STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES

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1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR BINDING ARBITRATION HOA ELECTION DISPUTE RIVER HOLDINGS OF CENTRAL FLORIDA, LLC and VIDACO INVESTMENTS, LLC, Petitioners, v. Fee Case No Rel. Case No BLACK BEAR RESERVE HOMEOWNERS ASSOCIATION, INC., Respondent. / FINAL ORDER ON MOTION FOR ATTORNEY S FEES On May 7, 2013, Respondent Black Bear Reserve Homeowners Association, Inc., filed a motion for attorneys fees against Petitioners River Holdings of Central Florida, LLC and Vidaco Investments, LLC. The condominium is located in Lake County, Florida. Respondent s motion seeks an award of $13, in attorney s fees. By Order entered on May 8, 2013, Petitioners were directed to file a response within twenty (20) days of the date of the Order. On May 28, 2013, Petitioners filed a response. In the response, Petitioners argue that Respondent is not entitled to an award of attorney s fees and costs. This Order is entered accordingly. Findings This fees case arises from arbitration case number In the underlying case, the petition alleged that Respondent improperly conducted the 2011 and 2012 annual meetings and elections, and would not allow members to speak at the 2012 annual meeting. The petition also contained a general allegation that Respondent 1

2 had a long history of various and sundry types of misconduct, including gross mismanagement, fraud, improper assessments, failing to allow access to official records, providing incorrect information to government agencies, entering into ultra vires business transactions, selective enforcement of the covenants and restrictions, and harassment of association members. No factual details were provided in support of the allegations of general misconduct. The petition sought as relief an Order finding the 2011 and 2012 elections to have been illegal, invalid, void and otherwise have no effect; ruling that the current Board of Directors is invalid, illegal and without any powers, authority and/or rights; requiring the immediate dissolution of the current Board of Directors; forbidding the current Board of Directors from meeting, organizing, or making any decisions as a board or on behalf of the homeowners association; requiring a new election of all vacancies on the Board of Directors to take place within 30 days of the order; and appointing a receiver to operate, oversee and otherwise manage the Board of Directors until the new election takes place and to oversee the new election. The Association was served on February 4, 2013, and a default was entered against the Association on March 11, On March 20, 2013, the Association filed an Answer to the petition, a motion to lift the default, a motion in opposition to the petition, and a motion to dismiss. An order was entered on March 22, 2013, vacating the default, striking certain claims in the petition for lack of jurisdiction, striking all claims pertaining to the 2011 election as moot due to the intervening 2012 election, and requiring Petitioners to show cause why the remaining claims in the petition should not be dismissed for failure to 2

3 provide pre-arbitration notice and/or because Petitioners lacked standing to challenge the manner in which the Association conducted the 2012 election. 1 On April 1, 2013, Petitioners filed a Response to the March 22, 2013 Order to Show Cause, a Motion to Disqualify Donald Holmes as Counsel for Respondent, and a Motion for Leave to Amend Petition to Add Additional Petitioners to resolve the issue of standing, and remove Vidaco as a party. On April 4, 2013, the Association filed their Opposition to Petitioners Motion for Disqualification of One Counsel (Donald C. Holmes) a Qualified Representative Application (for Donald C. Holmes & Associates, P.A.) and a Response to Petitioners Motion for Leave to Amend Petition to Add Additional Petitioners, a second Motion to Dismiss the Petition, and a Reply to Petitioners Response to March 22, 2013 Order to Show Cause. On April 9, 2013, a Final Order of Dismissal was entered in the underlying case. The basis for dismissal was that Petitioners had not provided adequate pre-arbitration notice to Respondent in compliance with Section (4)(b), Florida Statutes. Conclusions Pursuant to section (4)(k), Florida Statutes, the prevailing party in an arbitration proceeding shall be awarded the costs of the arbitration and reasonable attorney s fees in an amount determined by the arbitrator. A party is a prevailing party if it succeeds on a significant issue in the arbitration and achieves some of the benefit sought in bringing the action. See Moritz v. Hoyt Enterprises, Inc., 604 So. 2d 807, 809 (Fla. 1992) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). 1 The Association claimed that Petitioners lacked standing to challenge the 2012 election based on the dates their deeds were recorded. 3

4 In the underlying case, the significant issue in the arbitration was whether Respondent properly conducted the 2012 annual election. However, Respondent did not prevail on this issue because the arbitrator never reached the merits of the petition. Some claims were dismissed for lack of jurisdiction, claims pertaining to the 2011 election were dismissed as moot, and ultimately, the remainder of the petition was dismissed for failure to provide adequate pre-arbitration notice. Prior arbitration cases addressing attorney s fees when a petition has been dismissed for failure to give pre-arbitration notice have reached differing conclusions. Some cases have held that under these circumstances, there is no prevailing party, and therefore, no fees are awarded. See, e.g., Henderson v. Charleston Place Condo. Ass'n, Inc., Arb. Fees Case No , Order on Motion for Costs and Attorney's Fees (May 8, 2006)(Where case was dismissed for lack of pre-arbitration notice, there is no prevailing party. ); High Point of Delray West Condo. Ass n., Section 3, Inc. v. Lester, Arb. Case No F, Final Order (June 15, 1994)(Where association failed to present any evidence to support its allegation that it had demanded compliance with declaration prior to filing arbitration petition, and where unit owners denied they had received any notice of the violation prior to receipt of petition, association would not be considered a prevailing party when case was mooted because unit owners immediately cured violation upon receipt of petition). Other cases have held that a Respondent who files a successful motion to dismiss based upon failure to provide pre-arbitration notice is a prevailing party for the purpose of attorney s fees. See Holfve v. Ocean Park North Condo. Ass n., Inc., Arb. Fee Case No , Final Order Awarding Attorney's Fees and Costs (November 27, 4

