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

Transcription

1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION-HOA ELECTION ED DE FILIPPIS, Petitioner, v. Case No PALM BEACH LEISUREVILLE COMMUNITY ASSOCIATION, INC., Respondent. / SUMMARY FINAL ORDER Statement of the Issue The issue presented in the petition is whether Palm Beach Leisureville Community Association, Inc. (the Association) properly conducted its annual election on February 2, Relevant Procedural History On April 6, 2016, Petitioner Ed De Filippis filed a petition for mandatory binding arbitration against the Association concerning an election dispute. On April 12, 2016, the arbitrator issued an Order Requiring Answer. On May 5, 2016, the Association filed an Answer. On May 24, 2016, Petitioner filed a reply. On June 28, 2016, the arbitrator conducted a case management conference. On June 29, 2016, the arbitrator entered an Order After Case Management Conference, which required the parties to file briefs and other documentation concerning the issues in this case. On August 1, 2016, the parties filed documents responsive to the Order After Case Management Conference. On August 5, 2016, the Association 1

2 supplemented its filing. On August 26, 2016, Petitioner supplemented his filing. This Order is entered after the arbitrator has considered the pleadings and the documents filed by the parties. Findings of Fact 1. Petitioner is the owner of a lot governed by the Association and the governing documents, including the Declaration of Restrictions, Articles of Incorporation and Bylaws. 2. The Association is the entity responsible for implementing the governing documents. 3. The Association conducted an annual meeting and election of directors on February 2, Four seats on the board were up for election at the February 2, 2016 annual meeting and election of directors. 5. The notice of the February 2, 2016 annual meeting and election of directors contained a one-page combination proxy form and ballot. The proxy appeared on the top half of the page and the ballot appeared on the bottom half of the page. The proxy/ballot contained lines for the date, signature and printed name of the homeowner. The ballot portion of the sheet instructed homeowners to vote for four of the candidates listed. Petitioner was one of the candidates. The notice instructed the homeowners to sign and date the proxy and to select no more than four candidates on the ballot. The notice further advised that the ballots would be cast as ballots in the ballot box by the proxy holders. An accounting firm retained by the Association would count the votes on the ballots and the votes would be known only by the accounting firm and would remain 2

3 confidential. Finally, the notice indicated that a valid election required that a minimum of 30% of the voting interests of the Association participate in person or by proxy. 6. There are 2,305 voting interests within the Association. Therefore, 692 voting interests of the Association must participate in person or by proxy in order to reach the required 30%. 7. Section 2.4 of the Association s By-Laws provides, in pertinent part, A quorum at members meetings shall consist of persons entitled to cast a majority of the votes of the entire membership. 8. Section 2.5 of the Association s By-Laws provides, in pertinent part, Votes may be cast in person or by proxy. 9. As to the election of directors, Section 3.2(c) of the Association s By-Laws provides, The election shall be by ballot (unless dispensed by unanimous consent) and by a plurality of the votes cast, each person voting being entitled to cast his votes for each of as many nominees as there are vacancies to be filled. There shall be no cumulative voting. The Association s governing documents do not require voting by secret ballot. 10. A total of 832 voting interests participated in person or by proxy at the February 2, 2016 annual meeting and election of directors. 11. The independent certified public accounting firm engaged by the Association, Hafer and Company, filed an affidavit of its Director of Operations, Nicole Johnson- Pendergrass, who was present at February 2, 2016 annual meeting and election of directors. Ms. Johnson-Pendergrass states that a quorum was established at the 3

4 annual meeting and election of directors by the presence in person or by proxy of at least 30% of the total voting interests of the Association. Conclusions of Law The Division has jurisdiction over the parties and the subject matter pursuant to Sections (9)(c), (1) and , Florida Statutes. This Summary Final Order is entered pursuant to Rule 61B , Florida Administrative Code, which requires the arbitrator to summarily enter a final order if no disputed issues of material fact exist. Petitioner s challenge to the 2016 election is based upon the following two issues: (1) Petitioner alleges that the Association improperly failed to use a secret ballot in its election of directors; and (2) Petitioner alleges that a quorum of the membership did not cast a valid ballot in the election of directors. For the alleged violations in the conduct of the election, Petitioner seeks an Order removing the board members elected in 2016, reinstating the 2015 board members, and requiring a new election. At the outset, it should be noted that only substantial compliance with the statutes and rules pertaining to voting procedure is required, and strict compliance is not required. Alvarez v. Club Atlantis Condo. Ass'n, Inc., Arb. Case No , Final Arbitration Order (March 25, 1993). 1 Moreover, technical violations do not necessarily affect the fundamental fairness of an election. See Maignan v. Star Lakes Ass'n, Inc., Arb. Case No , Summary Final Order (September 9, 2009). 1 Although the rules and case law applicable to condominiums do not control homeowners' associations, they do provide persuasive authority to evaluate the fairness of homeowner association elections. Parker v. East Linden Homeowners Ass'n, Inc., Arb. Case No , Summary Final Order (October 1, 2007). 4

