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 MARIE MILLER DAHM, Petitioner, v. Case No SUN ISLAND ASSOCIATION, INC., Respondent. / SUMMARY FINAL ORDER Pertinent Procedural History On August 30, 2010, Petitioner, Marie Miller Dahm, filed a Mandatory Non- Binding Arbitration Form Petition, naming Sun Island Association, Inc. (Association), as respondent. On October 6, 2010, Petitioner filed an Amended Petition which alleged that the board had improperly adopted a rule which imposed a minimum leasing period of three months, had created memorial program which sold trees, plants or benches to be located on the common elements which was a material alteration to a common element, and improperly removed a putting green from the common elements. On November 24, 2010, the Association filed an Answer which alleged the following: the minimum leasing period was in effect for 20 years prior to the time the Petitioner purchased her unit; the memorial program did not create a material alteration as it simply reduced the cost to the Association for landscaping the common areas; and the putting green had been removed by the developer prior to turnover and 1

2 two decades prior to the time Petitioner purchased her unit. The Association alleged that the Petitioner s claims relating to the rental restrictions and putting green are barred by the statute of limitations and the equitable doctrine of laches. On December 14, 2010, a telephonic case management conference was conducted. During the case management conference, the parties confirmed that the putting green had been removed from the condominium property decades before and Petitioner confirmed that she was aware that there was no putting green on the condominium property at the time she purchased her unit. On December 16, 2010, Petitioner filed Petitioner s Legal Arguments to Amended Mandatory Petition for Non-Binding Arbitration. Between December 17 and 21, 2010, numerous unit owners filed letters with the Division as interveners. On December 22, 2010, Petitioner filed additional documents consisting of various e- mails, letters relating to the operating expenses of the Association. On December 27, 2010, the Association filed an Objection to Petitioner s Filings. This order is entered after review of the entire file. Statement of Issues 1. Has the Association improperly adopted a rule imposing a minimum leasing period of three months and has the time for challenging the rule passed? 2. Is Petitioner estopped from demanding the Association cease enforcing the minimum leasing requirement? 3. Whether the Association s memorial program which collects funds and purchases trees, bushes and benches which are placed on the common element green 2

3 space and authorizes the placement of memorial plaques on a wall in the Association s club house constitutes a material alteration to the green space and club house? Preliminary Matters Putting Green During the telephonic case management conference, the parties agreed that the putting green had been removed by the Developer approximately two decades before, prior to turnover and at least a decade before Petitioner purchased her unit in With regards to the removal of the putting green from the common element area, such action, if taken subsequent to turnover, would constitute a material alteration to the common elements. However, alterations made before the enforcement of the declarations and bylaws are transferred to the Association are not the responsibility of the Association. Ladner v. Plaza Del Prado Condominium Ass n, Inc., 423 So. 2d 297 (Fla. 3d DCA 1982)(Prior actions of a developer cannot be used against an association in an attempt to establish such conduct by the association). During the telephonic case management conference, the arbitrator entered an order ore tenus granting the Association s motion to dismiss Petitioner s putting green claim. Accordingly, Petitioner s allegations relating to the putting green was dismissed by the arbitrator nunc pro tunc. Intervenors Between December 17 and 21, 2010, letters were filed by Maria Menotti Halis, Carol and Rudolph Lehner, Mark Patton, Juliet Mastry Miller, Roy Frick, Constance Maxwell-Harrison, and Mark Patton, as Interveners. Rule 61B (2), Florida Administrative Code, provides, in pertinent part, as follows: 3

4 The only disputes eligible for arbitration are those existing between a unit owner or owners and the association or its board of administration The letter writers are not intervenors in this case. They have not filed a timely motion to intervene and permission to intervene has not been granted by the arbitrator. Their unsworn testimony through a letter writing campaign is not appropriate for a legal dispute. Accordingly, the letters filed by Maria Menotti Halis, Carol and Rudolph Lehner, Mark Patton, Juliet Mastry Miller, Roy Frick, Constance Maxwell-Harrison, and Mark Patton will be stricken. Findings of Fact 1. Petitioner, Marie Miller Dahm, is a unit owner and member of the Sun Island Association, Inc. (Association). 2. Respondent, Sun Island Association, Inc., is the entity that manages the operation of the Bay Island Community, a single condominium phase development. Leasing Requirement Restriction 3. In August of 2004, the Association adopted and published Rule 15.c.1., relating to minimum leasing periods, which states, Three (3) months is the minimum lease period for a unit. 4. It is undisputed that the Association, since the adoption of the rule in 2004, has enforced the three month leasing requirement. 5. On June 17, 2010, Board President Lou Ippolito made a motion to remove the 3-month minimum lease requirement from the Rules and Regulations. The motion failed. 4

