Whether a condominium association’s requirement for owner approval of litigation was triggered, and who has standing to enforce the owner approval requirement was at issue in last week’s decision in De Soleil South Beach Residential Condominium Association, Inc. v. De Soleil South Beach Association, Inc., Case No. 3D18-1423 (Fla. 3d DCA, January 15, 2020).
- Louis Taic (“Individual Developer”) is an officer and owner of South Beach Resort Development LLC (“Corporate Developer”).
- The Corporate Developer:
- Recorded a Master Declaration creating Respondent De Soleil South Beach Association, Inc. (“Master Association”),
- Declared the Condominium, and,
- Created the De Soleil South Beach Residential Condominium Association, Inc. (“Condominium Association”).
- The Individual Developer though not a member of the Master Association or the Condominium Association was a past member of the Condominium Association.
- The Corporate Developer owns 12 of the 80 Condominium units as well as a garage and commercial parcels which apparently allow the Corporate Developer to name two of the three Master Association directors and allow the Corporate Developer to be a member of the Condominium Association.
The Condominium Association asserted that the Individual Developer and Corporate Developer structured the Master Association and the Condominium Association’s documents, including a recent amendment to the Master Association documents, to grant the Master Association authority to directly levy and collect assessments from Condominium Association members.
The Declaration of Condominium requires approval of 3/4 of all residential Condominium unit owners to approve payment or contracting for legal fees for a lawsuit other than for “the collection of assessments.”
The Condominium Association raised two issues for review, both circling the Declaration’s condition precedent of an owner vote.
Substantively, the appellate court focused on the meaning of the Declaration’s use of the term “collection.” Without a definition in the Declaration, the court relied upon a dictionary to provide common usage:
To gather together; to bring scattered things (assets, accounts, articles of property) into one mass or fund; to assemble.
Citing Black’s Law Dictionary (4th Ed. 1969). The Condominium Association’s lawsuit does not seek to gather or obtain funds, but instead merely seeks a declaration as to the “power to collect” which the court distinguished from the act of actually collecting. Thus, because collecting was not at issue, the exception to unit owner vote requirement did not apply.
Next, the Condominium Association asserted that the Master Association lacked standing to raise the vote requirement because the Master Association was not an Association member and not a party to the Declaration of Condominium. The court agreed, the Master Association did not have standing to challenge the vote requirement.
Separately concerning standing, the Corporate Developer as a Condominium unit owner had standing to raise the approval requirement. The Condominium Association conceded the Individual Developer had the same standing as the Corporate Developer; thus, summary judgment was affirmed for both.
As how to address the failure to obtain a vote, the court noted that whether in this circumstance to grant a stay as opposed to a dismissal is within the trial court’s discretion and no abuse of discretion was found.
This decision is of interest in the realm of standing, right for declaratory relief and interpretation as well as ADR compliance. The court’s reliance on the Master Association not being a party to the Declaration of Condominium and thus without standing appears appropriate. It is interesting that the approval requirement is a corporate procedure, yet the court did not rely on § 617.0304 Fla. Sta. in that, in essence, the Master Association was raising an ultra vires act, a challenge to which is reserved only for members or members’ representatives.
In parsing the exceptions to the vote requirement, the court narrowly construed the provision as applying to claims only actually involving the gathering assessments, not the power to assess or the power to collect. Though the holding is averse to the Condominium Association in this case, in the long run this narrow construction of the limitation on claims may bode well for Associations because frequently the drafters of these provisions, usually developers, do so to restrain association claims.
In addressing a stay, the court does not foreclose a stay but leaves it solely within the trial court’s discretion, applying the higher “abuse of discretion” role. It is questioned though why a stay would appropriate unless the Association could prove that compliance was occurring which would seem to be difficult if no vote of the unit owners had actually occurred, and further with the Corporate Developer owning 12 of 80 units, the ability of the Condominium Association to obtain a 3/4 vote would appear, as a practical matter, slim.
So we begin the new year…..
Michael J. Gelfand
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
© 2020 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
The only thing necessary for the triumph of evil is for good men to do nothing.
- Edmund Burke