STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR BINDING ARBITRATION - HOA Robert and Virginia Burnamun, Petitioners, v. Case No. 2008-02-1169 South Oaks Homeowners Association of Melbourne, Inc., Respondent. / FINAL ORDER On April 8, 2008, Robert and Virginia Burnamun (the petitioners) filed a Petition for Mandatory Binding Arbitration of an Election Dispute naming South Oaks Homeowners Association of Melbourne, Inc. (the association) as the respondent. The petitioners allege that the association s annual election held on November 14, 2007, was flawed for various reasons. On May 14, 2008, the association filed its Answer denying the petitioners allegations. A case management conference was held in this matter on July 18, 2008, during which the association was directed to provide the petitioners and the arbitrator with a copy of the member roster used to mail notices of the November 14, 2007 election, and related affidavits or other proof of mailing of the notices. The petitioners were directed to file a supplement to their petition indicating the members of the association to whom the association failed to provide notice of the election. On July 14, 2008, the association filed a members list and on July 21, 2008, Petitioners filed a supplement to 1
their petition indicating the members whom they claimed did not receive notice of the election. On August 18, 2008, the association filed a response to the petitioners supplement. A telephonic final hearing was held in this matter on September 12, 2008, during which the parties presented the testimony of witnesses, tendered documents into evidence and cross-examined witnesses. On October 10, 2008, the parties filed recommended orders. This order is entered after consideration of the complete record in this matter. Findings of Fact 1. South Oaks Homeowners Association of Melbourne, Inc. is the legal entity responsible for the operation of the South Oaks of Melbourne community (the community). 2. Petitioners own real property within the community located at 1026 South Oaks Circle, Melbourne, Florida. 3. Bayside Management Services, Inc. is the management company hired by the association to manage association. 4. On October 15, 2007, Bayside Management Services sent the petitioners a Notice of the Date of the Annual and Budget Meeting of South Oaks Homeowners Association of Melbourne, Inc. The notice was addressed to All Members. 5. The notice indicated that the matters to be considered by the members at the November 14, 2007 meeting would be the election of directors, proposed amendments to the declaration and by-laws, and presentation of the proposed annual budget for 2008. Attached to the notice was a copy of the meeting s agenda, a form 2
proxy (hereinafter referred to as the association form proxy), the proposed amendments, a form written execution of the amendments, and the proposed budget. 6. As to annual election, the notice stated: There will be (3) three directors elected for (3) three-year terms. Six (6) owners have submitted their names that are willing to serve on the Board Dennis Sullivan, Dan O Nell, Audrey Adsit, Arthur B. Karns, Steve McCurry and Jerry Cassidy. Nominations from the floor will also be accepted the night of the meeting. Ballot for the election of directors will be distributed the night of the meeting when you register at the meeting, in case there are nominations from the floor. 7. The notice provided information regarding the use of proxies. The association form proxy attached to the notice was titled Limited Proxy For Annual Meeting of the Members. 8. The association form proxy stated, in pertinent part: The undersigned hereby appoints his or her designee, or (if no name is shown in the space above) the President of the Association as proxy holder to attend the Annual Meeting of the Membership of South Oaks Homeowners Association of Melbourne, Inc., which meeting will be held at 4073 Twin Oaks Blvd., Melbourne, FL, on November 14, 2007, at 7:00 PM., and any adjournment thereof, for the purpose of voting on the attached amendment, and acting on all other matters and in all things that may come before that meeting or meetings and any and all adjournments, and to represent the undersigned with all the powers that the undersigned would possess if personally present. The undersigned ratify and confirm any and all acts and things that the proxy shall lawfully do or cause to be done in the premises, whether at the annual meeting or at any change, adjournment or continuation of it and revoke all proxies previously given to anyone for the above purposes. Powers This proxy may be used to: 1. Establish a quorum at the Annual Meeting of the Membership; and 2. Vote on the following Amendment(s) as indicated hereafter. I specifically authorize and instruct my proxy holder to cast my vote in reference to the following matters as indicated below for amendments to the By-laws and the Declaration of Covenants, Conditions and 3
