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 SUN AND SURF ONE HUNDRED ASSOCIATION, INC., Petitioner, Consolidated v. Case No Case No WALTER C. PHILLIPS, III and JEAN M. PHILLIPS, Respondents. / AMENDED FINAL ORDER AFTER HEARING Pursuant to notice, the undersigned arbitrator of the Division of Florida Condominiums, Timeshares and Mobile Homes conducted a telephonic final hearing in this case on February 24, 2015 and March 19, During the hearings, the parties presented the testimony of witnesses, entered documents into evidence and crossexamined witnesses. The parties have filed post-hearing memoranda and proposed final orders and this order is entered after consideration of the complete record. Appearances For Petitioner: Respondents: Howard J. Perl, Esquire Becker & Poliakoff, P.A. 1 East Broward Boulevard, Suite 1800 Fort Lauderdale, FL Attorney for the Association Steven S. Marcus, Esquire McGlinchey Stafford One East Broward Boulevard, Suite 1400 Fort Lauderdale, FL Attorney for Respondents

2 Relevant Procedural History On October 20, 2014, Sun and Surf One Hundred Association, Inc. (the Association) filed a petition for mandatory non-binding arbitration naming Walter C. Phillips III and Jean M. Phillips, as Respondents. Respondents own unit R221 in the condominium and are members of the Association. The petition alleged that Respondents violated the governing documents by installing clear 1 glass instead of the gray tint glass the documents required, without the approval of the board of directors. On November 20, 2014, Respondents filed a cross petition for mandatory nonbinding arbitration and named the Association as Respondent alleging that the Association failed to properly amend the declaration in They contend that specifications for sliding glass doors and windows were intended to go hand-in-hand with the amendment and when the amendment was mishandled, it fatally affected the validity of the specifications. The cases were consolidated on January 8, By May 1, 2015, the parties had submitted proposed findings of facts, proposed final orders and memorandums in support of their respective positions. Findings of Facts 1. Sun and Surf One Hundred Association, Inc. (the Association), is the governing body of Sun and Surf One Hundred Condominium with the responsibility to operate the condominium and to maintain its property. 2. Respondents own unit R221 in the condominium and are therefore members of the Association. 1 The pleadings in the first petition alleged Respondents windows were installed with green tinted glass in their windows and doors. During the final hearing Respondents described the glass tint as clear. In either event, they were not gray tinted which is the subject of this order. 2

3 3. There are nine members of the board of directors and 136 voting interests in the condominium; 125 residential units and 11 residential penthouses. 4. To amend the declaration the board must propose a resolution to amend the declaration which must be passed by 75% of the board members and by 55% of the unit owners, which is The board passed the resolution to amend the declaration unanimously. 2 The vote by the voting interests is in dispute. 3 The amendment provided: Each unit within the Condominium unit must have windows and sliding glass doors that are incompliance with the applicable Town of Palm Beach building code provisions for hurricane protection and in conformance with the guidelines and specifications adopted by the Board of Directors, in consultation with a Florida licensed engineer. Such guidelines and specifications may address, without limitation, engineering and manufacturing standards, criteria for the type, style, design and the removal and or installation of the windows and sliding glass doors, including all framing, sealing and other materials and/or methods association therewith, and any other factors deemed relevant by the Board of Directors... to ensure the uniformity of the exterior appearance of the Condominium Property... Any replacement of windows and sliding glass doors by a unit owner must comply with the guidelines and specifications of the Association and all applicable current building codes in effect at the time of replacement.... The installation of all windows and sliding glass doors must have prior written approval from the Board of Directors, which approval shall be conditioned upon the submission of appropriate plans and specifications to the Association evidencing that the installation will conform to the Association s guidelines and specifications and current, applicable building codes. 6. The Association s declaration was recorded September 16, 1976, and section I of Article XIII provides: 2 It is not clear whether Mrs. Phillips also voted with the majority to present the amendment to the membership. Ultimately, the Phillipses did not dispute that the vote was unanimously. 3 Whether the amendment was passed as will be explained later, is not relevant to this ruling. The undersigned has determined that the un-amended declaration and the sliding glass door specifications control. 3

