STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION HOA RECALL CAMP CREEK POINT HOMEOWNERS ASSOCIATION, INC., Petitioner, v. Case No. 2014-03-7310 LOT OWNERS VOTING FOR RECALL, Respondent. / SUMMARY FINAL ORDER Statement of the Issue The issue presented for determination is whether the written recall agreement served on the Association s board of directors on August 21, 2014 should have been certified. Relevant Procedural History On September 5, 2014, Camp Creek Point Homeowners Association, Inc. (the Association) filed a petition for recall arbitration. On September 9, 2014, an Order Requiring Answer was entered, directed to the homeowners representative designated in the written agreement. The homeowners representative was served with the petition and the Order Requiring Answer. On September 18, 2014, the homeowners representative filed a response to the recall arbitration petition. On October 9, 2014, a telephonic case management conference was conducted in this case. Both parties appeared at the case management conference. Also on October 9, 2014, the arbitrator 1
entered an Order After Case Management Conference directing the parties to file certain documents. On November 4, 2014, the parties filed the last of the documents in response to the Order After Case Management Conference. This Summary Final Order is based upon the pleadings in the file. Findings of Fact 1. The total number of voting interests in the Association is 16. 2. To recall a board member, 9 valid recall ballots are needed. 3. There were 9 purported recall ballots served on the board on August 21, 2014. 4. The board of directors of the Association held a properly-noticed meeting on August 28, 2014, at which it did not certify the recall. 5. There were nine seats on the Association s board of directors at the time the recall was served. 6. The written recall ballots, which largely utilized the standard form accepted by the Division, sought the recall of directors JC White and Paris Wixon. There were 9 purported votes each submitted to recall JC White and Paris Wixon. 7. The minutes of the board meeting of August 28, 2014 document the reasons why the board voted not to certify the recall. The board accepted six recall ballots as valid. According to the minutes of the meeting, the board rejected the recall ballots for Lots 2, 3 and 6 because documents establishing that person s authority to vote on behalf of the lot were not provided to the Association. Each of these three units is owned by a trust or trusts. 2
8. Lot 2 is owned by the Susan B. Snider Revocable Trust. Susan B. Snider signed the recall ballot in her individual name and not as trustee. Respondent submitted an affidavit signed by Susan B. Snider stating that she signed the recall ballot as the trustee of the Susan B. Snider Revocable Trust. The affidavit also states that Susan B. Snider has full and complete authority to bind the Susan B. Snider Revocable Trust. The Association has not submitted any affidavit contradicting this affidavit. Furthermore, Respondent has filed limited excerpts of the Susan B. Snider Revocable Trust demonstrating that Susan B. Snider is the trustee and had full and complete authority to bind the trust. 9. Lot 3 is owned by the Derick Burgher Living Trust. Derick Burgher signed the recall ballot in his individual name and not as trustee. Respondent submitted an affidavit signed by Derick Burgher stating that he signed the recall ballot as the trustee of the Derick Burgher Living Trust. The affidavit also states that Derick Burgher has full and complete authority to bind the Derick Burgher Living Trust. The Association has not submitted any affidavit contradicting this affidavit. Furthermore, Respondent has filed limited excerpts of the Derick Burgher Living Trust demonstrating that Derick Burgher is a trustee and had full and complete authority to bind the trust. 10. Lot 6 is owned jointly by the Alan M. Swiercz Revocable Trust and the Cathleen M. Swiercz Revocable Trust. Alan M. Swiercz signed the recall ballot in his individual name and not as trustee. Respondent submitted an affidavit signed by Alan M. Swiercz stating that he signed the recall ballot as the trustee of the Alan M. Swiercz Revocable Trust, which owns half of Lot 6. The affidavit also states that Alan M. Swiercz has full and complete authority to bind the Alan M. Swiercz Revocable Trust. 3