Restrictions (a copy of the Ballot, Written Execution and Amendments are attached hereto). Please note, in order for my proxy to be valid as to amendments to the Declaration of Covenants, Conditions and Restrictions, I (not my proxy) will need to execute the Written Execution form and attach same to this Limited Proxy. Please note, a Yes vote indicates support for the mentioned amendment, and a No vote indicates opposition to (a vote against) the mentioned amendment. 9. The association proxy language was followed by specific instructions indicating whether the proxy holder was authorized to vote in favor or against each amendment. 10. Arthur B. Karns (Karns form proxy) created another form proxy which was used at the election by some of the members. The proxy was of the following form: SOUTH OAKS HOMEOWNERS ASSOCIATION OF MELBOURNE PROXY The undersigned owner(s), or designated voter of lot no Phase, Street address in the South Oaks Subdivision, appoints Arthur L. Karns or as my proxy holder to attend the meeting of the members of the South Oaks Homeowners Association, Inc., to be held November 14, 2007 at 7:00 PM at the Clubhouse, whose address is 4073 Twin Oaks Blvd,. Melbourne, Fl. 32901. The proxy holder named above has the authority to vote and act for me to the same extent that I/WE would if personally present, with power of substitution, except that my proxy holder s authority is limited as indicated below. GENERAL POWERS I/we hereby authorize and instruct my/our proxy to use his or her best judgement (sic) on all matters which properly come before the meeting and for which a general power may be used. Dated: Signature of owner or voter Signature of owner or voter This proxy is revocable by the unit owner and is valid only for the meeting for which it is given and any lawful adjournment. In no event is this proxy valid for more than ninety (90) days from the date of the orginal(sic) meeting for which it was given. 4
11. Maria Thibodeaux is the association s property manager. Ms. Thibodeaux and her husband own Bayside Management Services. Ms. Thibodeaux was charged with the task of mailing notices of the meeting to the association members. 12. Ms. Thibodeaux testified that she mailed the notices to all persons on the customer list for the association at the time. She stated that she did so by U.S. mail and requested return service for any letters not successfully delivered. No letters were returned. 13. On July 14, 2008, the association filed the customer list. 14. The customer list does not match the names on the sign-in sheet for the election. In fact, it appears that the customer list contains persons who did not own lots in the subdivision at the time of the election. 15. Ms. Thibodeaux explained that the inconsistency is due to how her company maintains the customer list. The customer list is continuously updated with no historical copy maintained. Therefore, the only customer list available at the time the association filed it was one reflecting recent membership rolls. 16. At the November 14, 2007, annual meeting there were four sign-in tables which were divided alphabetically. Virginia Burnamun manned one of the tables with a fellow member of the association. Each table was manned by two volunteers. 17. When a member signed-in, they were given a ballot for the election of directors and a ballot to vote on the amendments to the governing documents. 18. Persons who had provided a proxy appointing them as the proxy were given both a director ballot and amendment ballot for each proxy. 5
19. The member s name was confirmed against a sign-in sheet that provided the street number, phase number and lot number and name of the member. The signin sheet also contained columns for the person to sign as proxy or as present in person. Finally, the sign-in sheet contained a column to indicate that a ballot had been provided. Proxy holders signed their own names on the sheet next to the person who had given them the proxy. 20. There were additional handwritten dates on the sign-in sheet subsequent to the November 14, 2007, meeting. These dates indicate persons who voted on the governing document amendments at the continued meetings. 21. If an owner appeared at the meeting in person and had provided a proxy to the association or another person, the person was provided a ballot and the proxy was not used to vote. 22. For persons voting in favor of the amendments to the governing documents, there were notaries present at the meeting to notarize the Written Execution. 23. The ballot for election of directors listed the Audrey Adsit, Gerry Cassidy, Arthur B. Karns, Steve McCurry, Dan O Nell, Janie O Toole and Jim (James) White as candidates. The ballot instructed the voter to vote for only three candidates. The ballot also included spaces to list names of owners who were nominated from the floor and directed the voter not to sign the ballot. 24. Some of the members upon receiving their ballots immediately voted and returned the ballot to the volunteers manning the sign-in tables. Some did so before the 6
meeting was called to order. However, they were not required to cast their votes immediately. 25. The voters were not provided a confidential envelope or a voting box for their ballots. The ballots were simply placed face down on the voting table. 26. During the meeting there was an announcement seeking nominations from the floor. Nominations were received and some of the ballots listed persons nominated from the floor. 27. At the time of the meeting, Phyllis Balls was the association s secretary. She was present at the November 14, 2007, meeting. 28. During the election meeting, Ms. Thibodeaux circulated among the sign-in tables giving the volunteers instructions. The association had delegated her authority to help the volunteers, help with notarization of documents, hand out ballots and supervise the counting of the ballots. 29. When the voting was closed, the sign-in table workers counted the votes on the ballots returned to their table. 30. Once the counting was done, Dennis Sullivan, the association s president, announced that Audrey Adsit, Gerry Cassidy and Dan O Neil had won the election. 31. The grand total vote as determined at the meeting was: a. Audrey Adsit: 115 b. Gerry Cassidy: 67 c. Arthur B. Karns: 45 d. Steve McCurry: 49 e. Dan O Nell: 112 f. Janie O Toole: 44 g. Jim (James) White: 44 7
