupancy of any lot in the subdivision to anyone OTHER THAN a duly admitted member in good standing of the association was prohibited. The court held that, “in its purest sense, this provision is a condition to alien (transfer) only to particular persons, was perpetual in duration, and effects every type of alienation.  When viewed in combination with the association bylaws defining membership, the provision becomes a condition prohibiting conveyance without the consent of the Association.”  In other words, the owner was absolutely and fully prohibited from selling their property to anyone except other existing owners.

As a result, the court found the restriction invalid.

In 1977, in Coquina Club v. Mantz, the Second District Court of Appeal reviewed an association’s declaration that contained a certain age restriction (that was otherwise lawful at the time), and that also required the association to provide a substitute buyer upon its denial of a purchaser. In this case, the applicant did not meet the age requirement and was therefore “facially” disqualified. Therefore, the court reasoned that, in light of the “facial disqualification”, the association did not have to provide the otherwise required substitute buyer.

To re-cap, if a restriction is absolute, applies to all sales and is perpetual in duration, then it is invalid.  In other words, limitless power of denial is rendered judicially improper and unlawful.  If the association has the right to deny a purchaser, but the declaration is void of any standards by which such decisions should be made, the restriction is most likely invalid.

If the declaration requires a substitute buyer be provided by the association when it denies a proposed transaction, then the restriction likely has validity. If the applicant is “facially” disqualified, the association need not provide the otherwise required substitute buyer.

If the association has the right to deny an applicant “for-cause”, then to withstand judicial scrutiny, the declaration needs to minimally provide for standards as to what “for-cause” means. For example, if the declaration provides that “for-cause” meant “felons who committed crimes of moral turpitude”, then based on the existing cases, the restriction is, more than likely, valid.   Another “for-cause” standard could be as simple as requiring the applicant to be truthful. If a lie is later discovered, then the above line of cases suggests that a “for-cause” denial based on a facial disqualification would be justified.  There is another important lesson to be learned. Legislation to set parameters regarding an association’s approval rights is long overdue.

Leshana tova to all those celebrating Rosh Hashanah. May you and your families be inscribed for a good year!

The storm is over and sadly the association’s clubhouse is damaged. The manager calls the association’s insurance company to report the claim. They arrange for their “adjuster” to survey your damage and issue a report. The insurance carrier reviews the report and determines the association’s entitlement for the loss it suffered. So far, the board is pleased at the insurance company’s responsiveness and the adjuster’s attentiveness who genuinely sympathizes with the association’s loss. Everyone is starting to feel a little better about the situation. The manager starts to arrange for the substantial repairs that must be undertaken. The repair estimates arrive while the board waits for the insurance carrier’s valuation. Then, the report arrives. The board is panic struck as they read that the association’s claim is valued at $300,000., and the least repair estimate was $700,000.  What went wrong and how did this happen?

An old expression comes to mind, “the good Lord helps those who help themselves”. In this made up story, that likely at times resembles real life, the association did not avail themselves of what some consider to be the most important part of making an insurance claim. The association did not retain a Public Adjuster to value the claim.

Albeit the term “Public Adjuster” can be a bit of a misnomer and is confusing. Let’s address that right now. A Public Adjuster is a state licensed insurance claims adjuster who advocates for YOU in appraising and negotiating your insurance claim.

In general, there are three classes of insurance claims adjusters: i) “staff adjusters” who are employed by an insurance company or self-insured entity, ii) “independent adjusters” who are independent contractors hired by the insurance company and iii) “Public Adjusters” who are hired by the policyholder.

The Public Adjuster works for you, the property owner, and not the insurance company. Aside from attorneys and your insurance broker, Public Adjusters are advocates for your rights. Public Adjusters are experts on property loss adjustment who are retained by policyholders to assist in preparing, filing and adjusting insurance claims. Employed exclusively by a policyholder who has sustained an insured loss, these professionals manage every detail of the claim, working closely with the insured to provide the most equitable and prompt settlement possible. A Public Adjuster inspects the loss site immediately, analyzes the damages, assembles claim support data, reviews the insured’s coverage, determines current replacement costs and exclusively serves the client, not the insurance company. Public Adjusters are also beneficial when it is clear that the insurer will pay the claim and the only issue is the proper identification of all losses and their valuation and cost to repair.

A typical wind storm, fire or flood policy contains hundreds of provisions and stipulations, constantly changing forms and endorsements, and many complex details such as inventory appraisals and real estate evaluations that are required in case of a loss. Most policyholders are not aware that they have the burden of proof.

Best of all, Public Adjusters are highly motivated to ensure that you receive every penny you can because they typically charge a percentage of the insurance settlement.  It’s money well spent! How do I know? Because, even as an attorney, I used them, too. Years ago after we were hit with multiple storms back to back, my own claim was undervalued. My Public Adjuster helped ensure that my claim was properly compensated.

Whether you’re an association board member or homeowner, if your property suffers damage from a casualty event, remember to avail yourselves of the benefits of a reputable Public Adjuster.