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

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1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION RALPH BRANSCOMB, Petitioner, v. Case No MARTINIQUE 2 OWNERS ASSOCIATION, INC., Respondent. / SUMMARY FINAL ORDER This order is entered pursuant to Rule 61B , Florida Administrative Code, which permits the arbitrator to enter a summary order where there are no disputed issues of material fact. ISSUE PRESENTED Whether the association is required by its bylaws to notice and hold a special meeting of unit owners for the purpose of recalling directors when it receives a written request for a special members meeting for that purpose, signed by 10 percent of the voting interests. PROCEDURAL STATEMENT On February 4, 1999, Ralph Branscomb (petitioner or unit owner) filed a request for expedited determination of jurisdiction and a petition for mandatory non-binding arbitration. The petition and request allege that Martinique 2 Owners Association, Inc. (association or respondent) failed to call a special meeting of the members of the association for the purpose of a vote on the removal of certain directors, as required by the bylaws. On February 12, 1999, an order was entered determining that the arbitrator had jurisdiction over the dispute. An order requiring answer was served on the association, and on March 10, 1999 the association filed its motion to dismiss the 1

2 arbitration or to stay the petition. Following respondent s filing o f an amended motion to dismiss, an order denying the motion was entered on March 31, On April 8, 1999, the petitioner filed its motion for summary disposition, and on April 14, 1999 the respondent filed its answer and affirmative defense. On April 23, 1999 the parties filed memoranda of law on the issue presented. Thereafter, on May 10, 1999, the petitioner filed a motion to amend the petition to include an additional claim alleging that the appointment of Bernard Green to fill a vacancy created by the resignation of Robert Loeb, one of the directors sought to be recalled by the unit owners, was improperly effected. The motion to amend will be denied as the issue is unrelated to the instant dispute. DISCUSSION On or about December 16, 1998, the petitioner and other unit owners delivered to the association s board of directors a written request signed by at least 10 percent of the membership requesting the board to call a special meeting of the members. The request indicated that the signing members requested a special members meeting be called on January 28, 1999 for the purpose of conducting a vote for the removal of four directors, Robert Loeb, Raymond Dolan, Bernard Green and Abe Bosman, who were named in the request. The request further stated that it was made pursuant to paragraph 2.2 of the bylaws and that the vote for removal would be conducted in accordance with paragraph 3.2(c) 1 of the bylaws of the association. 1 It appears that the owners meant to cite 3.2(e) which deals with removal as (c) pertains to elections. 2

3 Paragraph 2.2 of the association bylaws provides: Special members meetings shall be held whenever called by the President or Vice President or by a majority of the Board of Directors, and must be called by such Officers upon receipt of a written request from members entitled to cast ten (10%) percent of the votes of the entire membership. The business conducted at a special meeting shall be limited to that stated in the notice of the meeting. (Emphasis supplied) Paragraph 3.2(e) of the bylaws provides as follows: Any Director elected by the Apartment Unit Owners may be removed by concurrence of a majority of the vote of all the Apartment Unit Owners. The vacancy in the Board of Directors so created shall be immediately filled after a vote of the apartment owners at the same meeting. The board failed to call the meeting. On January 13, 1999, prior to the filing of the petition for arbitration, the petitioner s attorney faxed a letter to the associat ion s attorney complaining of the failure and demanding that the board immediately set the meeting on or before Friday, January 22, The board still did not call the meeting and this petition for arbitration was filed on February 4, The respondent s defense is that it does not have the authority to call a meeting of owners where the subject matter of the meeting is a recall. According to the respondent, uni t owners seeking to recall an individual director or the entire board may, pursuant to Section (2)(j), Florida Statutes (1998 Supp.), give notice of a meeting for that purpose directly to the unit owners, and the procedural rules adopted by the division which provide a game plan for such meetings preempt the bylaws to the extent that a meeting on recall is being requested. Indeed, Section (2)(j), Florida Statutes (1998 Supp.), provides that a special meeting of the unit owners to recall a member or members of the board of administration may be called by 10 percent of the voting interests giving notice of the meeting as required for a meeting of unit owners... Section (2) provides that the bylaws shall provide for the following and, if 3

4 they do not do so, shall be deemed to include the following:... However, this provision does not require that the provisions of the bylaws in the instant case be disregarded; rather it provides that the bylaws may be supplemented by its requirements. as follows: Rule 61B , Florida Administrative Code, pertaining to recalls by meeting, provides Recall of One or More Members of a Board of Administration at a Unit Owner Meeting; Board Certification; Filling Vacancies. (1) Calling a Recall Meeting. Regardless of any provision to the contrary in the condominium documents, 10 percent of the voting interests may call a meeting of the unit owners to recall one or more members of the board by the voting interests giving the notice specified in paragraphs (2)(a) and (b) below. As utilized in this rule, the phrase "condo minium documents" means the recorded declaration of condominium and all recorded exhibits and amendments thereto, and the articles of incorporation and bylaws of the condominium association in effect, and any amendments to each which are in effect. (Emphasis supplied) Respondent s argument, that paragraph 2.2 of the association bylaws is superseded by Rule 61B , Florida Administrative Code, is based in part on the underlined text in paragraph (1) of the rule, above. However, this phraseology is clearly intended to mean that regardless of any more demanding provisions contained in the condominium documents, the unit owners may convene a meeting of owners after having obtained the signatures of only 10 percent of the voting interests. For example, if the documents provided that a meeting for the purpose of recalling the board could only be called by the board, the rule s provision allowing unit owners to call their own meeting would prevail, or if the documents provided that 25 percent of the owners had to make a written request for a meeting on recall, the rule s requirement that signatures of only 10 percent of the owners are required, would prevail. The division addressed a situation similar to the instant one in a declaratory statement involving a time-share resort condominium. In In re: Sanibel Beach Club Association, Case No. 4