32. The ballots entered into evidence at the final hearing by the association revealed that the counting of votes was in error. However, the error did not change the results. The actual votes for each candidate were as follows: a. Audrey Adsit: 109 b. Gerry Cassidy: 60 c. Arthur B. Karns: 49 d. Steve McCurry: 55 e. Dan O Nell: 105 f. Janie O Toole: 45 g. Jim (James) White: 48 33. There was an insufficient number of votes to pass the amendments to the governing documents. Therefore, as to the vote on the governing documents the meeting was continued until January 2008. 34. Article I, section 2, of the association s declaration of covenants, conditions and restrictions (the declaration) defines owner as follows: Owner shall mean and refer to the record owner, whether one or more persons or entities, of a fee simple title to any Lot which is a part of the properties, including contract sellers, but excluding those having such interest merely security for the performance of an obligation. 35. Article III of the declaration provides, in pertinent part, as follows: Section 1. Every owner of a Lot which is subject to assessment shall be a Member of the Association. Membership shall be appurtenant to and may not be separated from ownership of any Lot which is subject to assessment. Section 2. The Association shall have two (2) classes of voting Membership: Class A. Class A Members shall be all Owners, with the exception of the Declarant, and each Class A Owner shall be entitled to one (1) vote for each Lot owned. When more than one person holds an interest in any Lot, all such persons shall be Members. The vote for such Lot shall be exercised as they determine, but in no event shall more than one vote be cast with respect to any Lot. 36. Art. III, section 5 of the association s bylaws states: 8
At all meetings of members, each member may vote in person or by proxy. All proxies shall be in writing and filed with the secretary. Every proxy shall be revocable and shall automatically cease upon conveyance by the member of his Lot. 37. Article V of the association s bylaws states: Section 1. Nomination. Nomination for election to the Board of Directors shall be made by a Nominating Committee. Nominations may also be made from the floor at the annual meeting. The Nominating Committee shall consist of a Chairman, who shall be a member of the Board of Directors, and two (2) or more members of the Association. The Nominating Committee shall be appointed by the Board of Directors prior, to each annual meeting of the members, to serve from the close of such annual meeting until the close of the next annual meeting and such appointment shall be announced at each annual meeting. The Nominating Committee shall make as many nominations for election to the Board of Directors as it shall in its discretion determine, but not less than the number of vacancies that are to be filled. Such nominations may be made from, among members or non-members. Section 2. Election. Election to the Board of Directors shall be by secret written ballot. At such election the members or their proxies may cast, in respect to each vacancy, as many votes as they are entitled to exercise under the provisions of the Declaration. The persons receiving the largest number of votes shall be elected. Cumulative voting is not permitted. 38. Section 28(c) of Article VIII of the association s bylaws provides: (c) Secretary. The secretary shall record the votes and keep the minutes of all meeting and proceedings of the Board and of the members; keep the corporate seal of the Association and affix it on all papers requiring said seal; serve notice of meetings of the Board and of the members; keep appropriate current records showing the members of the Association together with their addresses, and shall perform such other duties as required by the Board. 39. Article V of the association s articles of incorporation defines membership in the association as follows: Every person or entity who is a record owner of a fee or undivided fee interest in any Lot which is subject by convenants or record to assessment by the Association, including contract sellers, shall be 9
a member of the Association. The foregoing is not intended to include persons or entities who hold an interest merely as security for the performance of an obligation. Membership shall be appurtenant to and may not be separated from ownership of any Lot which is subject to assessment by the Association. 40. 40. Article VI of the association s of articles of incorporation provides that when more than one person holds an interest in any lot, all such persons shall be members. 41. 41. Section 3 of Article III of the association s bylaws states: Notice of Meetings. Written notice of each meeting of the members shall be given by, or at the direction of the secretary or person authorized to call the meeting, by mailing a copy of such notice, postage prepaid, at least fifteen (15) days before such meeting to each member entitled to vote there at, addressed to the member s address last appearing on the books of the Association, or supplied by such member to the Association for the purpose of notice. Such notice shall specify the place, day and hour of the meeting, and, in the case of a special meeting, the purpose of the meeting. Conclusions of Law The undersigned has jurisdiction over this dispute and the parties pursuant to section 720.311 and 718.1255, Florida Statutes. Proxies Article III, section 5, of the association s by-laws permits members to vote at a members meeting by proxy. The petitioners challenge the use of the association form proxy during the election arguing that it is a limited proxy which does not authorize the holder to vote in the election on behalf of the grantor. The association form proxy is a general grant of authority with a singular limiting condition controlling the manner in which the holder may vote on the by-law amendments. As to all other matters that may come before the membership for a vote 10
