IN THE SUPREME COURT OF FLORIDA DCA CASE NO. 3D SUPREME COURT CASE NO.

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1 IN THE SUPREME COURT OF FLORIDA DCA CASE NO. 3D SUPREME COURT CASE NO. MONROE COUNTY and ROGER OLDS, PEGGY OLDS, MARIA BARROSO, ORESTES LOPEZ, SCOTT BARRET, and FELIX PEREZ, Intervenors, Petitioners, vs. KEY LARGO OCEAN RESORT CO-OP, INC., Respondent. PETITIONER S BRIEF ON JURISDICTION JOHN A. JABRO, ESQUIRE Florida Bar Co-counsel for Intervenors Overseas Highway, Suite B Tavernier, Florida Telephone: (305) Facsimile: (305) jjabro@aol.com

2 TABLE OF CONTENTS Page Table of Authorities Introduction ii iii Statement of the Case and Facts 1 Summary of Argument 3 Argument I. THIS COURT HAS JURISDICTION BECAUSE THE THIRD DISTRICT S DECISION CONFLICTS WITH DECISIONS OF OTHER DISTRICT COURTS. 4 II. THIS COURT SHOULD EXERCISE ITS JURISDICTION BECAUSE THE THIRD DISTRICT COURT S DECISION RENDERS SECTION (1) A NULLITY. 8 Conclusion 10 Certificate of Service 11 Certificate of Compliance 11 Appendix A-1 i

3 TABLE OF AUTHORITIES Cases Page Beau Monde, Inc. v. Bramson, 3, 4, 7, So. 2d 164 (Fla. 2d DCA 1984) Downey v. Jungle Den Villas Recreation Ass n, Inc., 3, 4, So. 2d 438 (Fla. 5 th DCA 1988) Forsythe v. Longboat Key Beach Erosion Control Dist., So. 2d 452, 456 (Fla. 1992) Kel Homes v. Burris, So. 2d 699, 703 (Fla. 2d DCA 2006) McAllister v. Breakers Seville Ass n, Inc., 3, 4, So. 2d 566 (Fla. 4 th DCA 2008) Stoletz v. State, So. 2d 572, (Fla. 2004) Other Authorities (4), Florida Statutes (4), Florida Statutes 5, (1), Florida Statutes 1, 2, 3, 4, 5, 6, 8, 9, 10 ii

4 INTRODUCTION Petitioners Roger Olds, Peggy Olds, Maria Barroso, Orestes Lopez, Scott Barrett, and Felix Perez will be referred to as they stand in this Court and as Interventors. Petitioner Monroe County will be referred to as it stands in this Court and as the County. Respondent Key Largo Ocean Resort Co-Op, Inc. will be referred to as it stands in this Court and as KLOR. Emphasis is supplied by counsel unless otherwise indicated. Citations to App. refer to the copy of the Third District s opinion in the appendix to this brief. iii

5 STATEMENT OF THE CASE AND FACTS Intervenors seek review of a Third District Court decision which held that the trial court departed from the essential requirements of law by applying section (1), Fla. Stat. (2008), to require 100% shareholder approval of an amendment where the original cooperative documents provide some procedure for amendments. This decision effectively renders (1) a nullity and conflicts with decisions of other district courts of appeal. KLOR is a corporation, formed in 1980, that owns a campground in Key Largo. That campground is divided into separate campsites, which were sold under a lease agreement providing each owner-lessee ( unit owner ) with one share in the corporation. Over the years, many of the residents or unit-owners built permanent structures, which apparently did not comply with Monroe County s zoning regulations. In 1994, Monroe County began code enforcement proceedings against KLOR because the names of the individual unit owners were not available in the public records. These proceedings eventually led to a Development Agreement which required the approval of a site plan which involves change to the size and configuration of certain of the cooperative units, including widening of roads, removal of non-compliant structures, and a change in the location of and 1

6 elimination of certain common areas. Intervenors are a group of residents who felt these proposed changes adversely and unfairly affected their interests. They moved to intervene, arguing, in part, that the proposed site plan could not be approved without 100% shareholder/resident approval, as provided in (1). KLOR filed a declaratory judgment action arguing that only 51% shareholder approval was required. The trial court ruled in favor of Intervenors, and declared that 100% voter approval was required to make these material amendments. KLOR proceeded with the vote, and only 69.4% of KLOR s shareholders voted to approve the site plan. KLOR filed a petition for writ of certiorari in the Third District Court of Appeal, again arguing that only 51% shareholder/resident approval was required. The Third District agreed and quashed the decision of the trial court. [App.] The Third District found that KLOR was a cooperative subject to chapter 719, Fla. Stat. The court then defined (1) as providing that amendments to a cooperative s Bylaws affecting the size or configuration of a cooperative unit may require the approval of the affected shareholder, all lien holders, and the record owners of all other units. The court noted that (1) is only triggered where the cooperative s original documents are silent as to an amendment enacting such a change. The court then found, without citation to those documents, that 2