5 Furthermore, 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. It is therefore necessary to determine whether either of the two issues raised by Petitioner prevented a full, fair and free expression of the public will. Secret Ballot Issue Petitioner alleges that the Association improperly failed to use a secret ballot in its election of directors. In the case at hand, the Association used a one-page proxy/ballot form where the proxy portion of the form contained the signature and printed name of the homeowner. The ballot portion of the form disclosed the four candidates for which the homeowner giving the proxy was voting. Without doubt, this arrangement did not allow for any true secrecy. Even though the votes would be known only by the accounting firm and allegedly would remain confidential, the ballots are official records subject to inspection by the members. Interested parties could later determine for whom their neighbors had voted by inspection of the voting records. Nevertheless, Section (9)(a), Florida Statutes, provides, in pertinent part: Elections of directors must be conducted in accordance with the procedures set forth in the governing documents of the association. As to the issue of secret ballots, Section (8)(b), Florida Statutes, provides: 5

6 (Emphasis supplied.) 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. If the eligibility of the member to vote is confirmed and no other ballot has been submitted for that lot or parcel, the inner envelope shall be removed from the outer envelope bearing the identification information, placed with the ballots which were personally cast, and opened when the ballots are counted. If more than one ballot is submitted for a lot or parcel, the ballots for that lot or parcel shall be disqualified. Any vote by ballot received after the closing of the balloting may not be considered. Thus, Section (9)(a) requires that all elections procedures must be in accordance with an association s governing documents and Section (8)(b) clearly indicates that an Association s governing documents may or may not permit voting by secret ballot. In the instant case, the Association s governing documents permit voting by proxy and do not require voting by secret ballot. Accordingly, it was not improper for the Association to use a proxy/ballot form that did not allow for a secret ballot for the homeowners. See Castro v. Snapper Creek Townhouse Home Owners Ass'n, Inc., Arb. Case No , Summary Final Order (July 10, 2009)(the legislature has created the right to vote by proxy without a requirement for secret ballots). Quorum Issue As a preliminary matter, it must be noted that Section 2.4 of the Association s By- Laws states that a quorum at members meetings requires a majority of the 6

7 membership. However, Section (1)(a), Florida Statutes, provides, in pertinent part: Unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be 30 percent of the total voting interests. The statute prevails over the Association s governing documents. Accordingly, in order for the Association to conduct an annual meeting, at least 30% of the total voting interests must be present in person or by proxy. There are 2,305 voting interests within the Association. Therefore, 692 voting interests of the Association must participate in person or by proxy in order the reach the required 30%. In the case at hand, Petitioner has confused the requirement of quorum with the issue of the number of ballots cast. Petitioner has not alleged that there was an insufficient number of voting interests present in person or by proxy to constitute a quorum at the annual meeting. Rather, Petitioner alleges that there was an insufficient number of valid ballots cast in the election to constitute a quorum. Petitioner has not pointed to any provision in either the Florida Statutes or the Association s governing documents that requires a minimum number of valid ballots to be cast in the Association s election, and the arbitrator is unaware of any such provision. Once a quorum is established, the election can take place regardless of the number of ballots cast. There is no genuine issue of material fact in dispute regarding the number of voting interests present in person or by proxy at the February 2, 2016 annual meeting and election of directors. This is evidenced by Petitioner s admission in the petition for 7

8 arbitration that, The total number of ballots received was Thus, even Petitioner has acknowledged the existence of a quorum at the annual meeting. For that number of ballots to have been cast, there had to be at least that number of voting interests appearing in person or by proxy. Section (8)(a), Florida Statutes, provides, in pertinent part: 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. Thus, even if some of those ballots were ultimately discarded as invalid, the invalidation of the ballot would not invalidate the attached proxy, provided the proxy contained the elements required by the statute. The proxy form in the case under examination contained all of the required elements. In addition, the existence of a quorum at the February 2, 2016 annual meeting and election of directors was certified by the independent accounting firm, Hafer and Company. Its Director of Operations, Nicole Johnson-Pendergrass, certified that a quorum was established at the annual meeting and election of directors by the presence in person or by proxy of at least 30% of the total voting interests of the Association. Petitioner has not provided evidence to refute the affidavit from the independent accounting firm. The Association contends that a total of 832 voting interests participated in person or by proxy at the February 2, 2016 annual meeting and election of directors. Petitioner acknowledges that there were 857 ballots received. Either total, 832 or 857, is well in excess of the quorum requirement of 692. The arbitrator therefore concludes that the Association attained a quorum at its February 2, 2016 annual meeting and election of directors. 2 Statement of Facts at paragraph n. 8

9 Based upon the foregoing, it is ORDERED: 1. Petitioner s requests for relief are DENIED. 2. Any and all pending motions are DENIED. DONE AND ORDERED this 15 th day of September, 2016, at Tallahassee, Leon County, Florida. David R. Slaton, Arbitrator Department of Business and Professional Regulation Arbitration Section 2601 Blair Stone Road Tallahassee, Florida Telephone (850) Facsimile (850) Attorney s Fees As provided 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 final order has been sent by U.S. Mail to the following persons on this 15 th day of September, 2016: Ed De Filippis 1114 SW 17 th Street Boynton Beach, FL Petitioner Mary Ann Chandler, Esq. Katzman Garfinkel 1500 West Cypress Creek Road Ste. 408 Fort Lauderdale, FL Attorney for Respondent David R. Slaton, Arbitrator 9