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 BINDING ARBITRATION - HOA ELECTION Ivan Hernandez, Petitioner, v. Case No Oak Haven Property Owners Association, Inc., Respondent. / SUMMARY FINAL ORDER Issue The issue in this case is whether the November 30, 2016 election for two seats on the board of directors of Oak Haven Property Owners Association, Inc. (the Association) was conducted properly. Procedural History On January 27, 2017, Ivan Hernandez (Petitioner) filed a Petition for Mandatory Binding Arbitration Election Dispute naming the Association as Respondent. On February 23, 2017, the Association s president, Neil Tucci, filed a request for an extension of time to answer the petition. On February 27, 2017, an Order was entered requiring the Association to engage an attorney and have the attorney file a notice of appearance or have Neil Tucci file a Qualified Representative Application accompanied by minutes of the board meeting at which the board voted to authorize Neil Tucci to act as the Association s Qualified Representative. Page 1 of 13

2 On February 28, 2017, Neil Tucci filed the required application and minutes and Respondent [sic] Answer. Neil Tucci was authorized to act as the Association s Qualified Representative by Order entered on March 7, A Case Management Conference (CMC) was held on March 22, 2017, with both parties appearing. After inquiry at the CMC, the Association indicated there was a First Notice for the November 30, 2016 election, and the Association filed a copy of the First Notice by facsimile during the CMC. Findings of Fact 1. Petitioner is a property owner within the development and by such ownership is a member of the Association. 2. The Association is the corporate entity responsible for the operation of the development. 3. The Association s First Notice of Annual and Organizational Meeting reads, in pertinent part: Page 2 of 13

3 pertinent part: 4. The Association s Second Notice of Annual and Budget Meeting reads, in Page 3 of 13

4 5. The Association s Second Notice of Annual and Budget Meeting was accompanied by the following set of instructions: 6. The Association s Second Notice of Annual and Budget Meeting was accompanied by the following ballot: Page 4 of 13

5 7. The Association s Second Notice of Annual and Budget Meeting also was accompanied by a return envelope entitled BALLOT Return Envelope, with signature lines, a printed name line, and lines for Address, Unit #, Bldg # and Owners/Voting Representative. 8. All of the candidates, except Petitioner, submitted a candidate information sheet that was mailed with the Association s Second Notice of Annual and Budget Meeting. 9. The Association sent the following correction to the membership: Page 5 of 13

6 10. In its Answer, the Association admits that it intended to hold the election by secret ballot, as follows: Section (8)(b) of the Florida Statutes governing HOA s states that secret ballots may be used if the governing documents permit. Oak Haven HOA Bylaws do not specifically state the use of secret ballots, nor do the Bylaws state that they cannot be used. Petitioner has misinterpreted the package sent to homeowners. The package contained exactly what is stated in the Florida Statute (8)(b), ballots placed in an inner envelope with no identifying markings and mailed or delivered to the association in an outer envelope bearing identifying information reflection [sic] the member name, lot for which the vote is being cast and the signature of the lot owner. However, only one ballot was sent to the representing [sic] Management Company and that ballot was returned to the homeowner because they were in attendance at the meeting. 11. The proxy form included with the Second Notice appears as follows: Page 6 of 13

7 12. The parties do not dispute that at the conclusion of the annual meeting, the election results were announced with the following vote count for each candidate: Page 7 of 13