7 both KLOR s Articles of Incorporation and the Bylaws provide a complete procedure applicable to proposed amendments like those which will be imposed by adoption of the proposed site plan. The Third District denied Intervenors timely filed motion for rehearing on March 12, Intervenors filed a timely notice to invoke the discretionary jurisdiction of this Court under article V, 3(b)(3), of the Florida Constitution. SUMMARY OF ARGUMENT The Third District's ruled that (1) did not apply where the original cooperative documents included a procedure for amendments affecting the size and configuration of a cooperative unit. The court s interpretation and application of (1) reads the key element of materiality out of the statute. This Court has jurisdiction because this decision directly conflicts with the Fourth District s decision in McAllister v. Breakers Seville Ass n, Inc., 981 So. 2d 566 (Fla. 4 th DCA 2008), and with cases interpreting the virtually identical statutory language in the condominium statute. Downey v. Jungle Den Villas Recreation Ass n, Inc., 525 So. 2d 438 (Fla. 5th DCA 1988); Beau Monde, Inc. v.bramson, 446 So. 2d 164 (Fla. 2d DCA 1984). This Court should exercise its jurisdiction because the Third District s decision effectively eviscerates (1), making it a nullity. Because identical provisions are in both the chapter on cooperatives (chapter 719) 3

8 and condominiums (chapter 718), this case will impact condominium law as well. ARGUMENT I. THIS COURT HAS JURISDICTION BECAUSE THE THIRD DISTRICT S DECISION CONFLICTS WITH DECISIONS OF OTHER DISTRICT COURTS. The Third District's decision in this case conflicts with the decision of the Fourth District's decision in McAllister v. Breakers Seville Ass n, Inc., 981 So. 2d 566 (Fla. 4 th DCA 2008), and with cases interpreting the virtually identical statutory language in the condominium statute. Downey v. Jungle Den Villas Recreation Ass n, Inc., 525 So. 2d 438 (Fla. 5 th DCA 1988); Beau Monde, Inc. v. Bramson, 446 So. 2d 164 (Fla. 2d DCA 1984). This Court therefore has jurisdiction to review this case. The Third District acknowledged that its ruling on KLOR s petition hinged solely on whether , Fla. Stat. (2008), applied to the vote on the proposed site plan. The court stated its understanding of the statute: Section (1) provides that amendments to a cooperative s Bylaws affecting the size or configuration of a cooperative unit may require the approval of the affect shareholder, all lien holders, and the record owners of all other units. [App., slip op. at 6]. This paraphrase of the statute is missing the key element of (1): materiality. Section (1) provides in pertinent part: 4

9 Unless otherwise provided in the original cooperative documents, no amendment thereto may change the configuration or size of any cooperative unit in any material fashion, materially alter or modify the appurtenances of the unit, or change the proportion or percentage by which the owner of the parcel shares the common expenses and owns the common surplus..., unless the record owner of the unit and all record owners of liens on it join in the execution of the amendment and unless the record owners of all other units approve the amendment. Thus, this statute specifically addresses not just any amendments that change the configuration or size of a cooperative unit, or that alter or modify the appurtenances of the unit but only those that materially do so. It is when that threshold of materiality is reached that the heightened protections of (1) apply. Below that threshold, general amendment procedures, such as those required by (1)(h), Fla. Stat. (2008), are considered sufficient. Materiality, therefore, is the raison d etre of (1). After setting out its interpretation of the statute, without the materiality threshold, the Third District then found that the statute did not apply because the original cooperative documents included amendment procedures. The court made no distinction between amendments that make material or nonmaterial changes to cooperative units or appurtenances. Nor did the court address the trial court s finding that the proposed amendment would make material changes. Thus, both the Third District s explanation of (1), and its application to the facts of this 5

10 case, effectively read the materiality threshold out of the statute. This conflicts with McAllister, the only reported case to date applying (1), McAllister v. Breakers Seville Ass n, Inc., 981 So. 2d 566 (Fla. 4 th DCA 2008). In McAllister, the Fourth District ruled that (1) applies where an amendment would materially alter or modify an appurtenance to a cooperative unity. 981 So. 2d at 570. In determining applicability of this statute, the court first determined that the amendment involved an appurtenance as defined in the cooperative statutes, then addressed whether that appurtenance would be materially altered or modified. Id. at The court found that the threshold requirement of materiality was met, because the amendment appreciably affected the space s function and use. Id. at 573. Therefore, the court ruled that (1) applied to a vote on the proposed amendments. This Third District s decision in this case conflicts with McAllister. The Fourth District in McAllister recognized that the key element triggering the heightened voting requirements of (1) is materiality of the changes proposed. If the proposed changes were material, (1) applied; if they were not, general amendment procedures and voting requirements were sufficient. The Third District in this case defined (1) in a way that totally cut materiality from the statute, and applied the statute without distinguishing whether the proposed 6

