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 ELECTION DISPUTE - HOA BONNIE ALICEA, Petitioner, Fee Case No Rel. Case No VERDE RIDGE HOMEOWNERS ASSOCIATION, INC., Respondent. / FINAL ORDER ON CROSS MOTIONS FOR FEES AND COSTS On May 8, 2015, the Association, Verde Ridge Homeowners Association, Inc. (the Association) filed a motion for the award of attorney s fees and costs as prevailing party based upon underlying arbitration case number The motion was assigned fee case number The Association is located in Lake County. The Association moved for $2, in attorney s fees. On May 14, 2015, Petitioner filed a cross motion for the award of costs also as prevailing party in the underlying case. This motion was assigned fee case number Combined with the request for costs, Petitioner also moved to Squash [sic] Association [sic] Request for Attorney [sic] Fees and Costs. In an order dated May 18, 2015, the two fees cases were consolidated. In the underlying petition, Petitioner alleged that the Association unlawfully postponed the November 14, 2014, annual meeting and election due to the lack of a quorum to conduct business. For relief,

2 Petitioner sought an order declaring that the five holdover members of the board were serving invalid terms, that said board be dissolved, that the board be prohibited from conducting business on behalf of the Association and that although the election was postponed, the winners of the ballots that were cast be put on the board. Relevant Procedural History 1. Verde Ridge Homeowners Association, Inc. (the Association) is the governing body of Verde Ridge Homeowners Association, with the responsibility to conduct the day-to-day operations of the community and to maintain its property. 2. On February 20, 2015, Petitioner filed a petition for an election dispute arbitration concerning the annual meeting and election; a motion to waive the 60-day limitations period contained in sections (2)(d)4.c and (9)(a), Florida Statutes; a qualified representative application for herself; and a request for expedited determination of jurisdiction The petition alleged that the Association unlawfully postponed the annual meeting and election for failure to meet the 20% quorum requirement because 20% of the number of unit owners who attended the meeting, 48, was 5, so the election should have proceeded. 4. There are 404 eligible voting interests in the Association of which 20% totals 81. Eighty-one homeowners had to attend the meeting to meet the quorum requirement in order to conduct business. Only 48 unit owners attended the meeting and election. 1 Petitioner filed a previous petition for arbitration regarding the same election which was dismissed on January 29, 2015, for failure of the Petitioner to prove that proper pre-arbitration notice had been served on the Association. The filing of the previous petition tolled the 60 day limitations period making this second petition timely. Sections (4)(i) and (1), F.S.A. 2

3 5. On March 23, 2015, Petitioner filed a petition for a temporary injunction to which the Association responded which ended in the arbitrator denying on March 25, On March 30, 2015 an order scheduling a case management conference for April 7, 2015 was issued which both parties attended. 7. At the conference, the Association was ordered to file certain documents related to the November 14, 2014 election, and the Association did so on April 16, On April 21, 2015, Petitioner filed a notice that she was taking a voluntary dismissal and pursuant thereto, a Final Order of Dismissal was entered on April 22, Conclusions of Law Prevailing Party Pursuant to Sections (9)(c), and (1), Florida Statutes, any election dispute between a member of a homeowners association and the association must be submitted to mandatory binding arbitration with the Division. They also require that such proceedings be conducted in the manner provided by section , Florida Statutes and the procedural rules adopted by the Division. Section (4)(k), Florida Statutes, states, 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)). Petitioner notified the undersigned and the Association on April 21, 2015, that she was voluntarily dismissing the petition. The dismissal may have been precipitated 3

