Ruggieri Law Firm - Quarterly Newsletter

QUARTERLY NEWSLETTER

Dear Business Partners, First of all, Happy New Year! My best wishes on a prosperous 2014. I took the opportunity to put together this “Year In Review” which provides a summary of significant appellate decisions issued in the State of Florida in 2014 directly impacting Community Associations in Florida. What follows is not an exhaustive list of every appellate decision issued which affects Community Associations but, only those which I felt will have a significant impact on Community Associations in Florida. Feel free to call or e-mail should you have questions regarding a particular appellate decision or issue. Best wishes in 2014!

Frank A. Ruggieri The Ruggieri Law Firm, P.A.

Year In Review Maronda Homes, Inc. of Florida v. Lakeview Reserve Homeowners Association, Inc. Unlike condominiums, homeowners

common areas which provide significant support to the homes

associations do not have statutory implied

such as roadways.

warranties against construction defects in the

While on appeal, our legislature modified Florida Statute

a significant benefit to condominiums

§553.835, Florida Statutes to limit implied warranty claims in

as there is no burden to prove fault or

favor of homeowners association improvements on the lot

knowledge of the defect on the part of

which immediately supports the home. The Florida Supreme

the developer. Rather, the condominium

Court ultimately decided that this legislative change could not

association need only prove the defect

be applied retroactively to defeat Lakeview Reserve’s implied

itself. Implied warranties are a “strict

warranty claim. In so holding, the Florida Supreme Court

liability” cause of action. In Mironda

stated that a cause of action on the part of a homeowners

Homes, the Association filed suit

year in review

against the developer for construction defects in the common areas, and included a claim for breach of implied warranty. The trial court entered summary judgment in favor of the

2013

That decision was appealed to the Florida Supreme Court.

common areas. Implied warranties provide

developer and the builder, and the association appealed to the Fifth District Court of Appeals who ultimately ruled that implied warranties do extend to

association for implied warranties as they pertain to common areas which accrued prior to the effective date of the act cannot be defeated by this legislative change.

This is significant as the Court stated, “a cause of action, in short, occurs when the complaining party sustains damage and the last act necessary to establish liability occurs.”

Consequently, you should consult your community association counsel to determine if a potential claim for construction defect which you have in your community occurred prior to the effective date of the statute which would allow the association to pursue a claim for breach of implied warranties.

Rosenberg v. Metrowest Master Association, Inc. Rosenberg filed suit against the master

homeowners and it was therefore improper to award the master association

association alleging violations of the

its attorney’s fees and costs because he was not a “member”. The Fifth District

transition provisions of Chapter 720. The master association prevailed on summary judgment and the trial court awarded the master association its attorney’s fees and costs.

Court of Appeals held that the statutory definition of member controlled because Rosenberg was obligated to pay assessments to the master association, and he was a member of the master association pursuant to F.S. §720.301 (10) which defines member as any parcel owner who is obligated by the governing

Rosenberg appealed the final judgment to the Fifth

documents to pay an assessment or amenity fee. The Court held that the fact

District Court of Appeals arguing that the trial

that the master assessments were paid to the sub-association where Rosenberg

court improperly awarded the master association’s

resided did not alter the fact that he was obligated to pay assessments to the

attorney’s fees as the definition of member in

master association. The Fifth District Court of Appeals held that the statutory

the master declaration did not include individual

definition controlled over the definition in the master declaration.