The Association has not submitted any affidavit contradicting this affidavit. Furthermore, Respondent has filed limited excerpts of the Alan M. Swiercz Revocable Trust demonstrating that Alan M. Swiercz is the trustee and had full and complete authority to bind the trust. Cathleen M. Swiercz also signed the recall ballot in her individual name and not as trustee. Respondent submitted an affidavit signed by Cathleen M. Swiercz stating that she signed the recall ballot as the trustee of the Cathleen M. Swiercz Revocable Trust, which owns half of Lot 6. The affidavit also states that Cathleen M. Swiercz has full and complete authority to bind the Cathleen M. Swiercz Revocable Trust. The Association has not submitted any affidavit contradicting this affidavit. Furthermore, Respondent has filed limited excerpts of the Cathleen M. Swiercz Revocable Trust demonstrating that Cathleen M. Swiercz is the trustee and had full and complete authority to bind the trust. 11. According to the minutes of the recall meeting, the board also rejected the entirety of the recall effort for the following reasons: a) The recall agreement was not properly served on the board; b) The removal of either JC White or Paris Wixon would result in an inequality of representation between lake front owners and gulf front owners, thus diluting the votes of the gulf front owners; c) JC White and Paris Wixon have accomplished their duties in a very professional, effective and unbiased manner trying to bring the community together ; d) The recall was in retaliation of the vote of the board of directors on August 14, 2014 ; and e) The recall procedure was unconstitutional because it deprives lot owners their right to vote for a director or keep the director they voted for if the director can be recalled at any time without cause. 4
12. On October 6, 2014, the Association filed a pleading containing an objection to the form of the recall ballots. The Association contends that the lack of a line or a box in the retain space next to each director subject to recall makes the recall agreement facially invalid. However, this basis for rejecting the recall agreement is not contained within the minutes of the recall meeting. 13. On the written recall ballot, there was a space wherein the homeowner could indicate whether each individual director at issue should be recalled or retained. Conclusions of Law The arbitrator has jurisdiction of the parties and the subject matter of this dispute pursuant to Sections 720.303(10) and 718.1255, Florida Statutes. A Summary Final Order is appropriate in this case pursuant to Rule 61B-80.114, Florida Administrative Code. Because the Association maintains 16 voting interests, a board member must receive at least 9 valid votes in order to be properly recalled from the board. As noted above, there were 9 purported votes submitted to recall JC White and Paris Wixon. Three specifically-identified ballots were rejected by the Association. The board also rejected the entirety of the recall effort for various reasons. The arbitrator will address the propriety of the Association s bases for the rejected recall ballots in this Order. Lots 2, 3 and 6 According to the minutes of the recall meeting, the board rejected the recall ballots for Lots 2, 3 and 6 because documents establishing that signer s authority to vote on behalf of the lot were not provided to the Association. For each of these three disputed ballots, Respondent has provided an affidavit signed by the person executing 5
the recall ballot stating that he or she signed as the trustee of the applicable trust. The Association did not submit any affidavits contradicting these affidavits. Furthermore, for each of these three disputed ballots, Respondent has filed limited excerpts of the applicable trusts demonstrating that signer is a trustee who had full and complete authority to bind the trust. The recall ballots for Lots 2, 3 and 6 were signed by the trustees of the applicable trusts owning such Lots. The persons signing the recall ballots had full and complete authority to bind each applicable trust. Accordingly, the Association should not have rejected the recall ballots for Lots 2, 3 and 6. Los Prados Condo. Ass'n., Inc. v. Unit Owners Voting for Recall, Arb. Case No. 2013-03-1031, Summary Final Order (October 9, 2013). 1 See also Lakes of Woodhaven Condo. Ass'n., Inc. v. Unit Owners Voting for Recall, Arb. Case No. 2005-01-5139, Summary Final Order on Petition for Recall Arbitration (April 8, 2005) (although unit may be owned as trustee of trust, where ballot was, in fact, signed by the trustee, but word trustee was not appended, person is only one who can make decisions regarding unit, and failure to place word trustee after name does not justify rejection of ballot). Service of the Recall Agreement According to the minutes of the recall meeting, one of the reasons the board rejected the entirety of the recall effort was due to defective service because the recall agreement was not sent by certified mail. However, Respondent filed evidence, which 1 Prior arbitration case law has held that, 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. 2007-04-5781, Summary Final Order (October 1, 2007). This same reasoning applies in the use of condominium recall cases to evaluate homeowners association recall cases. 6