at the meeting, the proxy holder is given discretion to act in place of the grantor. The undersigned finds that the proxy unequivocally expresses the intent to grant broad discretion to the proxy holder as to member votes at the meeting other then the by-laws amendment. Therefore, the proxy was properly used during the election. The Karns form proxy clearly grants general authority to the holder on all matters. Therefore, it was appropriate to allow the holders of such proxies to vote. The petitioners also raise concern because members who had provided the association proxies voted in person at the election. Based upon the testimony presented at the final hearing, it was established that when a person who had provided a proxy appeared in person at the sign-in table, they were provided a ballot and the proxy was deemed withdrawn. The grantor of a proxy may revoke it. This issue would be of concern if more votes were cast than persons who had signed-in either in person or as proxy. Such was not the case in this election. Ballot Secrecy and Negative Comments The petitioners allege that the association failed to maintain the secrecy of the voting and that at times persons manning the sign-in tables negatively commented on members votes. The association acknowledged that it did not use a ballot box or an anonymous envelope in which to place the ballot. As members turned in their ballots, the ballots were simply placed face down on the table. Article IV, section 2, of the association s bylaws requires that election of the board of directors to be by secret ballot. However, the governing documents do not indicate the method for maintaining secrecy. 11
The petitioners presented the testimony of members who felt that the association failed to maintain the confidentiality of their vote. However, no one testified that the voting process used by the association deterred them from voting. A member may waive the requirement of a secret ballot by voting. Alvarez v. Club Atlantis Condominium Association, Inc., Arb. Case No. 92-0305, Final Order (March 25, 1993). The petitioners presented the testimony of members who stated that a volunteer attending one of the sign-in tables commented negatively on his vote. However, even assuming that such negative comments occurred, the petitioners failed to prove that the comments affected the election. The petitioners failed to prove that any breach in the secrecy of the voting by the association affected the election. 1 Likewise, the petitioners failed to prove that negative comments affected the election. Accordingly, any such irregularities would not merit ordering a new election. Nominations From the Floor Section 720.306(9), Florida Statutes, provides that any member of a homeowners association may nominate himself or herself as candidate for the board at a meeting where the election is to be held. The petitioners contend that it was improper for the association to accept ballots at the meeting before nominations were made from the floor. It is clear that some members voted their ballots and returned them to the sign-in table prior to the announcement seeking nominations. The annual election notice sent to the membership clearly stated that there would be the opportunity for nominations 1 This is not to say that the association in an abundance of caution should not use a more secure method of ensuring secrecy. 12
from the floor at the meeting. Additionally, the ballot provided to the membership at the meeting included spaces to list names of owners that were nominated from the floor. The membership was adequately informed that candidates would be nominated from the floor during the election meeting. Therefore, anyone who voted a ballot prior to nominations from floor is presumed to have waived the opportunity to vote for such candidates. Accordingly, the association s acceptance of ballots prior to announcement of the floor nominations was appropriate. The Election Meeting The petitioners allege that the association failed to properly supervise the election meeting. Pursuant to section 28(c) of article VIII of the association s by-laws, the secretary of the association is the corporate officer charged with recording the votes and keeping the minutes of all meeting and proceedings of the Board and of the members. The testimony presented at the final hearing indicated that the association s property manager, Marie Thibodeaux, handled much of the ministerial aspects of the election, setting up the sign-in tables, advising the volunteers, supervising the collection and tallying of ballots and notarizing documents. However, it was not established that the association s secretary or the board of directors abandoned their duty to supervise the meeting. Even if it is assumed that the board improperly delegated supervision of the election meeting to the property manager, the petitioners failed to establish how such actions detrimentally affected the election. 13
