STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION Aron P. Newfield and Norma F. Newfield, Petitioner, v. Case No. 2004-05-8013 Aliki Tower Condominium Management Association, Inc., Respondent. / FINAL ORDER Pursuant to notice, the undersigned arbitrator of the Division of Florida Land Sales, Condominiums, and Mobile Homes convened a formal hearing in this case on July 25, 2006. During the hearing, the parties presented the testimony of witnesses, entered documents into evidence and cross-examined witnesses. This order is entered after consideration of the complete record in this matter. Appearances For the Petitioners: Arthur Graham, Esq. Landis, Graham, French, P.A. 444 Seabreeze Boulevard Suite 1001 Daytona Beach, Florida 32118 For the Association: Harry W. Carls, Esq. Taylor & Carls, P.A. 850 Concourse Parkway South Suite 105 Maitland, Florida 32751 1
Statement of the Issue The issue presented in this case is whether the Association s board of director s has the authority to replace condominium s concrete balcony knee walls with glass panels. Findings of Fact 1. Aliki Tower Condominium (the condominium) is a condominium as defined by section 718.103, Florida Statutes. 2. Aliki Tower Condominium Management Association, Inc. (the Association) is the legal entity responsible for the maintenance and operation of the condominium. 3. Aaron P. Newfield and Norma F. Newfield (the Petitioners) are the record owners of unit 22 located at the condominium. 4. The condominium consists of a 25 story building containing twenty-three units constructed in 1979 and 1980. Twenty two of the units occupy an entire floor each with the penthouse unit occupying two floors. Each unit has a balcony around the entire perimeter of the floor. 5. The condominium is located on the ocean and due to exposure to chlorides from the saltwater, the balconies and other concrete portions of the condominium building have suffered severe damage. 6. In 1999, the Association first started to notice damage such as cracking and chipping concrete. 7. In 2001 the Association commissioned Unit Engineering Consultants, Inc., to conduct an inspection of the building s concrete structure. The engineer s 2
report issued in December 2001, indicated that there was severe deterioration to the concrete balconies. 8. Therefore, in May 2003, the Association hired contractor, Southeast Restoration Group, Inc, to make the needed repairs. 9. While, the Association intended to repair the existing concrete walls and other concrete damage, as the project progressed, it became apparent the damage was more severe than initially estimated. It was discovered that there was severe damage to the perimeter edge of the balconies necessitating the removal of the majority of the concrete knee walls on the balconies. 10. The engineers supervising the project recommended that the cement knee walls be replaced with a lighter system. The engineer opined that the concrete knee wall was too heavy for the design of the balcony which was one of the contributing factors the balcony s deterioration. The engineer also advised the Association that that the prior knee wall s design lacked sufficient drainage and ventilation which permitted salt water to pool on the floor of the balcony. 11. The Association considered the following systems, listed in order of increasing expense: a. Open railing system; b. Open railing and closed aluminum panel system consisting of alternating solid panels and open vertical railing section; 3
c. Closed glass panel system consisting of glass panels mounted in a Kynar 1 coated frame. The glass panels can be tinted to resemble concrete; d. Closed aluminum panel system consisting of solid Kynar coated aluminum panels mounted in a Kynar frame; and, e. Block wall and stucco system finished to appear like the concrete knee wall. 12. The concrete knee walls could have been replaced with new concrete knee walls. However, the cost of the project would be much greater than alternative systems which did not use concrete walls. The walls would have to be thicker in order to accommodate additional rebar required by the current code. Additionally, due to the load placed on the balcony by the walls, light weight concrete would have to be used which is approximately three times more expensive than normal concrete and is more susceptible to chloride penetration requiring more maintenance. An aluminum handrail would need to be placed on top of the replacement knee walls. 13. The Association considered replacing the concrete knee walls with an open tubular railing system. However, this system was rejected when it was determined that wind blowing through the railings could result in annoying noise. 14. The Association eventually replaced the knee walls with a clear glass panel system. 15. Although the Association held numerous meetings to inform and permit unit owners to ask questions regarding the restoration project, no vote of the 1. Kynar is a polyurethane coating that can be tinted to resemble the color of the concrete knee walls. 4