4 by a discussion between the undersigned and Petitioner during the case management conference held on April 7, Petitioner disputed the lack of a quorum at the November 14, 2014, election and raised the additional issue that 10% of the voting interests in the Association had not received the first notice of the annual meeting and election. However, both claims were premised on Petitioner s misunderstanding of the term voting interests. Two weeks after the undersigned explained to Petitioner that the term voting interests meant the 404 owners, she Petitioner voluntarily dismissed the petition. The other contention raised by Petitioner as proof that the election process was bungled was the Association s failure to mail the first notice of the annual meeting and election to 10% of the voting interests. Petitioner believed to void the election she only had to provide evidence that 10% of the attending unit owners, 5, failed to receive the first notice. The petition failed utterly to set forth a factual basis upon which Petitioner was entitled to relief. As an aside, the voluntary dismissal ended the possibility of further litigation of the issue because the 60-day limitations period would have prevented the filing of yet a third petition regarding the same election. The general rule is that when a plaintiff [petitioner] voluntarily dismisses an action, the defendant [respondent] is the 'prevailing party' within the meaning of statutory or contractual provisions awarding attorney s fees to the prevailing party in litigation. Holt v. Legends Country Club Community Association, Inc., Fee Arb. Case No , Final Order on Respondent s Motion for Attorney s Fees and Costs (October 19, 2011), citing Alhambra Homeowners Ass'n v. Asad, 943 So. 2d 316, 318 (4 th DCA, Fla. 2006). Petitioner was not awarded any of her requested relief therefore, 4

5 she is not a prevailing party and is not entitled to reimbursement of any costs expended by her in bringing this litigation. Furthermore, to find Petitioner the prevailing party would be contrary to the goal of the Homeowners Association Act, which is to provide its associations and its members with the benefit of an expedited alternative process for the resolution of election and recall disputes. Section (2), Florida Statutes. Just as one of the goals of the Condominium Act, is to discourage needless litigation by encouraging settlement 2 that is also a laudable goal of all litigation including this arbitration. Neither Petitioner, nor others following her lead, should be reimbursed for their costs arising from bringing unsustainable arbitration actions against their associations [or vice versa]. Such payments would only reduce the funds of the association to which all its members contribute to defend a baseless action against the Association. Petitioner will not be awarded her costs for bringing this action. The Association s Entitlement to Fees and Costs A ruling was never reached on the merits of the case because Petitioner voluntarily dismissed the petition. However, with regard to the Association, there need not be a determination on the merits for purposes of a fee award, if the applicable statutory provision provides for fees to a prevailing party. Crescent Beach Club Condominium Association, Inc. v. Krueger, Fee Arb. Case No , Final Order on Motion for Attorney s Fees and Costs (December 23, 2005). Rule 61B , Florida Administrative Code, does provide for prevailing party fees. 2 Tubbs v. Mechanik Nuccio Herane & Webster, P.A., 125 So. 3d 1034, 1041(2 nd DCA, 2013), citing Padow, M.D., P.A. v.knollwood Club Ass n, 839 S. 2d 744, 745 (4 th DCA, 2003). 5

6 However, this general rule does not apply without exception. A court [or arbitrator] may look behind a voluntary dismissal at the facts of the litigation to determine whether a party is a substantially prevailing party. Tubbs v. Mechanik Nuccio Herane & Webster, P.A., 125 So. 3d 1034, 1041(2 nd DCA, 2013) citing Padow, M.D., P.A. v. Knollwood Club Ass n, 839 S. 2d 744, 745 (4 th DCA, 2003). Courts must look to the substance of litigation outcomes - not just procedural maneuvers in determining the issue of which party has prevailed in an action. Id. It is the result not the procedure which governs the determination of which party prevailed for purposes of awarding attorney s fees. Id. Petitioner only voluntarily dismissed the petition after she was convinced eligible voting interests in the governing documents and the statute meant total eligible parcel owners in the Association not just those parcel owners who appeared for the annual meeting and election. It was two weeks after the case management conference when Petitioner filed notice of voluntary dismissal. Petitioner finally had accepted the fact that her petition was based upon a faulty premise which made her efforts futile and a waste of resources for her as well as for the Association. Whether this realization was a result of the undersigned s discussion at the conference or what is most likely, by finally seeking the advice of counsel on her own, the Association had to defend two frivolous petitions for arbitration. For this expenditure of Association resources and the successful termination of Petitioner s efforts in this regard, the undersigned finds that the Association is the prevailing party in this matter and its reasonable fees and costs will be awarded. 6