8 1. Neil Tucci Ricardo Santos Joseph Franco Ivan Hernandez - 1 Conclusions of Law Pursuant to Sections (9), and , Florida Statutes, the Division has jurisdiction over the parties to, and the subject matter of, this dispute. 1. Secret Ballot In pertinent part, Section , Florida Statutes, provides: (5) NOTICE OF MEETINGS. The bylaws shall provide for giving notice to members of all member meetings, and if they do not do so shall be deemed to provide the following: The association shall give all parcel owners and members actual notice of all membership meetings, which shall be mailed, delivered, or electronically transmitted to the members not less than 14 days prior to the meeting. Evidence of compliance with this 14-day notice shall be made by an affidavit executed by the person providing the notice and filed upon execution among the official records of the association (8) PROXY VOTING. The members have the right, unless otherwise provided in this subsection or in the governing documents, to vote in person or by proxy. (a) To be valid, a proxy must be dated, must state the date, time, and place of the meeting for which it was given, and must be signed by the authorized person who executed the proxy. A proxy is effective only for the specific meeting for which it was originally given, as the meeting may lawfully be adjourned and reconvened from time to time, and automatically expires 90 days after the date of the meeting for which it was originally given. A proxy is revocable at any time at the pleasure of the person who executes it. If the proxy form expressly so provides, any proxy holder may appoint, in writing, a substitute to act in his or her place. (b) If the governing documents permit voting by secret ballot by members who are not in attendance at a meeting of the members for the election of directors, such ballots must be placed in an inner envelope with no identifying markings and mailed or delivered to the association in an outer envelope bearing identifying information reflecting the name of the member, the lot or parcel for which the vote is being cast, and the signature of the lot or parcel owner casting that ballot.... (9) ELECTIONS AND BOARD VACANCIES. (a) Elections of directors must be conducted in accordance with the Page 8 of 13

9 procedures set forth in the governing documents of the association. Except as provided in paragraph (b), all members of the association are eligible to serve on the board of directors, and a member may nominate himself or herself as a candidate for the board at a meeting where the election is to be held; provided, however, that if the election process allows candidates to be nominated in advance of the meeting, the association is not required to allow nominations at the meeting. An election is not required unless more candidates are nominated than vacancies exist. The Declaration of Covenants and Restrictions for Oak Haven (Declaration), at Section 1.9, defines the Governing Documents of the Association to include the: Declaration, the Articles of Incorporation, Bylaws, Rules and Regulations, Architectural Planning Criteria and the Resolutions of the Association. In the event of a conflict in the interpretation of the Governing Documents, they shall be applied in the order of priority stated above. There is nothing in the governing documents of the Association that permits voting by secret ballot by members who are not in attendance at a meeting of the members for the election of directors. Because pursuant to Section (9)(a) elections of directors must be conducted in accordance with the procedures set forth in the governing documents of the association, and in the case at hand, the governing documents do not permit voting by absentee or secret ballot, the Association was not authorized under Section (8)(b) to state in the Instructions for Completing the Election Ballot that accompanied the Second Notice of Annual and Budget Meeting that Balloting for the Board of Directors is secret[,] and provide an inner and outer envelope format for a member to vote. See De Filippis v. Palm Beach Leisureville Comty. Ass n, Inc., Arb. Case No , Summary Final Order (Sept. 15, 2016)(where governing documents did not require voting by secret ballot, proper for association to use proxy/ballot form that did not allow for a secret ballot). Page 9 of 13

10 2. Proxy Voting Petitioner contends that the Association was not in compliance with Section (8)(a) when neither the proxy form provided nor the instructions for its completion included a statement that the proxy is revocable at any time at the pleasure of the person who executes it. While an Association may choose to include such a statement on the proxy form or in the instructions, the statute does not require such inclusion for the proxy to be valid. The Association s Bylaws also do not require the proxy to include such a statement. Section 3.6 of the Bylaws provides, in its entirety: 3.6 Proxy Voting. To the extent lawful, any Member entitled to attend and vote at a Members meeting may establish his presence and cast his vote by proxy. A proxy shall be valid only for the specific meeting for which originally given and any lawful adjournment of that meeting, and no proxy is valid for a period longer than ninety (90) days after the date of the first meeting for which it was given. Every proxy shall be revocable at the pleasure of the person executing it. To be valid, a proxy must be in writing, dated, signed by the person authorized to cast the votes, specify the date, time and place of the meeting for which it is given, and the original must be delivered to the Secretary by the appointed time of the meeting or adjournment thereof. Holders of proxies need not be Members. No proxy shall be valid if it names more than one (1) person as the holder of the proxy, but the holder shall have the right, if the proxy so provides, to substitute another person to hold the proxy. While Section 3.6 includes more requirements for validity than the statute, a statement that the proxy is revocable at the pleasure of the person executing it is not one of them. Petitioner also contends that the Association s instructions for proxy completion contained in the Second Notice were in error by stating that, It must be dated, must state the date, time and place of the meeting for which it is given and must be signed by all owners of the lot. (emphasis added). Section (8)(a) provides that a proxy, to be valid, must be signed by the authorized person who executed the proxy. Section Page 10 of 13

