The Issue The issue for resolution in this proceeding is whether Respondent committed the violations alleged in the Notice to Show Cause: Failure to deliver to the association a review of financial records for the required period. Section 718.301(4)(c) F.S. (1981). Failure to fund reserves. Section 718.112(2)(k) F.S. (1981). Failure to turn over converter reserves. Section 718.301(4)(d) F.S. (1981). Charging the association $10,000 for management services without documentation of the contract for the services. Section 718.115(1) F.5. (1981). If it is determined that violations occurred, the remaining issue is what corrective action and civil penalties are appropriate.
Findings Of Fact The parties have stipulated to the following facts: Batura Enterprises, Inc. (Batura) is the developer, as defined in Section 718.103(13) F.S., of a residential conversion condominium known as English Park, in Melbourne, Florida. The condominium association for English Park was incorporated on December 2, 1980. The declaration of condominium for English Park was recorded in the public records on January 22, 1981. Turnover of control of the condominium association from control by the developer to control by unit owners other than the developer pursuant to Section 718.301 F.S., occurred on May 31, 1982. (Joint exhibit #1.) A review of financial statements dated January 19, 1983, was delivered to the condominium association. The review covers a ten-month period commencing August 1, 1981, and ending May 31, 1982. (Joint Exhibit #4.) A supplemental turnover review, performed during the course of this litigation and signed on February 7, 1987, covers the period from incorporation of the condominium association on December 2, 1980, through July 31, 1981. (Joint exhibit #6.) The function of the review is to provide an accounting during the time that the developer is responsible for the association, and to insure that assessments are charged and collected. (Testimony of Eric Larsen, C.P.A., qualified without objection as an expert in condominium accounting.) The proposed operating budget included $15,248.00 for an annual reserve account ($1,270 per month). (Joint exhibit *5, p. 83.) Based on this, the reserve account from the creation of the condominium, January 22, 1981, until the date of turnover, May 31, 1982 should have been $20,688.71 (sixteen months and nine days). The "election period" provided in Section 718.116(8)(a) F.S. (1979) is addressed in the Condominium documents, p. 31: F. Common Expenses payable by the Developer. Until the sale of the first Unit in the Condominium, Developer shall be solely responsible for all expenses of the Condominium. Following the first closing, the Unit Owner in whom title shall have been vested shall be responsible for his proportionate share of Common Expenses, based upon his percentage interest in the Common Elements. The Developer shall be excused from payment of the share of the Common Expenses and Assessments relating to the unsold units after the recording of this Declaration for a period of time which shall terminate on the first day of the fourth calendar month following the month in which the closing of the sale of the first unit occurs. The Developer shall pay the portion of expenses incurred during that period which exceeds the amount assessed against other Unit Owners. (Joint Exhibit #5.) The first units were sold in April 1981. (Joint Exhibit #2, p. 2). Therefore, the "election period" ended on August 1, 1981. The turnover review does not reflect the existence of the $20,688.71 reserve fund at the time of turnover on May 31, 1982. Instead, it reflects a certificate of deposit in the amount of $18,795.00 that was created as a "reserve for transition operations". This was derived from initial payments made by the owners to the association to provide working capital for the start- up phase. (Joint Exhibit #4., testimony of Philip Batura.) These "initial assessments" are addressed in the condominium documents: G. Initial Assessments. When the initial Board, elected or designated pursuant to these By-laws, takes office, it shall determine the budget as defined in this Section for the period cornencing 30 days after their election or designation and ending on the last day of the fiscal year in which their election or designation occurs. Assessment shall be levied against the Unit Owners during said period as provided in this Article. The Board will levy an "initial assessment" against the initial purchaser at the time he settles on his purchase contract. Such initial assessment shall be in an amount equal to two months regular assessments, and shall be utilized for commencing the business of the Association and providing the necessary working fund for it. In addition, the initial purchaser shall pay the pro-rated portions of the monthly assessments for the remaining balance of the month in which closing takes place. The initial assessment and other assessments herein provided shall be paid by each subsequent purchaser of a Unit; no Unit Owner shall be entitled to reimbursement from the Association for payment of the initial assessment. Developer shall not be liable to pay any initial assessment. (Emphasis added) (Joint Exhibit #5, p. 31.) Based on the above, it is apparent that none of the $18,975.00 was contributed by the developer. Between April 1, 1981, and August 1, 1981, 60 percent of the units were sold. (Testimony of Philip Batura. Joint exhibit #4, attachment C.) Therefore at any given point in time between those dates, at least 40 percent of the units were in the hands of the developer. Between August 1, 1981 and turnover at the end of May 1982, an additional 30 percent of the units were sold, for a total of 90 percent. (Testimony of Philip Batura.) This means a minimum of 10 percent of the units were in the hands of the developer at any point between those dates. While Philip Batura claims that reserves were waived by a majority of members pursuant to Section 718.1l2(2)(k), F.S. (1981), he produced no evidence of that. He admitted that the action is not reflected in association minutes. (Joint Exhibit #1.) Reserves are included in the proposed budget filed with the condominium documents. (Joint Exhibit #5.) Reserves are noted in the supplemental financial review provided by the developer: ENGLISH PARK CONDOMINIUM ASSOCIATION, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (SEE ACCOUNTANT'S REVIEW REPORT) JULY 31, 1981. NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RESERVES - The Association's policy is to currently fund all expected replacements and major repairs of commonly owned assets. Should restricted funds available to meet future replacements and major repairs prove to be insufficient, the Association's Declaration provides that special assessments may be made against the unit owners. * * * (Joint Exhibit #6.) The purpose for a reserve account is to insure that funds are available in the future for replacements and deferred maintenance on the common elements. (Testimony of Eric Larsen) In addition to