Yang v. Sebastian Lakes Condominium Association, Inc. In this case, the condominium association filed lien

conducted business activity; and (4) That it was a regular practice of that

foreclosure actions against two (2) owners of a unit. At

business to make such a record. The unit owners claimed to have made a

the hearing on the association’s motion for summary

partial payment which was not reflected on the association’s ledgers. During

judgment, the association presented the testimony of

the community association manager’s testimony, on cross-examination,

its then community association manager regarding the

she testified that the records prior to the 2008 takeover were maintained

ledgers to admit them into evidence under the “business

by the prior accountant, that she started with an account balance from

records exception” to the hearsay rule. The association

outside records, that she did not know the prior accountant’s practice and

had transitioned management companies prior to the

procedure, and that she never worked for that accountant. She was unable to

time that the lien foreclosures were initiated. The

testify as to the accuracy of the starting balance. The Fourth District Court

current management company did not have ledgers

of Appeals reversed the lower court’s ruling in favor of the association and

dating back to a zero balance. Pursuant to the business

remanded the case to the trial court for entry of a directed verdict in favor

records exception to the hearsay rule, the proponent

of the condominium unit owners. This case demonstrated the importance

of a record must show: (1) The record was made at or

of obtaining ledgers that date back to a zero balance when taking over a

near the time of the event; (2) Was made by or from

community from another management company. The association must

information transmitted by a person with knowledge;

either have ledgers that date back to a zero balance or be prepared to obtain

(3) Was kept in the ordinary course of a regularly

testimony from the prior management company regarding their records.

Boyle v. Hernando Beach South Property Owners Association, Inc. The association filed suit against the homeowner

favor of the association and entered the mandatory injunction ordering the

alleging he was in violation of the declaration by

homeowner to “properly maintain and trim the landscaping and trees…”. It

failing to keep his lot in a neat, clean and orderly

also allowed the association to enter onto the lot if the homeowner failed to do

condition by failing to properly maintain and

so, perform the maintenance, and lien the lot if necessary to secure its costs.

trim the landscaping and trees. In support of its motion for summary judgment, the association filed affidavits from the board members with no photographic evidence alleging generally that the homeowner had failed to keep his lot in a

The homeowner appealed arguing that the summary judgment evidence in the record did not indicate how he was in violation of the declaration. The Fifth District Court of Appeals ruled that there was no evidence to show how the landscaping and trees had not been properly maintained and trimmed, and the summary judgment in favor of the association was reversed.

neat, clean and orderly condition by failing to

In connection with maintenance violations, or any violation for that

properly maintain and trim the landscaping

matter, it has always been my practice to submit photographic evidence to the

and trees (there was also an allegation regarding mold on the house which is not relevant to the discussion). The trial court granted summary judgment in

court attached to the community association manager’s affidavit depicting specifically how the property is not in compliance. The failure to do so in this instance was fatal to the association’s action.

Flescher v. Oak Run Associates Limited This opinion of the Fifth District Court of Appeals involves amendments by

As amended, the new provisions limited the use of assessments to the

a developer to the declaration pursuant to the amendment provision in the

common areas and recreational areas, and allowed the developer to retain any

declaration which reserved the unilateral power of the developer to amend

unused assessments, effectively preventing the creation of any reserves. The

the declaration while in control. The opinion also addresses the retroactive

lower court ruled in favor of the developer and the homeowner appealed.

application of Florida Statute §720.3086 regarding the developer’s obligation

The Fifth District Court of Appeal referenced prior case law which

to disclose financial information (the declaration was recorded prior to the

provides that a developer’s right to unilaterally amend the declaration is

effective date of this legislation).

subject to a reasonableness standard and the developer may not materially

The original covenant for maintenance assessments provided that the

change the burden to the community members unless the amendment

assessments were, in part, to be used for maintaining the lawn and landscape

provision specifically reserves the right to do so. The Fifth District Court of

areas, common areas and recreational areas, for all utility costs, including

Appeals ruled that the amendment violated this standard as it impermissibly

electricity, water, gas, and telephone service in connection with the foregoing,

changed the burden between the parties. It effectively operated to relieve the

garbage and trash collection, 24 hour security service, cable television reception

developer of his express burden to use the funds collected for maintaining the

service, and an exclusive closed circuit Oak Run television channel, for road

lawns and landscaped areas, utilities, etc.

and drainage facilities, repair and maintenance. It further stated that the

With respect to the financial disclosure requirements of F.S. §720.3086,

assessments may also provide reasonable reserves for deferred maintenance and

the Fifth District Court of Appeals overruled the trial court’s ruling, ruling that

replacement, for construction of common areas, recreational areas, and was to

it was not impermissible to retroactively apply the statute as the developer had

also be used as a means of enforcing compliance with the deed restrictions.

no “vested right” to the confidentiality of its financial records.

