IN THE CIRCUIT COURT OF THE 11TM JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA SEAWAY VILLAS CONDOMINIUM ASSOCIATION, INC., Plaintiff, GENERAL JURISDICTION DIVISION CASE NO.: 09-45515 CA 09 VS. PATRICIA COHEN, et al. Defendants. / AMENDED VERIFIED COUNTERCLAIMS Counter-Plaintiff, Patricia Cohen (Cohen), by and through undersigned counsel, sues Counter-Defendant, Seaway Villas Condominium Association, Inc. (Seaway), and Additional Defendants Diana Humphrey (Humphrey) and Jeffrey Crass (Crass), and alleges: 1. Counter-Plaintiff, Cohen, is an individual and the owner of the subject property a/k/a 9149 Collins Ave, #212, at the Seaway Villas, Surfside, Florida, and he is otherwise sui juris. 2. Counter-Defendant, Seaway, is a corporation that maintains its office and is authorized to do business in Florida. 3. Additional Defendant Diana Humphrey has been the President or the Secretary of Seaway and on the board of directors of Seaway (Seaway Board) at all material times in this action, resides in Miami-Dade County, and is otherwise suijuris. ~ directors. ~At all times material to this action, the Seaway Board has consisted of no more than three 1 PC0023625
4. Additional Defendant Jeffrey Crass was the President of Seaway and on the Seaway Board at all material times in this action, and resides part-time in Miami-Dade County, and is otherwise suijuris. 5. This is an action for damages in excess of $15,000, and for equitable relief, plus attorney s fees and costs. 6. Venue and jurisdiction are proper in Miami-Dade County, Florida, because the acts giving rise to this action occurred in this jurisdiction, and the subject property on which plaintiff attempts to foreclose its lien under this action, is located in this jurisdiction. GENERAL ALLEGATIONS 7. Seaway alleged that it received a 40 Year Re-certification Notice from Miami-Dade County and/or the Town of Surfside. The Seaway Board apparently attempted to levy a $500,000.00 unapproved assessment (the "Unapproved Assessment"). The Unapproved Assessment was levied without notice, without declaring an emergency, without calling for a special meeting of the Board, without giving notice of the meeting to all directors of the Board, without providing written specifications as to the purpose of the meeting, without calling the question for a vote, and without taking a vote of all the members of the Seaway Board. Despite this, Seaway represented to Norris and remaining owners within the Seaway Villas, that a meeting was in fact held under emergency circumstances and that a vote among the board of directors was made to pass the emergency special assessment of $500,000. It has also become apparent that there was no notice from either Miami-Dade County or the Town of Surfside urging immediate compliance with a 40 year re-certification requirement.2 2At on-site inspection in September 2012, Seaway failed to produce any notice from 2 PC0023626
Miami-Dade County or Town of Surfside requiring immediate or urgent need for, renovations or improvements for compliance with a 40-year re-certification requirement. PC0023627
8. The Seaway began collecting payments from the Seaway unit owners toward the Unapproved Assessment in the ensuing months following the April 2008 attempted levy of the Unapproved Assessment. As of October 22, 2008, $352,389.00 was collected from the owners toward the $500,000.00 Unapproved Assessment. 9. The Seaway Board in its October 24, 2008, Meeting, stated that the Unapproved Assessment in April 2008 was an " emergency Special Assessment under the terms of the Seaway Documents and was in order." The Seaway Board further stated that "[t]his meeting was to assure everyone that the proper procedures were followed in case there was any doubt." 10. In the same October 24, 2008 Meeting, the Seaway Board voted for a special assessment of $500,000.00 and Seaway then, on October 31, 2008, sent a Notice of Special Assessment by the Seaway Villas Condominium Association, Inc. to all unit owners (Notice of Special Assessment). Despite the fact that Seaway had already collected $352,389.00 from the owners toward the Unapproved Assessment, Seaway falsified the Notice of Special Assessment. The Notice of Special Assessment stated that the original assessment is rescinded and that the current balances due, in light of the Special Assessment passed on October 24, 2008, are the original balances, and therefore reflecting no payments having been made or collected, in the apparent attempt to avoid appearance of impropriety, and omitting any reference to what was originally an "emergency assessment" imposed back in April 2008.3 3In fact, the November 18, 2006 Board Minutes, and the January 6, 2007 Board Minutes reflect that the 40 year re-certification was on the board s agenda dating back to 2006, and any 40-year re-certification would not have been due until sometime in 2014. In short, there was no emergency. 4 PC0023628
