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 BINDING ARBITRATION - HOA Reba Fennessy, Petitioner, v. Case No Coastal Estates, Inc., Respondent. / SUMMARY FINAL ORDER Procedural History On May 26, 2010, Petitioner Reba Fennessy filed a petition for mandatory binding arbitration of a homeowner s election dispute naming Coastal Estates, Inc. (Association) as Respondent. By Order entered on June 11, 2010, Petitioner was directed to file an Amended Petition and a Qualified Representative Application. 1 On June 22, 2010, Petitioner filed an Amended Petition naming only Reba Fennessy as Petitioner. On July 1, 2010, an Order Requiring Answer was entered. On July 20, 2010, counsel for the Association made a first appearance by filing a letter requesting an extension of time to file an Answer. On July 22, 2010, a notice of communication and order granting an extension of time to file an Answer was entered. On July 30, 2010, an Answer was filed. On August 5, 2010, Petitioner filed a Motion for Summary Disposition. On August 9, 2010, the Association filed a Notice of Filing 1 The original petition was styled Reba Fennesssy, et al. as Petitioners and signed by more than one person, therefore a Qualified Representative Application was ordered. 1

2 Affidavit. The Association has not filed a response to Petitioner s Motion for Summary Disposition. Statement of Issues The issues presented in the Amended Petition are whether the Association: 1. Improperly denied Petitioner s request to have Petitioner s representatives take part in the vote verification and counting process; 2. Improperly rejected a ballot because the voting member, who did not attend the meeting, completed both the side of the ballot for a member attending the election meeting and the side appointing a limited proxy, when a statement in the meeting notice declared that a ballot would be invalid for only the three reasons stated in the meeting notice; 3. Improperly declared William Hart as an ineligible voter for Lot 10, because he is a non-owner; 4. Failed to mail the meeting notice and ballot to five (5) named members; 5. Failed to comply with the Association s by-laws relating to Absentee Voting. Findings of Fact 1. Petitioner Reba Fennessy is the owner of a lot in the subdivision governed by the Association and the governing documents, including the Coastal Estates Deed Restrictions, Articles of Incorporation and By-laws. documents. 2. Respondent Association is the entity responsible implementing the governing 3. The Association s board of directors is composed of seven (7) members who are elected annually to serve a one year term. 4. The total voting interests in the Association is In its entirety, the notice for the annual meeting and election for the board of directors of the Association is quoted as follows: 2

3 Coastal Estates Homeowners Association, Inc Bombay Lane Fort Myers FL Dear Fellow Lot Owners: The Annual Meeting of the members of the Coastal Estates Homeowners Association will he held: January 25, 2010 at 6:00 PM at lona Hope Episcopal Church, 9650 Gladiolus Rd., Fort Myers, FL The purpose of the Annual Meeting is to elect the Board of Directors for that year. Even though some members of the 2009 Board of Directors want to continue to serve on the Board for 2010, Article IV, Section 2 of the Coastal Estates By-laws provides that each Director shall hold office only until the expiration of the year for which he or she was elected. Therefore, the 2009 board members must be re-elected to serve in For some of the positions on the Board there are challengers to the incumbents. Please make sure you only vote for one person where there are multiple people running for the same position, and that you vote for no more than seven (7) total members to the Board of Directors. For the position of Board Member vote for no more than two (2). If you do not follow these instructions, your ballot will be invalid. Enclosed you will find a two (2) sided voting form that has been stamped with the Coastal Estates Corporation seal. Please don t forget to sign the ballot. If you will be attending the meeting, please us [sic] the BALLOT side of the form and bring it with you to the meeting. If you will not be able to attending the meeting, please vote by using the LIMITED PROXY side of the form and return it by mail to be received NO LATER THAN JANUARY 24, 2010, or drop your PROXY in the park mailbox at Bombay Lane NO LATER THAN 1:00 PM ON JANUARY 24, 2010, or you may have your proxy holder bring your PROXY to the meeting. If you use the LIMITED PROXY form please be sure to check one: A.) The Secretary of the Association as your proxy, or B.) write in the name of the person you wish to be your proxy. Thank you for voting. The CEHA 2009 Board of Directors James Kirk, President Tony Miller, Vice President Patsy Parmenter, Treasurer Richard Stiffey, Secretary Diane Kirkpatrick, Asst Secretary Richard DeLuca, Board Member 3

