STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS ) REGULATION, DIVISION OF FLORIDA ) LAND SALES AND CONDOMINIUMS, )

)

Petitioner, )

)

vs. ) CASE NO. 82-1975

)

POINT MANAGEMENT, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was conducted in this matter on November 23, 1982, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: David M. Maloney

Tallahassee, Florida

For Respondent: Robert M. Schwartz and W. J. Hunston

North Palm Beach, Florida

On or about April 30, 1982, the Petitioner issued a Notice to Show Cause, which serves as an administrative complaint against the Respondent. The notice alleges violations of the Condominium Act, Chapter 718, Florida Statutes. The Respondent requested a formal administrative hearing, and the matter was forwarded to the office of the Division of Administrative Hearings for the assignment of a hearing officer and the scheduling of a hearing. The final hearing was scheduled as set out above by notice dated September 3 1982.

At the final hearing, the Respondent submitted a Motion to Dismiss. Issues raised in the motion were carried forward with the case and are resolved in the Conclusions of Law which follow.

Petitioner called the following witnesses. Harold Lichten, a unit owner and president of Valencia "C" Condominium Association; and Evan Cross, an employee of the Respondent who serves as community manager of the condominiums involved in this proceeding. The Respondent recalled the witness Cross and called the following additional witnesses: Sidney Gilburg, a resident of the Kings Point Condominium and president of the Kings Point Community Association; Arthur Ainpinder, a resident of the Kings Point Condominium and president of the "Men's Golf Club"; Sylvia Lappin, a Kings Point resident and vice president of the "Women's Golf Club"; Peter Sachs, an attorney who represented the Kings Point Community Association in litigation against the condominium developer; and Donald Butenmuller, an attorney who represented the Kings Point Housing Corporation in litigation involving the recreation lease at the condominium.

Joint Exhibit 1, Petitioner's Exhibits 1 through 15, and Respondent's Exhibits 1 through 5 were offered into evidence and received.

The parties have submitted post-hearing legal memoranda. The parties' memoranda include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law which follow. They have been otherwise rejected as not supported by the evidence, contrary to the better weight of the evidence, irrelevant to the issues, or legally erroneous.

ISSUE

Petitioner contends that the funds necessary for maintaining golf courses at the Kings Point Condominium are "common expenses" within she meaning of the Condominium Act, and that Respondent has engaged in a practice of raising funds to maintain the golf courses in a manner which violates the provisions of Sections 718.115(2), 718.116(8) and 718.123(1), Florida Statutes. Respondent contends that the methods that it employs to raise funds to maintain the golf courses are in accordance with the condominium declaration and documents creating the condominium. Respondent further maintains that the Petitioner is without jurisdiction to maintain this proceeding because interpretation of contracts is involved and that the Petitioner is through this proceeding engaged in rule making without following the procedural requirements of the Administrative Procedure Act, Chapter 120, Florida Statutes.

FINDINGS OF FACT

1. The Kings Point Condominium project is a multiphase condominium development located in Delray Beach, Palm Beach County, Florida. The first 89 condominiums constructed at Kings Point are the subject matter of this proceeding. These condominiums have the following names: Seville "A", "B", "C", "D", "E", "F", "G", "H", "I", "J", "K", "L", "M", "N" and "O"; Tuscany "B", "C", "D", "E", "F" and "G"; Waterford "A", "B", "C", "D", "E", "F", "G", "H", "I" and "J"; Brittany "A", "B", "C", "D", "E", "F", "G", "H", "I", "J", "K", "L", "M", "N" and "O"; Valencia "A", "B", "C", "D", "E", "F", "G", "H" and "I"; Monaco "B", "C", "D", "E", "F", "H", "J", "K", "L", "M", "N", "O" and "P"; Saxony "A", "B", "C", "D", "E", "F", "G", "H", "J", "K", "L", "N", "N" and "O"; and Flanders "B", "E", "F", "H", "I", "N" and "P". At the time that these 89 condominiums were created, each was operated by a separate condominium association. Each of the associations entered into long-term leases of recreation areas with Kings Point Housing Corporation, a Florida corporation and the developer of the Kings Point Condominium project.

   
   

2. On or about October 12, 1977, amendments to the 89 declarations of condominium were filed in the public records of Palm Beach County, Florida, except with respect to Valencia "C" Condominium. The amendments deleted the individual condominium associations and created eight "area" associations with names corresponding to the area. All of the various Seville condominiums, for example, are now managed by the "Seville Condominium Association, Inc." The Valencia "C" Condominium is an exception. The "Valencia Condominium Association, Inc." does not operate Valencia "C" Condominium. It is now operated by the Valcencia "C" Condominium Association of Kings Point, Inc., in accordance with an amended declaration of condominium.

