STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION Herbert S. Rose, Petitioner, v. Case No. 2008-03-7422 The Village of Kings Creek Condominium Association, Inc., Respondent. / SUMMARY FINAL ORDER Statement of the Issue The issue in this case is whether the Association willfully failed to comply with a unit owner s request to inspect official records. Procedural History Herbert S. Rose filed a Petition for Arbitration on June 26, 2008, against The Village of Kings Creek Condominium Association, Inc., alleging failure to allow inspection of books and records. An Order Requiring Answer was entered on July 9, 2008. On July 24, 2008, Respondent filed a Motion in Opposition to the Petition. The motion includes a motion to dismiss for failure to state a cause of action and failure to provide proper pre-arbitration notice. On July 31, 2008, Respondent filed a response to the Motion in Opposition. Also on July 31, 2008, Petitioner filed a Motion for Sanctions, alleging that, after receiving the Order Requiring Answer, the Association s manager improperly communicated with Petitioner. On August 5, 2008, Respondent filed a 1
Motion to Strike the Motion for Sanctions. On December 8, 2008, the motion for sanctions was denied. Two arbitration cases between the same parties produced final orders after evidentiary hearings. Rose v. The Village of Kings Creek Condo. Assn., Inc., Arb. Case No. 2006-05-0289, Final Order (April 13, 2007); Rose v. The Village of Kings Creek Condo. Assn., Inc., Arb. Case No. 2005-01-9934, Final Order After Hearing (July 26, 2005). Pursuant to Rule 61B-45.043(6), Florida Administrative Code, the arbitrator takes official notice of those decision and the facts found therein. Findings of Fact 1. Petitioner is a unit owner in The Village of Kings Creek Condominium. 2. Respondent, The Village of Kings Creek Condominium Association, Inc., is the entity responsible for operation and maintenance of The Village of Kings Creek Condominium. 3. The Village of Kings Creek Condominium consists of 1,067 units, with a separate file maintained for each unit. 4. On May 1, 2008, Petitioner sent a letter to the Association making a request to inspect the original and all copies of three categories of documents summarized as follows: 1. Current roster of unit owners required by section 718.111(12)(a)7, Florida Statutes; 2. Minutes of all meetings from 1/1/05 to the date of the response; 3. All accounting records described in section 718.111(12)(a)11. a.-d., Florida Statutes for the period 12/1/06 through 5/16/08. 5. The actual language used by Petitioner for category #1 was: 2
his request. #1. as provided by Florida law at FS 718, (12(a)(7) the current roster of all unit owners and their mailing addresses, unit identifications, voting certifications and, if known, their telephone numbers, land, cell, e-mail or otherwise personal and/or business numbers. To the extent, in addition, that such information is held in other than paper documents, as for example computer, disc or floppy discs other technological of electronic means, such disc or other recording means or items shall be provided to me. This request shall extend for all purposes to any CPA or accounting or management firm or consultant holding such material for and on behalf of VKC specifically, including but not limited to Padron & Montoro LLP, and/or Mireya Villaverde CAM, or under their direct or indirect control or authority. 6. The request letter was received by the Association on May 6, 2008. 7. On May 19, 2008, Respondent inspected records produced in response to 8. On May 19, 2008, Respondent and an Association representative prepared a hand written list of documents not provided at that time. The list specified: 1. Cell phone, Email + business phone numbers of unit owners 2. Accounting + financials for March 2008, April 2008 or any portion of May 2008 3. Copies of all checks from 12/1/06 May 16, 2008 4. All receipts + invoices for all bills + expenses+ credit card purchases 12/1/06 to May 16, 2008 9. On May 20, 2008, Petitioner sent a letter confirming the hand written list and that he had inspected a roster of unit owners that included only home telephone numbers. 10. Respondent attended a second inspection on June 2, 2008, at which he received copies of accounting and financial statements for March and April 2008. 11. On June 3, 2008, Petitioner sent a letter, to insure that there is no further delay in obtaining all of the documents set forth in my request for inspection of May 1, 2008. The letter added that he had not received copies of checks or charge receipts, 3
supporting documents for charges and checks, documentation for the items charged in March 2008 or April 2008, or a financial statement or bank statement for May 2008. This letter also presented a request to review all unit owner files from A-101 thru P-412. It concluded with the statement: If all of the above are not provided to me by not later than June 10, 2008 at 1PM time of the essence, I will file an arbitration action or take other action to obtain same. This letter constitutes pre-arbitration notice under FS 718.1255. 12. On June 10, 2008, Petitioner sent a letter demanding production of all requested documents he had not received plus payment of $500.00 for willful failure to provide the records. Conclusions of Law The Division has jurisdiction over a disagreement that involves the failure of the Association to allow inspection of books and records pursuant to section 718.1255, Florida Statutes. Rule 61B-45.030(2), Florida Administrative Code provides that an arbitrator shall enter a summary final order denying relief if no disputed issues of material fact exist and no preliminary basis for relief has been demonstrated. Section 718.111(12)(b), Florida Statutes, provides: The official records of the association shall be maintained within the state. The records of the association shall be made available to a unit owner within 5 working days after receipt of a written request by the board or its designee. This paragraph may be complied with by having a copy of the official records of the association available for inspection or copying on the condominium property or association property. Section 718.111(12)(c), Florida Statutes, provides, in pertinent part: 4