4 No change shall be made in the color of any exterior window, door, storm or hurricane shutter, glass or screen of a unit, without the prior written consent of the Board of Directors of the Association. All shutters, and reflective window covering, or other such covering of the exterior doors and windows shall be uniform in color as prescribed by the Board of Directors of the Association... The unit owner shall not cause anything to be affixed, attached to, hung, displayed on the exterior walls... including doors or windows of the building except with the prior written consent of the board of directors of the Association, and further, when approved, subject to the rules and regulations adopted by the board of directors of the Association(emphasis added). 7. This provision was not enforced by the Association until July 8, 2013, when the Sliding Glass Door Replacement Specifications and Procedures were adopted by the board on July 8, In December, 2013, five months after the specifications were passed, Respondents replaced their sliding glass door and windows and reinstalled them with glass which was clear rather than gray tint in color. 9. Testimony from Basil Taha, the engineer from Lawless & Mangione Architects and Engineers, LLP (L & M), who issued the specifications and oversaw the sliding glass door replacement project also reviewed the unit owners submissions to their contractors to ensure they were in line with the specifications. He indicated that the only unit in the building which has installed new sliding glass doors after the specifications were issued without the gray tint is Respondents unit. Conclusions of Law The undersigned has jurisdiction over the parties and the subject matter of this dispute pursuant to section , Florida Statutes. 4

5 Background During , after the condominium building suffered 40 years of deterioration caused by aging and salt water damage, the Association contracted with Lawless & Mangione Architects and Engineers, LLP (L & M), to conduct an engineering study of the condominium. Renovation of the building was estimated to cost $6,000, The study concluded by advising the Association, among other issues, that 24 units needed to have their sliding glass doors replaced and upgraded. While considering the recommendation, the Association decided it would include in any specifications issued thereafter, color tint requirements for the replacement doors and windows with the ultimate goal of having a uniform appearance of the exterior of the building. L & M, engineer, Basil Taha, drafted The Sliding Glass Door Replacement Specifications and Procedure (specifications) which was passed by the board on July 8, The specifications, among other things, required unit owners to seek approval from the board before the installation of the new sliding glass doors and the doors had to conform to the new specifications which included gray tinted glass. The expectation of the board was to amend the declaration to include the specifications when and if they were adopted. Many issues were raised by the parties that will not be addressed in this order. 4 Respondents contend that if the amendment did not pass, the specifications as part and parcel of the amendment, also failed and cannot be enforced by the Association. 4 These issues included the following: may the board grandfather existing violations of the specifications; can the Association cast ballots in favor of an amendment to the declaration on behalf of the 7 commercial units that it owns. 5

6 Respondents provide no legal support for this proposition. The declaration was recorded on September 16, 1976, and contains provisions which authorize the Association to enact rules and regulations governing the operation of the condominium. The issuance of the Sliding Glass Door Replacement Specifications and Procedures falls squarely within this authority and were properly promulgated despite the fact that the amendment to the declaration may have failed to pass. The 1976 declaration at Article XIII.I prohibits: [T]he change in the color of any exterior window, door... glass or screen of a unit, without the prior written consent of the board of directors of the Association. It states further that all shutters and reflective window covering, or the exterior doors and windows shall be uniform in color as prescribed by the Board of directors of the Association. Article XIII, of the declaration at subparagraph K, provides the following under the heading, Regulation : Reasonable regulations concerning the use of the condominium property may be made and amended from time to time by the Board of directors of the Association. Article V, of the By-Laws of the Association, under the heading Powers and Duties of the Board of Directors at subsection D, states: The Board of Directors shall have powers and duties necessary for the administration of the Association....these powers shall specifically and include but not be limited to... D. to make and amend regulations respecting the regulation and use of the condominium property to include but not limited to the common elements, the several condominium units and any property owned by the Association, subject to the applicable provisions of the Declaration of Condominium. Article XV, of the By-Laws of the Association, under the heading, Rules and Regulations, provides: 6