11. The minutes from the October 24, 2008 Board Meeting, state that Chris Krystal, director, is absent from the meeting, implying that Chris Krystal was still on the board. In fact, Chris Kystal had resigned more than four months prior (on June 18, 2008), in opposition to the emergency assessment.4 12. At its April 8, 2009, Board Meeting, Seaway alleges that an addition of $255,000.00 to the special assessment was passed by the Seaway Board. 13. At its March 9, 2010, Annual Meeting, Seaway alleges that an addition of $150,000.00 to the special assessment was passed "[A]t the preceding Board of Directors Special Assessment Meeting," to cover those delinquent owners on their payments toward the $500,000.00 special assessment. 14. Circumventing a vote of the owners within the Seaway Villas, Seaway ignored the requirements set forth in the Declaration of Condominium of Seaway Villas Condominium (the "Declaration"), the By Laws of The Seaway Villas Condominium Association, Inc. (the "Bylaws") and the Articles of Incorporation of The Seaway Villas Condominium Association, Inc. (the "Articles"), first with the Unapproved Assessment (as an "emergency assessment" in April 2008), again in Seaway s attempt to legitimize the emergency assessment by the board action on October 24, 2008 (as a "special assessment"), and then at each of the subsequent special assessments ($255,000.00 and $150,000.00). 15. Seaway s actions exceeded its authority thereby violating Article V of the 4On-site inspection in September 2012 revealed a letter of resignation, dated June 18, 2008, from Board Member Chris Krystal to The Seaway Villas. It states therein, "It is with much regret that I resign my position as Vice President of the Board of Directors for The Seaway Villas. I am not in agreement with the current assessment and am not able at this time to oversee further proceedings." 5 PC0023629
Declaration (which promulgates the general powers of the Association), by reason of its failure to comply with provisions of the condominium document provisions, including, but not limited to the following in particular: (i) The Declaration, Article VII requires special assessments receive the approval of members owning at least a majority of the apartments; (ii) The Declaration, Article XII requires that even if it was within the Seaway Board s sole discretion to levy a special assessment, that the amount of the special assessment must first meet the de minimis test which sets the threshold at which the owners must approve the assessments); (iii) Bylaws, Article 6 addresses the association s authority for additional assessments - operating and management expenses - which are inapplicable to the assessments at issue in this action; (iv) Section 717.113(2)(a) of the Florida Statutes (which requires that any material alterations not provided for in the Declaration, are to be approved instead by 75% of the total voting interests of the owners within the Association); and (v) Fla. Stat. 617.0303 Corporations Not for Profit- the matters of this action do not meet the definition of "emergencies", the definition to which the Declaration defers by reason that the Declaration, itself, does not define the term. 16. The acts of the Seaway Board were therefore ultra vires. Bramson, et al. vs. Beau Monde, Inc., et al., 415 So.2d 761 (Fla.2d DCA 1982). The assessment being ultra vires, there is no emergency assessment, Norris has no duty to pay the emergency assessment, and the Association has no authority to enforce it. PC0023630