the statutorily-required reserves for exterior painting, roof replacement and repaving, the English Park proposed budget includes reserves for the swimming pool and "townhome hot water tanks". According to Philip Batura the budget was not amended prior to turnover. A separate reserve was required at the time of turnover because this was a condominium converted from apartments. (Testimony of Philip Batura) The only converter reserve applicable was a reserve for roofing in the amount of $6,114.00. (Joint exhibit #2, p. 2 of 11.) The Respondent has admitted its failure to turn over this reserve, but claims the obligation is offset by $10,000 in management fees which it asserts the association owes. (Joint Exhibit #1, p. 2 of 6.) Philip Batura is President of Batura Enterprises, Inc. He was elected or designated to the association board of directors at some point prior to turnover and remained on the board at turnover as he still owned some units. He mostly ran the association until the turnover in May 1982. (Testimony of Philip Batura.) Batura claims that there was an oral agreement for management services for $1,000.00 per month, commencing on August 1, 1981, between the association and Batura Enterprises, Inc. He said this was never paid by the association as there was not enough income to cover the costs of operation. The financial review covering the period August 1, 1981 to May 30, 1982, addresses the accrual of a management fee of $10,000, "...per the proposed operating budget which was recorded in the original declaration." (Joint Exhibit #4.) It is unclear where this figure was derived, as the budget does not reflect a $1,000.00 per month expense line item for management services. Included in the condominium documents is a proposed contract between the association and Eussel G. Hurren for management services. Both the fee and the term of the contract are left blank. The contract form that was filed is not signed, nor was a contract with this individual ever signed. (Testimony of Philip Batura.) The Declaration of Condominium permits a contract with a professional managing agent, including the developer. (Joint - Exhibit #5, p. 25.) No competent evidence was adduced by either party that this provision was ever fulfilled.
Recommendation Final hearing in the above-styled action was held on February 10, 1987, in Cocoa, Florida, before Mary Clark, Hearing Officer of the Division of Administrative Hearings. The parties were represented as follows: For Petitioner: Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 For Respondent: James S. Cheney, Esquire Post Office Drawer 10959 Melbourne, Florida 32902-1959
Findings Of Fact The Division is the administrative agency of this state empowered to ensure that condominium associations comply with the Condominium Act. The Association is the condominium association which manages and operates 12 separate condominiums known as the Pines of Delray, located in Delary Beach, Florida. This case involves a structure placed on the common elements of three of those condominiums: The Pines of Delray condominiums 5, 6, and 11. Condominium 5 has 64 units, 6 has 72 units, and 11 has 96 units. Initially, the 12 condominiums received television under a "Central Television Antenna System Lease" with the Pines of Delray CAT, an agent of the condominium developer. On November 1, 1979, the unit owners of 8 of the 12 condominiums, including condominiums 5, 6 and 11--by vote equal to or in excess of 75 percent of the unit owners in each of the 8 condominiums--voted to cancel or terminate the television system lease pursuant to Section 718.302, Florida Statutes. The leased television equipment was eventually removed by the owner. On February 1, 1982, the Association entered into a written agreement with A-I Quality TV, Inc. d/b/a Denntronics Cable to provide television service for the 12 condominiums. The agreement was authorized by the Association's board of directors; the unit owners were not given an opportunity to vote on the agreement. An addendum to the agreement was entered in December, 1982. The addendum authorized Denntronics to install a satellite receiving station or dish at an unspecified location on the property of the 12 condominiums. The addendum was authorized by the Association's board of directors, but again, a vote of the unit owners was not taken. The Board subsequently selected the site for the receiving dish, centrally locating it on common elements of condominiums 5, 6, and 11, between building no. 65 in condominium 6, no. 25 in condominium 5, and nos. 66 and 110 in condominium 11. On December 24, 1982, Denntronics, with the Board's authorization, entered the premises of the condominiums and cut down four full-grown pine trees on the site to allow construction of a concrete foundation or pad and erection of the satellite dish. The parties stipulate that this cutting of the trees was an alteration of the common elements and that it was not approved by the owners of 75 percent of the condominium units in the affected area. The pertinent declarations of condominiums provide a specific procedure for obtaining approval before altering or improving common elements of the condominium. Article 5.1(b) of each declaration states: 5 MAINTENANCE, ALTERATION AND IMPROVEMENT Responsibility for the maintenance of the condominium property and restrictions upon the alteration and improvement thereof shall be as follows: .1 Common Elements. (b) Alteration and Improvement. After the completion of the improvements included in the common elements which are contemplated in this Declaration, there shall be no alteration nor further improvement of common elements without prior approval, in writing, by record owners of 75 per cent of all apartments. The cost of such alteration or improve ment shall be a common expense and so assessed. After removing the trees, Denntronics poured the concrete pad and attached it to the realty. The pad measures 10 feet by 10 feet, has a depth of 18 inches, and is reinforced with no. 5 grade steel bars. The construction of this pad, as with the tree removal, was not approved or voted on by the condominium owners. Denntronics then anchored the satellite receiving dish to the concrete pad. The dish is approximately 16 feet in diameter, extending 20 to 25 feet in the air. It remains the property of Denntronics since it was only leased to the Association. It is not a fixture since it may be detached and removed from the concrete pad. The cutting of the trees, the construction of the concrete pad, and the erection of the satellite dish altered the common elements. The condition of the real property was changed and the satellite dish affected nearby residents' view and enjoyment of the park-like green space in which it was placed. The replacement of the trees with the concrete pad and satellite dish affected the appearance of the surrounding area. A park-like environment of grass and pine trees surrounds the condominiums; it was this feature which persuaded some residents to originally purchase condominiums at Pines of Delray. Both the name of the condominium and its accompanying description on the condominium documents, "A Condominium in the Woods" emphasize this aesthetic feature of the condominium. As shown by the photographs in evidence, the reinforced concrete pad with satellite dish is an intruding presence in a park- like, pristine area. It is an incongruous, even imposing structure, 1/ and, in the setting in which it was placed, is aesthetically displeasing. 