DIVISION OF FLORIDA LAND SALES ) AND CONDOMINIUMS, DEPARTMENT OF ) BUSINESS REGULATION, STATE OF ) FLORIDA, )
vs. ) CASE NO. 77-664
EDWIN W. PECK, INC., ) EDWIN W. PECK and HILDA W. PECK, )
Respondent. )
Pursuant to notice, the Division of Administrative Hearings by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on bay 3, 1977 at Tallahassee, Florida.
For Petitioner: Dennis E. LaRosa, Esquire
For Intervenor: Mallory E. Horne, Esquire (Condominium Barnett Bank Building Owners) Tallahassee, Florida
Joseph C. Jacobs, Esquire Post Office Box 1170 Tallahassee, Florida 32302
By Amended Notice to Show Cause filed April 7, 1977 the Division of Florida Land Sales and Condominiums, Petitioner, seeks to hold Respondents in violation of the Articles of Incorporation, By Laws and Declaration of Condominiums involving Peck Plaza Condominium. As grounds therefor it is alleged that the unit owners are being assessed for the operating costs (electricity) of the limited common element which serves only the restaurant on the 29th floor owned by Respondents. In its reply to said Notice to Show Cause Respondents admit that the 2625 Management Corporation, Inc. (Association) is currently charged for the electricity used to operate the limited common element but contends the Association has no right to protest this charge and further alleges that the By- Laws which provide for the assessment levied against the 29th floor includes the
cost of the electricity for this limited common element. At the hearing an additional defense of estoppel was asserted by Respondents.
At a pre-hearing conference held on April 28, 1977 Petitioner and Respondent stipulated that the sole issue to be determined at the hearing was whether the Respondents or the Association should pay for the electricity used to operate the limited common element, viz. the express elevator to the 29th floor. It was further stipulated that six exhibits which included the Articles of Incorporation, By-Laws and Articles of Condominium of Peck Plaza Condominium, minutes of board of directors' meetings of April 12, 1975 and April 10, 1976, plus other letters be admitted into evidence. These six exhibits plus three additional exhibits were offered into evidence at the hearing and one witness testified. All exhibits except Exhibit 7 were admitted.
Peck Plaza Condominium was developed by Edwin W. Peck, Inc.
The management of this condominium has been turned over to 2625 Management Corporation, Inc. (Association) a nonprofit corporation charged with the assessment of charges and fees for the maintenance and operation of the common elements and other duties not material to this determination.
The Respondents retained ownership of the 29th floor which is leased to King Arthur's Roundtable, Inc., a Kentucky corporation which operates a restaurant and cocktail lounge in this space.
The limited common element is an express elevator from the garage and lobby to the restaurant on the 29th floor. Electricity for the operation of this elevator is currently charged to the Association.
Respondents retained control of the roof of the condominium which is leased to Motorola Corporation, apparently for installation of broadcasting equipment.
The structure comprising the condominium "flares" out at the 28th floor, thus making the 28th and 29th floors approximately 40 percent larger than the lower 27 floors.
A limited number of parking spaces are reserved for the lessee of the 29th floor and an additional 55 parking spaces are reserved for the patrons of the restaurant.
The parking spaces are part of the common elements operated by the Association.
The Declaration of Restrictions, Reservations, Covenants, Conditions and Easements of Peck Plaza (contained in Exhibit 1)(hereafter referred to as Declarations) provided that the regular assessment for units would be as follows:
Unit 2 SW $ 25.00 monthly
Unit 3 SW (Resident Manager's apartment) -0-
29th floor Unit 400.00 monthly
All other units 75.00 monthly
Unit 2 SW is the second floor lobby which provides access to the express elevator and is owned by Respondents. It occupies about the same space as a one-bedroom living unit.
Assessments are levied to cover common expenses such as insurance for fire and extended coverage, vandalism and malicious mischief for units, common elements and limited common elements, public liability insurance for common elements, operating expenses, maintenance expense, repairs, utilities, replacement reserve and reasonable operating reserve for common elements.
The developer reserved the right to subdivide the 29th floor into 4 apartments and until so modified the Declarations provide that its owner be assessed 533.32 percent of the regular assessments assessed against standard living units. ($75 x 5.3332 which is approximately equal to $400)
The Declaration of Condominium (Exhibit 1) Schedule B establishes the percentage of undivided interest in common elements and common surplus. There the 29th floor is awarded 5.621 percent, the 28th floor is awarded 5.12 percent divided equally between the four units, and the remaining floors receive 3.72 percent divided between the four units on that floor. Unit 2 SW is awarded .202 percentage.
Assessments have subsequently been raised to $90 for the standard living unit and a corresponding increase for the 29th floor and Unit 2 SW.