7 Although this issue is case dispositive, the undersigned will briefly address Petitioner s other bases for opposing attorney s fees and costs. Petitioner contends that neither party is responsible for the other s fees and costs because section 8 of the Declaration of Covenants (the declaration), under the heading Mediation/Arbitration of Disputes, states that disputes between the Association and a member shall be first submitted to mediation conducted before the American Arbitration Association (AAA), in accordance with the AAA s Commercial or Construction Industry Mediation Rules. The provision continues, if mediation does not resolve the dispute then the parties have to move to binding arbitration also conducted by the AAA. It ends by stating that all costs of the mediation and arbitration will be borne equally by each party. Petitioner has interpreted this provision as prohibiting the Association from seeking reimbursement of its fees and costs. Section (1), Florida Statutes, which governs homeowners associations states: the powers and duties of the association include those set forth in this section and, except as expressly limited or restricted in this chapter, those set forth in the governing documents. Section (1), Florida Statutes, states: Each member and the member s tenants, guests, and invitees, and each association, are govern by, and must comply with, this chapter, the governing documents of the community and the rules of the association. Actions at law or in equity, or both, to redress alleged failure or refusal to comply with these provisions may be brought by the association or by an member against: (a) The association; (b) A member; (c) Any director of officer of an association who willfully and knowingly fails to comply with these provisions; and (d) Any tenant, guests or invitees occupying a parcel or using the common areas. The prevailing party in any such litigation is entitled to recover reasonable attorney s fees and costs. 7

8 Petitioner filed this petition pursuant to the provisions of the Homeowners Association Act and the Condominium Act, both of which govern the resolution of election disputes in each community including the award of prevailing fees and costs. The mediation provision in the declaration on which Petitioner relies is not applicable when arbitration is brought pursuant to statutory authority which in this case are Chapters 718 and 720, Florida Statutes, which both contain fee and costs provisions. Petitioner also complains that the Association did not provide the undersigned a copy of an invoice billed to the Association by its counsel that reflects the claimed attorney fees owed. However, Rule 61B , Florida Administrative Code, does not require an invoice for services before the undersigned can award a prevailing party attorney s fees. The provision regarding providing receipts only relates to costs. It states in pertinent part: If an award of costs is sought, attach receipts or other documents that provide evidence of the costs claimed. The arbitrators shall follow Florida case law and the Statewide Uniform Guidelines for Taxation of Costs in Civil Actions in awarding costs. Petitioner s argument is not well taken. The Association is the prevailing party and will be awarded its reasonable attorney s fees and costs. Attorney s Fees The next issue to be decided is the reasonableness of the attorney s fees and costs claimed by the Association. In Florida Patient s Compensation Fund v. Rowe, 472 So. 2d 1145, 1150 (Fla. 1985), the Supreme Court adopted the federal lodestar approach as the foundation for setting reasonable fee awards. This approach requires the trial court to determine a lodestar figure by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate for the services of the 8

9 prevailing party s attorney. Fashion Tile & Marble v. Alpha One Construction, 532 So. 2d 1306 (Fla. 2d DCA 1988). In undertaking this analysis, the reasonableness of the hourly rate and the number of hours reasonably expended must be separately considered. See Rowe, 472 So. 2d at In determining the reasonableness of attorney s fees, the criteria set forth in Rule 4-1.5, Rules Regulating the Florida Bar, Rules of Professional Conduct [then Disciplinary Rule 2-106(b) of the Florida Bar Code of Professional Responsibility] should be applied. Id. at The factors for determining a reasonable attorney s fee set forth in Rule are basically the same as the factors set forth in Rule 61B , Florida Administrative Code. Attorney s Fees Hourly Rate The Association is seeking fees for attorney Karen Wonsetler for 8.5 hours of expended time at the rate of $ per hour. According to the Florida Bar website, Ms. Wonsetler was admitted to the practice of law in the state of Florida on May 22, 1998, 17 years ago. The undersigned finds the rate of $ per hour excessive and a more reasonable hourly rate for an attorney of Ms. Wonsetler s experience litigating in the area of community associations which falls within the range of fees charged in the locality for similar legal services is $ per hour. Seminole Condominium Association, Inc. v. TOSU Enterprises, LLC., Fee Arb. Case No , Final Order on Motion for Attorney s Fees and Costs (June 18, 2015). Hours Expended The Association is requesting reimbursement for 8.5 hours of service rendered by Ms. Wonsetler on behalf of the Association. One and a half hours of this time will not be awarded leaving the total expenditure of time at 7.0 hours. On April 16, 2015, 9