   
   

3. Litigation was brought in the Fifteenth Judicial Circuit of Florida in Palm Beach County involving the developer, the eight area associations and

   Valencia "C" Condominium Association. The litigation resulted in a judicially approved stipulation and settlement agreement. In accordance with the settlement, the area associations and Valencia "C" entered into an agreement for deed with the developer. The agreement was to purchase the recreation areas at Kings Point. At the same time, the various associations entered into separate recreation area management agreements with Point Management, Inc., the Respondent herein. Under these agreements, the Respondent is the agent of the area associations and the Valencia "C" Association for providing all managerial services for management of the recreation areas. The recreation areas include:

   3 club houses, 8 tennis courts, 6 swimming pools, 60 shuffleboard courts, and 2 golf courses. The recreation areas are intended solely for the use of residents of Kings Point with the exception of the two golf courses, which are available for use by the general public. Among the powers of the Respondent is the power to collect from the associations all regular and special assessments, carrying charges and other charges which may be due from the associations' members on account of the recreation areas at Kings Point. With the exception of sums that may be due to the developer under the long-term lease agreement and agreements for deed with the condominium associations all other rents, issues and profits arising out of the recreation areas are used to defray costs of operating the recreation areas.

   
   

4. Article I, Definition "H" of the Declarations of Condominium, as most recently amended, provides, inter alia, that "common expenses" include:

   
   

   [E]xpenses of insurance, maintenance, operation, repair and replacement of

   ... Recreation Area and other common facilities, if any, utilized at the Kings Point project ...

   
   

   Since the golf courses are a part of the recreation area, the declarations of condominium seem to contemplate that expenses of maintaining and operating the golf courses will be considered "common expenses." The agreement for deed which resulted from settlement of the litigation has the effect of replacing the long- term leases that were in effect between the developer and the condominium associations with respect to the recreation areas. The long-term leases, however, continue to govern rights to use the recreation area. Paragraph 6.1 of the Contract for Deed provides:

   
   

   Prior to the conveyance of the RECREA- TION AREA to the PURCHASER [the condo- minium associations], the use rights of the members of the PURCHASER shall be as defined by Articles XIV and V and other pertinent provisions of the LONG-TERM LEASES.

   
   

   Prior to the execution of the agreements for deed, the condominium documents did not provide that the cost of maintaining and operating the golf courses would be a common expense. Article V of the Long-Term Leases provides in part, as follows:

   
   

   The lessor [the developer] may provide for the use of certain portions of Kings Point recreation facilities, under such terms and conditions as it deems advisable in its sole discretion,

   and such use may be conditioned upon the payment by the requesting party of additional compensation, and said addi- tional compensation shall be chargeable as a special assessment of the lessor against the requesting party(s) in such amounts and proportions as the lessor determines.

   
   

5. Prior to the judicial proceedings which resulted in the contract for deed and in the contract whereby the Respondent manages recreation areas, the developer managed the recreation areas including the golf courses. In accordance with Article V of the Long-Term Leases, the developer established a practice of charging special assessments for golf course users. A user could pay an annual single membership fee, an annual family membership fee, a single play fee, or a fee for purchasing a ten-play ticket. Members of the general public were allowed to use the golf courses by paying a single play fee, or by purchasing a ten-play ticket. Condominium members received a reduced rate for greens' fees. These fees, together with other money generated by recreation areas and facilities, are used to offset the cost of operating the recreation areas. After the litigation was settled, the Respondent continued to assess fees for golf course users in the same manner. At present, users of the golf courses can pay either annual membership fees, or buy reduced-rate tickets.

   
   

6. The Respondent raised the annual membership fees for 1982 in response to increased operating costs. A unit owner in the Valencia "C" Condominium complained to the Petitioner. The complaint was generated by the increase in fees. The Petitioner's Notice to Show Cause, however, is based upon the nature of the fees.

   
   

7. There is an ambiguity in the contract documents with respect to whether funds necessary to operate and maintain the golf courses should be viewed as "common expenses" of the Kings Point Condominium. While the declarations of condominium as amended provide that maintenance and operation of the recreation areas including the golf courses should be considered a "common expense," the provisions of the long-term leases which remain in effect under the agreement for deed would allow the Respondent to raise funds to maintain the golf courses by assessing users rather than by assessing all residents in proportion to their ownership interest in the common elements of the condominium. The parties to the judicial litigation intended that funds to operate and maintain the golf courses would continue to be raised by assessing users rather than all condominium residents. Golf course users generally prefer that the course be operated in that manner so as to prevent overcrowding and so that amenities can be provided that all condominium residents would not be willing to fund. Nonusers of the golf course prefer the present system because they do not wish to be assessed for amenities that they do not use. It was the intention of the parties that the funds not be treated as a common expense.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