5 DS94266 (Division of Florida Land Sales, Condominiums and Mobile Homes, 1994), the division indicated that where the bylaws required the board to call a special meeting of unit owners upon the written request of 25% of the voting members, the association was not obligated to deliver the notice; rather the unit owners seeking the meeting for the purpose of recalling the board had to deliver the notice. Sanibel Beach is distinguishable, however, because it involved approximately 1,000 time-share unit week owners and a 224-page signature list; thus, mailing the notice of meeting to the owners would have cost the association over $5,400. In the instant case, there are 220 unit owners and the signature list is a mere 9 pages long. In addition, in dicta, the division stated that the bylaws of Sanibel Beach specifically provide the procedure for calling a special recall meeting by 10% of the voting interests giving notice of the meeting. The division noted that where there are general and special provisions in a contract relating to the same thing, the special provision will govern in its construction over matters stated in general terms. The bylaws in the instant case contain no such recall meeting provision. The association also argues that its bylaws provision, that the president of the association is to preside at an owners meeting, conflicts with the procedure encompassed by Rule 61B , Florida Administrative Code, in which the unit owners calling the meeting are to specify a person, other than a board member subject to recall at the meeting, who shall determine whether a quorum is present, call the meeting to order, preside, and proceed as provided in the rule. According to the association, the rule also provides that the presiding member designate a representative of the owners in connection with any petition for recall arbitration that may be filed and designate someone to record the minutes of the meeting. In fact, Rule 61B (3)(b), Florida Administrative Code, provides that the representative shall be elected by the voting interests or designated by the presiding officer. The person who records the minutes of the meeting is selected in the same manner. Thus, once the meeting is convened, the unit owners may conduct it pursuant to the administrative rule. 5

6 Respondent s point is well taken, however, in that the provisions of the rule and the association s bylaws do not mesh seamlessly. A special unit owner meeting called by the board, for the purpose of recalling one or more of its members, could be subverted if the board were to become overly involved in the conduct of the meeting. Nevertheless, the undersigned does not read Rule 61B , Florida Administrative Code, as precluding use by the owners of their right, under the bylaws, to have the board notice and call the meeting. In a case such as the instant one, where there are a large number of voting interests, it may be advantageous from a financial point of view for the owners seeking recall to have the notice of the meeting provided by the association. In Nassif v. Continental Towers, Inc., Arb. Case No , Partial Summary Final Order (May 28, 1997), the association refused to call a meeting of unit owners because the purpose of the meeting, a referendum on whether to approve/disapprove the management contract, was within the exclusive authority of the board of directors; therefore, any action by the unit owners at a meeting would be a nullity. The arbitrator rejected the association s argument, stating as follows: The fact that the unit owners sought a meeting at which they erroneously believed they could conduct a referendum on issues within the board s exclusive purview does not excuse the board from calling the special meeting as required by the bylaws. The fact that, in the instant case, the subject of the meeting would be a recall of the board of directors, for which there is another procedure available to the owners under the administrative rules, does not relieve the board from calling the meeting at the unit owners request. Based on the foregoing, it is ORDERED: 1. The relief requested by the petitioner, a determination that the association is required to call a special meeting of members as requested, regardless of whether the subject of the meeting is the recall of certain directors, is GRANTED. The petit ioner shall notify the association as to the date on which the owners wish to have a meeting, and shall provide the text of the notice. Within 10 days of receipt of the notice text, the association shall provide notice to the owners as specified in the 6

7 bylaws. 2. The motion to amend the petition to include an additional claim is DENIED. DONE AND ORDERED this 8th day of June 1999, at Tallahassee, Leon County, Florida. Patricia A. Draper, Arbitrator Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida

8 RIGHT OF APPEAL In accordance wit h Section , Florida Statutes, a part y adversely affected by this final order may appeal from the order by filing, within 30 days of entry and mailing of the order, a complaint for trial de novo with a court of competent jurisdiction within the circuit in which the condominium is located. This order does not constitute final agency action and is not appealable to the district courts of appeal. CERTIFICATE OF MAILING I HEREBY CERTIFY that a true and correct copy of the foregoing was faxed and mailed by U.S. mail, postage prepaid, to Kenneth J. Scherer, Esq., 712 U.S. Highway One, Suite 400, North Palm Beach, FL and Jay Steven Levine, Esq., 2500 N. Military Trail, Suite 275, Boca Raton, FL this the 8th day of June Patricia A. Draper, Arbitrator 8