5 Memorial Program 6. On January 19, 2006, the Association adopted a memorial program which authorizes the sale of memorial trees and/or memorial benches to be planted or placed upon the common element property as part of the landscaping The Association, through its memorial program has permitted placement and replacement of trees, bushes and benches on the common element green spaces. 8. The Association s Rules relating to the memorial program state that the names of the individual(s) being honored cannot be affixed to trees or benches and that memorial benches can only replace existing benches. 9. The names of those honored are inscribed on a large wooden memorial plaque with individual brass plates mounted on the plaque located in the clubhouse lobby The Association has permitted the benches to be inscribed with the names of the person(s) being honored and has approved benches to replace previous benches and to be located at additional sites where benches were not previously located. 11. The previous inscriptions on the front of the benches have been removed. 12. The trees, bushes and benches used by the Association in landscaping the common elements are paid for by individual owners and family members and become the property of the Association. 1 The rule was adopted by the board and a copy of the rule was published in a pamphlet and Association newsletter. 2 Neither party submitted a photograph or the dimensions of the memorial plaque. In review of the file, the plaque is merely described as a wooden plaque with brass nameplates affixed to it. 5

6 13. The funds received as a result of the memorial program have been used to offset the Association s ongoing landscaping costs and maintenance costs. 14. The Association is responsible for the common element green spaces, including landscaping and benches. 15. The Association is responsible for the clubhouse, including decorations. Conclusions of Law Petitioner, Marie Miller Dahm, by virtue of her ownership of a unit, is a member of the Sun Island Association, Inc. Sun Island Association, Inc., is a condominium association within the meaning of Chapter 718, Florida Statutes. The undersigned has jurisdiction over the parties and of the subject matter of this dispute, pursuant to section , Florida Statutes. Minimum Leasing Requirement Article IX, Section 2 of the Declaration of Condominium, provides as follows: The Board of Directors may from time to time adopt or amend previously adopted rules and regulations governing and restricting the use and maintenance of the condominium unit(s) provided, however that copies of such rules and regulations are furnished to each unit owner prior to the time the same became effective, and where applicable or desirable, copies shall be posted in a conspicuous place on the condominium property. Additionally, Rule 15.c.1 of the Rules and Regulations (August 2004), provides, Three (3) months is the minimum lease period for a unit. This rule was adopted in August 2004 by the Board of Directors of the Association. Chapter (13), Florida Statutes 3, provides as follows: Any amendment restricting unit owners rights relating to the rental of units applies only to unit owners who consent to the 3 Chapter , Laws of Florida, took effect on October 1,

7 amendment and unit owners who purchase their units after the effective date of that amendment. In the case at hand, the Association s rule was adopted in August 2004 and paragraph (13), Florida Statutes, became effective on October 1, Since the Association s rule was in place prior to the effective date of the statute, the exception to the application of the rental restriction against an owner who voted against the restriction does not apply to the Petitioner. Additionally, Respondent has alleged the affirmative defense of laches/statute of limitations based on the time that has passed since the adoption of the rule by the Board and the Petitioner s challenge of the rule. Laches is an equitable defense which weighs the totality of the circumstances to determine whether it would be fair to grant affirmative relief to a party. The elements of laches are as follows: that there is conduct on the part of the defendant giving rise to a situation of which complaint is made; that plaintiff, having knowledge or notice of the defendant's conduct, and having been afforded the opportunity to institute suit, is guilty of delay in asserting his right by suit; that there is a lack of knowledge on the part of the defendant that plaintiff will assert the right on which he bases his suit; and there is injury or prejudice to defendant in the event relief is afforded to plaintiff, or in the event suit is not held to be barred. Niagra Fire Ins. Co. v. Allied Elec. Co., 319 So. 2d 594 (Fla. 3d DCA 1975). In the case at hand, the rule was adopted in August Petitioner 5 waited six years to file the petition. In Heisner v. Bimini Village Condominium Association, Inc. v. Jamnik, Arb. Case No , Final Order (May 11, 1995)(laches was ruled to bar the 4 Typically, unless otherwise stated within the statute, a statute creating or modifying substantive law applies only prospectively. 5 Who is also a member of the Board of Directors of the Association. 7