At the Association board meeting on April 12, 1975 (Minutes thereof Exhibit 5) the issue of the electricity for the express elevator being charged to the Association was raised and the board approved a motion that, since the tenant of the 29th floor was keeping the top of the building lighted, they would consider this a "swap out" and continue to pay for the electricity for the express elevator.
At the board meeting on April 10, 1976 the issue of the charge for electricity for the express elevator was again raised and after Mr. Peck advised that he would not comply with the Association's prior request to install a meter and relieve the Association of the expense of the express elevator, the board voted to refer the issue to Petitioner herein for resolution.
The estimated cost of the electricity for the elevator is approximately $110 per month (Exhibit 4).
The Declaration provides in part:
"In connection with the operation of a restaurant or other business/commercial enterprise or the operation of apartments in the twenty-ninth (29th) floor Unit there will be constructed as a Limited Common Element (as same is hereinafter defined)
an express elevator which will run from the garage and lobby (which are common areas on the second floor) directly to the twenty-ninth floor Unit, nonstop, and this elevator will be for the sole use and purposes of the owner of the twenty-ninth floor Unit except as otherwise provided herein.
There is a LIMITED COMMON ELEMENT appurtenant to the twenty-ninth (29th) floor Unit in this condo- minium as shown and reflected by the floor and
plot plans, known as the express elevator whether the use of the twenty-ninth (29th) floor is for the purpose of access to condominium Units or
to a restaurant or other business/commercial use. This Limited Common Element is reserved for the use of the Unit appurtenant thereto to the exclusion of other units, and there shall pass with the said Unit as appurtenant thereto, the exclusive right to use the Limited Common Element so appurtenant. Expenses of maintenance, repair or replacement [sic] relation to the said Limited Common Element shall be paid for by the owner of the twenty-ninth floor Unit. In the event the Developer elects to subdivide the said twenty- ninth floor Unit, then the Limited Common Element appurtenant to the said twenty-ninth floor Unit
known as the express elevator shall be reapportioned among the twenty-ninth floor Unit as so subdivided."
Nowhere in the Articles, By-Laws or Declarations is specific provision made for the operating expenses of the limited common element.
As noted above Respondent, at the hearing, contended that, following the April 12, 1975 meeting of the board, where the motion to accept the use of the exterior lights on the top of the building for the elevator electricity as a "swap out" was carried, he took action upon this "swap out". The action he took was to continue to pay the expenses of maintenance, repair or replacement of the express elevator, to continue to pay the assessment for the 29th floor and Unit
2 SW, to repair defects in the pool and air conditioning, and to correct the odor in the hall. Also his claim for $11,500 against the Association was not pressed. However when asked if that claim had been satisfied Mr. Peck replied, no.
Clause 44 of Lease Agreement (Exhibit 6) for occupancy of the 29th floor provides:
"Lessor agrees to use its best efforts to have separate meters installed at its expense for all public utilities used in relation to the demised premises. In the event it is unsuccessful, submeters will be installed for gas, water and other public utilities and the cost of utilities shall be prorated on a monthly basis."
The above Findings of Fact are substantially in agreement with the Proposed Findings submitted by Petitioner and Respondent. Petitioner proposed findings that:
The ownership of 2 SW is irrelevant to the proceedings does not comport to the evidence that 2 SW comprises the lobby from where there is access to the express elevator; and
Each residential owner is assigned one parking space per unit is not supported by any evidence regarding the number of parking spaces
assigned unit owners. However neither of these findings is material to the result reached.
Respondent's proposed finding that the 29th floor is presently assessed $510 per month is not in agreement with the evidence that the owner of the 29th floor, who also owns Unit 2 SW pays an assessment of $480 per month for the 29th floor and $30 per month for Unit 2 SW.
Other proposed findings inconsistent with the above findings have been fully considered and are neither relevant nor material to the conclusions below.
CONCLUSIONS OF LAW
At no time prior to the completion of the hearing did Respondent contest the jurisdiction of the Division of Florida Land Sales and Condominiums to resolve the dispute here involved. In its answer to the Notice to Show Cause filed April 22, 1977, Respondent admitted Petitioner has jurisdiction over the development of condominiums in the State of Florida, and did not contest Respondent's jurisdiction to resolve the issues joined. At the prehearing conference called at the request of Respondent the parties stipulated and agreed that the sole issue to be considered at the hearing is whether Respondents Peck or the 2625 Plaza Management Corp., Inc. should pay for the electricity used to operate the express elevator to the 29th floor. Therefore, it is interesting, although somewhat disconcerting, that this issue has been raised in Respondent's Proposed Recommended Order and brief in support thereof. It will be dealt with.
Section 711.801 F.S. lists the powers and duties of the Division of Florida Land Sales and Condominium as follows:
"In addition to other powers and duties prescribed by Chapter 478, the Department
of Business Regulations, Division of Florida Land Sales and Condominiums hall have power to enforce and insure compliance with the provisions of this chapter relating to the
development, construction, sale, lease, owner- ship, operation, and management of residential condominiums and residential cooperative units."