condominium owners was taken to approve replacing the concrete knee walls with the glass panel system. 16. The building was originally designed by Anargyros N. Xepapas, an architect who specialized in the design of beach front buildings. The knee walls were part of his signature design. 17. A significant factor in the Petitioners decision to purchase a unit at the condominium was the appearance of the building. 18. The installation of the glass knee walls materially changed the appearance of the building by radically changing its character and architectural design. CONCLUSIONS OF LAW 1. Aliki Tower is a condominium within the meaning of section 718.103, Florida Statutes. 2. The undersigned has jurisdiction over the parties and subject matter of this dispute, pursuant to section 718.1255, Florida Statutes. 3. Pursuant to Section 718.113(1), Florida Statutes, and Section 6.3 of the declaration it is the Association s duty to maintain the common elements. It is undisputed that the building s balconies and the balcony knee walls constitute a common element for which the Association is responsible to maintain and repair. 4. Section 718.113(2), Florida Statutes, prohibits the making of material alteration or substantial additions to the condominium property or common elements except as provided in the condominium documents, and if not addressed by the documents, requires 75% of total voting interests to approve the change. 5
5. Section 6.1 of the declaration, in addition to charging the Association with the responsibility of maintaining and repairing the common elements, prohibits the Association from changing the appearance of the building from its appearance as originally constructed. 6. Section 6.3 of the declaration permits the Association to make changes, improvements or additions to the common elements provided that such changes are approved by the board of directors and do not result in a change to the appearance of the building as originally constructed. 7. Section 13.3 of the declaration prohibits amending sections 6.1 and 6.3 of the declaration 2 unless all of the unit owners agree to the amendment. 8. In Sterling Village Condo. Inc. v. Breitenbach, 251 So.2d 685, 687 (Fla. 4th DCA 1971) the court addressed material alterations to the appearance of a building: As to buildings the term material alteration or addition means to palpably of perceptively vary or change the form, shape, elements or specifications of building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance. 9. The replacement of cement knee walls with glass panels has materially altered the appearance the building. The Association did not submit the change to a vote of the unit owners. Therefore, such change violated section 718.113(2), Florida Statutes, unless it is approved by 75% of the owners. 10. However, Section 718.113(2), Florida Statutes prohibits the making of material alteration or substantial additions to the condominium property or common elements except as provided in the condominium documents. Sections 6.1 and 2 The provision controls the amendment of section 6 of the declaration of which sections 6.1 and 6.3 are subsections. 6
6.3 of the declaration clearly govern alterations to the appearance of the building made by the Association and are controlling as to any material alteration that would change the appearance of the building undertaken by the Association. 11. When sections 6.1 and 6.3 and 13.3 of the declaration are read in conjunction, it is clear the declaration intends that no changes be made to the appearance of the building by the Association unless all of the unit owners agree. Therefore, since the change from concrete knee walls to a glass panels changed the appearance of the building in violation of section 6. 1 and 6.3, the change must be approved by all the unit owners in the form of unanimous consent to amend section 6.1 and 6.3 to permit the change. 12. The Association contends that pursuant to the maintenance doctrine, unit owner approval was not necessary to make the alteration. The maintenance doctrine is a well established exception to the requirement that unit owners approve material alterations where the alteration is necessary to maintain or protect the common elements. See A.N. Inc. v. Seaplace Ass n, Inc., Arb. Case No. 98-4251, Final Order (November 19, 1998) citing Ralph v. Envoy Point Condo. Ass n Inc., 455 So.2d 454 (Fla. 2d DCA 1984). 13. As noted by the arbitrator in O Neil v. Coral Isle East Condo. Ass n, Inc, Arb. Case No. 93-0332, Final Order (June 28, 1994), the maintenance doctrine pertains to changes necessary to protect the property as they relate more to the maintenance function of the board and are perceived to be exempt from the potentially harsh application of section 718.113(2), Florida Statutes. Such 7
