STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION CYPRESS CHASE NORTH CONDOMINIUM NO. 3 ASSOCIATION, INC., Petitioner, v. Case No. 2010-05-8324 CYPRESS CHASE NORTH PROPERTY OWNERS ASSOCIATION, INC., Respondent. / SUMMARY FINAL ORDER On November 18, 2010, Cypress Chase North Condominium No. 3 Association, Inc. (Petitioner) filed a petition for mandatory non-binding arbitration alleging certain violations relating to the February 2010 annual election for the board of directors of Cypress Chase North Property Owners Association, Inc. (Respondent). On December 22, 2010, the Respondent filed an Answer. On January 12, 2011, a Case Management Conference was held. Appearing at the conference were: Tamar Shendell, Esquire, counsel for the Petitioner and Michael Rothschild, Esquire, counsel for the Respondent. Petitioner alleges that: Collette Empson was improperly removed from the board by Respondent; Respondent has improperly conducted elections in the past in violation of Article VI of the Articles of Incorporation; and the number of board members currently serving on the board, five (5), is not authorized by Article VI of the Articles of Incorporation. 1
Statement of the Issues 1 1. Whether Respondent has improperly conducted elections in the past by holding at-large voting for each of the five (5) seats on the board? 3. Whether the board has improperly elected and seated a five-member board? Findings of Fact 1. Cypress Chase North Property Owners Association, Inc. (hereafter POA) is the corporate entity (master association) responsible for the operation of Cypress Chase North Condominium No. 1, Cypress Chase North Condominium No. 2, Cypress Chase North Condominium No. 3, and Cypress Chase North Condominium No. 4 (sub associations). 2. Since turnover, the current board of directors of the POA has consisted of five (5) members. 3. Petitioner is Cypress Chase North Condominium No. 3., Inc. 4. Unit owners within the four (4) sub-associations are Class A members. 5. The parties agree that there is no Class B member since turnover by the Developer. 6. The parties agree that each of the sub-associations consist of one hundred forty (140) units. 7. The parties agree that all previous elections to the POA since turnover by the Developer were conducted as at-large elections. 1 Petitioner also sought the restoration of Ms. Collette Empson as the Petitioner s member of the board of directors; however, due to the imminence of the upcoming election and the necessity of determination of the remaining issues, Petitioner agreed to drop this claim for relief. 2
8. The next annual meeting and election for the POA is scheduled for February 24, 2011. Conclusions of Law The undersigned has jurisdiction over the parties to, and the subject matter of, this dispute, pursuant to Section 718.1255, Fla. Stat. If no disputed issues of material fact exist, the arbitrator may enter a Summary Final Order. Fla. Admin. Code R. 61B- 45.030. Article VI of the Articles of Incorporation of the POA states as follows: The affairs of the Association shall be managed by a Board of Directors consisting of not more than seven (7) Directors. So long as the Developer shall not have the right to appoint the Board of Directors, Directors need not be members of the Association and need not be residents of the State of Florida; thereafter, all Directors shall be members of the Association and residents of the State of Florida. There shall be three (3) Directors appointed by the Class B member so long as the Class B member has the right to appoint the Board of Directors. After the Class B member s right to appoint the Board of Directors terminates, there shall be elected by the Class A members a Board of Directors consisting of a number determined based upon the number of units in Cypress Chase North which are subject to the provisions of the Declaration of Covenants and Restrictions. The owners of Units in each separate phase (each phase being either a separately submitted condominium regime or separately owned non-condominium phase of Cypress Chase North) of the Property subject to the Declaration of Covenants and Restrictions shall elect at least one member of the Board of Directors. Any such phase with more than one hundred forty (140) units shall elect two such directors. Any such phase with more than two hundred eighty (280) units shall elect three (3) such directors. For any such phase with more than four hundred twenty (420) units an additional director shall be elected. Each director elected by Class A members shall serve for a term of the date of the meeting where he is elected until the next annual meeting. In no event can a Board member appointed by the Class B member be removed except by action of the Class B 3
member. Any Director appointed by the Class B members shall serve at the pleasure of the Class B member, and may be removed from office, and a successor Director may be appointed, at any time by the Class B member. According to Article VI, prior to turnover, the Developer was entitled to appoint three members to the POA board. However, after turnover, the POA board is to consist of representatives of each of the sub-association. Article VI provides that each of the subassociations is entitled to elect one resident director to the POA board. In addition, to the four (4) resident directors, Article VI also provides that if a sub-association has more than one hundred forty (140) units the sub-association shall elect two (2) resident directors, and if the sub-association has over two hundred eighty (280) units, the subassociation shall elect three (3) resident directors. If a sub-association has over four hundred twenty (420) units, then the sub-association is to elect an additional resident director for each additional one hundred forty (140) units. The POA board may have a maximum total of seven (7) POA board members. Article V of the Bylaws, provides as follows, (Emphasis Supplied.) 2. Director positions to be filled by Class A members shall be assigned to each phase of Cypress Chase North project and filled by a vote of a majority vote of the owners of the units in such phase present at a meeting for such purpose, assuming a quorum is present. The number of positions assigned to each phase is set forth in the Articles of Incorporation. Both parties agree that for some unknown number of years the POA board has consisted of a five (5) member board with all five (5) members elected at-large. Therefore, the current scheme of electing five (5) POA members with an at-large vote is 4