4 6. The Association filed copies of three vote tabulation sheets, each dated January 25, One was signed by Charlotte Hamilton, one was signed by Shari Uharzu and one was signed by Hilda Winebarger. 7. In pertinent part, the undisputed vote count announced at the election meeting and identified in the vote tabulation sheets filed by the Association is as follows: President: James Kirk - 39; Reba Fennessy 36 Vice President: Tony Miller 37; Rosemary Adamski 31 Secretary: Deborah Kelliher - 40; Mandy Beran At the election, four ballots were disallowed by the Association. Petitioner disputes only the disallowance of the ballot of William Hart and of a ballot that was completed both on the side designating a limited proxy and on the side permitting a homeowner to vote who will be attending the meeting. 9. James Kirk is the owner of Lot 60 in the subdivision, and the street address of the lot is Bombay Lane, Fort Myers, Florida. 10. Petitioner provided a compact disc (CD) with the following identification affixed to the CD: TRACK 1: EXCERPTS OF JAN. 25, 2010 ANNUAL MEETING OF COASTAL ESTATES H.O.A. PRES. JAMES KIRK PROHIBITING REPRESENTATIVES FROM INSPECTING BALLOTS. 2 As follows, the Association s by-laws appear to direct that board candidates also run for specific offices: ARTICLE V. OFFICERS 1. OFFICES, ELECTION, TERM: Unless otherwise provided for in the Certificate of Incorporation, the membership shall appoint a President, one or more Vice-presidents, a Secretary and a Treasurer, and such other officers as it may determine, who shall have such duties, powers and functions as hereinafter provided. 4

5 TRACK 2: PRES. JAMES KIRK CONFIRMING HE PROHIBITED THE INSPECTING OF BALLOTS. TRACK 3: PRES. JAMES KIRK NOT ALLOWING BILL HARTS [sic] BALLOT TO BE COUNTED. The CD audio corresponds to the identification set out above. Conclusions of Law The Division has jurisdiction over the parties and the subject matter pursuant to Sections (9), and , Florida Statutes. For the alleged violations in the conduct of the election, Petitioner seeks a new election for the members of the board of directors. Subsections (8) and (9) of section , Fla. Stat. (2009), 3 governing the election of directors in a homeowners association, provide: (8) PROXY VOTING.--The members have the right, unless otherwise provided in this subsection or in the governing documents, to vote in person or by proxy. 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. A proxy is effective only for the specific meeting for which it was originally given, as the meeting may lawfully be adjourned and reconvened from time to time, and automatically expires 90 days after the date of the meeting for which it was originally given. A proxy is revocable at any time at the pleasure of the person who executes it. If the proxy form expressly so provides, any proxy holder may appoint, in writing, a substitute to act in his or her place. (9) ELECTIONS.--Elections of directors must be conducted in accordance with the procedures set forth in the governing documents of the association. All members of the association shall be eligible to serve on the board of directors, and a member may nominate himself or herself as a candidate for the board at a meeting where the election is to be held. Except as otherwise provided in the governing documents, boards of directors must be elected by a plurality of the votes cast by eligible voters. Any election dispute between a member and an association must be submitted to mandatory binding arbitration with the division. Such proceedings shall be conducted in the manner provided by s and the procedural rules adopted by the division. 3 These subsections were amended effective July 1, 2010, however the election at issue occurred before that date. Therefore, the 2009 statutes apply. 5

6 In pertinent part, the By-laws, recorded in 2000 with the Clerk of Court in Lee County, Florida, provide: ARTICLE III MEMBERSHIP MEMBERSHIP MEETINGS: The Annual Membership Meeting of the Corporation shall be held in January each year. The Secretary shall cause to be mailed to every member in good standing, at his address as it appears on the membership roll book of the Corporation, a notice stating the time, date, and place of the Annual Meeting.... ARTICLE V. OFFICERS 1. OFFICES, ELECTION, TERM: Unless otherwise provided for in the Certificate of Incorporation, the membership shall appoint a President, one or more Vice-presidents, a Secretary and a Treasurer, and such other officers as it may determine, who shall have such duties, powers and functions as hereinafter provided. Participation in Vote Verification and Count Petitioner asserts the election was defective, because the Association allegedly improperly denied Petitioner s request for Petitioner s representatives to participate in the verification and counting of the ballots during the election. Petitioner asserts there is no law prohibiting Petitioner s representatives from participating in these activities. While Petitioner is correct that there is no law prohibiting Petitioner s representatives from participating in these activities, there also is no requirement that Petitioner s representatives be permitted to do so. This issue is not addressed in chapter 720 or chapter 617, Fla. Stat., or chapter 61B-80 or 61B-81, Fla. Admin. Code. However, in the condominium association context, Rule 61B Fla. Admin. Code, provides, in pertinent part, (10) Envelopes containing ballots received by the association shall be retained and collected by the association and shall not be opened except in the manner and at the time provided herein. 6