Notice of the Election Section 3 of article III of the association s bylaws requires that each member of the association entitled to vote at a meeting be given notice in writing at least fifteen days prior to the meeting. The notice is to be provided by mailing a copy of it to each member. The petitioners allege that the association failed to provide notice of the election to its entire membership. The association claims that notice was provided to the members listed on its property manager s customer list. The customer list produced by the association did not match the sign-in list and contained names of owners who purchased their parcels after the election. Ms. Thibodeaux explained that the inconsistency because the customer list is continuously updated with no historical copy maintained. Section 720.303(4)(g), Florida Statutes, requires a homeowner s association to maintain a current roster of all members. There is no requirement that an association maintain historical rosters. Various deceased persons were listed on the association s customer list whose deaths were reported in the association s newsletter. These persons included Hector Pino (July 2003) 2, Vern, a/k/a Levergne Adsit, George Cutty (March 2006), Everett Warren (July 2006), and Phil, a/k/a Phillip Eberle (August 2007). The deceased persons were also included on the sign-in sheet for the November 2007 meeting. Clearly, the association was aware that members had died, but failed to update its customer list. The association filed the customer list with arbitrator on July 14, 2008. At the final hearing, the petitioners entered into evidence property appraiser records generated 2 Month and year of death was reported in the association s newsletter. 14
on August 28, 2008, listing the owners of lots in the community. Any owners who appear on the property appraiser s records and listed on the sign-in sheet for the November 2007 meeting should also appear on the customer list filed by the association. Based upon the above analysis, the following parcels had multiple owners at the time of the election and the customer list only lists a single owner for each parcel: Phase/ lot Owners on deed 2 / 6 Herbert Van Kruinigen & Julia Van Kruiningen, his wife 2 / 30 Gary R. Ziegler & Geraldine H. Ziegler, his wife 2 / 31 Michael Grofik & Ella Grofik, his wife 2 / 54 Roger Maslin & Martha C. Maslin, husband & wife 2 / 73 John E. Duggan & Cecilia Duggan, his wife 2 / 85 Daniel R. Woelfel & Maria J.Woelfel, his wife Deed Date Customer List 01/11/93 Jim van Krunigen 10/04/94 Gary Ziegler 02/29/00 Michael Grofik 07/30/96 Roger Maslin 07/19/91 John Duggan 03/22/91 Daniel Woefel Printed name on Sign-in sheet June Van Ruinigen Gary/ Geraldine Ziegler Michael Grofik Property Appraiser as of 08/28/08 Herbert J. Van Kruinigen Gary R. Ziegler and Geraldine H. Ziegler H/W Michael Grofik and Ella Grofit H/W Martha/ Roger Roger W. Maslin and Martha C. Maslin H/W John/Ceil Duggan Daniel/ Maria Woefel John E. Duggan Daniel R. Woelfel and Maria J. Woelfel, H/W The association used the customer list to provide written notices to its members. As such, the list is basically the association s roster for notice purposes. Section 15
720.303(4)(g), Florida Statutes, requires a homeowner s association to maintain a current roster of all members. It is evident that the customer list is inaccurate because it contains persons whom the association knew were deceased and does not include all of the association s members. Based on the testimony of the association s property manager that the list was used to generate the notices of the election meeting sent to the membership, it is found that the above members were not provided notice of the meeting. Arbitration case law has ruled that it is proper to require a new election when election irregularities are substantial. See Maqueira v. International Park Condominium II Association, Inc., Arb. Case No. 01-3939, Amended Final Order (May 30, 2002)(the arbitrator ruled that the relief of a new election is an extraordinary measure, but in light of the fact that the board failed to provide notice to at least six unit owners not less than 60 days prior to the election and failed to provide a credible explanation for doing so, which deprived unit owners of the opportunity to run for office, a new election was the only remedy that sufficed). The failure to provide numerous members of the association notice of the election meeting is a substantial irregularity meriting the ordering of new election. Such relief is especially justified considering that a few votes separated the third, fourth and fifth place candidates. Based upon the foregoing, it is ORDERED: The association shall hold a new election within thirty days of the date this order for the seats on its board of directors that were open for election at the November 14, 2007, meeting. 16
DONE AND ORDERED this 6 th day of January 2009, at Tallahassee, Leon County, Florida. James W. Earl, Arbitrator Division of Florida Land Sales, Condominiums, & Mobile Homes Dept. of Business & Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1030 Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail and facsimile to the following persons on this 6 th day of January, 2009: Ross Stafford Burnaman, Esq. 1018 Holland Drive Tallahassee, FL 32301 Russell E. Klemm, Esq. Clayton & McCulloh 1065 Maitland Center Commons Building Maitland, FL 32751 James W. Earl, Arbitrator 17