2/ It has adversely affected some residents' enjoyment of the grassy green space and has disturbed the scenic view which they enjoyed from their windows. Some residents now keep their window shades closed or no longer use the park-like surroundings. One resident was so upset by the sudden placement of the structure that she sold her condominium and moved away. Another nearby resident who purchased his unit, in large part, because of its proximity to the park-like green space, would not have purchased it if the pad and satellite dish had been there. Denntronics has a franchise application pending before the City of Delray Beach. If it is granted a franchise, Denntronics will remove the pad and satellite dish, and replace it with underground cable. If Denntronics is not granted a franchise, it intends to maintain and operate the satellite dish at least until June 30, 1987, when the agreement with the Association expires and is up for renewal. If the satellite dish is removed now, however, the Pines of Delray Condominium will not necessarily be without cable television service. Leadership Cable, the only cable T.V. company franchised by the City of Delray Beach, is willing and able to provide cable T.V. reception to the pines of Delray Condominiums.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Division of Florida Land Sales and Condominiums find the Association guilty of violating Section 718.113(2) and order it to cease and desist from further violations. Further, the order should require the Association to remove the concrete pad and satellite receiving dish within 10 days and restore the affected area, as nearly as possible, to its prior condition. Restoration should include the placing and maintenance of grass sod and at least four healthy trees, aesthetically pleasing and not less than 12 feet in height. DONE and ENTERED this 21st day of June, 1984, in Tallahassee, Florida. R. L. Caleen, Jr. Hearing Officer 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 21st day of June, 1984.
Findings Of Fact Background Respondent, Edgewater Condominium Association, Inc., is a nonprofit corporation and association of unit owners of Edgewater Beach Towers, a condominium project with sixty residential units located at 420 North Surf Road, Hollywood, Florida. It is subject to the regulatory requirements of petitioner, Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division). The project was initially constructed as a sixty five unit project. During the construction phrase, the original developer, K.S.L. Building Corporation, was unable to financially complete the project, and the project went into receivership under the auspices of the primary lender, Home Federal Savings and Loan Association of Florida. Eventually the project was completed and its declaration was filed on January 15, 1971. The respondent took over the active operation of the project that same date. An association such as respondent is subject to various Division requirements, including those relating to the levying of monthly assessments on unit owners for common expenses, and the adherence to certain association election procedures. This case stems from a complaint filed with petitioner by an attorney who represented certain unit owners. The complaint related to the manner in which respondent levied both monthly and special assessments over the years, and respondent's use of write-in ballots at annual meetings. This complaint precipitated the instant proceeding. Count I Under Division requirements, an association must levy all monthly and special assessments against unit owners in the proportions or percentages provided in the declaration. In this case, the association's declaration identifies five different classes of units, the number of each, and their percentage of ownership in the common elements. They are as follows: Type of Unit Percentage No. of Units one bedroom, one bath .01204453 1 one bedroom, one and one half bath .01475458 38 two bedroom, two bath .01927130 21 two bedroom, two bath deluxe .02205365 1 recreational units and areas .00013262 4 Paragraph 6 of the declaration specifically provides that the four recreational units "shall not contribute to the common expenses" of the association. This is also confirmed in paragraph 15(a) of the same document. Moreover, at the time the association took control of the project in January 1971, the association was required by order of the circuit court to purchase these four units for $236,000 in order to pay off subcontractor bills still owed at that time. Since their purchase, these units have remained common elements, and therefore no assessments could be properly levied on them. Unit 303 is the one bedroom, one bath unit referred to in the declaration, and has served as the manager's unit since the receiver relinquished control to the association in 1971. It, too, is characterized as a common element and is exempt from assessment requirements. The original floor plan of the twelfth floor of the structure reflects five penthouse (PH) units, of which unit PH 2/3 is the two bedroom, two bath deluxe unit referred to in the declaration. Uncontradicted testimony established that approximately one-half of that unit's floor space has been dedicated to common use and has served as the swimming pool equipment room. Consequently, the remaining portion of the unit has been properly classified as a one bedroom, one and one-half bath unit for assessment purposes. However, the declaration has never been amended to reflect this change. After taking into account the above changes, there are now and have been since 1971 only two classes of units in the project: one bedroom, one and one-half baths, and two bedroom, two baths. They number 39 and 21 units, respectively. Since its inception, the association established monthly assessments for only the above two classes of units. The monthly assessments are set forth on respondent's exhibit 1 received in evidence and reflect increases in April 1972, April 1976, October 1980, October 1984, September 1985 and May 1986. In all cases, the two bedroom, two bath monthly assessment has exceeded the smaller unit assessment by at least $10 per month, and most recently the spread increased to $16 per month. However, the assessments have not been calculated using the precise square footage of the units as dictated by the declaration. More specifically, section 15(a) of the declaration provides that "each unit owner . . . shall be liable for a proportionate share of the common expenses." This provision has not been strictly followed. Although the