was not contradicted by the Association, that Alan M. Swiercz, a director of the Association, was personally served with the written recall agreement on August 21, 2014. Furthermore, Respondent filed evidence, again not contradicted by the Association, that Ingrid Esser, the Association s registered agent and manager, received a copy of the written recall agreement on August 21, 2014 by Federal Express. Pursuant to Rule 61B-81.003(1)(g), Florida Administrative Code, The written agreement or a copy shall be served on the board by certified mail or by personal service. Service of the written agreement on an officer, association manager, board director or the association s registered agent will be deemed effective service on the association. The purpose of requiring the unit owners to serve the association with the written recall agreements is to officially place the board on notice that a recall has been attempted by the homeowners. See Nautilus Condo. Ass'n., Inc. v. Unit Owners Voting For Recall, Arb. Case No. 99-2076, Summary Final Order (December 3, 1999). Arbitration case law has consistently held that where there is no dispute as to when the association received the recall agreement, the method of delivery is of no significance, as the law only requires formal service in order to determine exactly when the agreements were received. See Aqua Gardens Townhouse Ass'n., Inc. v. Unit Members Voting for Recall, Arb. Case No. 02-5861, Recall Arbitration Summary Final Order (December 24, 2002)(service by hand-delivery deemed adequate); see also Opal Towers Condo. Ass'n., Inc. v. Unit Members Voting for Recall, Arb. Case No. 02-5700, Recall Arbitration Summary Final Order (December 24, 2002)(service by hand-delivery deemed adequate); and Stonebridge Gardens, Section One, Condo. Ass'n. v. Unit Owners Voting for Recall, Arb. Case No. 01-4167, Summary Final Order (April 17, 7
2002) (method of delivery unknown). Respondent s service of the recall agreement on the Association was legal and proper. Therefore, the arbitrator finds that the Association improperly rejected the written recall agreement at issue herein for defective service. Retain Space Subsequent to the filing of the petition herein, the Association filed a pleading containing an objection to the form of the recall ballots. The Association contends that the lack of a line or a box in the retain space next to each director subject to recall makes the recall agreement facially invalid. However, this basis for rejecting the recall agreement is not contained within the minutes of the recall meeting. Rule 61B-80.102(3)(h), Florida Administrative Code, requires that, when a board meets to consider a recall petition, the minutes of such board meeting contain, [e]ach specific basis upon which the board based its determination not to certify the recall, including the parcel number and specific defect to which each challenge applies. See also 720.303(10)(i), Fla. Stat. The rule further provides that, Any specific reason upon which the board bases its decision not to certify the recall that is stated in the petition for recall arbitration, but absent from the board meeting minutes or attachments thereto, shall be ineffective and shall not be considered by the arbitrator. As a result of Rule 61B-80.102(3)(h), it is not necessary for the arbitrator to consider the Association s belated challenge to the form of the recall ballot. Nevertheless, Rule 61B-80.102(6), Florida Administrative Code, states, in relevant part: The failure of an association to timely file a petition for recall arbitration within the time limits imposed under these rules or Chapter 720, F.S., will result in the certification of the recall 8
