STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION Elwood S. Levy and Dorothy Warnell, Petitioners, v. Case No. 01-4093 Embassy House Association, Inc., Respondent. / FINAL ORDER DISMISSING PETITION Comes now, the undersigned arbitrator, and issues this final order as follows: Petitioners filed their petition for arbitration in this matter on December 5, 2001. Petitioners seek to challenge the procedure whereby an amendment to the bylaws was accomplished. The amendment purported to abolish term limits for directors. The amendment finds immediate relevance to the parties insofar as an election is scheduled to occur in February 2002. If the amendment is invalid, then certain current members of the board who filed their notice of intent to become candidates in the election are ineligible to serve on the board for an additional term. Petitioners filed a motion to expedite this proceeding, and a motion to take discovery on January 2, 2002. On January 8, 2002, the association filed a motion to dismiss the petition. The arbitrator heard arguments of counsel on the motion to dismiss in a teleconference hearing conducted on January 9, 2002. For purposes of ruling on the association s motion to dismiss, all facts asserted in the petitioner are presumed to be true. As a point of fact, there are no disputed issues of material fact. 1
The petition argues that the procedure whereby the amendment was passed was fatally flawed. According to the petition, the proposed amendment to the bylaws was first placed on the agenda for a board meeting to be held on November 14, 2001. The agenda failed to list the specific subject matter of the amendment but simply provided that a request to change Article III of the declaration would be discussed. The petitioners argue that the lack of specific detail on the agenda negates the board vote taken on this matter. Also, petitioners argue that since the contemplated amendment was an amendment to the bylaws and not to the declaration 1, the notice of meeting was deficient. There is nothing in the statute or the case law indicating the required level of specificity for a board meeting agenda. The statute in s. 718.112(2)(c), F.S., simply provides that adequate notice of board meetings, which shall incorporate an identification of agenda items, shall be posted conspicuously at least 48 hours in advance. Mention of the contemplated amendment was contained in the notice and owners were put on inquiry notice of the amendment. It is not evident that disclosure was inadequate. After hearing the arguments of counsel, the arbitrator granted the motion to dismiss as to the issue of notice of the November 14 board meeting. The basis for the ruling did not involve a determination of whether the notice violated the statute, as discussed above, but was based on the fact that under the bylaws, it is the owners and not the board that has the authority to amend the bylaws. In this sense, absent outright fraud or other similar circumstance, it cannot be said that what 1 This having been said, it is observed that under Article VIII of the bylaws, amendments to the bylaws must be reflected as amendments to the declaration. Therefore, this error, assuming it to be an error, would not appear to be fundamental. 2
occurred at the board meeting is relevant to whether the membership at a later date legitimately voted on the subject amendment. The arbitrator on this basis granted the motion to dismiss as to the board meeting. Next, petitioners challenged the amendment on the basis that inadequate notice was given for the December 4 membership meeting at which the amendment was formally voted on by the owners. Specifically, petitioners argued that the board promulgated a defective misleading notice when the notice provided that the meeting would be held for the purpose of confirming membership approval of the amendment. The choice of this phraseology by the board was improvident and improper. It gives the impression that membership approval had already been assured or achieved, and does not give rise to an even playing field in presenting the merits of the amendment doing away with term limitations. Likewise, the board sent along with the limited proxy that it sent out to the owners, a letter from a board member expressing approval of the elimination of term limits. The arbitrator ruled in the course of the motion hearing that the conduct of the board with reference to the membership meeting, while cumulatively unsavory, did not violate any specific portion of the statute, rules or condominium documents. The arbitrator also ruled that the effect of any misstated notice provision was effectively nullified in this case because the entire text of the proposed amendment along with a limited proxy form that also contained the text of the amendment were sent to each unit owner in advance of the membership meeting. It cannot be said that the owners lacked meaningful notice of the subject matter of the amendment or the meeting. The arbitrator at the conclusion of the hearing ruled that the petition failed to 3
state a cause of action upon which the requested relief may be granted. Accordingly, for the reasons stated, the petition is hereby dismissed. DONE AND ORDERED this 10 th day of January, 2002 at Tallahassee, Leon County, Florida. Karl M. Scheuerman, Arbitrator Department of Business and Professional Regulation Arbitration Section Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-1029 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 10 th day of January, 2002: Donald W. Scarlett, Jr., Esq. Judd, Shea, Ulrich, et al., P.A. 2940 S. Tamiami Trail Sarasota, Florida 34239 Kevin Edwards, Esquire Becker & Poliakoff, P.A. 630 S. Orange Ave Fl 3 Sarasota, Florida 34236-7504 Karl M. Scheuerman, Arbitrator Right to Appeal As provided by s. 718.1255, F.S., this final order may be appealed by filing a complaint for trial de novo with a court of competent jurisdiction in the circuit in which the condominium is located, within 30 days of the entry and mailing of this final order. This order does not constitute final agency action and is not appealable to the district courts of appeal. If this final order is not timely appealed, it will become binding on the parties and may be enforced in the courts. 4
Attorney s Fees As provided by s. 718.1255, F.S., the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney s fees. Rule 61B-45.048, 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-45.048, 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. 5