7 A. The board of directors may, from time to time, adopt or amend previously adopted administrative rules and regulations governing the details of the operation, use, maintenance, management and control of the common elements and limited common elements, and any facilities or services made available to the unit owners. A copy of the rules and Regulations adopted from time to time, as herein provided, shall fromt time to time, be posted in a conspicuous place. B. As to Condominium Units. The board of directors may, from time to time, adopt or amend previously adopted Rules and Regulations governing the restricting the use and maintenance of the condominium units, provided, however, that copies of such Rules and regulations, prior to the time the same become effective, shall be posted in a conspicuous place on the condominium property, and/or copies of same shall be furnished to each unit owner. C. Conflict. In the event of any conflict between the Rules and regulations adopted, or from time to time amended and the condominium documents, or the Condominium Act, the latter shall prevail. If any unreconciled conflict should exist or hereafter arise with respect to the interpretation of these By-laws and the Declaration of Condominium to which these By-Laws are attached, the provision of said Declaration shall prevail. Whether a rule is valid requires a determination that the board acted within the scope of its authority and that the rule reflects reasoned rather than arbitrary and capricious decision making. Platero v. Lighthouse Village Condominium Association Inc., Arb. Case no , Summary Final order (May 1, 1997). If the Association was within the scope of its authority to promulgate a rule, it must be determined whether the action reflects reasoned rule-making. As demonstrated above, the Association was clearly within the scope of its authority to issue the specifications. The undersigned finds further that, the Association s decision to issue and to enforce the Sliding Glass Door Replacement Specifications and Procedures was a reasonable exercise of that authority. Westbay Cove South Association, Inc., v. Tarantola, Arb. Case No , Order Denying Respondents Motion to Dismiss and Requiring Answer (March 6, 7

8 2015), citing Hidden Harbour Estates v. Basso, 393 F. 2d 637 (Fla. 4 th DCA, 1981). The requirement of "reasonableness" in these instances is designed to somewhat fetter the discretion of the board of directors. Id. By imposing such a standard, the board is required to enact rules and make decisions that are reasonably related to the promotion of the health, happiness and peace of mind of the unit owners. Id. The Association s $6,000,000.00, restoration project was a reasonable time for it to make the effort to eventually reach uniformity in the outside appearance of the condominium by establishing rules regarding the exterior appearance of glass within sliding glass doors and windows. The building had been subjected to wear and tear over its forty-year history as well as salt damage from the ocean nearby. When the engineers informed the Association that 24 units sliding glass doors needed replacing and upgrading it was perfectly reasonable to begin seeking uniformity with the 24 units which needed immediate replacement. Therefore, the specifications stand alone and can be enforced by the Association without regard to the successful passage of the amendment to the declaration. The Association admittedly never enforced Article XIII, I of the declaration prior to issuance of the specifications on July 8, However, there is nothing preventing the Association from enforcing the prohibition now. Blanco v. Bay Colony Club Condominium Association Inc., Arb. Case No , Final Order (August 12, 2014). Associations can prospectively enforce declaration provisions without being arbitrary and capricious if it provided notice and enforced the provision against unit owner evenhandedly. Id.; Morgan v. Crystal Sands Owners Association, Inc., Arb. Case No , Final Order of Dismissal (April 2, 2014), citing Chattel Shipping 8

9 and Investment, Inc. v. Brickell Place Condominium Assoc, Inc. 481 So. 2d 29 (Fla. 3 rd DCA, 1986)). Chattel Shipping, supra., instructs that the adoption and implementation of a uniform policy under which, for obvious reasons of practicality and economy, a given building restriction will be enforced only prospectively cannot be deemed selective and arbitrary. It is not unusual for an association that has not enforced a restriction for a lengthy period of time to set a point in time and declare its intention to enforce the restriction prospectively. Sea Ranch Villas Association, Inc., v. Reinhardt, Arb. Case No , Final Order (May 2, 2002). It is also common for associations making this decision to determine not to act against then-existing violations. Id. See also, Dayton v. Surfside Tower Association, Inc., Arb. Case No , Final Order (January 22, 2015)(The association properly adopted and implemented a uniform policy requiring a 30-day minimum leases and the owners were placed on specific notice that any subsequent violation would not be permitted. These actions were sufficient to reinstitute the 30-day minimum lease, even assuming the association had abandoned it at some point in the past). There is no dispute that the Association gave adequate notice to its membership that it was going to start enforcing the declaration s provisions related to improvements or alterations to their units. This leaves the remaining issues of, a) did the resolution to amend the declaration pass the vote of the membership; b) was the gray tint requirement a material alteration of the individual units thereby requiring a vote of the membership; c) whether Respondents violated the specifications; and if so, d) have Respondents proven by a 9