8 enforcement action for a tile violation, because the complainant had waited six years before taking action). Considering that Petitioner waited over six years before she filed a petition for arbitration, the Association could reasonably believe that there were no challenges to the rule. Pursuant to the rationale in the cases cited above, Petitioner s inaction before challenging the rule constituted an unreasonable delay and the defense of laches applies. Additionally, Respondent alleges Petitioner s challenge to the enforcement of the minimum leasing requirement should be dismissed because she failed to timely institute legal proceedings challenging the Association s adoption of the rule, as set forth in Section 95.11(2)(b), Florida Statutes, relating to statute of limitation. In considering the defense of statute of limitations, the period begins to run when the action may be brought. See Sheoah Highlands, Inc. v. Daugherty, 837 So. 2d 579 (Fla. 5 th DCA 2003)(Unit owner alleged condominium association failed to enforce the declaration against five unit owners. Appellate court applied a five year period of statute of limitations.). It is undisputed that the rule requiring a minimum leasing period of three months was adopted in August 2004 and that it has been enforced by the Association since that time. Petitioner has not advanced any theory that would have the effect of tolling the statute. Accordingly, the petition was not filed within the five year statute of limitations period. Based on the foregoing, the arbitrator finds that this action is time barred and is hereby dismissed based on the statute of limitation and laches. 8

9 Memorial Program Petitioner argues that the placement of trees and benches on the common element green space and the placement of memorial plaques in the Association s clubhouse through the Association s memorial program constitute a material alteration of the common elements, requiring that 75% of the unit owners approve it, rather than just approval of the board of directors. 6 The Association denies that the trees, benches or plaques materially alter the common elements. The Association alleges that its actions are part of the Board s duty to maintain and repair the common elements and are authorized as part of the business judgment rule. 1. Material Alteration and Business Judgment Rule In order to determine the appropriate interpretation of the facts sub judice, it is necessary to examine the legal principles governing material alterations and the business judgment rule. Petitioner s argument that the replacement of the trees, bushes, and benches located within the common area green space; along with the placement of the memorial plaque on the wall in the clubhouse lobby constitute a material alteration of the common elements and is based upon Section (2)(a), Florida Statutes, and Section 13(c) of the Declaration of Condominium. Section (2)(a), Florida Statutes, states, in pertinent part, as follows: Except as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements or to real property which is association property except in a manner provided in the declaration as originally recorded or as amended under the procedure provided therein Additionally, Petitioner objects to the Association permitting unit owners from holding a dedication of the memorial in the presence of friends and family of the individual being memorialized. The occasional presence of a few friends and family at a dedication is not a violation of Article 9, Section M of the Rules and Regulations, relating to prohibited activities. 9

10 Section 13(c) of the Declaration of Condominium, states, in pertinent part, as follows: There shall be no material alterations or substantial additions or omissions to or from the common elements or limited common elements of the Condominium, except as the same are authorized by the Board of Directors and ratified by the affirmative vote of Voting Members casting not less than seventy-five (75%) percent of the total votes of the members of the Condominium present at any regular or special meeting of the unit owners called for that purpose In addressing the issue of material alterations, the court in Sterling Village Condominium, Inc. v. Breitenbach, 251 So. 2d 685, 687 (Fla. 4th DCA 1971), defined material alterations to buildings as: To palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance. When applying this standard, it is only where the character of a facility is changed in a manner significantly affecting its function, use or appearance, that the change constitutes a material alteration. It is Respondent s position that, if a material alteration of the landscaping has occurred, as a result of the memorial program, such changes in the landscaping are protected by the business judgment exception to the above-listed requirements of the statute and the Association s governing documents. In the case at hand, the Association has instituted a memorial program which has a stated purpose is to replace existing trees, bushes, and benches on the common element green space. The Association describes this activity in their flyer describing the memorial program, in pertinent part, as follows: Our beautiful Island is always concerned with the environment and appearance. Trees have a definite 10

