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 ARBITRATION THE LEMON TREE -1 CONDOMINIUM ASSOCIATION, INC., Petitioner, v. Case No ABROSCAT FAMILY TRUST, et al., Respondents. / ORDER TO AMEND PETITION On January 4, 2012, Petitioner, The Lemon Tree-1 Condominium Association, Inc., filed a petition for arbitration related to issues resulting from the total destruction by fire on February 28, 2009 of 8 of its units. These units were located in Building 7. The Association s prayer for relief in its arbitration petition is for the arbitrator to order Respondents to come to a unanimous agreement as to whether the Association shall completely raze Building 7, without formal approval for same as required by Section 9(b)(2) of the Declaration of Condominium or comply with Article 14.5 of the declaration and reconstruct Building 7. According to the petition, the condominium property is comprised of 17 two-story residential buildings housing 8 to 12 units each for a total of 168 units. The 8 burned units were all located in building 7 which has been deemed totally uninhabitable. Presumably, the 8 unit owners have been displaced since the fire in 2009, but the

2 petition makes no reference to the unit victims at all. The insurance company has paid the Association the limits of its policy for that building, $250, Attached as exhibit C to the petition is a copy of a Declaratory Statement Petition which the Association filed in April, 2010, with the Division, seeking a declaratory determination resolving what it perceived as conflicts between provisions of the declaration and The Condominium Act (the Act), section , et seq., Florida Statutes. These conflicts also arose from the damage left by the 2009 fire and the Association s indecision as to whether to repair Building 7 or demolish it. The Division, however, declined to issue a declaratory statement because the subject matter pertained to an inherent conflict within the declaration which is outside of its jurisdiction. The Association s petition details the governing documents, including: the portions of the Act which it deems in conflict; the consequences if the Association chooses to demolish and not rebuild; that the property was underinsured and the insurance payout left the Association with only one half of the funds needed to restore or repair the building; why the Association was otherwise short of rebuilding funds; that the declaration and the Act prohibit the Association from securing the shortfall from a special assessment; the effort it took in balloting all 168 unit owners in an attempt to get 100% written agreement from them and their first mortgagees on whether to repair or demolish the building; and opining that the Association was not likely to qualify for a loan to rebuild. There is nothing in the petition which notes that the Association separately reached out to the owners of the destroyed units to get their input or that they were 2

3 canvassed so their concerns could be considered, apart from those of the other unit owners. For some reason, the petition does not state definitively what has happened to the remnants of Building 7 since the fire. 1 Is it standing or not? The Association went to the trouble of issuing ballots to all unit owners to get their votes on whether to repair or demolish and rebuild, but never states in the petition the outcome of the vote. Of the 168 votes cast, all the petition notes is that there was no unanimity. It appears from the petition that the Association has taken no action whatsoever with respect to the burned out building s remains. The board has made no decision in the 2 years since the fire whether to rebuild or demolish, except to shift the burden entirely onto the unit owners and their mortgagees. As a result, the petition is left alleging only a disagreement among the owners and their mortgagees---not one between the owners and the Association. A dispute under the Act does not include disputes between unit owners; it must be a dispute between a unit owner or owners and its board of administration. Rule 61B45.018(3), Florida Administrative Code. Here, there is no dispute with the Association because it never took a position of whether to repair or demolish. It never decided which alternative it felt was in the best interest of the property and acted thereon. It never exercised its repair and maintenance authority under the Act and the Association s governing documents which might have attracted opposition from the unit owners and created a dispute subject to arbitration. Moreover, there is no way to know the number of owners who might have actually objected to whatever action the board decided to take and those who might not have objected. Establishing this number could reduce considerably the number of actual respondents who are potential parties to the 1 Paragraph 19 of exhibit C suggests that the building has not been razed. 3

4 dispute. Having taken no action which garnered a dispute between the proper parties, the Division has no jurisdiction to entertain the petition. Also, the letter dated June 7, 2011, which is an exhibit to the petition, cannot be described as a proper pre-arbitration notice as defined, under section , Florida Statutes. The letter states: This correspondence serves as notice to the membership regarding the status of this matter as well as notice to each owner regarding the Association s intent to file a Petition for Arbitration in accordance with Section , Florida Statutes, if resolution of this matter is not reached. [t]his letter serves as notice to all members that unless every owner (as well as every lienholder of record) unanimously agrees to handle the Building 7 issue in the same manner, the Association will be forced to file a Petition for Arbitration with the Division. Please indicate your decision with respect to Building 7 by initialing below. Please note that if even one owner (or lienholder of record) disagrees with every other owner/lienholder with respect to how to resolve the Building 7 issue, the Association will be compelled to file with the Division (there must be unanimous agreement amongst everyone involved.) If the Association does not receive a written response from every individual owner by July 7, 2011, the Association will be forced to file the Petition for Arbitration. At the end of the letter, the Association provided the following two options for the members and lienholders of record to complete to cast their vote: I agree to have Building completely razed, and to have the total number of units of Lemon Tree 1 be reduced by the 8 units that previously were contained within Building 7. I agree to have Building 7 be rebuilt to its condition prior to the fire that damaged it. A pre-arbitration notice cannot seek resolution of a dispute or warn owners that legal action will be pursued that is contingent upon the actions of third parties---in this case, every other unit owner and their respective first mortgagees. 4

5 Moreover, the Association s prayer for relief requesting the arbitrator to order Respondents to come to a unanimous agreement as to whether the Association shall (i) comply with Section 9(b)(2) of the Declaration of Condominium by completely razing Building 7, or (ii) comply with Article 14.5 of the declaration and reconstruct Building 7 is not an appropriate remedy to seek. The first mortgagees are not parties to this action and the arbitrator does not have jurisdiction to interfere with the contractual relationship between them and their mortgagors. What the petition needs is focus. There is only one prayer for relief and that is to force an agreement between prospective parties and non-parties to the litigation. Anything related to the Declaratory Statement Petition is beside the point. The dispute currently is only between unit owners which is outside of the Division s jurisdiction and the pre-arbitration letter is deficient. For all the foregoing reasons, the Association is ORDERED by 5:00 p.m. on February 26, 2012, to amend the petition and prove proper pre-arbitration notice was sent to the potential respondents or this case will be dismissed without prejudice. DONE AND ORDERED this 25 th day of January 2012, at, Tallahassee, Leon County, Florida. Leah A. Simms, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida Telephone (850) Facsimile (850)

6 Copy furnished by U.S. mail to: Michael A. Ungerbuehler, Esq. The Association Law Firm, PLLC 417 E. Jackson Street Orlando, Fl Counsel for Petitioner 6