association amended its bylaws in February 1984 to eliminate the word "proportionately" and substitute the word "equally" when referring to future maintenance and special assessment fees, no such change was made to the declaration, and the latter document remains controlling. Through its president, respondent asserts it has, in good faith, previously charged the foregoing assessments due to financial and budgetary problems caused by the original developer being forced into receivership. However, she represented that all future assessments will be strictly assessed in accordance with the declaration. The notice to show cause alleges, and respondent concedes, that on April 13, 1985, respondent imposed a one-time special assessment of $350 on all unit owners, regardless of the size of the unit, for common element roof repairs made in April 1985. This assessment was calculated in a manner consistent with the way in which all other special assessments have been calculated in the past. According to testimony, the board of directors derived this amount by dividing the roofing contractor's bill of $21,680 by sixty units to arrive at a special assessment of $350 per unit. 1/ This was contrary to the declaration which required that such an assessment be based upon each unit owner's "percentages in the common elements," as well as section 3 of Article VII of the by-laws which states that "special assessments . . . shall be levied and paid in the same manner as hereinabove provided for regular assessments." The association opposes any requirement that it retroactively recalculate any assessment on the ground it is now impractical to do so since ownership of units may have changed hands. It also points out that it is willing to strictly adhere to all declaration requirements in the future. Count II It has been the practice of the association since 1972 to allow persons absent from annual meetings to participate by write-in vote without going through the formality of preparing a written proxy. This practice was confirmed through testimony of a unit owner who had cast a write-in vote on behalf of another unit owner at the 1985 annual meeting. Section 6 of Article V of the association's bylaws requires that voting to transact business matters at meetings shall be done "in person" or "by written proxy." This is also confirmed in Section 2 of Article IV. There is no provision for "write-in" votes in either the bylaws or the declaration. Therefore, this practice was contrary to section 8(d) of respondent's declaration, which provides that "the administration of the condominium shall be in accordance with the bylaws." Respondent has agreed to strictly adhere to this requirement in the future.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Subsection 718.115(2), Florida Statutes (1985), in two respects and Subsections 718.112(2)(b)1. and (2)(d)3., Florida Statutes (1985), in one respect as discussed in the Conclusions of Law Portion of this order. It is further recommended that a $500 civil fine be imposed, that in the future respondent cease and desist from such unlawful activities, and that it recalculate all monthly assessments on and after May, 1986, and make such additional collections or refunds (credits) as may be required. DONE and ORDERED this 15th day of July 1986, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 15th day of July 1986.
Findings Of Fact The following findings of fact are made upon the stipulation of the parties in the Prehearing Stipulation and in the course of the hearing: Respondents are developers of a condominium as defined by Section 718.103(14), Florida Statutes. Respondents are developers of The Somerset, a condominium located in Naples, Florida. The declaration of condominium for The Somerset was recorded in the public records of Collier County on or about August 27, 1979. No turnover review as prescribed by Section 718.301(4)(c), Florida Statutes (1985), was provided by the developer to the association within 60 days after the date of transfer of control of the association to non-developer unit owners, or has yet been provided to the association. On or about January 29, 1985, unit owners other than the developer had elected a majority of the members of the board of administration for The Somerset condominium. Letters of annual financial reports of actual receipts and expenditures were not furnished to unit owners following the end of the calendar years 1980, 1981, 1982, 1983, and 1984. No vote of the unit owners was taken to waive reserve accounts for capital expenditures and deferred maintenance for each of the years 1980, 1981, 1982, 1983 and 1984. The following findings of fact are made upon the evidence adduced at hearing. The turnover review and report mandated by Section 718.301(4)(c), Florida Statutes, must be prepared by a certified public accountant. Respondents sought the necessary review from the firm of Rogers, Hill and Moon, which had done the association's accounting prior to the turnover. However, Rogers- Hill was unable to perform the review in the required time. Respondents consulted with two other accounting firms, but neither could provide the turnover report. Respondents suggested to the President of the association that they would pay $1,000 to the association in lieu of the turnover report. The association accepted the offer. Respondents paid $1,000 to the association and gave the association all of Respondents' books, ledgers and receipts. Respondents did not promulgate and mail to unit owners proposed budgets of common expenses for the fiscal years 1982, 1983 and 1984. Respondents guaranteed that the assessments for common expenses imposed upon each unit owner would not exceed $75.00 per month from the date of recording the declaration of condominium until the date of turnover of control of the association. There were no meetings of unit owners of The Somerset condominium until time of the turnover. According to the original proposed budget, the items designated as reserve items were roof replacement, resurfacing, and painting. While Respondents maintain that they properly waived the funding of the reserve account for 1980, 1981, 1982, 1983, and 1984, the only evidence offered to support their testimony is the minutes of the annual meeting for each year. However, the credibility of these documents is suspect. The minutes were admittedly all prepared by Respondents in 1985, well after the supposed annual meetings. For the years 1982, 1983 and 1984, David Davis II was a director. His name appears on the minutes as offered by Respondents. Yet, Davis says he did not attend an annual director's meeting in those 3 years. Davis also says that he never attended a director's meeting at which the funding of reserves was waived. In fact, Davis never attended a director's meeting at which a proposed budget was adopted. The minutes are inherently unreliable because they were created much later in time and appear to directly conflict with the testimony of Davis. The minutes are also self-serving. Accordingly, it is found that