If the Division has reasonable cause to believe violations of the provisions of Chapter 711 F.S. have been violated section 711.805 F.S. provides:
"Violations; enforcement. Notwithstanding any remedies available to unit owners and associations, if the Division of Florida Land Sales and Condominiums has reasonable cause to believe that a violation of any provision of this chapter has occurred, the division is authorized to institute enforcement proceedings in its own name against any developer or association or their assignees or agents to secure com- pliance with the statutes as follows:
The division may issue cease
and desist orders pursuant to s. 478.171.
The division may bring an action in the appropriate circuit court
for declaratory relief, injunctive relief, or restitution on behalf of a class of unit owners or lessees."
Here the Association has complained to the Division that requiring them to pay the operating expenses for the limited common element is in violation of the provisions of Chapter 711. Probable cause having been alleged and not contested by Respondents, the Hearing Officer has jurisdiction over the parties and the issues.
Chapter 711 F.S., the Florida condominium Act, defines, in Section 711.03, certain terms here involved in the following language:
"(5) 'Common elements' means the portion of the condominium property not included in the units.
(13) 'Limited Common Elements' means and includes those common elements which are reserved for the use of a certain unit or units to the exclusion of other units."
Section 711.12 F.S. provides for the operation of condominium to be by the Association and provides in pertinent part:
"For these purposes the powers of the association shall include, but not be limited to, the maintenance, management
and operation of the condominium property."
Section 711.14 F.S. relates to common expenses and provides in part: "(1) Common expenses shall include the
expenses of the operation, maintenance, repair, or replacement of the common elements, cost of carrying out the powers and duties of the association and any other expense designated as common expense by this law, the declaration or the by laws.
(2) In a residential condominium, funds for the payment of common expenses shall be assessed against unit owners in the proportions or percentages of ownership of the common elements provided in the declaration."
It is clear that the limited common element is appurtenant to the 29th floor, serves only the 29th floor, and the other unit owners receive no benefit from this limited common element not shared by the general public. Accordingly it is not a common element as that term is defined in those provisions of Chapter 711 F. S. above quoted and the operations of this limited common element is not a cost that should be shared by the unit owners.
The suggestion was presented that Respondent in its assessment is paying an amount adequate to cover the cost of electricity for the limited common element.
As noted in the findings above, Respondent's initial assessment was
$400 per month for the 29th floor and $25 per month for 2 SW (the lobby).
The following are relevant to this assessment:
The 29th floor is approximately 40 percent larger than the floors below the 28th floor and these floors each contain 4 living units.
The roof of the 29th floor is obviously included in the definition of common elements but is under the control and direction of Respondent. No evidence was presented that maintenance of this roof is funded by anyone other than the association.
Unit 2 SW (lobby) assessed at $25.00 per month is approximately the size of a living unit that was assessed $75.00 per month.
The lessee of the 29th floor has use of all common elements shared by members of the Association. The patrons of lessee do not enjoy this right.
The owner of the 29th floor has a 600 percent larger undivided interest in the common elements and common surplus than does the owner of the "average" unit.
The right to use 55 parking spaces has also been reserved for use of the 29th floor. These parking spaces are part of the common elements owned, operated, and maintained by the Association.
The value of the electrical service currently provided by the Association is approximately $110 per month.
While evidence of the value of the services received by the owner of the 29th floor for its assessment was not presented, the following calculations result if a unit area is used as a basis for the common expenses. The area of the 29th floor is approximately 5.6 times the area of a regular living unit. The area of the lobby is equal to the area of a living unit. Thus the owner of the 29th floor and 2 SW controls approximately 6.6 times the area occupied by a living unit. If $75 is assessed against a living unit, and this was based solely on area occupied, the assessment against respondent, on this same basis only, would be 75 x 6.6 or $495. At the initial assessment time Respondent was paying $425 per month. For this munificient fee Respondent was also receiving the use of the roof, 55 parking spaces and electricity to operate the express elevator. While it is recognized that the testimony expressly refuted the concept that assessment was based upon area of unit it is obvious that the area
of the unit must bear some relation to the cost of casualty-insurance and actual cost of maintaining the walls, floors, ceilings, etc. that are common with other units, the costs of which are born by the Association from the assessments levied.
If the assessment is measured by the ownership of the common elements, and s. 711.14(2) F.S. above quoted provides this method of assessment shall be used, and if we compare Peck's ratio of assessment to its percentage of individual ownership of common elements with the same ratio for an average unit it will show $510/mo. / (5.62 percent + .202 percent) = $89.61/mo/percent for 2SW and the 29th floor and $90/mo / .929 percent = $98.88/mo/percent for the average unit. This method also fails to indicate Peck is overassessed
The value to Respondent of the roof lease was not presented; however, it would appear safe to assume that it had some value.