South Fields of Palm Beach Polo and Country Club Homeowners Association, Inc. v. McCullough A homeowner in the community filed suit seeking both an injunction and

affirmed the lower court’s ruling and specifically referred to provisions of the

mandamus relief compelling the association to file a marketable record title act

declaration that the board had a duty to protect the covenants. This appellate

notice to preserve the covenants. The lower court granted the injunction and

opinion makes it clear that boards should file its marketable record title act

mandamus relief ordering the association to file the marketable record title

notices in a timely fashion, and homeowners do have the right to compel that

act notice, and the association appealed. The Fourth District Court of Appeals

action should the board indicate that they are not willing to do so.

Estoril, Inc. v. Mayfield Condominium Association, Inc. The appellant, Estoril, Inc., was the developer of a multiuse building which

budget prior to turnover, was sufficient course of conduct to establish a rule

included a residential condominium, and numerous shared facilities. The

or regulation. The Third District Court of Appeals noted that the governing

shared facilities included a parking garage which the developer owned. The

documents did not specify that a rule or regulation had to be in writing. It

declaration specifically stated that the developer was entitled to establish

should be noted that the Third District Court of Appeals did not address

fees for use of the shared facilities and, prior to turnover, the developer had

whether it felt the course of conduct was sufficient. It merely held that there

for several years charged the condominium association use fees for use of its

was a material issue of fact that precluded summary judgment and remanded

parking garage. The association paid them for several years. However, after

the case back to the trial court for further proceedings consistent with its

turnover, the association refused to pay them stating that no specific rule had

opinion.

been adopted regarding the use fees and the developer filed suit to recover

It is unclear whether the Third District Court of Appeals felt that the

the unpaid parking garage charges. The trial court entered judgment in favor

developer’s actions were indeed sufficient to establish a rule or regulation by

of the association based upon the lack of a formally adopted written rule

course of conduct. This opinion appears to stand for the proposition that a

regarding the use fees for the parking garage, and the developer appealed.

rule or regulation can be adopted by course of conduct if there are sufficient

The Third District Court of Appeals reversed indicating that there were

actions to establish the rule in question. I would certainly recommend that

material issues of fact regarding whether the developer’s course of conduct

all rules and regulations be formally adopted by the board with a formal board

of having charged the use fees and having included it in the association’s

resolution and proper notice of the meeting at which the rules will be adopted.

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Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc. The association initiated a lien foreclosure action against

for all unpaid assessments that came due

a unit and ultimately obtained title at the foreclosure sale.

up to the time of transfer of title. The Third

The first mortgage holder initiated its mortgage foreclosure

District Court of Appeals reversed the ruling

while the lien foreclosure action was pending, and Aventura

that the association was the “prior owner” for

Management, LLC was the successful bidder at the first

purposes of the statute and, therefore, could not

mortgage holder’s foreclosure sale and took title to the

demand the amounts that had accrued in unpaid

unit shortly after the condominium association took title

assessments prior to the time that the association

in their own lien foreclosure. The Association fought to

took title.

collect all delinquent amounts which had accrued prior

Interestingly, this issue was specifically

to the time that it took title. The trial court ruled in favor

addressed by the legislature in July of 2013 in the

of the Association and Aventura Management appealed.

legislative changes to Chapter 720. However, the

On appeal, the Third District Court of Appeals reversed

same change was not made to Chapter 718. This

the ruling that the association was the “prior owner” for

may simply be a legislative oversight that will be

purposes of F.S. §718.116 (1) (a) which provides that a unit

corrected in the next legislative session.

owner is jointly and severally liable with the previous owner

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