16.1 The acts of the Seaway Board were also a breach of their fiduciary duty, and, as such, the Business Judgment Rule does not apply where a board member breaches his or her fiduciary duty. Under a tort theory, acts of gross negligence can expose the board member to liability. Perlow v. Goldberg, 700 So.2d 148 (Fla. 3d DCA 1997). In B & J Holding Corporation v. Weiss_, 353 S0.2d 141, S0.2d 141(Fla. 3d DCA 1978), the Third District Court of Appeal held that "where the acts constituting a breach of contract also amount to a cause of action in tort, there may be recovery of exemplary damages upon the proper allegations and proof of the intentional wrong, insult, abuse or gross negligence constituting an independent tort. 17. The assessment is invalid because the Association had no authorization to levy the assessment under the Declaration, which is a prerequisite to the Association s assertion of a lien. See Coral Way Condominium Investments, Inc. v. 21/22 Condominium Association, Inc., 66 So.3d 1038 (Fla..3d DCA 2011). See also Sandra Berg v. Bridle Path Homeowners Association, Inc., 809 Do.2d 32 (Fla. 4th DCA 2002). Without a lien under the Declaration, the Association had no basis or authority to file a claim of lien against Norris. Accordingly, the Lien is invalid and fraudulent. 18. All conditions precedent to these counterclaims have been performed, waived or otherwise excused. COUNT I BREACH OF CONTRACT - Seaway 19. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 20. There existed contracts between Norris and Seaway, including the Declaration, the Bylaws and Articles (the "Seaway Documents", which are attached as Composite Exhibit A and PC0023631
are hereby incorporated herein). 21. Seaway breached the contract(s) by the reasons more fulled stated above. 22. Cohen has been damaged as a result of the breach. AVVA-BC, LLC v. Amiel, 25 So.3d 7, 12 (Fla. 3d DCA 2009); Collections, USA, Inc. v. City of Homestead, 816 So.2d 1225, 12227 (Fla. 3d DCA 2002); AIB Mortgage Co. v. Sweeney, 687 So.2d 68, 69 (Fla. 3d DCA 1997). Norris is entitled to an award of attorney fees pursuant to the condominium documents. this Court enter a judgment against Seaway for damages, including costs and attorney fees, and for such other further relief that this Court deems just and proper. COUNT II BREACH OF FIDUCIARY DUTY - Seaway, Humphrey, Crass 23. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 24. Seaway, Humphrey and Crass, individually and collectively, share a relationship with Norris whereby Norris reposes trust and confidence in Seaway, Humphrey and Crass, and Seaway, Humphrey and Crass undertake such trust and assume a duty to advise, counsel and/or protect Cohen. 25. Seaway, Humphrey and/or Crass breached its duties to Cohen, by the reasons more fully stated above. 26. Seaway, Humphrey and/or Crass s breach proximately caused Cohen to suffer damages. Orlinsky v. Patraka, 971 So.2d 796, 800 (Fla. 3d DCA 2007). PC0023632
this Court enter a judgment against Seaway for damages, and for such other further relief that this Court deems just and proper. COUNT III FRAUD - Seaway, Humphrey and Crass 27. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 28. Seaway, Humphrey and/or Crass made false statement(s) concerning a material fact, by the reasons more fully stated above. 29. Seaway, Humphrey and/or Crass knew that their representations were false. 30. It was their intention that their representations induce Cohen s reliance. 31. Cohen has been consequently damaged by their actions in his reliance upon their representation. Susan Fixel, Inc. v. Rosenthal & Rosenthal, Inc., 842 So.2d 204 (Fla. 3d DCA 2003). this Court enter a judgment against Seaway for damages, including costs and attorney fees, and for such other further relief that this Court deems just and proper. COUNT IV CONSTRUCTIVE FRAUD - Seaway~ Humphrey and Crass 32. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 33. Seaway, Humphrey and Crass had a fiduciary relationship with Cohen and therefore had a fiduciary duty to Cohen. PC0023633