not authorized by the POA s governing documents, or any amendment thereto, as filed with the arbitrator. 2 Laches Respondent raises laches as a defense alleging that Petitioner and the other sub-associations have participated in the numerous prior elections and did not complain of the election procedures used by the Association in those elections. This defense has no bearing on the case at hand, because of the on-going nature of the activity. Simply because Petitioner and other sub-associations have not objected to the Respondent s procedure in the past, does not mean they cannot object to them in the present. To allow such a defense would permit the Respondent to essentially amend the POA s governing documents without obtaining a vote by the unit owners of the subassociations and would render the recorded POA governing documents unreliable and unit owners would be without knowledge regarding the POA s election procedures. Subsection (9) of Rule 61B-23.0021, Fla. Admin. Code, provides, in pertinent part, as follows: 2 Section 718.112(2), Fla. Stat., provides, in pertinent part, as follows: (2) REQUIRED PROVISIONS. The bylaws shall provide for the following and, if they do not do so, shall be deemed to included the following: (a)administration. 1.The form of administration of the association shall be described indicating the title of the officers and board of administration and specifying the powers, duties, manner of selection and removal, and compensation, if any, of officers and boards. In the absence of such a provision, the board of administration shall be composed of five members, except in the case of a condominium which has five or fewer units, in which case in a not-for-profit corporation the board shall consist of not fewer than three members. As the Articles of Incorporation and the Bylaws specifie the composition of the board, this section does not apply to the case at hand. 5
The written ballot shall indicate in alphabetical order by surname, each and every unit owner or other eligible person who desires to be a candidate for the board of administration and who gave written notice to the association not less than 40 days before a scheduled election, unless such person has, prior to the mailing of the ballot, withdrawn his candidacy in writing. The failure of the written ballot to indicate the name of each eligible person shall require the association to mail, transmit, or deliver an amended second notice, which shall explain the need for the amended notice and include a revised ballot with the names of all eligible persons within the time required by this rule. If an amended second notice cannot be timely mailed, transmitted or delivered, then the association must re-notice and reschedule the election. If the election has already been held, under these circumstances the association shall conduct a new election. No ballot shall indicate which candidates are incumbents on the board. No write-in candidates shall be permitted. No ballot shall provide a space for the signature of or any other means of identifying a voter. The next annual meeting election is currently scheduled to be held on February 24, 2011. That is insufficient time for each sub-association to obtain names of unit owners interested in being a candidate for the sub association s resident director position on the POA board of directors. Accordingly, it is ORDERED: 1. Respondent s affirmative defense of laches is DENIED. 2. Respondent POA s annual meeting and election currently schedule for February 24, 2011, is CANCELLED. 3. Within five days of the expiration of the time for the parties to file for rehearing or for a de novo trial, Respondent POA shall select another date to conduct an election and shall conduct the election in accordance with the Respondent POA s 6
governing documents, Section 718.112, Fla. Stat., and Rule 61B-23.0021, Fla. Admin. Code., as follows: a. The number of POA board members is four (4), until and unless the POA amends its governing documents. b. Unit owners of each of the four (4) sub-associations shall elect a unit owner from their sub-association to serve on the POA board. c. There shall be no at-large candidates, and unit owners shall only cast a vote for a candidate to represent their sub-association. d. Those elected to serve on the POA board shall serve until the next annual election or as provided by statute. DONE AND ORDERED this 14 th day of January, 2011, at Tallahassee, Leon County, Florida. Tonya S. Chavis, 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 7
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, Fla. Stat. As provided by Section 718.1255, Fla. Stat., the prevailing party in this proceeding is entitled to have the other party pay reasonable costs and attorney s fees. Any such request must be filed in accordance with Fla. Admin. Code R. 61B-45.048. Certificate of Service I certify that a copy of the foregoing Summary Final Order was furnished by U.S. Mail and by facsimile on January 14, 2011, to the following: Tamar Duffner Shendell, Esquire FAX: 954.782.3748 Shendell & Associates, P.A. 3650 North Federal Highway Suite 202 Lighthouse Point, FL 33064 Michael Rothschild, Esq. FAX: 954.424.1206 Glantz & Glantz, P.A. 7951 SW 6 th Street Suite 200 Plantation, FL 33324 Tonya S. Chavis 8