7 (a) Any envelopes containing ballots shall be collected by the association and shall be transported to the location of the duly called meeting of the unit owners. The association shall have available at the meeting additional blank ballots for distribution to the eligible voters who have not cast their votes. Each ballot distributed at the meeting shall be placed in an inner and outer envelope in the manner provided in subsection (8) of this rule. Each envelope and ballot shall be handled in the following manner. As the first order of business, ballots not yet cast shall be collected. The ballots and envelopes shall then be handled as stated below by an impartial committee as defined in paragraph (b) below appointed by the board. The business of the meeting may continue during this process.... (b) Any association desiring to verify outer envelope information in advance of the meeting may do so as provided herein. An impartial committee designated by the board may, at a meeting noticed in the manner required for the noticing of board meetings, which shall be open to all unit owners and which shall be held on the date of the election, proceed as follows. For purposes of this rule, impartial shall mean a committee whose members do not include any of the following or their spouses: 1. Current board members; 2. Officers; and 3. Candidates for the board. At the committee meeting, the signature and unit identification on the outer envelope shall be checked against the list of qualified voters. The voters shall be checked off on the list as having voted. Any exterior envelope not signed by the eligible voter shall be marked Disregarded or with words of similar import, and any ballots contained therein shall not be counted. (emphasis supplied). Although these administrative rules are not applicable to disputes subject to arbitration under chapter 720, Fla. Stat., they do provide guidance as to how a homeowner s association election may be conducted. Applying those rules, Petitioner has not alleged or identified any specific bias of any of those appointed by the board to verify and count the ballots. Petitioner also has not alleged there was a separate committee meeting on the same day as the election that would require notice. Thus, 7

8 the Association was not required to permit Petitioner or Petitioner s representatives to verify voter eligibility or to count the votes. Rejection of Ballot for Completion of Both Sides Petitioner asserts the Association should not have rejected a ballot that was completed on the proxy side and on the reverse side as if the voter were attending the meeting, because the Association did not reject the ballot for one of the three reasons stated in the notice of annual meeting and election. The notice for the election states that a ballot will be rejected for the following reasons: voting for more than one candidate when there are multiple candidates for the same position; voting for more than seven (7) total candidates; and voting for more than two candidates for the position of Board Member. Petitioner s argument has no merit. The meeting notice contains no statement that the Association is precluded from rejecting ballots for reasons other than those stated in the notice. However, it would be improper for the Association to reject the ballot for the reason that it was completed on both sides if the voter attended the meeting and rescinded the proxy. Then, the vote on the non-proxy side of the ballot could be counted. Alternatively, if the voter did not attend the meeting and there were indicia of the validity of the limited proxy, the limited proxy vote could be counted. In the case at hand, there is nothing submitted by either party that indicates that the person who submitted the ballot at issue attended the meeting. With Petitioner s Motion for Summary Disposition, Petitioner filed the affidavit of Rosemary Adamski stating that she was the proxyholder for the vote of Barbara Alcorn who Petitioner surmises is the voter 8

9 who filled out the ballot on both sides. However, Petitioner did not submit the affidavit of the voter, rather Petitioner submitted the affidavit of the proxyholder. Submission of the affidavit of the proxyholder as evidence of the intent of the voter is self-serving and does meet any exception to the hearsay rule, therefore the affidavit cannot be given any weight. Thus, Petitioner has not shown that this vote was rejected improperly. Rejection of the William Hart Ballot Petitioner argues the Association improperly rejected the ballot of William Hart as a non-owner. For several reasons, Petitioner asserts that William Hart has authority to vote for Lot 10, Ballweg Lane. First, Petitioner asserts that William Hart may vote because the records of the Property Appraiser for Lee County, Florida show William Hart as the Owner of Record. The copies of records from the website of the Lee County Property Appraiser filed by Petitioner show the Owner of Record as the Mary L. Hart Estate with the name C. William Hart appearing immediately below that notation, followed by an address in Indiana. Petitioner filed two other documents as proof of its assertion. One document is a copy of a page from the Association s official Register in 2007 with the entry, Mary Hart (deceased on 1/18/07 children now owners) Bill Hart, 724 N. Howard Rd., Greenwood, IN The other document is a copy of the Association s Statement of Account as of May 31, 2008 which lists Bill Hart in the column Owner s Name with the entry PAID in the column PAID AS OF May 31, 08. The proof filed by Petitioner does not establish the authority for William Hart to vote on behalf of Lot 10. Petitioner has not filed a deed or any document in the Mary L. Hart Estate that authorizes William Hart to cast a ballot on behalf of Lot 10 in the 9

