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

Transcription

1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION JOHN D. McHALE and JOHN McHALE, Petitioners, v. Case No LAKES OF NEWPORT CONDOMINIUM I ASSOCIATION, INC., Respondent. / FINAL ORDER Pursuant to notice, on September 27, 2000, a formal hearing in this case was held by telephone conference with the arbitrator participating from Tallahassee and the parties participating from Plantation, Florida. Both parties presented the testimony of witnesses and tendered documents into evidence. Both counsel filed post-hearing memoranda, with said filings being completed on October 16, This final order is entered after consideration of the complete record in this matter. STATEMENT OF THE ISSUE The issue is whether the respondent association properly conducted its February 2000 election of directors. DISCUSSION Unit owners John D. McHale and John McHale, father and son (petitioners) filed a petition for non-binding arbitration against Lakes of Newport Condominium I Association, Inc. (respondent or association) on June 1, The petition alleges that 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

2 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. The annual meeting of unit owners and election of directors was held at the offices of the association s management company in February In attendance were unit owners Luis Dejesus and his wife; Malcolm H. Waldron, III; and Ron D Oria, both of the association s management company; and candidates for the board, Miguel Cabrera, John D. McHale, Jeffrey Kruse, Betty Drake and Beverly Kruse. After the meeting was called to order, Waldron asked Madeline Leigh to inspect the outer envelopes and tally the ballots. Leigh sat at a desk in a space outside the conference room where the meeting was scheduled to take place and inspected and counted the ballots. The area is an open area with desks in cubicles. Dejesus and Cabrera both testified they told Waldron that they wanted to be present when the envelopes were reviewed, opened, and the ballots counted. They were refused. Petitioner McHale also testified that he asked to see the ballots being counted, and was refused. McHale said he walked out of the conference room into the hallway in order to observe the counting of votes but he st ill could not see it being done. An argument broke out between these individuals and Waldron over how the election was being conducted, and Waldron called the police. According to Dejesus, the police enforced Waldron s directive that the owners stay away from the vote count. Waldron testified that he asked Madeline Leigh to count the ballots because there was no one else at the meeting who was not running for a position on the board, or related to someone who was. He further testified that she asked to be sequestered because the noise of the unit owners made her uncomfortable, and Dejesus wanted to leave the conference room to help her count the votes. 2

3 Waldron stated that the unit owners were permitted to stand in the hallway on the other side of the desk from Leigh; the unit owners testified that they could not see her at all. Waldron s testimony is unpersuasive. He argued with the petitioners counsel on cross-examination rather than admit the existence of obviously true facts and documents that reflect negatively o n the conduct of the election that he was charged with conducting. The testimony of the three unit owners is accepted as an accurate description of the vote tabulation procedure. Rule 61B (10)(a), Florida Administrative Code, provides that after the outer envelopes are checked against a list of qualified voters, and those that are not signed by the eligible voters are marked disregard, then: in the presence of any unit owners in attendance, and regardless of whether a quorum is present, all inner envelopes shall be first removed from the outer envelopes and shall be placed into a receptacle. Upon the commencement of the opening of the outer envelopes, the polls shall be closed, and no more ballots shall be accepted. The inner envelopes shall then be opened, and the ballots shall be removed and counted in the presence of the unit owners. (emphasis supplied) Garing v. Sugar Creek Country Club Travel Trailer Park Association, Inc., Arb. Case No , Final Order (March 23, 1994) held this rule was violated where the envelopes were opened and the ballots counted in a separate room across the hall from the room in which the annual meeting was conducted. While owners were not prohibited from leaving the meeting room to observe the ballots being counted, it was impossible for an owner to participate in the annual meeting and be present during the opening and counting of the ballots. Therefore, the arbitrator held that the association had violated the rule because the ballots were not counted in the presence of the association members generally. In the instant case, while it does not appear that the annual meeting continued during the counting of the ballots, the unit owners were prohibited from entering the area where the ballots were being removed from the outer envelopes and counted. Therefore, it is determined that the rule 3

4 was violated. The outer envelopes and a list of owners were admitted into evidence. Some of the names on the list were highlighted. McHale testified that he obtained the list from the association after the election. At that time, he was told that the names of the owners who voted in the election were highlighted. Waldron, on the other hand, testified that the highlighting reflected that a ballot had been received through the mail, and anyone whose name was not highlighted could vote at the unit owner meeting. There was no consistency to the highlighting, however. The names of Beverly Kruse, Madeline Leigh, Jeffrey Kruse, Loretta Jones, Betty Drake, and Nubia Beltran (some of whom were present at the meeting and some of whom were not) were not highlighted on the list, but the ballots of these owners were counted. Moreover, Valdes Duda is listed on the list of owners, but Norberto Duda submitted the ballot for the unit. Waldron admitted that he did not personally maintain the list; that an assistant in his office did, and that he had no actual knowledge of which envelopes were received by mail and which were received at the meeting. He also testified that the list was a mailing list rather than a list of qualified voters. Waldron testified that the list did not contain the names of every individual with an interest in a unit, and that to ascertain whether a qualified voter signed a ballot, the file on the unit would have to be checked. He further admitted that a list of those voting at the meeting was not kept. Since the association does not maintain a list of qualified voters, it is clear that the ballots were not checked against a list of eligible voters as required by Rule 61B (10)(a), Florida Administrative Code ( [t]he signature and unit identification on the outer envelope shall be checked against a list of qualified voters ) In addition, the outer envelopes provided by the association to the owners did not have a space for the unit owner to write in the unit number. Several of the envelopes were disregarded by the association because the unit number was not indicated on the outer envelope, even though the 4