34. The duty under the fiduciary relationship has been abused by reasons of their misrepresentation or concealment, or by reason of an unconscionable advantage of Cohen having been taken, by the reasons more fully stated above. this Court enter a judgment against Seaway for damages, including costs and attorney fees, and for such other further relief that this Court deems just and proper. COUNT V GROSS NEGLIGENCE - Seawaw Humphrey and Crass 35. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 36. Seaway, Humphrey and Crass, individually and collectively, had a duty to protect Cohen from injury. 37. Seaway, Humphrey and Crass failed to perform this duty by engaging in a grossly negligent and reckless conduct, by the reasons more fully stated above. 38. Consequently, Cohen has been damaged which has been proximately caused by such failure. Beltran v. Rodriguez, 36 So.3d 725 (Fla. 3d DCA 2010); Kayfetz v. A.M. Best Roofing, Inc., 832 So.2d 784, 786 (Fla. 3d DCA 2002); rev. denied, 851 So.2d 728 (Fla. 2003); Florida Power and Light Co. V. Lively, 465 So.2d 1270, 1273 (Fla. 1985), rev. denied, 476 So.2d 674 (Fla. 1985). See also Perlow v. Goldberg, 700 So.2d 148 (Fla. 3d DCA 1997), and B & J Holding Corporation v. Weiss, 353 S0.2d 141, S0.2d 141(Fla. 3d DCA 1978), pertaining to the exception to the business judgment rule as well as the application of gross negligence to individual board liability. 10 PC0023634
this Court enter a judgment against Seaway for damages, including costs and attorney fees, and for such other further relief that this Court deems just and proper. COUNT VI VIOLATION OF FLA. STAT. 718.11, FLA. STAT. 617.0834 - Humphrey and Crass 39. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 40. The actions of Humphrey and Crass set forth more fully above, constituted recklessness or were acts or omissions that were committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of the rights of Cohen or of Cohen s property. 41. Consequently, Cohen has been damaged. this Court enter a judgment against Seaway and for damages, and for such other further relief that this Court deems just and proper. COUNT VII INJUNCTIVE RELIEF - Seaway 42. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 43. Seaway, despite its improprieties and improper passage of assessments, by reasons more fully stated above, continue to pursue the collection of the improper assessments. 44. Cohen, by reason of Seaway s pursuit, has been and continues to be damaged, as a 11 PC0023635
result of Seaway s improper pursuit. 45. Cohen is entitled therefore to an injunction against Seaway to prevent Seaway from continuing its attempt to collect improper assessments from Norris. this Court enter a judgment against Seaway for damages, including costs and attorney fees, and for such other further relief that this Court deems just and proper. COUNT VIII FRAUDULENT LIEN - Seaway 46. Cohen re-alleges the allegations contained in paragraphs 1-18 as if set forth fully herein. 47. The lien on Cohen s subject property is both improper and exaggerated, and therefore fraudulent, by the reasons more fully stated above. 48. Cohen has been damaged as a result of the fraudulent lien 49. Cohen is entitled therefore to having the lien discharged, and its related lis pendens removed, and Cohen s attorney fees and costs paid, pursuant to the Florida Lien Statutes. this Court enter a judgment against Seaway for damages, including costs and attorney fees, to discharge the lien and its related lis pendens, and for such other further relief that this Court deems just and proper. COUNT IX BREACH OF FIDUCIARY DUTY - (FAILURE TO EXERCISE RIGHT OF FIRST 12 PC0023636
RFFUSAL) - Seaway, Humphrey 50. During 2013, developers have communicated offers to purchase the Seaway Villas, and such offers were made directly to the Board. The Board s counsel, Straley & Otto, PA, had been in negotiations with numerous developers for the potential sale of the Seaway Villas. The offers initially came in around $20,000.000.00 ($20 million), and the latest public offer continues to stand at a $32,000,000.00 ($32 million) sale of Seaway Villas to developer Fort Capital. 51. Despite the offers, the Board reportedly received an offer from the wife of one of its directors, of a mere $180,000.00 for the purchase of one of its units, Seaway Unit #209. Upon information and belief, a telephonic board meeting was conducted on short notice, the transaction was approved in a reckless and grossly negligent manner, without serious contemplation or review of the proposed contract. 