10 Association s 2010 election. Thus, the Association properly rejected the William Hart ballot. Mailing of the Meeting Notice and Ballot Petitioner alleges the Secretary of the Association failed to mail the meeting notice and ballot to every member of the Association in good standing. Petitioner makes this allegation because she alleges she was contacted by the following five (5) association members each of whom stated he or she did not receive a meeting notice and ballot in the mail: Heinz Baasner, John Rogers, Judy Bilodeau, Richard Barfield and William DeMays [sic] son, Cam DeMays (who resides in the home). The Amended Petition states Richard Barfield and William DeMays went to the annual meeting and requested a ballot. For these two Association members, Petitioner admits that any defect in the mailing of the meeting notice and ballot was cured. For the other three Association members, Petitioner filed certain documents. With respect to John Rogers, Petitioner filed a letter dated May 5, 2010, addressed To Whom It May Concern and signed by John Rogers stating he owns two lots but did not get two ballots. However, the letter also states he got a ballot from another named individual who was going to attend the meeting. Based upon this letter, Petitioner admits that any defect in the mailing of the meeting notice and ballot to John Rogers was cured. With respect to Heinz Baasner, Petitioner filed a copy of a notarized Appointment of Proxy dated October 12, 2009, signed by Heinz Baasner and Lieselotte Baasner appointing Petitioner as my proxy to vote on my behalf regarding all association matters. Petitioner also filed a letter dated May 5, 2010, and signed by Petitioner 10

11 stating neither Mr. Baasner nor Petitioner received a ballot in the mail for the meeting and election, however Petitioner went and got a ballot from the Association s president. Based upon the letter, Petitioner admits that any defect in the mailing of the meeting notice and ballot to Heinz Baasner was cured. With respect to Judy Bilodeau, Petitioner filed a copy of an from Judy Bilodeau to Petitioner dated January 8, 2010 stating, Could you tell me if they have sent out the ballots to vote yet? Paul and I have received nothing in the mail. However, Petitioner did not allege, and did not file, anything showing that Judy Bilodeau never received a ballot. Petitioner has not shown that any alleged failure by the Association regarding the mailing of the meeting notice and ballot to every homeowner was not cured or did not happen or would have changed the outcome of the election. Failure to Comply with Absentee Voting Petitioner asserts the Association failed to comply with the by-laws relating to Absentee Voting. In support of this assertion, Petitioner references the following provisions of the by-laws, ARTICLE III MEMBERSHIP ABSENTEE VOTING: Every member entitled to vote at a meeting of members or to express consent or dissent without a meeting may be submitted to the Secretary in writing in advance of any meeting. These votes shall be sealed and will be opened at the General Meeting and counted when voting has been taken. 11

12 ARTICLE X - ORDER OF BUSINESS The President shall be guided at all meetings by the manual of Roberts Rules of Order. With respect to Roberts Rules of Order, Petitioner filed a copy of a page from the website bearing the date 6/21/ In pertinent part, the copy of the webpage states, Absentee Voting. In a strictly deliberative assembly no member can vote who is not present when the question is completely put.... This provision, when it is deemed advisable to adopt it, should be placed in the constitution or by-laws, as otherwise, unless the charter or state laws authorize absentee voting, no member can vote except in person[.] There are two forms of absentee voting -- by mail, and proxy voting. Voting by Mail is used for election of officers, and for amendments to the constitution or by-laws, and for such other important matters as the society may order to be voted on in this way. If an amendment to the by-laws is to be voted on by mail, a printed copy of the proposed amendment is mailed to every member with the words "yes" and "no" printed underneath, or on a separate slip, with directions to cross out one of them, and return in the enclosed envelope, upon which should be printed the words, "Ballot for Amendment to Constitution." This envelope should usually have the signature of the voter on it, and be sealed and enclosed in another one addressed to the secretary, or to the chairman of the tellers, so that the inner envelope will not be opened except by the tellers when the votes are counted.... Instead of having the voter's signature on the inner envelope, it may be placed on the ballot, but a place for the signature should be indicated, so that there may be some means of protection against votes being cast by other than legal voters. Voting by mail cannot be a secret ballot, as it is necessary for the tellers to know by whom each vote is cast. By some such method as the above it is practicable to give all the members, however scattered they may be, an opportunity to vote on questions of great importance. Petitioner asserts the Association failed to comply with these two provisions of Roberts Rules and hence, the by-laws, because: 1. The meeting notice for the annual election 4 Following the link noted takes one to a website entitled Roberts Rules of Order Revised VIII, where the heading Art. VIII. Vote., 46. Voting appears under which is the material quoted immediately below in the text. It is unknown whether the text from Roberts Rules provided by Petitioner is to the 2010 version of that publication. 12

