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

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1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION NATIONAL VENTURES, INC., and AGRA INDUSTRIES LIMITED, Petitioner, v. Case No WATER GLADES 300 CONDOMINIUM ASSOCIATION, INC., Respondent. / FINAL ORDER OF DISMISSAL On July 16, 1997, National Ventures, Inc., and Agra Industries Limited (petitioners) filed a petition against Water Glades 300 Condominium Association, Inc. (respondent or association). Agra Industries Limited is the parent company of National Ventures, Inc. The dispute had previously been filed in the Circuit Court in and for Palm Beach County. On July 22, 1996, the judge before whom the case was pending entered an order requiring arbitration of Counts I, II, V, VI, VII in accordance with Section , Florida Statutes; the remaining counts were stayed pending arbitration. The petition alleges that the respondent seeks to impose against the petitioners a regulation prohibiting occupancy of a unit by other than immediate family members in the owner s absence for a cumulative total of more than thirty days during any calendar year. According to the petition, petitioners use their unit at the condominium as a vacation facility for executives of Agra Industries Limited. The association applies the regulation to preclude occupancy of the petitioners unit by its executives for more than 30 days per year. As a result, the use of the unit by the owners is severely limited.

2 The claims referred to arbitration by the court are: Count I - Acting Ultra Vires and Breach of Fiduciary Duty; Count II - Unjust Enrichment; Count V - Interference with Business Relations; Count VI - Constructive Ejectment and/or Loss of Use of Property; and Count VII - Breach of Contract. The petition seeks an award of damages. No injunctive relief is requested, most likely because the petitioners no longer own the unit. The respondent filed a motion to dismiss the arbitration petition claiming among other things that the petitioners lack standing to challenge the acts of the corporation as ultra vires. Respondent argues that since the petitioners are no longer unit owners they lack standing to bring the claim. Section (1), Florida Statutes (1995), requires that certain disputes involving condominium associations and unit owners must be submitted to arbitration before a case is filed in court. The only proper parties in an arbitration under Section are condominium associations, unit owners and tenants, in certain instances. This requirement is codified in Rule 61B (2), Florida Administrative Code, which provides that [t]he only disputes eligible for arbitration are those existing between a unit owner or owners and the association or its board of administration... In Szczepanski v. Cypress Bend Condominium II Association, Inc., Arb. Case No , Final Order Dismissing Petition (Aug. 4, 1997), the arbitrator dismissed the petition for arbitration on jurisdictional grounds where the petit ioning unit owner failed to file a deed proving his ownership of a unit as required by order of the arbitrator. The order held that the dispute did not involve an owner despite the fact that the petitioner resided in the unit and was the husband of a record owner because Chapter 718, Florida Statutes, defines owner as a record owner of legal title. And in Imber v. The Falls of Inverrary Condominium, Inc., Arb. Case No , Final Order Dismissing Petition for Arbitration (July 5, 1996), the arbitration petition was dismissed where the unit owner/petitioner sold the unit in question. The arbitrator held that since the petitioner was no longer a unit owner, and the association was no longer requiring an owner to take action, or not to 2

3 take action, jurisdiction did not exist. These authorities are still sound and their rat ionale is adopted. The petitioners argue that the fact that they had to sell the unit was before the court and that the court s order directing arbitration is a determination that the allegat ions were sufficient to invoke the jurisdiction of the department. Contrary to the petitioners assertion, the court s order does not address the standing question. True, the complaint pending before the circuit court states that the petitioners lost the use of the property and had to sell it. However, the issue of standing was not squarely presented to the court. Supporting this analysis is the court s statement that the ruling is based upon its interpretation and application of Florida Statute Section , as well as Woodlake Redevelopment Corporation v. Woodlake Condominium Association of Marco Shores, Inc., et al, [671 So.2d 253 (Fla. 2d DCA 1996)] and Ward v. The 3900 Condominium Association. [670 So 2d 1182 (Fla. 4th DCA 1996) In Woodlake 1 the court affirmed the determination of the trial court that claims of breach of fiduciary dut y against the directors and for an accounting against the condominium association fell within the definition of dispute set forth in Section In Ward the unit owner appealed the trial court s decision awarding a final judgment of foreclosure of the association s lien for $1,175, in unpaid assessments, $78.55 in interest, $13,100 for attorney s fees and $1, for court costs, making a total of $16, The court affirmed the judgment which granted a lien to the association, but found that the trial court erred in not considering the condominium association s refusal to deposit the owners late-submitted check that was less than the full sum then owned by the owner; the court held the check should have been deposited and applied in accordance with Section (3), Florida Statutes. The court indicated that if this had been done the amount in dispute might have been much less and the matter resolved without protracted litigation. In passing, the court lamented that the part ies had not utilized 1 Woodlake has since been overruled legislatively. See Chap , Laws of Florida. 3

4 mandatory nonbinding arbitration pursuant to Section Ward does not stand for the proposition that the arbitrators have jurisdiction over assessment disputes. Section (1), Florida Statutes (1995), states Florida. "Dispute" does not include any disagreement that primarily involves title to any unit or common element; the interpretation or enforcement of any warranty; or the levy of a fee or assessment, or the collection or any assessment levied against a party. Based on the foregoing, it is ORDERED: The motion to dismiss is GRANTED based on the petitioners lack of standing. DONE AND ORDERED this 26th day of November 1997, at Tallahassee, Leon County, Patricia A. Draper, Arbitrator Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida

5 Copies furnished to: Julian H. Kreeger, Esq Courthouse Tower 44 West Flagler Street Miami, FL Attorney for petitioner George W. Bush, Jr., Esq. United National Bank Tower 1645 Palm Beach Lakes Blvd., #800 West Palm Beach, FL Attorney for respondent 5