Respondents did not properly waive the funding of the reserve account for the years 1980, 1981, 1982, 1983, and 1984. Respondents never disclosed to the unit owners that reserves were not funded. The reserve liability is $8,890.00, calculated at $8.75 per month per unit in Phase I (eight units) from August 31, 1979, and in Phase II (12 units) from November 13, 1981, plus all twenty units for the first quarter of 1985. The original budget allocates $8.75 of the assessments to reserves and the original documents (Section 8.2) specify that assessments are to be paid quarterly on January 1, April 1, July 1, and October 1. Since the turnover occurred on January 29, 1985, the assessments for the first quarter had already been paid to Respondents. Respondents expended money for reserve-type expenses. Their Exhibit 5 shows reserve-type expenditures totalling $8,164.78. However, certain of these expenditures do not qualify as reserve-type expenses and must be excluded. Specifically, payments of $485.00 to David Chalfant for repairs to leaking windows, of $560.00 to Roy Hutchinson for repairs to doors which rotted out from the rain, and of $470 Bayside Sandblasting to repair steel doors and to sandblast stains on the sidewalk, are not reserve items (roof replacement, resurfacing and painting). Therefore, Respondents established that they paid $6,649.78 for reserve-type expenses. Petitioner argues that other items should be eliminated because they are not reserve-type expenses or because they were paid after turnover. These arguments are rejected and it is found that $6,649.78 for reserve-type expenses is accurate and should be offset against the reserve liability. Respondents owe the Association $2,240.22 in reserve funds. Paragraph 8.3 of the declaration of condominium for The Somerset provides: The Board shall, in accordance with Bylaws of the Association, establish an annual budget in advance for each fiscal year, which shall correspond to the calendar year, which shall estimate all expenses for the forthcoming year required for the proper operation, management and maintenance of the condominium. . . . Upon adoption of each annual budget by the Board, copies thereof shall be delivered to each unit owner, and the assessment for each year shall be based upon such budget. . . The unit owners were not notified of any Board of Directors meeting at which a proposed annual budget would be considered or adopted. Further no unit owner received copies of proposed annual budgets, except for the budget set forth in the prospectus with the original condominium documents. In fact, no formal meeting of the Board was held to adopt an annual budget.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business Regulation, Division of Florida Land Sales, Condominium and Mobile Homes, enter a Final Order and therein order Respondents to take the following actions: Obtain and furnish to the Association a turnover review as required by Section 718.301(4)(c), Florida Statutes (1985). Pay to the Association the sum of $2,240.22 for Respondents' liability for reserves. Pay to the Petitioner a civil penalty of $5,000.00, pursuant to Section 718.501(1)(d)4, Florida Statutes. DONE and ORDERED this 10th day of December, 1986, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer 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 10th day of December, 1986.
The Issue The issues in this matter concern an Administrative Complaint/Notice to Show Cause, which has been brought by the Petitioner against the Respondent charging various violations of Chapter 718, Florida Statutes. Those accusations are more completely described in the conclusions of law.
Findings Of Fact The parties in the person of their counsel entered into a written prehearing stipulation, by which certain facts were agreed to. Those facts are as follows: Stipulated Statement of Facts: The Petitioner herein is the State of Florida, Department of Business Regulation, Division of Florida Land Sales and Condominiums. The Respondent in this matter is Sujac Enterprises, Inc., the developer of a residential condominium known as Ginger Park Condominium located in Jacksonville, Florida. Mr. Jackson M. Jobe is the president of the developer corporation. Transition from developer control of the condominium association occurred pursuant to Section 718.301, Florida Statutes, on November 1, 1983. Prior to this date, Respondent Sujac Enterprises, Inc., was in control of the condominium association. On April 18, 1983, The Division received a condominium complaint from unit owner, Cynthia A. Doallas, filed against Sujac Enterprises, developer of the Ginger Park Condominium. The Division investigation file was opened on April 20 and this investigation was assigned to Janice Snover, specialist and investigator. The Declaration of Condominium was recorded March 12, 1982. The condominium association was incorporated February 16, 1982. Section 8.4 of the declaration of condominium provides for an assessment guarantee for so long as the developer shall own any condominium units within the condominium. At the time of this stipulation, the developer still owns at least one condominium unit within the condominium. The developer controlled association failed to maintain the accounting records provided by Section 718.111(7)(a), (b), Florida Statutes, during the period beginning with the incorporation of the association through at least March 1983. Accounting records were assembled after March of 1983. Mr. Phillip DiStefano was elected to the board of administration in March of 1983 in accordance with Section 718.301(1) , which provides that when unit owners other than the developer own 15 percent or more of the units, the unit owners other than the developer shall be entitled to elect no less than one-third of the members of the board of administration. Mr. DiStefano was elected by unit owners other than the developer. The developer through its president instituted recall procedures pursuant to the procedure as outlined in Section 718.112(2)(g), Florida Statutes, against board member Phillip DiStefano, by circulating a form entitled "Removal of Director or Directors." Mr. Jobe solicited signatures for the agreement, and further, voted the developer corporation's unsold unit votes in favor of the recall. Mr. DiStefano was recalled, with a sufficient number of unit owners other than the developer voting in favor of recall to approve the recall. The developer controlled condominium association failed to provide to unit owners a financial statement of actual receipts and expenditures for the fiscal/calendar year ending December 21, 1982, within 60 days of the end of the year. This financial statement was, however, provided to unit owners approximately three months after the 60 day time period provided in Section 718.111(13), Florida Statutes, had elapsed. The following additional facts are found based upon the presentation made at the final hearing: At the point of the final hearing, the developer still owned a condominium unit within the condominium. The