Likewise no evidence was presented with respect to the value of the 55 parking spaces provided by the Association for the exclusive use of the patrons of the 29th floor. Again it would be safe to assume that this had some value.
The value of the electricity provided by the Association to operate the limited common element was shown to be approximately $110 per month.
From the foregoing it is clear that Respondent is getting full value in its use of and the maintenance of the common elements by the Association for the amount of the assessment paid even when the value of the electricity for the common element is not included.
Although Mr. Peck testified that his interpretation of item 44 of the lease (Exhibit 6) included only water and gas meters, it is obvious that the express elevator is a public utility used in conjunction with the demised premises. It provides the only reasonable access to the restaurant and is specifically made appurtenant thereto in the Declarations. There is no rational basis for the maintenance, repair and replacement expense for this elevator to be charged to the unit to which it is appurtenant and the operating expenses not to be so charged.
We now consider Respondent's position that the Association is estopped to now require Respondent to pay for the operating expenses of the limited common element. As a preliminary matter it is noted that this defense was first raised at the hearing. Estoppel is an affirmative defense which must be specifically pleaded; it is waived if not pleaded. Dicks v. Colonial Finance Corp. 85 So.2d 874 (Fla. 1956).
However, since the defense of estoppel was raised and the facts supporting this defense were noted above it will be disposed of. While there are several types of estoppel, that raised here is estoppel en pais or equitable estoppel. Estoppel is a doctrine for the prevention of injustice. Therrell v. Reilly, 151 So. 305 (Fla. 1932) Carrying equitable attributes it may be used as a shield but not as a sword. The bases upon which equitable estoppel depends are acts or representations by one party and a change in position by the other party to his detriment in reliance thereon. With this simple hornbook law definition, the elements relied upon by Respondent are, first, the action of the board in April, 1975 in voting to "swap out" the costs for the upper level lighting for the costs of the electricity for the express elevator. If the board had the authority to enter into this "agreement", it is beyond cavil that they had authority to rescind this agreement unless they are estopped from so doing. In order for them to be so estopped it must be shown that Respondent materially changed his position to his detriment in reliance on this agreement and it would therefore create an injustice if the Board thereafter rescinded the agreement.
Following this agreement Respondent, through his lessee, continued to maintain the upper exterior lighting and the Association continued to pay for the electricity used to operate the express elevator. Respondent continued to pay for the maintenance of the express elevator as required by the Declarations. Respondent made certain repairs to correct defects in the air conditioner, to correct the condition causing odor in the lobby, and to correct defects in the swimming pool. These corrections were made by Respondent in his role as developer, and not as owner of the 29th floor. As owner of the 29th floor he
would have no obligation to correct these conditions; as developer he probably did. Had Respondent cancelled his claim against the Association for the $11,500 he had previously paid as an assessment for unoccupied units, his claim of equitable estoppel would have been stronger. However, in his testimony Mr. Peck stated that this claim had never been settled. Since no detrimental change was made in Respondent's position as a result of the "swap out" there is no basis for a claim that the Association is estopped from rescinding the agreement at a duly held board meeting.
From the foregoing it is concluded that the payment for the electricity to operate the limited common element is not an expense properly charged to the Association as a common expense to be shared by the unit owners and that all such operating expenses are properly charged to the unit or units to which this express elevator is appurtenant. It is therefore,
RECOMMENDED that Respondent be directed to install a meter separate and apart from the meters used to measure the electricity provided for the use and benefit of the common elements so the charges for this service can properly be billed to the unit or units receiving the benefit of this limited common element. It is further,
RECOMMENDED that such available sanctions be applied as are necessary to ensure prompt accomplishment of this meter installation.
DONE and ENTERED this 27th day of May, 1977, in Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
Dennis E. LaRosa, Esquire
Division of Land Sales and Condominiums Johns Building, 725 S. Bronough Street Tallahassee, Florida
Mallory E. Horne, Esquire Barnett Bank Building Tallahassee, Florida
Dean Bunch, Esquire and Joseph C. Jacobs, Esquire
Respondents be and the same are directed to install a meter separate and apart from the meters used to measure electricity provided for the use and benefit of the common elements so the charges for the service to the express elevator appurtenant to the 29th floor unit can be properly billed to the unit receiving the benefit of that limited common element.
DONE AND ORDERED this 24th day of June, 1977, at Tallahassee, Florida.
I HEREBY CERTIFY that a copy of the foregoing Order has been furnished to Dean Bunch, Esquire and Joseph C. Jacobs, Esquire, Attorneys for Respondents and Mallory E. Horne, Esquire, Attorney for Intervenors, by U.S. Mail this 24th day of June, 1977.