11 environmental benefit. While adding beauty and shade, they also protect the land and Boca Ciega Bay from the damage caused by excessive runoff and erosion The Grounds Committee has put together a list of approved trees for donor selection. The actual choice will be constrained by site requirements and appropriateness. Benches will replace existing benches Names of those being honored cannot be affixed to either the tree or bench. Names of those being honored will be inscribed on a permanent plaque located in the club house lobby. It is undisputed by the parties that the Association has permitted the replacement of trees, bushes, and benches on the common element green space. While some change in appearance is inevitable where landscaping details are altered, not all changes are material. In Girsch v. Whisper Walk Section E Association, Inc., Arb. Case No , Order Dismissing Petition (November 26, 1997), the owner challenged the board s decision to replace a hibiscus hedge with a ficus hedge on the basis that a material alteration resulted. In Girsch,arbitrator ruled as follows: The essential character of the property has not changed in a material sense. Some change in appearance is inevitable where landscaping details are altered but this does not compel the conclusion that all changes are material owners have less of a legitimate expectation that landscaping details, unlike perhaps other aspects of the [condominium common area] property, will remain static. In this case, the use and function of the green space have not been materially altered under the memorial program instituted by the Association. The placement of the additional benches are an inconsequential change of the green space from its original design or plan and does not have appreciable affect or influence on its function, use or appearance. The arbitrator will not substitute her judgment regarding a board s decision regarding the degree of maintenance required to maintain the Association s common elements as such activities are part of the day-to-day decisions affecting the 11

12 general and routine maintenance of the common elements, granted to the board pursuant to Section (1), Florida Statutes. Accordingly, the trees, bushes and benches placed in the open area green space are de minimis and do not constitute a material alteration of the common element. 2. Inscription on Benches It is undisputed by the parties that the memorial benches contain inscriptions. In this case, while the inscription alone does not rise to the level of a material alteration, such inscriptions are clearly a violation of the program as described in the Association s flyer. However, as the Association has removed the inscription from the benches, the dispute relating to inscriptions on benches is moot. 3. Memorial Plaque in Clubhouse Lobby It is undisputed by the parties that the Association has authorized the placement of a memorial plaque with memorial brass nameplates in the lobby of the club house. In this case, such placement does not affect the function or use of the clubhouse lobby, but does result in a change the appearance of the club house lobby. In Anderson v. Five Towns of St. Petersburg No. 305, Inc., Arb. Case No , Order on Issue of Law (March 28, 1995), the arbitrator found that the association materially altered the common element carport by painting the bottom 36 inches of support columns a bright yellow without a vote of the unit owners. Anderson relied on Islandia Condominium Association, Inc. v. Vermouth, 501 So. 2d 741 (Fla. 4th DCA 1987), where the court found a material alteration in the change of color, where the buildings needed repainting. Based upon Section 13(c) of the Declaration of 12

13 Condominium and the law cited above, the association has altered the common element lobby walls in violation of the declaration. In the case at hand, the Association has permitted the installation of a single plaque with brass nameplates to be hung on a single wall in the clubhouse lobby which has resulted in a change. Unlike the painting of the columns and carports in Anderson which changed the color of all the columns and lower 36 inches of the walls in all of the common element carports or the painting all the buildings a different color as in Islandia, the placement of a single plaque in the clubhouse lobby is a de minimis change and does not constitute a material alteration to the clubhouse which would require the approval of the unit owners. Based upon the foregoing, it is ORDERED: 1. The letters filed by Petitioner s Intervenors are STRICKEN. 2. Petitioner s claim of relief for the reinstatement of the common element putting green is DENIED. 3. Petitioner s request for an order to require the Association to remove the additional memorial benches is DENIED. 4. Petitioner s request to order the Association to cancel the memorial program is DENIED. 5. Petitioner s request to order the Association to remove the memorial plaque hanging in the clubhouse lobby is DENIED. 13

14 Florida. DONE AND ORDERED this 6 th day of April, 2011, at Tallahassee, Leon County, Tonya S. Chavis, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida FAX: Trial de novo and Attorney s Fees This decision shall be binding on the parties unless a complaint for trial de novo is filed in accordance with section , Florida Statutes. As provided by section , Florida Statutes., the prevailing party in this proceeding is entitled to have the other party pay reasonable costs and attorney s fees. Any such request must be filed in accordance with Rule 61B , F.A.C. Certificate of Service I hereby certify that a true and correct copy of the foregoing final order on default has been sent by U.S. Mail to the following persons on this 6 th day of April, 2011 Marie Miller Dahm FAX: Sunset Drive North St. Petersburg, Florida Scott H. Jackman, Esquire FAX: YueLing E. Lee, Esquire Cole, Scott & Kissane, P.A W. Boy Scout Blvd., Suite 400 Tampa, Florida Tonya S. Chavis, Arbitrator 14