10 preponderance of the evidence that they should be excused from doing so because they have been unlawfully singled out by the Association for selective enforcement. Estoppel Respondents claim that one of the reasons they decided to replace their sliding glass doors with clear glass was that their neighbor, Mrs. Kiddons, had replaced her doors with clear glass instead of the gray tint and Respondents liked how it looked. Since the Association approved Mrs. Kiddons clear glass, Respondents argue they had no reason to believe they could not install the same clear glass contrary to the requirement of the specifications. Respondents contend the Association should be estopped from pursuing this enforcement action. The essential elements of estoppel are (1) a representation as to a material fact that is contrary to a later-asserted position, (2) reliance on that representation, and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. Baywatch Condominium Association of Pensacola Beach, Inc., v. McDaniel, Arb. Case No , Summary Final Order (September 23, 2013). Respondent, Mrs. Phillips, was on the board of directors from 2013 to 2014, and was present at meetings held on March 18, 2013, June 24, 2013 and July 8, 2013, when the specifications were discussed and passed. Mrs. Phillips voiced objections to the proposed specifications but the Phillipses have not disputed that board ultimately voted unanimously to issue them. Also, the Kiddons sliding glass doors were replaced before the specifications were issued because their unit had been damaged in a prior storm and they asked permission of the board to replace their doors much earlier than 10

11 others. In contrast to Respondents, the Kiddons sought the Association s permission to replace and install their sliding glass doors which contained clear glass. Also, Testimony from Basil Taha, the engineer from L & M who reviewed the unit owners submissions to their contractor to ensure they were in line with the specifications, indicated that the only unit in the building which installed new sliding glass doors after the specifications were issued without the gray tint is Respondents unit. This severely undercuts Respondents claim that they reasonably relied on the Kiddons circumstances when installing the incorrect glass tint. Even more stunning is that Respondents assisted other unit owners in locating a contractor to remove the old sliding glass doors and install the new sliding glass doors with the specified gray tint. All of these neighbors contracts were submitted to their contractor and the city of Palm Beach Building Department with gray tint specified as the color for the glass. Yet, when Respondents gave their order to the same contractor for the removal and re-installation of their sliding glass doors, Respondents ordered their glass to be clear tint. Respondents were well aware that after the specifications were issued they were being enforced and any contention to the contrary rings hollow. Selective Enforcement Respondents argument that they have been singled out unfairly for enforcement action is not persuasive. The engineer s testimony that they were the only owners who installed clear glass after the specifications were adopted casts grave doubts on this defense. If they are the only owners who installed clear glass they have been properly singled out for enforcement; they are the only owners who violated the specifications. 11

12 Respondents also raised the Kiddons situation as an example of selective enforcement which if true, would result in the Association s inability to enforce the specifications against Respondents. To prove the defense of selective enforcement, a party must show that there are instances of similar violations of which the governing body has notice but in which they have refused to act. Hillcrest East No. 22, Inc. v. Cohen, Arb. Case No , Final Order (October 5, 2012). Respondents bear the burden of proving his affirmative defense by a preponderance of the evidence. Id. They have burdened themselves to prove all the elements comprising the defense. Tavares Ridge Condominium Homeowners Association, Inc. v. McPhee, Arb. Case No , Final Order (October 15, 2012). The Kiddons situation is too dissimilar to Respondents for the undersigned to find in favor of this defense. The Kiddons requested approval from the Association to replace and install new sliding glass doors and windows. Permission was granted and months before the specifications were adopted, the Kiddons installed their sliding glass doors with clear glass. Respondents on the other hand, installed their new sliding glass doors and windows five months after the specifications were adopted. Respondents did not meet their burden of proving selective enforcement by a preponderance of the evidence. Did the Resolution to Amend the Declaration Pass There are 136 voting interests in the condominium. To amend the declaration a resolution to amend the declaration must be passed by 55% of the unit owners, which in this instance is 75. On March 18, 2013, the board approved the resolution to amend Article XVI.A of the declaration to require each unit to have SGD and windows which are in 12

13 compliance with the Town of Palm Beach building code and with specifications adopted by the board. It provided in pertinent part: Each unit must have windows and sliding glass doors that are in compliance with the applicable town building code provisions for hurricane protection and in conformance with the guidelines and specifications adopted by the Board of Directors. Such guidelines and specifications may address without limitations, engineering and manufacturing standards, criteria for the type, style, design and the removal and/or installation of the windows and sliding glass doors, including all framing, sealing and other materials and or methods association therewith, and any other factors deemed relevant to the Board of Directors. Any replacement of windows and sliding glass doors by a unit owner must comply with the guidelines and specifications of the Association... The installation of all windows and doors must have prior written approval from the board of Directors, which approval shall be conditioned upon the submission of appropriate plans and specifications to the Association evidencing that the installation will conform to the Association s guidelines and specifications... At the unit owners meeting to vote on passage of the amendment, eighty-two units favored the amendment but seven of these were by agreement of the parties not counted because they were commercial units which were owned by the Association and should not have been counted, leaving 75 votes in favor of the amendment. Of the 75 favorable votes, the vote on behalf of PH-1 cast by its owner, Joel Picket, was invalidated leaving only 74 affirmative votes. Joel Picket owned two penthouses and he cast a ballot for each in favor of the amendment. However, the vote to amend the declaration for his unit PH-1, was dated as having been executed on May 17, 2013 but the amendment was recorded with the county clerk s office on May 13, 2013, four days earlier. Mr. Herb Kraus the president of the Association testified at the final hearing but he could not explain how Picket s vote 13

