NEWS

New Decision: Springing Condominium Association Sprung (Dimitri v. Commercial Center of Miami Master)
September 17, 2018

The Third District Court of Appeal issued its mandate in Dimitri v. Commercial Center of Miami Master Association, Inc., Case No. 3D16-2549 (Fla. 3rd DCA, August 8, 2018).

The passage of time since the decision’s issuance may allow for calmer analysis, and perhaps to reduce the initial alarm spawned by the slip opinion’s publication.

As one initial consideration, the decision is not likely to impact the status of “master” condominium associations created after 1991.

Reversing thirty years of precedent, the status of many “Jungle Den” condominium “master associations” created before January 1, 1992, See Fla. Laws 1991-103 Sec 1 (PDF Volume 751/1084) is up in the air as a result of the Third District Court of Appeal’s decision. The appellate court addressed whether the Condominium Act’s 1991 amendment to §718.103(2), expanding the definition of “association” applies to a “master” association created before the January 1, 1992 effective date of the amendment, and whether a pre-1992 association that does not operate condominium property can be a condominium association even if the association is composed of only condominium unit owners.

Background.

No material fact appeared to be in controversy. The Association is described as a “master association for a group of buildings, each with its own sub-association.” The decision recited that the Association was “formed” in 1982 “under” a recorded “Declaration of Covenants, Restrictions and Easements for the Commercial Center of Miami.” The Articles of Incorporation stated that the Association was a “corporation not-for-profit under Chapter 617.” Appellant “Dimitri owned six commercial condominium units located in one of the sub-associations.” The Association apparently does not govern or administer condominium property.

The dispute was triggered by what likely was first presented as a rather pedestrian conflict. The Association rejected Dimitri’s March 2015, request to inspect specific Association official records. Dimitri’s request was stated to be pursuant to the Condominium Association Act’s Official Records process in §718.111(12), Fla. Stat. (2014). After the denial, Dimitri sought declaratory and injunctive relief, including a declaration that the master association was subject to the Condominium Act. The trial court granted the Association’s motion for summary judgment.

No Retroactive Application of Definition

A substantial portion of the appellate court’s discussion focuses upon whether the amended statutory definition has retroactive application. The appellate court found that the 1991 amendment to the Condominium Act expanded the definition of an “association” to include:

in addition to any entity responsible for the operation of common elements owned in undivided shares by unit owners, any entity which operates or maintains other real property in which unit owners have use rights, where membership in the entity is composed exclusively of unit owners or their elected or appointed representatives and is a required condition of unit ownership.

§718.103(2), Fla. Stat. (1992 Supp.); Fla. Laws 1991-103 §1 (PDF Volume 751/1084). The court reasoned that because the 1991 Law did not expressly provide for retroactive application and, perhaps more persuasive for the court, the Law expressly stated as an effective date that it “shall take effect January 1, 1992,” there was no clear expression of a legislative desire for retroactivity. Thus, the court held that the new definition of “association” in §718.103(2) Fla. Stat. (1991) did not apply retroactively.

1982 Definition Not Applicable

Continuing, the appellate court addressed whether the 1982 version of the Condominium Act applied to the Association, 1982 being the association’s year of incorporation. The court focused on the statutory “association” definition which was limited to “operation of the condominium,” which in term was “a term of art.” Thus, because the Association does not solely administer condominium property the court determined that §718.103(15), Fla. Stat. (1981) does not apply.

The Dimitri court supported its focus solely on the administration of “condominium property,” by citation to the Florida Supreme Court’s decision of Siegel v. Div. of Fla. Land Sales, 479 So.2d 112 (Fla 1985). The Dimitri decision stated that “the Florida Supreme Court did not find the test [constituency and function] to be persuasive or helpful in Siegel” remarking that the Third District’s use of those tests, at 453 So. 2d 414 (Fla. 3rd DCA 1984), was overturned by the Florida Supreme Court.

In addition, the Dimitri court derided the constituency and function tests as being “administrative interpretations” from the Department of Business and Regulation. Because the language of the statute, presumably §718.103(2) Fla. Stat. (1982), was plain and unambiguous an agency interpretation would not be utilized.

Precedent Crumbler?

In the wake of Dimitri’s issuance, many commented that the opinion is, to say the least, inconsistent with Downey v. Jungle Den Villas Rec. Ass’n., Inc., 525 So. 2d 438 (Fla 5th DCA 1988). Long before the 1991 amendment to the Act, Jungle Den adopted the “constituency” test and the “function” test to determine whether a “master” type association is to be considered a condominium association.

The constituency test asked “whether the recreation association's "membership is comprised of only condominium unit owners, and only condominium unit owners have rights in the property administered by the Association”

The function test asked whether the association maintains or operates condominium property.

Id. at 440-441. The Jungle Den court was concerned that consumers would be left unprotected by crafty drafting undermining the legislative intent behind the Condominium Act.

The legislative intent of the requirement in section 718.110(4) of unanimous approval of any material alteration or modification of the appurtenances to a condominium unit should not be vulnerable to circumvention by the simple act of setting up an ostensibly independent corporation empowered to perform some of the functions of a condominium association but without the unit owner protection provided by chapter 718, Florida Statutes.

Id. at 441. (Footnote omitted.) It should go without saying that Jungle Den, predating the 1991 amendments to the Condominium Act, did not base its reasoning upon the 1991 amendments.

Jungle Den owed its conclusion to what the Fifth District Court of Appeal saw was a practical application of the Act. In essence, a developer’s labeling of a project should not take precedence over what actually was the status of the Towers of Quayside Association. The Dimitri court should have been well aware of Jungle Den’s rational because the Dimitri opinion begins with a reference to Jungle Den. In perhaps irony, the Fifth District recognizes that the issue is one that “has vexed” the courts!

Dimitri’s reliance on the Florida Supreme Court’s decision in Siegel appears misguided because Siegel’s facts showed that the association there could not meet either the constituency test or the function test. In Siegel, non-condominium unit owners and non-condominium property could be subject to the association. Thus, the Florida Supreme Court’s statement of legislative intent with facts which could have not created a “Jungle Den condominium” was purely dicta.

The Dimitri court’s choice of phrases likely will not reassure readers. A condominium association is not created pursuant to Chapter 718 or the other community association laws. The distinction being that a condominium association is created by the corporate acts and governed by Chapter 718.

Concerning the statutory amendment’s effective date of the 1992, it is questioned whether that is legislative guidance because all bills now have effective dates which state when they can be enforced, not consistently stating whether there is retroactive impact.

Stepping back a bit further for analysis, the Dimiti court’s confusion may be foreshadowed by the court’s terminology. For example, the court stated that the association “was formed” “under the recorded declaration of covenants…” not the articles of incorporation. A condominium association is not created pursuant to Chapter 718 or the other community association laws. The distinction being that a condominium association is created by the corporate acts and governed by Chapter 718. Furthermore, the decision speaks of Dimitri owning units in “one of the sub-association.” This is as opposed to being a member of a sub-association or owning a unit in a condominium.

This decision is certainly going to reverberate in many ways, first directly as to the administration of the master associations. It will be interesting also what becomes of the definition of a “master association.” Second, in terms of statutory retroactive impair analysis will there now be an evaluation of whether the statute is procedural or provides remedies, or just rely on the effective date?

Finally, stepping way back, this decision is a reminder that a seemingly minor situation, a request for records, can have astounding implications. But why was this dispute about access to records not mediated or arbitrated?

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

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