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 PETER KRETZ, Petitioner, v. Case No PALM-AIRE COUNTRY CLUB CONDOMINUM ASSOCIATION NO. 2, INC., Respondent. / SUMMARY FINAL ORDER On May 1, 2015, Peter Kretz (Petitioner) filed a petition for mandatory nonbinding arbitration naming Palm-Aire Country Club Condominium Association No. 2., Inc. (the Association) as the respondent. The petition challenges the Associatinon s March 4, 2015 annual election of the Association s board of directors alleging several irregularities including that the Association included four persons on the ballot who were delinquent in the payment of a monetary obligation due to the Association. On May 29, 2015, the Association filed its answer. On July 20, 2015, the parties filed legal arguments in support of their positions. 1 Findings of Fact 1. The Association is the legal entity responsible for the operation of the Palm-Aire Condominium No. 2 located in Broward County, Florida. 2. On March 4, 2015, the Association held its annual election for its Board of Directors. 1 Multiple motions and responses thereto were filed by the parties during this proceeding. However, as they are not pertinent to the resolution of this case, they will not be addressed by the arbitrator. 1

2 3. Prior to the election, the Association sent its members the ballot for the election. 4. The Association included on the ballot all the names of candidates who submitted notices of intent to be a candidate without realizing that four of the candidates were delinquent in the payment of a monetary obligation due to the Association. 5. Candidates Thomas Anthony, Rose Cilone, Jean Bowdreri and Jenny Monaco were delinquent in the payment of a monetary obligation due to the Association as of the deadline for submitting a notice of intent to run. 6. One day prior to the election, a delinquency report was generated for the Association s counsel and the Association s management company. The delinquency report showed the delinquency in the payment of a monetary obligation due to the Association by four of the candidates: Thomas Anthony, Rose Cilone, Jean Bowdren and Jenny Monaco. 7. The majority of the members of the Association s Board of Directors at that the time, upon becoming aware of the delinquency, determined that since four of the candidates were ineligible to serve on the Board, these candidates could not run for Board seats at the election. The majority of the Board sought to comply with the provisions of Section (2)(d)(2), Florida Statutes. 8. The majority of the prior Board made the decision to exclude the counting of votes for the ineligible candidates in a closed meeting with the Association s legal counsel. 9. The Board members instructed the volunteer committee who would count the votes to disregard votes made for candidates that were not eligible to serve and to only count votes for candidates who were eligible to serve. 10. Section (2)(d)2.,Florida Statutes, provides, in pertinent part, as follows: 2

3 A unit owner in a residential condominium desiring to be a candidate for board membership must comply with sub-subparagraph 4.a. and must be eligible to be a candidate to serve on the board of directors at the time of the deadline for submitting a notice of intent to run in order to have his or her name listed as a proper candidate on the ballot or to serve on the board. A person who has been suspended or removed by the division under this chapter, or who is delinquent in the payment of any monetary obligation due to the association, is not eligible to be a candidate for board membership and may not be listed on the ballot. 11. Rule 61B (9), Florida Administrative Code, provides in pertinent part, as follows: The failure of the written ballot to indicate the name of each eligible person shall require the association to mail, transmit, or deliver an amended second notice, which shall explain the need for the amended notice and include a revised ballot with the names of all eligible persons within the time required by this rule. If an amended second notice cannot be timely mailed, transmitted or delivered, then the association must re-notice and reschedule the election. If the election has already been held, under these circumstances the association shall conduct a new election. Conclusions of Law Palm-Aire Condominium No. 2 is a residential condominium within the meaning of section , Florida Statutes. The undersigned has jurisdiction over the parties and subject matter of this dispute pursuant to section , Florida Statutes. This order is entered in accordance with Rule 61B , Florida Administrative Code, because the dispute does not involve any disputed issues of material fact. Ineligible Candidates Section (2)(d)2., Florida Statutes, prohibits the Association from including on the ballot for the election of its board any candidates who are delinquent in the payment of a monetary obligation due to the Association at the time of the deadline for submitting a notice of intent to run. It is undisputed that the Association violated this statute by including four candidates who were delinquent in the payment of a monetary 3