   
   

9. At the outset of the hearing, the Respondent filed a Motion to Dismiss the Notice to Show Cause. Respondent contended that Petitioner was seeking to interpret provisions of the condominium contracts and to enforce its

   interpretation, and that Petitioner's interpretation of pertinent statutes in this proceeding constitutes rule making which has not been undertaken in accordance with the procedural requirements of the Administrative Procedure Act, Chapter 120, Florida Statutes. These contentions are without merit. Petitioner does lack authority to interpret ambiguous condominium documents and to enforce contractual provisions. This role properly rests with the courts. Peck Plaza Condominium v. Division of Florida Land Sales and Condominiums, 371 So.2d 152 (1 DCA Fla. 1979). That is not, however, the focus of the Notice to Show Cause.

   Petitioner is not seeking to enforce any particular interpretation of the condominium documents, but rather is seeking to enforce provisions of the Condominium Act, Chapter 718, Florida Statutes. That role is clearly within the Petitioner's ambit--see: Section 718.501(1), Florida Statutes--and does not offend separation of powers principles. Roberts v. Ayers, 380 So.2d 1057 (1 DCA Fla. 1980).

   
   

10. Respondent's contention that Petitioner's effort to enforce statutory provisions against the Respondent constitutes rule making is without merit. This is not a proceeding through which Petitioner is seeking to formulate a statement of general applicability. Rather, it is a proceeding through which

    the Petitioner is seeking to enforce the plain language of statutory provisions.

    
    

11. During the course of the hearing, the Respondent presented testimony from persons who participated in negotiations which led to the settlement of the judicial litigation and to the execution of the contract for deed. Petitioner moved to strike the testimony on the grounds that the condominium documents were neither vague nor ambiguous so that parol evidence explaining the parties' intention would be inadmissible. See: Section 90.103, Florida Statutes. The contention is without merit, and the motion to strike is hereby denied. The condominium documents as amended contain conflicting statements respecting the parties' intentions as to how funds would be raised to maintain and operate the golf course. The documents provide on the one hand that funds needed to operate and maintain all recreation areas should be regarded as common expenses, but on the other hand allow the Respondent to establish a means of funding golf course operations and maintenance other than as a common expense. Given this ambiguity, testimony respecting the parties' intentions is admissible.

    
    

12. Section 718.115(1), Florida Statutes, provides, as follows:

    
    

    Common expenses include the expenses of the operation, maintenance, repair, or replacement of the common elements, costs of carrying out the powers and

    duties of the association, and any other expense designated as common expense

    by this chapter, the declaration, the documents creating the condominiums, or the bylaws.

    
    

    Section 718.115(2), Florida Statutes, provides that funds for paying common expenses in residential condominiums must be collected from unit owners in the same proportions as their ownership interests in the common elements.

    Similarly, Section 718.116(8) provides that no unit owner may be excused from payment of his share of the common expense of a condominium unless all unit owners are likewise proportionately excused from payment. If funds required to maintain and operate the golf courses at the Kings Point Condominium were regarded as a common expense, the present system of charging user fees would violate theme statutory provisions. Given the parties' intention, however, that

    golf course expenses should not be treated as a common expense, no violations have been established.

    
    

13. The Notice to Show Cause in addition to charging violations of the provisions of Sections 718.115 and 718.116 charged that the method for funding the golf courses violated the provisions of Section 718.123(1). This allegation has not been sustained by the evidence. The statute provides that all common areas including recreational facilities serving any condominium must be available to all unit owners. It appears that the golf courses at Kings Point are available to all condominium owners. Their use is merely conditioned upon the payment of fees that are authorized by the condominium contracts.

RECOMMENDED ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is, hereby,

RECOMMENDED:

That the Division of Florida Land Sales and Condominiums of the Department of Business Regulation enter a final order dismissing the Notice to Show Cause filed against Point Management, Inc.

RECOMMENDED this 29th day of December, 1982, in Tallahassee, Florida.

G. STEVEN PFEIFFER Assistant Director

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 1982.

COPIES FURNISHED:

David M. Maloney, Esquire Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Robert M. Schwartz, Esquire

W. Jay Hunston, Jr., Esquire DeSantis, Cook, Gaskill

& Silverman, P.A.

860 North U.S. Highway 1 Post Office Drawer 14128

North Palm Beach, Florida 33408

Mr. E. James Kearney Director

Division of Florida Land Sales and Condominiums

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 82-001975

Orders for Case No: 82-001975