11 changes were material or nonmaterial. The Fourth District in McAllister relied on cases interpreting the condominium statutes, as the cooperative statutes essentially mirror those statutes. Id. at 571 n.1. The Third District s decision also conflicts with condominium cases interpreting the virtually identical language of (4), Fla. Stat.. Downey v. Jungle Den Villas Recreation Ass n, Inc., 525 So. 2d 438 (Fla. 5 th DCA 1988); Beau Monde, Inc. v. Bramson, 446 So. 2d 164 (Fla. 2d DCA 1984), which unlike the Third District s decision, also emphasize the applicability of the statutory heightened voting protections where an amendment would make material changes to a unit or appurtenance. In Downey, the court gave precisely the paraphrase the Third District should have given, but did not: Under (4), Fla. Stat. (1985), a material alteration or modification of the appurtenances to a condominium cannot be made absent unanimous approval of all unit owners. 525 So. 2d at 440. Similarly, the Second District in Beau Monde ruled that heightened voting requirements in (4), which are virtually identical to the language in the case at bar, applied because the proposal would materially alter or modify the appurtenances to the condominium units. 446 So. 2d at Because of the conflict in decisions of the district courts of appeal, this Court has jurisdiction to review this case. 7

12 II. THIS COURT SHOULD EXERCISE ITS JURISDICTION BECAUSE THE THIRD DISTRICT COURT S DECISION RENDERS SECTION (1) A NULLITY. The Third District Court s decision in this case eviscerates (1), making it a nullity. Pursuant to (1)(h), all cooperatives have general provisions for amendment of the bylaws. For example, in this case, section 15 of the KLOR Bylaws provides a general procedure for amendment upon vote of 75% of the entire membership of the Board of Directors and by not less than 51% of the shareholders. However, under (1)(h), if the KLOR Bylaws did not so provide, then the statutory general voting requirements of two-thirds would apply. According to the Third District s decision in this case, the existence of such general amendment procedures negate the applicability of the specific procedures in (1). But as all cooperatives have such general amendment procedures in their cooperative documents, either expressly or by operation of law, then (1) would never apply. It is, in effect, a nullity. This is contrary to a cardinal rule of statutory construction that courts should avoid readings that would render part of a statute meaningless or a nullity. See, e.g., Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So. 2d 452, 456 (Fla. 1992). The Third District s decision is also contrary to the 8

13 well-recognized rule of statutory and contract construction that a specific provision dealing with a particular subject controls over a general provision. E.g., Stoletz v. State, 875 So. 2d 572, (Fla. 2004)(statutes); Kel Homes v. Burris, 933 So. 2d 699, 703 (Fla. 2d DCA 2006)(contracts). As the Second District noted in Beau Monde, the type of specific heightened voting provisions in the condominium (and by extension the cooperative) statute is a specific statute that comes into play when the particular situation contemplated by the statute exists, i.e., when material changes would be made to the unit or appurtenances. See 446 So. 2d at 166 n.1 ( Less then unanimous consent to the corporation s actions would have been required for the general business of such a meeting; however, when a specific statute or a provision in the articles of incorporation requires unanimous consent, that statute or provision controls. ). The KLOR cooperative documents as originally adopted contain no specific language that covers the particular subject of (1), i.e., amendments that make material changes to units or appurtenances. On the other hand, while the KLOR cooperative documents as originally adopted did not contain a provision that specifically covered such amendments, section of the KLOR Bylaws provides: All laws of the State of Florida now in effect or that may be adopted hereafter regulating the internal administration and 9

14 operation of this Cooperative Campground shall be considered incorporated by reference herein and shall control in case of any conflict with these Bylaws. Section (1) was adopted in 1988, subsequent to the KLOR Bylaws, and is therefore incorporated by reference into the Bylaws. Under the express terms of the Bylaws, the heightened voting requirements of (1) should control. The Third District s decision not only eviscerates the statute, it effectively reads this provision out of these Bylaws as well. The precise issue presented by this case, whether the provisions of (1) apply where the cooperative documents contain general amendment procedures but not amendment procedures specifically addressing material changes to units or appurtenances, is one of first impression in Florida. This Court should exercise its jurisdiction to review this case, resolve the conflict, and quash the decision of the Third District Court. CONCLUSION For the reasons set forth above, Petitioners respectfully request this Court to exercise its jurisdiction and resolve the conflict presented by the Third District Court s decision in this case. 10

15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was delivered by US mail to: Franklin Greenman, Esquire, 5800 Overseas Highway, Suite 40, Marathon, FL, 33050, and Robert Shillinger, Jr., Esquire, Office of the Monroe County Attorney, P.O. Box 1026, Key West, Florida 33042, this 17th day of April JOHN A. JABRO, ESQUIRE Attorney for Defendants/Petitioners CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that this brief complies with the font requirements of Fla.R.App.P (a)(2), and is in Times New Roman 14-point font. JOHN A. JABRO, ESQUIRE Attorney for Defendants/Petitioners Overseas Highway, Suite B Tavernier, Florida (305) Florida Bar No