developer had allowed other persons to take charge of the accounting procedures of the condominium association from the inception of the association through March 1983. Those other persons operated on the basis of a checkbook in which check stubs were maintained and deposit slips kept. Some invoices were also maintained. These records, in addition to not being maintained by the developer when the developer was serving as the association in this period through March 1983, were not in accordance with good accounting practices. Moreover, they did not contain an account for each unit, designating the name and current mailing address for the unit owner, with the amount of each assessment, the dates and the amounts in which the assessments came due and the amount paid upon these individual accounts, with the balance due being reflected. As revealed by an audit which the developer had requested of an accountant which it hired, this audit dating from June 7, 1983, there was a deficit in the reserve account on that date. This discovery was made prior to the transfer of the accounting records from the developer to other condominium unit owners. In effect, on June 7, 1983, the reserve account for capital expenditures and maintenance was insufficiently funded. The exact amount of deficit was not shown in the course of the hearing. Therefore, it has not been demonstrated that the deficit of June 7, 1983, corresponds to the deficit in the reserve account in the amount of $1,186.18, effective December 31, 1983 as found by Petitioner's accountant. Respondent in its efforts to refute responsibility for the reserve deficit has failed to demonstrate, by way of defense, that charges incurred on behalf of other condominium unit owners should reduce the developer's deficit responsibility. This pertains to its reference to prepaid insurance, pest control and construction costs related to a fence. The reserve account for capital expenditures and maintenance is a common expense. The developer, pursuant to Section 8.4 of the declaration of condominium is responsible for the deficit in the reserve account as reflected on June 7, 1983, in keeping with the assessment guarantee set forth in that section. That guarantee continued until the account was tranferred to the other condominium unit owners. Features of the aforementioned guarantee related to responsibility to insure against additional assessments attributable to deficits other than those in the reserve account, i.e. for other forms of common expenses, developer's share, only would occur at the point of sale of the last condominium unit. That contingency had not occurred at the time of the conduct of the final hearing. The developer kept the accounting records from April 1983 until June 1983. Subsequently when the records were turned over to the other condominium unit owners as a part of the transition of association control, the developer failed to have a transitional review conducted by an independent accountant related to financial records of the association.
Recommendation It is recommended that a final order be entered which imposes a penalty in the amount of $2,500 for those violations established pertaining to Count I, IV and V and that Counts II and III be dismissed. DONE AND ORDERED this 3rd day of July 1984, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer 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 3rd day of July, 1984. COPIES FURNISHED: Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Jerry A. Funk, Esquire 1020 Atlantic Bank Building Jacksonville, Florida 32202 E. James Kearney, Director Division of Land Sales and Condominiums The Johns Building 725 South Bronough Street Tallahassee, Florida 32301 Gary Rutledge, Secretary Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32301 =================================================================
The Issue On February 27, 1987, petitioner issued a Notice to Show Cause which alleged that respondent had violated various provisions of Chapter 718, Florida Statutes, and Chapter 7D-17 and 7D-23, Florida Administrative Code. On March 20, 1987, respondent served petitioner with a Response to Notice to Show Cause and Request for Formal Hearing. The Notice to Show Cause and response identify the specific violations alleged and issues to be resolved as follows: CHARGE: Respondent, while in control of the association, violated Section 718.116(1)(a) and (8)(a), Florida Statutes (1985), by excusing itself from the payment of its share of common expenses pertaining to assessments on unbuilt developer-owned units in Phase VI and VII of Glenwood Manor by failing to pay assessments on the units until certificates of occupancy were issued; RESPONSE: Respondent denied that it had any liability for assessments on unbuilt developer-owned units in Phases VI and VII of Glenwood Manor Condominiums, and alleged that respondent paid assessments on developer-owned units commencing with the creation of the unit pursuant to Section 718.403, Florida Statutes (1985). CHARGE: Respondent, while in control of the association, violated Section 718.112(2)(k), Florida Statutes (1980 Supp.), Section 718.112(2)(f), Florida Statutes (1985), and Rule 7D- 23.04(2), Florida Administrative Code (1985), by failing to properly waive or fully fund reserve accounts for capital expenditures and deferred maintenance for the years 1981, 1982, 1984, 1985 and 1986; RESPONSE: Respondent denied that reserve accounts were improperly waived or funded as alleged in the notice, asserting that reserves were properly waived for the years 1981, 1982, and 1984, were not waived for the year 1985, and that respondent was without knowledge as to 1986 because the turnover of the condominium took place prior to the 1986 annual meeting. CHARGE: Respondent, while in control of the association, violated Section 718.112(2)(h), Florida Statutes (1982 Supp.), and Section 718.112(2)(g), Florida Statutes (1985), by failing to adopt budgets and make assessments for the fiscal years 1984, 1985 and 1986 in an amount no less than required to provide funds in advance for payment of all anticipated current operating expenses and all of the unpaid expenses previously incurred, in that respondent loaned the association $8,000 from May 19, 1983 to May 19, 1985, to cover operating expense, with repayment plus interest due after turnover; RESPONSE: Respondent denied that it failed to adopt budgets and make assessments for fiscal years 1984, 1985 and 1986 in amounts sufficient to provide funds in advance for payment of anticipated current operating expenses and for all of the unpaid expenses previously incurred. Respondent alleged that it adopted in good faith budgets which the association estimated would be required to meet these expenses. Respondent admitted loaning money to the association to meet the needs of the association. CHARGE: Respondent failed to follow its plan of phase development as stated in the original declaration of condominium or amend the plan of phase development, in violation of Sections 718.403(1), (2)(b), (6) and 