10 counsel for the Association reviewed Petitioner s notice that she was withdrawing the petition. The notice itself was not filed with the Division until April 21, Counsel s litigation experience with the Division and elsewhere is extensive and counsel should have stopped expending time on the litigation (except for informing the Association that the case had ended) even though the undersigned s Final Order of Dismissal was not issued until April 22, The Association s request for 1.8 hours for time spent after the issuance of the Final Order of Dismissal on April 22, 2015 will be reduced to 1.0 hour. Heron's Watch Condominium Association, Inc. v. CPS, LLC, Arb. Case No. Case , Final Order on Motion for Attorney s Fees and Costs (March 05, 2009)(no reimbursement for time spent after the entry of the final order, except for 1.0 hour spent preparing the motion for fees and costs.) The Association will only be awarded 1.0 hour and not the full 2.4 hours claimed for entries dated April 15 17, April 15 s activities were 0.8 hours for: drafting a notice of filing, a fax to the Division, sending a Fed-Ex to the Division, drafting an affidavit for the community association manager in support of defenses, and forwarding draft to the CAM for signature and verification. April 16, 2015 s activities were 0.8 hours for reviewing Petitioner s motion to withdraw petition, researching Florida s Administrative Code, regarding entitlement to fees when a voluntary dismissal is entered, and considering potential objection to request for Division to withhold an order. April 17, 2015 s activities were 0.8 hours for: update for board s consideration as to strategy for pending and anticipated litigation; review clerk of court information for additional litigation; explain nature of D & O coverage in case of individual suits and 10

11 standards in Florida law; and calendar motion for attorney s fees and costs post rehearing deadline of petition. Contacts with the Association were intertwined with other activities and were not amenable to precise calculation. As such, the undersigned finds that 0.7 hours is a reasonable expenditure of time in client contacts in this case. The total award for fees at $ per hour for 7.0 hours of time expended on behalf of the Association is $1, Costs The Association sought costs for copying 90 pages of an unidentified document(s) which will not be awarded. Pursuant to the Statewide Uniform Guidelines for Taxation of Costs, the costs of copies of documents filed with the court which are reasonably necessary to assist the court in reaching a conclusion are recoverable. However, the Association has failed to identify sufficiently the photocopies for which it seeks reimbursement, and for this reason, the arbitrator cannot determine if the photocopies are a recoverable cost. Oakcrest at Southmeadow Condominium Association, Inc. v. Lozada-Atacho, Fee Case No , Final Order on Motion for Attorney's Fees and Costs (May 22, 2012). Based on all the foregoing, within 30 days of the issuance of this order, Petitioner shall reimburse the Association $1, for attorney s fees expended in the defense of this litigation. DONE AND ORDERED this 18 th day of August, 2015, at Tallahassee, Leon 11

12 County, Florida. Leah A. Simms, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street 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 within 30 days in accordance with , Fla. Stat. CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing final order was mailed by U.S. mail, postage prepaid, this 18 th day of August, 2015, to: Bonnie Alicea 3033 Santa Maria Avenue Clermont, FL Petitioner Karen Wonsetler, Esq. 860 North Orange Avenue Suite 135 Orlando, FL Attorney for the Association/Respondent Leah A. Simms, Arbitrator 12