STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES

Transcription

1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION John Tanasychuk, Petitioner, v. Case No Espanola Way, Inc., Respondent. / SUMMARY FINAL ORDER Comes now, the undersigned arbitrator, and enters this summary final order as follows: Petitioner Tanasychuk filed his petition for arbitration in this matter on May 21, The petition alleges that the association held its 2002 annual meeting in March, 2003, while the declaration requires that the annual meeting be held on December 27 of each year. The petition also alleges that while the ballots issued by the association for the 2002 election instructed the voters to vote for up to 7 candidates, and while in prior years, there had been 7 positions on the board, at the March 26, 2003 annual meeting, the unit owners purportedly voted to amend the documents to reduce the number of directors to 5. According to the petition, with the reduction in the number of director positions, petitioner was unelected as he was in the top 7 candidates but not in the top 5 positions. The petition alleges that the vote was inadequate to change the documents. Petitioner seeks entry of a final order requiring that the association conduct its annual meeting on the date called for 1

2 in the documents and installing petitioner on the board. The association filed its answer on June 27, The association admits that the annual meeting was held in March, 2003 but claims that the delay in conducting the election was caused by petitioner s vexatious litigation. Concerning the second issue, the association argues that pursuant to general law and prior arbitration cases, the board as a matter of law should have 5 positions regardless of the amendment to the documents. The association argues generally that it substantially complied with the statute and documents. Regarding the annual meeting issue, the association has not demonstrated that its failure to hold the annual meeting on the date required by the declaration was the fault of the petitioner due to certain law suits being prosecuted by the petitioner. The timing of the filing of the lawsuits does not tend to add support to this theory, and in any event, the association is responsible for following its documents, absent a court order to the contrary. Accordingly, it is found that the association violated Article V of the declaration by failing to hold its annual meeting on December 27, The second issue concerns the number of directors. The declaration provides in article II Section 1 as follows: Section 1. Number and Term. The number of directors which shall constitute the whole board shall be not less than five (5) and not more than seven (7). Until succeeded by directors elected at the first annual meeting of members, directors need not be members; thereafter, all directors shall be members. Within the limits above specified, the number of directors shall be determined by the members at the annual meeting. The directors shall be elected at the annual meeting of the members, and each director shall be elected to serve for a term of one (1) year or until his successor shall be elected and shall qualify. [emphasis added]. 2

3 The association seeks to come within those prior arbitration cases holding that where the documents provide a range for the number of directors, but do not provide a method for determining the exact number of directors to be elected, the statutory provision contained in s (2)(a)a., Florida Statutes, applies and the board consists of 5 members. In Smith v. Ocean View Association, Inc. Arb. Case No , Final Order (June 27, 1997), the bylaws provided for a range of directors with the exact number to be determined at the time of the election. The arbitrator ruled that the bylaws were superceded by the election portions of Ch. 718, Florida Statutes, which requires that the number of positions on the board be ascertained in advance of the election so that a ballot may be prepared. Also, the administrative rules now require that the election be held as the first order of business at the annual meeting. The procedure whereby the annual meeting including a vote to set the number of directors was conducted prior to the election was held to be invalid, and the arbitrator held that the number of seats reverted to the statutory number of five positions. 1 In Cuervo v. West Lake Village II Condominium Association, Inc., Arb. Case No , Partial Summary Final Order (May 31, 1994), the bylaws of the association provided that the board consisted of five members, but the articles of incorporation provided for a range between 3 and 9 members, with the number to be determined in accordance with the provisions of the bylaws. The bylaws did not, however, provide a mechanism to determine the number of directors. The arbitrator held that the statutory mechanism applied and the board consisted of 5 members 1 Section (2)(a)1., Florida Statutes, provides that in the absence of a provision to the contrary in the bylaws, the board shall consist of 5 members. 3

4 until the bylaws were amended to provide a procedure for changing the number. In Mikhael v. Rio Espana Condominium Association, Inc., Arb. Case No , Final Order (January 13, 1994), the bylaws provided for a range of directors between 3 and 7, with the precise number to be determined by the membership from time to time. As the first order of business at an annual meeting, a membership vote was conducted to set the number of director positions for the ensuing election, and the number of positions was changed from 7 to 5, thereby placing certain candidates at a disadvantage. The arbitrator ruled that by not conducting the election as the first order of business at the annual meeting, the association violated rule 61B (10), Florida Administrative Code. The arbitrator invalidated the membership vote and ordered the 6 th and 7 th place candidates reinstated to the board. In the instant case, the declaration provides for a range between 5 and 7 board positions, and further provides that the number of positions shall be set by the members at the annual meeting. The documents plainly intend to permit the owners to set the number of directors at the annual meeting at which the election is to be conducted. Based on the cases set forth above, the conclusion is inescapable that the provision of the condominium documents allowing a membership vote to set the number of positions conflicts with the voting procedures mandated by statute and administrative rule, and the provision is accordingly invalid. When the mechanism in the documents for determining the number of board members drops out, the statute takes over and sets the number of directors at 5. Therefore, it is concluded that the board consists of 5 members, and that the board shall always consist of 5 members until and unless the membership duly adopts an amendment to 4

5 the declaration, articles, or bylaws as appropriate setting forth a valid procedure for changing the number of directors. 2 WHEREFORE, the arbitrator hereby orders the association to hold its annual meeting on the date required in the documents in the future. Furthermore, the arbitrator concludes that the board properly consists of 5 positions and hereby denies the relief requested by petitioner on this count that he be installed on the board. The arbitrator concludes that the owner vote to amend the documents was invalid. The arbitrator also declines to order a new election to be held because it is not shown that the outcome of the election would have changed if the invalid vote to amend the declaration had not been taken; the petitioner received far fewer votes than the candidates who finished ahead of him in the count. Furthermore, there is no evidence that the fact that owners expected leading up to the election--that 7 members would be elected--had any material impact on the actual outcome of the election. DONE AND ORDERED this 28 th day of August, 2003, at Tallahassee, Leon County, Florida. Karl M. Scheuerman, Arbitrator Department of Business and Professional Regulation Arbitration Section Northwood Centre 1940 North Monroe Street Tallahassee, Florida Having determined that the board consists of 5 members for the reasons expressed herein--reasons which are largely unrelated to those advanced by the association--it is unnecessary to dwell upon the issue of whether a sufficient owner vote was obtained in order to amend the declaration to provide for five board seats. However, it is obvious that the unit owner vote was invalid because an insufficient number of votes were garnered. 5

6 Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail to the following persons on this 28 th day of August, 2003: Steven K. Baird, Esquire 6301 Biscayne Blvd., Ste. 208 Miami, Florida Raymond A. Piccin, Esquire Shapiro, Blasi & Wasserman, P.A Glades Road, Ste. 200 Boca Raton, Florida Karl M. Scheuerman, Arbitrator Right to Appeal As provided by s , F.S., this final order may be appealed by filing a complaint for trial de novo with a court of competent jurisdiction in the circuit in which the condominium is located, within 30 days of the entry and mailing of this final order. This order does not constitute final agency action and is not appealable to the district courts of appeal. If this final order is not timely appealed, it will become binding on the parties and may be enforced in the courts. Attorney s Fees As provided by s , F.S., the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney s fees. Rule 61B , F.A.C. requires that a party seeking an award of costs and attorney s fees must file a motion seeking the award not later than 45 days after rendition of this final order. The motion must be actually received by the Division within this 45 day period and must conform to the requirements of rule 61B , F.A.C. The filing of an appeal of this order does not toll the time for the filing of a motion seeking prevailing party costs and attorney s fees. 6