718.110(4), Florida Statutes (1983), in that the original declaration describes Phase IV as containing eight units while the amendment adding Phase IV created only seven units; RESPONSE: Respondent denied that it failed to follow its plan of phase development as stated in the original declaration of condominium in that the Declaration of Condominium provided that the developer would have the option of constructing a swimming pool in Phase IV and that the construction of the pool would require a reduction in the number of units contained in Phase IV from eight to seven. CHARGE: Respondent violated Section 718.104(4)(f), Florida Statutes (1985), by creating a condominium in which the aggregate undivided share in the common elements appurtenant to each unit, stated as a percentage, does not equal the whole, in that Glenwood Manor consists of 55 units with each unit owning a 1/56th share of the common elements. RESPONSE: Respondent denied that it created a condominium in which the aggregate undivided shares in the common elements appurtenant to each unit did not equal the whole, and alleged that any reference to a unit owner owning 1/56th undivided share in the common elements is due to a scrivener's error which respondent would be willing to correct to clarify that each unit owner owns 1/55th undivided share in the common element. CHARGE: Respondent offered 33 condominium units for sale, and entered into purchase contracts in Phase II, III, V, VI and VIII of Glenwood Manor prior to filling the subsequent phase documents with the Division of Land Sales, Condominiums, and Mobile Homes (Division) on February 5, 1986, in violation of Section 718.502(2)(a), Florida Statutes (1984 Supp.), and Rule 7D- 17.03(2), Florida Administrative Code; CHARGE: Respondent closed on 33 units prior to obtaining Division approval on February 10, 1986, of subsequent phase documents for Phases II, III, V, VI and VII, in violation of Section 718.502(2)(a), Florida Statutes (1984 Supp.), and Rule 7D- 17.01(3), Florida Administrative Code; RESPONSE TO (6) AND (7): Respondent admitted that due to the death of one of its attorneys, it inadvertently did not file the subsequent phase documents for Phases II, III, V, VI and VII prior to offering some of those units for sale and closing on the sale, but filed the necessary documents with the Division and obtained the necessary approvals upon realizing that the documents had not been filed. CHARGE: Respondent accepted a deposit on the purchase contract for unit 605, Phase V, without filing a fully executed escrow agreement for Venice Realty, Inc., with the Division, in violation of Rule 7D-17.02(6), Florida Administrative Code. RESPONSE: Respondent admitted that due to confusion between respondent and the realtor involved, Venice Realty, Inc. inadvertently accepted a deposit on a contract for the purchase of Unit 605, Phase VI, but that prior to closing on the unit, respondent directed Venice Realty to transfer the deposit to the proper escrow agent which transfer was accomplished. Respondent requested a formal hearing on the issues thus joined, and on April 9, 1987, this matter was forwarded to the Division of Administrative Hearings for further proceedings. At the hearing, petitioner presented the testimony of Glen Turnow, a resident of Glenwood Manor Condominium and association board member; Candy McKinney, Examination Specialist with the Bureau of Condominiums; John Benton, Financial Analyst, Division of Florida Land Sales, Condominiums and Mobile Homes; and Marcel Cloutier, Secretary/Treasurer of Waterside Land Corporation. Petitioner's exhibits 1-8 were admitted into evidence. Petitioner's Exhibit No. 1, Petitioner's First Request for Admissions and responses, and petitioner's Exhibit No. 2, Petitioner's First Set of Interrogatories, were admitted into evidence as late-filed exhibits. Marcel Cloutier, an officer of Waterside Land Corporation, was accepted as the authorized representative for respondent and testified on respondent's behalf. Respondent did not enter any exhibits into evidence. A prehearing stipulation was submitted by the parties prior to the hearing. No transcript of the hearing has been filed. However, both petitioner and respondent have filed proposed findings of fact and conclusions of law, and a ruling on each of the proposed findings of fact is included in the Appendix to this Recommended Order.
Findings Of Fact At all times between October 21, 1981, and February 27, 1987, respondent was the developer, as that term is defined by Section 718.103(14), Florida Statutes (1985), of Glenwood Manor Condominium. Glenwood Manor Condominium is a phased condominium consisting of seven (7) phases with fifty-five (55) units located in Sarasota County, Florida. Between October 21, 1981, and February 17, 1986, respondent was in control of the Board of Directors of Glenwood Manor Owners Association, Inc. (Association). Control of the Board of Directors of the Association was turned over to the unit owners on February 17, 1986. The Declaration of Condominium of Glenwood Manor Condominium was recorded in the public records of Sarasota County, Florida, on October 21, 1981. Paragraph II of the Declaration of Condominium provides, in pertinent part, as follows: Developer does hereby declare the property owned by it and first described above, to be Condominium property under the Condominium Act of the State of Florida, now in force and effect, to be known as: GLENWOOD MANOR CONDOMINIUMS, hereinafter referred to as the CONDOMINIUM??, and does submit said Condominium property to Condominium ownership pursuant to said Act. Developer may, but is not obligated to create additional Phases of Development of GLENWOOD MANOR CONDOMINIUMS ... which said Phases, if any, shall be operated and managed in conjunction with this Condominium through that certain nonprofit corporation known as: GLENWOOD MANOR OWNERS ASSOCIATION, INC., and hereinafter referred to as the "ASSOCIATION." The creation of any such further Phases will merge the common elements of this Condominium with the common elements of such additional Phases. As Developer creates such additional Phases, Developer shall ... record an amendment to this Declaration of Condominium describing the lands and improvements so added and the revised percentage of owner- ship in the common elements of this Condominium as so enlarged. (e.s.) The details of the phase development are set forth on Exhibit B to the Declaration of Condominium, entitled Phase Development Exhibit, which provides as follows: This Condominium is being developed as a Phase Development under Florida Statute 718.403. The first Phase of Development, which is the Phase hereby submitted to Condominium ownership, is designated on the Condominium plat described in paragraph II of the Declaration of Condominium above as Phase I. It consists of 8 Condominium Units numbered 1 through 8. Each Unit owner will own 1/8th of the common elements and share 1/8th of the common expenses and is entitled to 1/8th of common surplus