5 2002)(A party may be considered a prevailing party, even where there is no determination on the merits, where the action by the party was the motivating factor or catalyst for the desired action and the action was required by law. Where the association filed a motion to dismiss alleging the failure of the petitioner to provide prearbitration notice, the association is the prevailing party.); Ovanes, et al. v. The Marina at the Bluffs Condo. Ass n Inc., Arb. Case No , Final Order on Attorney's Fees (October 29, 2002)(Where the association's motion to dismiss provides the catalyst for the petitioner to dismiss the petition for arbitration, the association is the prevailing party and is entitled to an award of attorney's fees.); Pine Ridge at Palm Harbor Condo. Ass n, Inc. v. Mourandian, et al., Arb. Case No , Final Order on Motion for Attorney's Fees (April 20, 1999)(Tenant was the prevailing party where petition was dismissed for failure of association to give pre-litigation notice.). The undersigned finds that the latter line of cases provides the more appropriate guidance as to the identification of a prevailing party in the present case, where the petition was dismissed only after the Association had filed an Answer to the petition, a Motion to Lift the Default, a Motion in Opposition to the Petition, a Motion to Dismiss, its Opposition to Petitioner s Motion for Disqualification of One Counsel (Donald C. Holmes), a Qualified Representative Application (for Donald C. Holmes & Associates, P.A.), a Response to Petitioners Motion for Leave to Amend Petition to Add Additional Petitioners, a second Motion to Dismiss the Petition, and a Reply to Petitioners Response to March 22, 2013 Order to Show Cause. In its answer and motions to dismiss, the Association raised, inter alia, lack of subject matter jurisdiction over claims of improper and fraudulent bad acts by the board, Petitioners failure to comply with 5

6 pre-arbitration notice requirements, and the fact that the intervening 2012 election rendered the claims as to the 2011 election moot. These were the precise reasons why, in the Order of March 22, 2013, Petitioners claims regarding bad acts by the board were stricken for lack of jurisdiction, claims regarding the 2011 election were stricken as moot, and the remaining claims in the petition were dismissed for failure to comply with pre-arbitration notice requirements in the Final Order of April 9, Therefore, the Association is the prevailing party in this case. The Association seeks compensation for the services of Donald C. Holmes, Esq. at the rate of $ per hour for hours. Although Mr. Holmes is licensed to practice law in Maryland, California, and the District of Columbia, he is not licensed in the State of Florida. In order to represent the Association in the present case, Mr. Holmes submitted a Qualified Representative Application on April 4, 2013, which was not ruled upon as the case was dismissed on April 9, The Association also seeks compensation for the services of Whilden S. Parker, Esq. at the rate of $ per hour for 1.0 hour; Elizabeth A. Lanham-Patrie, Esq. at the rate of $ per hour for hours; Patrick C. Howell, Esq. at the rate of $ per hour for 1.30 hours; and Robert Taylor at the rate of $ per hour for 0.50 hours. These attorneys are all licensed to practice in the State of Florida. However, only Donald C. Holmes actually made an appearance in this case by signing and filing pleadings and documents, and he did so not as an attorney licensed to practice in Florida, but in the capacity of a Qualified Representative. Prior arbitration cases do not support the conclusion that because a party's representative is an attorney who is licensed to practice law in a jurisdiction other than 6

7 Florida, the party is entitled to recover fees for his services. See, e.g., Huffman v. Emmy-Lou, Inc. of Naples a/k/a The Billows, Arb. Case , Final Order on Motion for Attorney s Fees and Costs (September 10, 2007); Belardo v. Four Seas Suns Condo. Ass'n, Inc., Arb. Case No , Final Order Awarding Costs (April 12, 2004)(attorney's fees were denied where the attorney never appeared in the underlying case and was not licensed to practice in Florida). Nor do prior arbitration cases support the award of attorney s fees where an attorney licensed in Florida was consulted, but never filed a notice of appearance or any other documents on behalf of a party. See Raska v. The Fountains of Ponte Vedra, Inc., Arb. Case No F, Final Order on Petitioner's and Respondent's Motions for Attorney's Fees and Costs (November 13, 1995)(Attorney's fees denied where petitioner consulted briefly with an attorney but where attorney never filed a notice of appearance or filed anything on behalf of petitioner). In the present case, for whatever reasons, the Association chose to be represented by someone who is not an attorney licensed in Florida. Since an arbitrator cannot authorize a non-florida attorney to appear as an attorney in Florida, a prevailing party may not recover attorney's fees for the efforts of a non-florida attorney. Bonavida Condo. Ass'n, Inc. v. Starr, Arb. Case No , Final Order on Fees (June 16, 2006). Accordingly, the Association's Motion for Attorney's Fees must be denied. Therefore, based on the foregoing, it is ORDERED: Respondent s Motion for Attorneys Fees is hereby DENIED. 7

8 DONE AND ORDERED this 12 th day of September, 2013, at Tallahassee, Leon County, Florida. Leslie O. Anderson-Adams, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Suite 16 Tallahassee, Florida Telephone (850) Facsimile (850) Trial de novo This decision shall be binding on the parties unless a complaint for trial de novo is filed in accordance with section , Florida Statutes. Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail to the following person on this 12 th day of September, 2013: John Y. Benford, Esq. Benford Law Firm, P.A West Morse Blvd., Ste. 101 Winter Park, FL Attorney for Petitioners Donald C. Holmes, Esq. Donald C. Holmes & Associates, P.A. 110 Mill Street P.O. Box 279 Greensboro, Maryland Respondent s Representative Leslie O. Anderson-Adams, Arbitrator 8