13 does not contain any instruction to a voter to enclose the ballot in a sealed envelope and enclose that sealed envelope in an outer sealed envelope marked ballot enclosed or ballot for election; and 2. The address for mailing a ballot stated in the meeting notice is the same address as that of the Association President. From these two assertions, Petitioner argues, in paragraph 7. of the Amended Petition, that the Association President, having to open all mail... would have had to open the envelopes containing the ballots returned by mail prior to the general meeting, which violates Article III (6) of the By-laws of Coastal Estates, and which subsequently violates the mandate in Section (9) that elections must be conducted in accordance with the By-Laws. Significantly, Petitioner does not allege that inner and outer envelopes were not enclosed with the ballot or that ballots in inner and outer envelopes were not delivered unopened to the meeting, rather Petitioner only alleges that the meeting notice did not provide instructions. Further, Petitioner does not allege the Association President or anyone else in any way tampered with any ballot that could have affected the outcome of the election. 5 Accordingly, Petitioner s allegations do not suggest a defect in the election process that would require a new election. Arbitration Cases Petitioner quotes from McHale v. Lakes of Newport Condo. I Ass n, Arb. Case No , Order on Motion for Clarification of Final Order (Dec. 8, 2000) as follows, In the instant case, the association conducted an election for directors that yielded totally suspect results, i.e., there is no assurance that the directors currently in place represent the will of the owners/voters. It is imperative, then, that the election be redone as directed in the final order and without additional delay. 5 The better practice would be for the Association to have a separate mailing address, such as a post office box, for Association mail. Additionally, the better practice would be to include in the meeting notice instructions regarding returning mailed or dropped off ballots in a sealed inner and outer envelope. 13

14 (Petitioner s emphasis omitted). Petitioner suggests that similarly, the results in the election at issue are totally suspect and a new election should be conducted. Significantly, Petitioner does not quote from the Final Order in the cited case. According to the Final Order in McHale, the petition in that case alleged, the outer envelopes supplied by the association for the election did not contain a space for the unit owner to indicate his or her unit number; the association disqualified certain votes because the outer envelope failed to contain the unit number; the association refused to allow unit owners to have access to the room where the ballots were removed from the outer and inner envelopes and counted; the association failed to disqualify ballots on which the outer envelope signatures did not correspond to the list of voters; the association added unit numbers to some of the outer envelopes; and ballots marked disqualified were opened. McHale v. Lakes of Newport Condo. I Ass n, Arb. Case No , Final Order (Nov. 6, 2000). The arbitrator found the allegations were supported. Petitioner s allegations in the case at hand are not analogous to those in McHale. Petitioner does not raise an issue with respect to any defects with the inner and outer envelope, rather Petitioner only alleges that the meeting notice did not contain instructions. Although Petitioner apparently recorded the election meeting, the excerpts of the recording filed by Petitioner do not include any complaint regarding inner and outer envelopes. Petitioner was in attendance at the election meeting and observed the voter verification and count, although Petitioner was not permitted to participate in those activities. Petitioner does not allege that the voter verification and count took place in a location isolated from the election meeting. The Final Order in McHale does not support Petitioner s arguments. Even if the two votes are counted that Petitioner claims should not have been rejected by the Association, there would be no change in the outcome of the election. 14

15 While not perfect, the Association s January 25, 2010 annual meeting and election was not so flawed with respect to adherence to the governing statutes and the governing documents as to require a new election. Based upon the foregoing, it is ORDERED: Petitioner s Request for Relief requiring the Association to conduct a new election is DENIED. DONE AND ORDERED this 26th day of August, 2010 at Tallahassee, Leon County, Florida. Glenn Lang, Arbitrator Division of Florida Condominiums, Timeshares & Mobile Homes Dept. of Business & Professional Regulation 1940 North Monroe Street Tallahassee, Florida Telephone: (850) Facsimile: (850) 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 26th day of August 2010: Reba Fennessy Ballweg Lane Fort Myers, FL Petitioner Karen M. Nissen, Esq. Vernis & Bowlin of Palm Beach, P.A. 884 U.S. Highway One North Palm Beach, Florida Counsel for Respondent Glenn Lang, Arbitrator 15