maintenance responsibility requires a board to comply with a minimum standard which may arise from a requirement to comply with building/life safety codes or from a threat to the property that can only be cured by making a material alteration, and, as such, an association is authorized to the make alterations without unit owner approval. See, Tiiffany Plaza Condo. Ass n, Inc. v. Spencer, 416 So. 2d 823 (Fla. 2nd DCA 1982), see also, O Neil. 14. It is within the board s judgment to determine whether to replace an element of the common elements which has performed poorly or is defective or outdated technology with an improved, modern version that is comparable in form and function. Kreitman v. The Decoplage Condo. Assn. Inc., Case No. 98-3495, Amended Final Order, (September 14, 1999). 15. In accordance with the business judgment rule the arbitrator will give great deference to the judgment of the board of directors in determining an appropriate level and form of maintenance. See Schwartz v. Brickell Townhouse Ass n, Inc., Arb. Case No. 95-0222, Final Order (December 2, 1996). However, courts have applied a reasonableness standard when considering the business judgment rule as applied to condominium boards. See Farrington v. Casa Solana Condo. Ass n, Inc., 517 So.2d 70 (Fla 3d DCA 1987); see also Cedar Cover Efficiency Condo. Ass n, Inc. v. Cedar Cove Properties, Inc., 558 So.2d 475 (Fla. 1st DCA 1990). 16. Whether the board acted reasonably must be determined on a case-by-case basis. In the instant matter, it is not disputed that the buildings balconies were in need of repair or replacement. After consulting engineers and other 8
professionals, the board determined that the concrete knee walls should be replaced with a lighter material with modifications necessary to enhance drainage to better preserve the balconies. 17. The undersigned would find the decision to replace the concrete knee walls with a lighter system with improved drainage quite reasonable if the board had chosen a substitute comparable in form and function. However, the board acted unreasonably by radically changing the appearance of the building when it replace the concrete knee walls with clear glass panels. In addition to serving as a safety device, the knee walls functioned as a key element of the overall architectural character of the building, creating the signature design of the noted architect Anargyros N. Xepapas. 18. The Association argues that since the original balconies were defectively designed due to insufficient drainage any replacement walls would have to incorporate additional drain holes in order to correct the problem and, therefore, the appearance of the building would have to be changed. The maintenance doctrine will authorize the Association to make such changes without unit owner approval since they are necessary to preserve the common elements. However, the maintenance doctrine is limited to alterations necessary to preserve the common elements. The doctrine is not a free license to make radical changes to the appearance of the building in violation the declaration. The Association contends that its decision was exempt from unit owner approval because the knee walls could not be replaced with an identical structure. However, where an association, as in the 9
present case, could have reasonably replaced a defective component of the common elements with one that is comparable in form and function and which would not materially alter the appearance of the common elements, it must do so unless the material changes are appropriately approved. Based upon the foregoing, it is ORDERED: By replacing the concrete knee walls on the buildings balconies with a clear glass panel system, the Association violated sections 6.1 and 6.3 of the declaration of condominium by changing the appearance of the building. Within ninety (90) days of the date this order the Association shall replace or modify the glass knee walls with a system that substantially maintains the appearance of the building as originally designed unless all the unit owners vote to amend sections 6.1 and 6.3 of the declaration in order to permit a change to the appearance of the building. DONE AND ORDERED this 18 th day of December, 2006, at Tallahassee, Leon County, Florida. James W. Earl, 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 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. 10
CERTIFICATE OF MAILING I hereby certify that a true and correct copy of the foregoing final order was mailed by U.S. mail this 18 th day of December 2006 to: Arthur Graham, Esq. Landis, Graham, French, P.A. 444 Seabreeze Boulevard Suite 1001 Daytona Beach, Florida 32118 Harry W. Carls, Esq. Taylor & Carls, P.A. 850 Concourse Parkway South Suite 105 Maitland, Florida 32751 James W. Earl 11