11 3.6 of the Bylaws provides the proxy, to be valid, must be... signed by the person authorized to cast the votes. In pertinent part, the Association s Bylaws provide as follows: 2.2 Voting Interest... If a Parcel is owned by one (1) natural person, his right to vote shall be established by the record title to the Parcel. If a Parcel is owned jointly by two (2) or more natural persons that [sic] are not acting as trustees, that Parcel s vote may be cast by any one (1) of the Owners. If two (2) or more Owners do not agree among themselves how their one (1) vote shall be cast, that vote shall not be counted for any purpose. If the Owner is a corporation, partnership, limited liability company, trust, trustee or other entity other than a natural person, the vote of that Parcel shall be cast by any officer, director, partner, manager, managing member or trustee, as the case may be. (bold emphasis added). The Association s instructions for proxy completion contained in the Second Notice stating that the proxy must be signed by all owners of the lot are more restrictive than the requirements for voting in the Bylaws when a parcel is owned jointly by two or more natural persons. Thus, the Association s instructions for proxy completion were in error. 3. Nominations While the parties did not raise the issue of nominations, it, nevertheless, must be addressed. Section (9)(a) provides that elections of directors must be conducted in accordance with the procedures set forth in the association s governing documents and that a member may nominate himself or herself as a candidate for the board at a meeting where the election is to be held, but if the election process allows candidates to be nominated in advance of the meeting, the association is not required to allow nominations at the meeting. The Association s Second Notice specifically states, Page 11 of 13

12 Nominations will not be taken from the floor the night of the meeting. (emphasis in the original). There is nothing in the Association s governing documents that provides for the nomination of candidates in advance of the meeting, nevertheless the Association announced nominations will not be taken from the floor at the meeting. Section (9)(a) does not permit the Association to create an election process that is not authorized in the statute or the governing documents. Therefore, the Association was in error when it announced in the Second Notice that nominations would not be taken from the floor at the election meeting. See Brown v. Villages of Bloomindale I Homeowners Ass n, Inc., Arb. Case No , Summary Final Order (Sept. 5, 2014). While the petition states that Petitioner was disadvantaged by the Association s attempt to institute an unauthorized secret ballot and flawed proxy, Petitioner does not assert that the elections results would have been different had the Association conducted the election differently, and the vote count does not suggest that the result would have been different. Thus, it could be argued that a new election is not required. However, the Association s improper prohibition of nominations at the election meeting is a fatal error, because it precluded a member from nominating himself or herself or someone else at the election meeting. Therefore, it is ORDERED: On or before April 30, 2017, the Association shall conduct, in accordance with the applicable law, the Association s governing documents and this Summary Final Order, a new election for the two seats on the board of directors that were the subject of Page 12 of 13

13 the November 30, 2016 election. DONE AND ORDERED this 27 th day of March, 2017, at Tallahassee, Leon County, Florida. Glenn Lang, Senior Attorney Division of Florida Condominiums, Timeshares & Mobile Homes Dept. of Business & Professional Regulation 2601 Blair Stone Road Tallahassee, Florida Telephone: (850) Facsimile: (850) Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by facsimile, where available, by , where available, and by U.S. Mail, postage pre-paid, to the following persons on this 27 th day of March, 2017: Ivan Hernandez 9352 Wrangler Drive Lake Worth, Florida IHZUS@yahoo.com Petitioner Neil V. Tucci, President Oak Haven Property Owners Association, Inc. c/o GRS Management Associates, Inc Woodlake Blvd. Suite 309 Lake Worth, FL Facsmile: Qualified Representative Neil V. Tucci, President Oak Haven Property Owners Association, Inc Wrangler Dr. Lake Worth, FL Neilt23@att.net Qualified Representative Glenn Lang, Senior Attorney Page 13 of 13