5 unit owner s signature was clearly legible and the owner s name appeared on the list of unit owners. Some envelopes, such as Robert Allen s, were counted even though the unit number was omitted. McHale s envelope was one of those disregarded because the unit number wasn t on the outer envelope. McHale testified that when he turned in his ballot at the meeting, he was not informed that the unit number had to appear on the outer envelope. Rule 61B (8), Florida Administrative Code, provides that the association shall supply to the unit owners a ballot and an outer envelope in which to place the ballot, and that [t]he exterior of the outer envelope shall indicate the name of the voter, and the unit or unit numbers being voted, and shall contain a signature space for the voter. The association failed to include a space for the unit or unit numbers being voted, in violation of this rule. Further, it disregarded some, but not all, envelopes lacking a unit number. Waldron, the associat ion s only witness at the hearing, was unable to explain why some ballots were rejected and others with the same deficiency were accepted. Rule 61B (10)(a), Florida Administrative Code, provides Any exteri or 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. The rule does not require the association to disregard an envelope on which the unit number is not marked, and it is unreasonable for the association to do so where the ballot envelope is legibly signed by the eligible voter and is valid in all other respects. McHale further testified that two vote tallies were announced at the meeting. The first tally reflected that the count for the various candidates was close. The second and final tally reflected a clear win for the incumbent directors, Betty Drake, Beverly Kruse and Jeffrey Kruse. Waldron testified that Leigh made the first tally, and then told him she didn t think the tally was correct because she had brought in 5 ballots including her own but her ballot wasn t there. According to Waldron, they looked around, found the missing ballots and included them in the second tally. This 5

6 explanation is rejected by the arbitrator because 1) the second count dramatically increased the number of votes for the incumbent candidates, while the votes for the challengers remained virtually the same; and 2) more than 5 votes were added on the second count. The vote tallies follow: candidate first tally second tally Miguel A. Cabrera 9 10 Betty Drake (incumbent) John S. Gecy 4 4 Timothy P. Howell 8 9 Beverly Kruse (incumbent) Jeffrey Kruse (incumbent) 8 12 John D. McHale 7 7 The association committed several major violations of the election rules, which were clearly demonstrated by the petitioners. The testimony disclosed that these violations could have materially affected the outcome of the election. Accordingly, the association is required to hold a new election as soon as possible and the unit owners will be informed that the association co mmitted violations of the division s rules governing condominium elections. It is unnecessary for the association to give notice of election in accordance with Section (2)(d)3., Florida Statutes, the purpose of which is to give individuals an opportunity to indicate their desire to run, as this has already been done. All that is required is that the candidates previously included on the February 2000 election ballot stand for election for the positions that they initially ran for. RELIEF AND REMEDY Based on the foregoing, it is ORDERED as follows: 6

7 1. Within 35 days of the date of this order, the associatio n shall conduct another, special election for the board of directors with the same candidates as the February 2000 election. The election notice and instructions included with the ballot shall state that the election is being repeated because the association committed violations of the division s rules governing condominium elections. The association shall comply with the Condominium Act and Rule 61B , Florida Administrative Code, except insofar as those procedures are modified by this order. In this regard, the association shall prepare a list of qualified voters. 2. Board members currently filling any of the positions on the board who are not reelected in the special election shall, immediately upon tallying of the ballots, vacate their seats on the board and deliver to the board any and all records of the association in the former board member s possession. 7

8 Florida. DONE AND ORDERED this 6th day of November 2000, at Tallahassee, Leon County, Patricia A. Draper, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida RIGHT OF APPEAL In accordance with Section , Florida Statutes, a party 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. ATTORNEY S FEES As provided by Section , Florida Statutes, the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney s fees. Rule 61B , F.A.C., requires that a party seeking an award of costs and attorney s fees must file a motion seeking the award not later than 45 days after rendition of this final order. The motion must be actually received by the Division within this 45-day period and must conform to the requirements of rule 61B , F.A.C. The filing of an appeal of this order does not toll the time for the filing of a motion seeking prevailing party costs and attorney s fees. 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 Larry A. Karns, Esq., 7332 N.W. 5th Street, Plantation, FL and Stephen M. Teplin, Esq., Tripp Scott, P.O. Box 14245, Fort Lauderdale, FL this the 6th day of November Patricia A. Draper, Arbitrator 8