4 obligation due to the Association at the time of the deadline for submitting a notice of intent to run. The Association realized its error on the day of the election. The Association s Board concluded that it could comply with section (2)(d)2., Florida Statues, by holding the election while discarding any votes for the ineligible candidates. Visyak v. Fairway Cove Homeowners Ass n, Inc., Arb. Case No , Summary Final Order (November 16, 2010), addressed whether an irregularity in election procedures merited the ordering of a new election stating: In the context of state and local elections, the Florida Supreme Court has held that an election component, such as a ballot, will be found to be valid if there was substantial compliance with the applicable statute. Boardman v. Esteva, 323 So. 2d 259, 264 (Fla. 1959) (substantial compliance with the absentee voting laws is all that is required to give legality to the ballot). In Boardman, the court stated: [A] fundamental inquiry should be whether or not the irregularity complained of has prevented a full, fair and free expression of the public will. Id. at 265. Accordingly, we must consider whether the irregularities cited by Petitioners, standing alone or taken together, have prevented a full, fair and free expression of the will of the owners in the May 6, 2010 election for the board of directors of the Association. The arbitrator in Visyak further noted that substantial compliance with the statutes, rules and the governing documents is necessary and technical violations will not render an election invalid. The Association failed to substantially comply with section (2)(d)2., Florida Statues, by including ineligible candidates on the ballot. By discarding the votes of members who voted for the ineligible candidates, the Association effectively disenfranchised the members who had voted for the ineligible candidates. This is not a mere technical flaw and prevented the full fair and fair expression of the members. The proper course would have been to hold a new election. 4

5 The Association argues that if the 4 ineligible candidates had been excluded from the ballot, there would have been 10 candidates for 9 board seat, and the only possible difference in the outcome would have been that the 10 th candidate, Martin Nova, could have been elected to the Board instead of one of the other 9 candidates. The Association further contends that Petitioner has not challenged the election of Martin Nova and lacks standing to do so. The only possible difference cited by the Association is significant. Additionally, the 9 th and 10 th place candidates were only separated by two votes. Petitioner has standing to challenge the validity of the election because it was fundamentally flawed. Since it is clear that a new election must be held, it must be determined whether the new election should commence from the first notice of the election required by section (2)(d)4.a, Florida Statutes, open to any currently eligible members, or should be limited to the candidates listed on the March 2015 ballot who were eligible at that time. The applicable statutes and administrative rules do not directly address this issue. Although not applicable to the instant dispute, guidance may be found in Rule 61B (9), Florida Administrative Code, which provides that where an Association fails to include eligible candidates on the ballot and the election has occurred, a new election must be held. Including ineligible candidates on the ballot is an analogous flaw. Therefore, the undersigned finds that a new election should be held in this matter, commencing with the first notice of election. The Association argues that prior arbitration cases have only required associations to send a new second notice and ballot where the association was found to have violated Rule 61B (9), Florida Administrative Code. The Association 5

6 relies upon Harrison v. Heritage Square Ass n, Inc., Arb. Case No , Final Order (September 14, 2014); Rehbaum v. Royal Arms Condo. Ass n, Inc., Arb. Case No , Summary Final Order (October 7, 2009) and Bocar at Boca Raton, LLC v. Bocar Condo. Ass n, Inc., Arb. Case No , Summary Final Order (April 11, 2011). Harrison predates the 2006 amendment to Rule 61B (9), Florida Administrative Code, which provided that, where an election has occurred, the association shall hold a new election. Neither Rehbaum nor Bocar at Boca Raton address this provision. The undersigned recedes from Rehbaum and Bocar to the extent that they may be interpreted as holding that a violation of Rule 61B (9), Florida Administrative Code, requires an association to send a new second notice and ballot where the election has already occurred. The Association contends that if the arbitrator orders a new election commencing with the first notice of election, candidates who were ineligible to serve as of the deadline for submitting notices of intent to be candidates for the March 2015 election will be provided with the opportunity to take action to become eligible for the new election. The undersigned will defer to the will of the members as to whether any previously ineligible candidates who become eligible should be elected to the Association s Board of Directors. The Association will be required to include a copy of this order with the first election notice sent to its members. Closed Meeting The Association admits that during the March 4, 2015 election meeting the majority of the prior Board made the decision to exclude the counting of votes for the 6