and the immediate removal of the board directors subject to recall; however, the failure of the association to timely call or hold a board meeting or to file a petition for recall arbitration will not validate a written recall that is otherwise void at the outset for failing to obtain a majority of the voting interests or is deemed fatally defective for failing to substantially comply with the provisions of these rules. However, even if the arbitrator were to review the facial validity of the recall ballots to determine if they were fatally flawed, the arbitrator would still find the form of the recall ballots herein to be acceptable. Rule 61B-81.003(1)(b), Florida Administrative Code, requires that a recall ballot, Provide spaces by the name of each director sought to be recalled so that the person executing the agreement may indicate whether that individual director should be recalled or retained. The Association contends that the lack of a line or a box in the retain space next to each director subject to recall makes the recall agreement facially invalid. However, on the written recall ballot, there was a space wherein the homeowner could indicate whether each individual director at issue should be recalled or retained. Accordingly, the arbitrator concludes that the recall agreement is facially valid. Remaining Reasons for Rejecting the Recall in its Entirety According to the minutes of the recall meeting, the board also rejected the entirety of the recall effort for the following reasons: a) The removal of either JC White or Paris Wixon would result in an inequality of representation between lake front owners and gulf front owners, thus diluting the votes of the gulf front owners; b) JC White and Paris Wixon have accomplished their duties in a very professional, effective and unbiased manner trying to bring the community together ; c) The recall was in 9
retaliation of the vote of the board of directors on August 14, 2014 ; and d) The recall procedure was unconstitutional because it deprives lot owners their right to vote for a director or keep the director they voted for if the director can be recalled at any time without cause. As to reasons a, b and c above, such are political arguments against the recall, and are not legally recognizable bases for contesting the recall. Furthermore, Section 720.303(10), Florida Statutes, permits members of a homeowners association to recall a board member with or without cause. Finally, as to reason d, the arbitrator lacks jurisdiction to determine the recall procedure to be unconstitutional. Thus, all of these reasons given by the Association for rejecting the recall were improper. As a result of the foregoing, there are 9 valid recall votes to recall directors JC White and Paris Wixon, which constitutes a majority. Therefore, the recall of directors JC White and Paris Wixon is hereby CERTIFIED. Pursuant to Rule 61B- 81.003(3)(a)(2), Florida Administrative Code, as less than a majority of the existing board has been recalled, the vacancy on the board may be filled by the affirmative vote of a majority of the remaining directors, subject to the provisions of Section 720.307, Florida Statutes, relating to developer control of the association and regardless of whether the authority to fill vacancies in this manner is provided in the governing documents. No recalled director shall be appointed by the Association to fill any vacancy on the board. The director appointed pursuant to this rule shall fill the vacancy for the unexpired term of the seat being filled. Based upon the foregoing, it is ORDERED: 10
1. The recall of board members directors JC White and Paris Wixon is hereby CERTIFIED and they are REMOVED as directors effective as of the date of this order. 2. Within five (5) full business days from the effective date of this recall, JC White and Paris Wixon shall deliver to the board any and all records of the Association in their possession. 3. These two vacancies on the board may be filled by the affirmative vote of a majority of the remaining directors, in accordance with this Order. DONE AND ORDERED this 25 th day of November, 2014, at Tallahassee, Leon County, Florida. David R. Slaton, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida 32399-1029 Telephone (850) 414-6867 Facsimile (850) 487-0870 [This space left intentionally blank, a Certificate of Service follows on the next page]. 11
CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing summary final order has been sent by facsimile (where available) and U.S. Mail to the following persons on this 25 th day of November, 2014: Leslie D. Sheekley, Esq. Becker & Poliakoff, P.A. Paradise Village 348 Miracle Strip Parkway, S.W. Suite 7 Fort Walton Beach, FL 32548 Fax: 850.664.7882 Attorney for Petitioner Gary A. Vorbeck, Esq. Vorbeck Law Firm, P.A. P.O. Box 5506 Destin, FL 32540 Attorney for Petitioner Brian D. Leebrick, Esq. Barron & Redding, P.A. PO Box 2467 Panama City, FL 32402 Fax: 850.785.2999 Attorney for Respondent David R. Slaton, Arbitrator 12