The official records of the association are open to inspection by any association member or the authorized representative of such member at all reasonable times. The right to inspect the records includes the right to make or obtain copies, at the reasonable expense, if any, of the association member. The association may make reasonable rules regarding the frequency, time, location, notice, and manner of record inspections and copying. The failure of an association to provide records within 10 working days after receipt of a written request shall create a rebuttable presumption that the association willfully failed to comply with this paragraph. A unit owner who is denied access to official records is entitled to the actual damages or minimum damages for the association s willful failure to comply with this paragraph. The minimum damages shall be $50 per calendar day up to 10 days, the calculation to begin on the 11th working day after receipt of the written request. Because the statute provides for a monetary penalty, it must be strictly construed. The penalty provision applies only to failure to make available official records described in section 718.111(12), Florida Statutes. It does not apply to records that have not been created, or documents the Association might obtain but would not normally receive, such as copies of negotiated checks. Petitioner declared his June 3, 2008 letter to be pre-arbitration notice as to the May 1, 2008 request to inspect records. The May 19, 2008 list of documents-not-provided does not describe any official records that would support a finding of willful failure to comply with an inspection request for the May 1, 2008 request. The Association made available a roster with telephone numbers. The May 1, 2008 letter inextricably linked the inquiry as to cell phone, e-mail and business phone numbers of unit owners to those included on the roster. Even if such numbers may exist in the separate files maintained for each unit (sought for inspection on June 3), the Association is not required to create new records to gather all information identified by categories in a request to inspect. Rose v. The 5
Village of Kings Creek Condo. Assn., Inc., Arb. Case No. 2005-01-9934, Final Order After Hearing (July 26, 2005). It is not reasonable to request that financial and accounting statements, current up to the date of an inspection request, be obtained from a bookkeeper or CPA. Because the professionals who prepare such documents are generally swamped with tax work up to April 15, routine financial statements for a condominium for the months of March and April would likely be scheduled for later preparation. Petitioner has made no allegation or showing that the Association in this case should have had those documents on May 19. Petitioner requested to inspect, all accounting records described in section 718.111(12)(11)a-d,[sic] Florida Statutes for the period 12/1/06 through 5/16/08. That request did not put the Association on notice that Petitioner wished to see all back-up documents for the accounting records, because those documents are not specified in sub-paragraphs a through d. Under subsection 718.111(12)(a)15., Florida Statutes, receipts, invoices and credit card statements remain official records while in the possession of outside accountants, but, in this case Petitioner had not asked to inspect them. The Association was entitled to rely upon the plain meaning of subparagraph a, which provides for accurate, itemized and detailed records of all receipts and expenditures as official records. The intent to go to another level of documentation must be clearly expressed, as it was by Petitioner on May 19. The May 19, 2008 list presented a request to inspect documents not requested on May 1. The parties agreed on an additional inspection on June 2, 2008. Petitioner s letter of June 3, 2008, more specifically identified documents that were not 6
encompassed within the request on May 19, but still referred back to what he had requested on May 1, 2008. Petitioner received what he had asked for on May 1, 2008. By repeating that date in subsequent correspondence he created confusion about what records he wanted to see and when they were requested. Requests to inspect records newly specified on June 3, 2008, cannot properly be considered in this case. The fact that Petitioner s requests after May 1, 2008, became progressively more narrow, until only specific individual documents were identified as yet to be inspected, demonstrates a good faith effort on the part of the Association to comply with the official records law. Under the facts of this case, the Association did not willfully fail to comply. Based on the foregoing, it is ORDERED that the requests for relief presented in the petition for arbitration in Case No. 2008-03-7422, are denied. DONE AND ORDERED this 16th day of December, 2008, at Tallahassee, Leon County, Florida. Bruce A. Campbell, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida 32399-1029 Trial de novo and Attorney s Fees This decision shall be binding on the parties unless a complaint for trial de novo is filed in accordance with section 718.1255, Florida Statutes. As provided by section 718.1255, Florida Statutes., the prevailing party in this proceeding is 7
entitled to have the other party pay reasonable costs and attorney s fees. Any such request must be filed in accordance with Rule 61B-45.048, F.A.C Certificate of Service I hereby certify that a true and correct copy of the foregoing summary final order has been sent by U.S. Mail to the following persons on this 16th day of December, 2008: Herbert S. Rose, Esq. P.O. Box 56-5834 Miami, FL 33256-5834 Gary M. Mars, Esq. Museum Tower 27th Floor 150 West Flagler Street Miami, Florida 33130 Bruce A. Campbell 8