7 ineligible candidates in a closed meeting with the Association s legal counsel. The Association claims that the Board members did not believe that they were required to hold a Board meeting in order to decide whether or not to comply with the requirements of the Florida Statutes. During an election meeting, it is reasonable to expect that board members will be called upon to resolve unforeseen issues. Therefore, a separate board meeting does not need to be called. However, any deliberations by a board must be open to the members pursuant to section (2)(c), Florida Statutes. The only exception to the requirement that board meetings be open is found in (2)(c)3., Florida Statutes, which provides: Notwithstanding any other law, the requirement that board meetings and committee meetings be open to the unit owners does not apply to: a. Meetings between the board or a committee and the association s attorney, with respect to proposed or pending litigation, if the meeting is held for the purpose of seeking or rendering legal advice; or b. Board meetings held for the purpose of discussing personnel matters. None these exceptions is applicable to the Board s closed meeting during the election. 2 Therefore, the Association violated the open meeting requirements of section (2)(c), Florida Statutes. Based upon the foregoing, it is ORDERED: declared void. 1. The Association s March 4, 2015 election of its Board of Directors is 2. The present Board shall consist of the board members serving at the time of the March 4, 2015 election. If any of these members are currently unavailable to 2 Although the Board met with its attorney to discuss how to comply with section (2)(d)2., Florida Statues, the meeting did not involve proposed or pending litigation. 7

8 serve, the remaining board members shall appoint replacement board members pursuant to section (2)(d)9., Florida Statutes. 3. Within twenty days of the date of this order, the Association shall issue a first notice for an election for it Board of Directors pursuant to section (2)(d), Florida Statutes. 4. The first notice of election shall include a copy of this order and include the following statement printed in bold, all capital letters, size 14 font, double spaced: IN ORDER TO COMPLY WITH THE ENCLOSED AUGUST 4, 2015 SUMMARY FINAL ORDER ENTERED BY THE ARBITRATION SECTION OF THE DIVISION OF CONDOMINIUMS, TIMESHARES AND MOBILE HOMES, FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, A NEW ELECTION, TO REMEDY DEFECTS IN THE MARCH 4, 2015 ELECTION PROCESS, MUST BE HELD COMMENCING WITH THE ENCLOSED FIRST (60 DAY) NOTICE OF ELECTION. 5. Board members elected during the new election shall serve until the next regularly scheduled annual election. 6. The Association violated the open meeting requirements of section (2)(c), Florida Statutes, by holding a closed meeting during the election meeting on March 4, At all times in the future, the Association shall comply with section (2)(c), Florida Statutes. Florida. DONE AND ORDERED this 4 th day of August, 2015, at Tallahassee, Leon County, James W. Earl, Arbitrator 8

9 Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida Telephone: (850) Facsimile: (850) 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 , Florida Administrative Code. Certificate of Service I hereby certify that a true and correct copy of the foregoing summary final order of dismissal has been sent by U.S. Mail to the following persons on this 4 th day of August 2015: Gerard S. Collins, Esq. Kaye Bender Rembaum, P.L Park Central Boulevard South Pompano Beach, FL Attorney for Petitioner Tamar Duffner Shendell, Esq. Shendell & Associates, P.A North Federal Highway, Suite 201 Lighthouse Point, FL Attorney for Respondent James W. Earl, Arbitrator 9