52. Article XIII of the Declaration lays out the requirements with regard to the sale of any unit (apartment) as it relates to the right of first refusal. SALE AND LEASING OF APARTMENTS, ASSOCIATIONS RIGHT OF FIRST REFUSAL, EXCEPTIONS A) With the exception of transfers of ownership of any APARTMENT by one Co-tenant to another, should an APARTMENT Owner desire to sell or lease his APARTMENT, the ASSOCIATION shall have and is hereby given and granted the right of first refusal to purchase or lease such APARTMENT, as the case may be, upon the same terms and conditions as those contained in any bona fide offer which such Owner may have received for the sale or lease of his APARTMENT... The ASSOCIATION S right of first refusal includes the right of the ASSOCIATION to designate another person or entity to take title to the APARTMENT or to lease the same in the event the ASSOCIATION exercises its right of first refusal. If the ASSOCIATION, upon the written approval of the Owners of a majority of the APARTMENTS, in the CONDOMINIUM, elects to exercise its option to purchase or lease (or cause the same to be purchased or leased by its designee) the ASSOCIATION shall notify the APARTMENT Owner desiring to sell or lease, of the exercise of its option... B) Notwithstanding the provisions of this Article XIII the Board of Directors may affirmatively approve and give its consent to such proposed sale or lease, and may 13 PC0023637
do so without the approval of the members of the ASSOCIATION, provided that a majority of the Board of Directors concur and evidence such concurrence in writing, delivered to the APARTMENT Owner desiring to sell or lease his APARTMENT. Declaration, Article XIII 53. The Board reportedly passed on any right-of-first-refusal under the condominium documents. There apparently has been no notice of any meeting (or minutes taken), nor any reporting of the decision to the members (the unit owners) to afford the members any opportunity to inquire or question the transaction. 54. The latest public offer of $32 million for Seaway Villas (to developer Fort Capital), would result in Unit #209 receiving its share of $961,568.00. Cohen (and indeed any Seaway unit owner, for that matter) would have elected to purchase the unit on the same terms (a mere $180,000), and was therefore deprived of the opportunity as a consequence of the Board and/or Humphrey s breach of their fiduciary responsibility. 55. Seaway and Humphrey, individually and collectively, share a relationship with Cohen whereby Cohen reposes trust and confidence in Seaway and Humphrey. Seaway and Humphrey undertake such trust and assume a duty to advise, counsel and/or protect Cohen. 56. Seaway and/or Humphrey breached their duties to Cohen, by the reasons more fully stated above. 57. Seaway and/or Humphrey s breach proximately caused Cohen to suffer damages. Orlinsky v. Patraka, 971 So.2d 796, 800 (Fla. 3d DCA 2007). this Court enter a judgment against Seaway for damages, and for such other further relief that this Court deems just and proper. 14 PC0023638
VERIFICATION OF AMENDED COUNTERCLMM Under penalties of perjury, I declare that I have read the foregoing Amended Verified Counterclaim and that the facts stated in it are true, except as to any facts stated to be on information and belief, which facts are true to the best of my information and belief. Date Patricia Cohen Dated: January, 2014. Respectfully submitted by: GOLDEN & La NEVE A ttomey fo~ Cozmte~-Plas nts ff 644 S.E. Fourth Avenue Fort Lauderdale, FL 33301 Tel: 954.764.6766 EUGENE J. La NEVE, ESQUIRE Fla. Bar No. 0381720 elaneve@goldenlaneve, com CERTIFICATE OF SERVICE I hereby certify that a copy hereof has been furnished by email this day of January, 20"14, to Charles Otto, Esq., Straley & Otto, PA, 2699 Stifling Road, Suite C-207, Fort Lauderdale, FI 333"12, emaih attorney@straleyottopa.com and cfo@straleyottopa.com; Rainy P. Elmasri, Esq., Vernis & Bowling of Miami, PA, "1680 NE "135th Street, Miami, FI, emaih relmasri@fiorida-law.com and ecruz@fiorida-law.com; and Lauren Luck, Esq., Law Offices of Isaac Benmergui, PA, "1"150 Kane Concourse, 2d Floor, Bay Harbor Islands, F133"154, emaih lauren@benmerguilaw.com and paralegal@benmerguilaw.com. 15 PC0023639
EUGENE J. La NEVE, ESQUIRE Fla. Bar No. 0381720 C:~Documentsand Settings\Compaq AdministratorkMyDocuments\Gene~Lit\3715-1\amended verified counterclaims.wpd 16 PC0023640