14 appeared on the tally sheet when the vote was taken on the evening of May 8, Mr. Picket also testified at the final hearing but had no explanation for why his vote for PH-1, post-dated the recording date of the amendment to the declaration. With no evidence to explain the discrepancy, the board properly disqualified one of Picket s votes leaving only 74 one short for passage. The undersigned finds that Picket s ballot was properly disqualified without addressing the other arguments raised by the Phillipses with regard to the validity of other votes cast. The resolution to amend the declaration did not pass the vote of the membership. Was the Gray Tint Requirement a Material Alteration Which Required a Vote of the Membership The Phillipses argue that the specification for gray tinted glass constitutes a material alteration to individual units which requires a vote of the unit owners despite the fact that it otherwise was a reasonable exercise of the Association s authority to enact rules and regulates. The gray tinted SGD and windows specification adopted on July 8, 2013, was not a material alteration to individual units or as phrased in the Phillipses answer to the original petition, a material alteration to unit appurtenances. If it had been, then the Phillipses will have failed in their efforts to support this prospective. They would have had to provide evidence of all the original glass tints in the SGD and windows of all 136 units (or at the very least of their own) in order to prove the gray tint was indeed an alteration. No such evidence was produced so even if that were an appropriate premise, there would be no record evidence to support making such a finding in this final order. The tint may be characterized as an exterior material alteration to the building but under the declaration at section I of Article XIII, the Association already required that all shutters, and reflective window covering, or other such covering of the exterior doors and 14

15 windows shall be uniform in color as prescribed by the Board of Directors of the Association. What the gray tint specification did was simply conform to the requirement of the declaration for exterior uniformity of the building after forty years of having failed to do so. No unit vote was needed to bring the Association in conformity with a duty it was already under an obligation to perform. A rehearing on this issue is DENIED. Remaining Defenses Mrs. Phillips admitted that she and her husband deliberately installed the sliding glass doors without the gray tint. Other than stating that they did so because they simply wanted to, they proffered the additional excuse that the energy efficiency of their clear glass tint was higher than that offered by the gray tint. Although Respondents spent a great deal of their testimony and argument thereafter discussing the visible light transmittance requirement of the specifications, the Association s pre-arbitration notice only accused Respondents of failing to install gray tint glass without its approval. The heat transmittance of the glass is not an issue in this arbitration. Finally, Respondents argue that because the windows and glass doors are a hodgepodge of colors and tints now, attempting to make the exterior windows and sliding glass doors uniform in the future would be futile. Prior arbitration case law has found this to be a legitimate argument only under circumstances not comparable here. See Lake Howell Arms Condominium Association Inc.,v. Beasley, Arb. Case No , fn 2, Final Order (May 11, 2010). The condominium went through a major restoration due to deterioration of the building. It was reasonable to use this opportunity to seek uniformity on the exterior 15

16 appearance of the building by mandating a single glass tint for the 24 units which needed to replace their sliding glass doors immediately. Over time, uniformity might be achieved. Accordingly; the Association s request for relief is GRANTED. Respondents are found to have violated the Sliding Glass Door Replacement Specifications and Procedure by installing their new sliding glass doors and windows without gray tinted glass and are ORDERED within 30 days of the date of this order to remove and place their glass with that required by the specifications. DONE AND ORDERED this 30 th day of September, 2015 at Tallahassee, Leon County, Florida. Leah A. Simms, Arbitrator 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 and Costs 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 , F.A.C. 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 30 th day of September, 2015: Howard J. Perl, Esquire Becker & Poliakoff, P.A. Steven S. Marcus, Esquire McGlinchey Stafford 16

17 1 East Broward Boulevard Suite 1800 Fort Lauderdale, FL Attorney for the Association One East Broward Boulevard Suite 1400 Fort Lauderdale, FL Attorney for Respondents Leah A. Simms, Arbitrator 17