relative to this Condominium. Phase II consists of 8 proposed Condominium Units as depicted on said condominium plat. At such time as Phase II is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the two phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/16th ownership of the common elements of said phases as merged, bear 1/16th of the common expenses of the merged phases and be entitled to 1/16th of the common surplus of the merged phases. At such time as Phase III is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the three phases shall then and there be considered as merged. Upon such mercer each unit shall be vested with a 1/24th ownership of the common elements of said phases as merged, bear 1/24th of the common expenses of the merged phases and be entitled to 1/24th of the common surplus of the merged phases. At such time as Phase IV is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the four phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/32nd ownership of the common expenses of said phases as merged, bear 1/32nd of the common expenses of the merged phases and be entitled to 1/32nd of the common surlus [sic] of the merged phases. At such time as Phase V is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the five phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/40th ownership of the common elements of said phases as merged, bear 1/40th of the common expenses of the merged phases and be entitled to 1/40th of the common surplus of the merged phases. At such time as Phase VI is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the six phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/48th ownership of the common elements of said phases as merged, bear 1/48th of the common expenses of the merged phases and be entitled to 1/48th of the common surplus of the merged phases. At such time as Phase VII is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the seven phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/56th ownership of the common elements of said phases as merged, bear 1/56th of the common expenses of the merged phases and be entitled to 1/56th of the common surplus of the merged phases. (e.s.) The units in Phases II - VII were submitted to condominium ownership pursuant to amendments to the Declaration of Condominium filed in the public records of Sarasota County, Florida, on the following dates: First Amendment Phase II November 16, 1981 Second Amendment Phase III June 10, 1983 Third Amendment Phase IV November 3, 1983 Fourth Amendment Phases V, VI and VII April 5, 1984 Each amendment provided for the merger of the common elements of the new phase with the previous phases, listed all units included in the condominium, and indicated the new share of ownership in and expenses for the common elements of the condominium for each unit. For example, the First Amendment of Declaration of Condominium, which added Phase II, consisting of eight units, to the condominium, which initially consisted of eight units, provided: As a result of the addition of the Phase II lands to the Condominium, as set forth above, each unit of Glenwood Manor, Condominiums as amended heretofore and hereby, shall be vested with a 1/16th owner- ship of the common elements of the merged Phases I and II lands and each unit shall bear a 1/16th share of the common expenses and be entitled to a 1/16th share of the common surplus of said merged phases of development. Both the First and Second Amendments added eight units to the condominium in accordance with the Phase Development Exhibit included in the Declaration of Condominium. However, the Third Amendment, adding Phase IV, added only seven units to the condominium, resulting in a total of 31 units. The Third Amendment correctly stated that each unit "shall be vested with a 1/31st ownership of the common elements of the merged Phases I, II, III and IV lands and each unit shall bear a 1/31st share of the common expenses ..." However, when the Fourth Amendment was filed, adding Phases V, VI and VII, each consisting of eight units, the share of ownership in the common elements for each unit was stated as 1/56th, whereas the total number of units included in the condominium was correctly shown as 55. Each amendment to the Declaration of Condominium ratified and confirmed the declaration and plat "[e]xcept as expressly modified" by the amendment. Unit owner and board member Glen Turnow stated that it was his understanding that he owns 1/55th of the common elements and that each unit owner pays 1/55th of the common expenses at Glenwood Manor; however, he has no documents indicating his ownership interest to be other than 1/56th of the common elements. Although the amendment creating the units in Phases VI and VII was filed on April 5, 1984, respondent paid no monthly assessments on developer-owned units in Phases VI and VII until Certificates of Occupancy were issued for those phases. Certificates of Occupancy for Phases VI and VII of Glenwood Manor were issued on October 25, 1985, and November 13, 1985, respectively. The assessment per unit of the condominium per month was $55 from April, 1984, through August, 1985; as of September, 1985, the assessment increased to $70 per unit. For the developer-owned units in Phases VI and VII from the date of amendment until the certificates of occupancy were filed, the assessments would have been $17,182.65. At 18 percent simple interest computed from the end of the year respondent owed for the assessments to the day before turnover of the association to the owners, interest on the assessments totals $2,029.92. Respondent admitted that it paid no assessments on the units in Phase VI and VII until Certificates of Occupancy were issued. Mr. Cloutier testified that respondent did not pay the assessments because it received legal advice that a unit is not in existence until a certificate of occupancy is issued. However, the first assessment was paid on November 4, 1981, and the certificates of occupancy for the first sixteen units were not issued until December 17, 1981. Mr. Cloutier also testified that respondent relied on language in the Declaration of Condominium which excused it from paying such assessments until the certificates of occupancy were issued. However, respondent did not introduce into evidence the portion of the Declaration on which it relied. Further, the Fourth Amendment to the declaration, which added the units in Phases VI and VII to the condominium, clearly provided that each unit would bear a proportionate share of the "common expenses." In the declaration "assessment" is defined as the "share of the funds required for the payment of common expenses." Respondent admitted that it made no guarantee to unit owners at Glenwood Manor Condominium which would excuse it from payment of assessments on developer-owned units other than pursuant to the provisions of Section 718.116(8)(a)1., Florida Statutes (1985), which provides, in pertinent part, as follows: (8)(a) No unit owner may be excused from the payment of his share of the common expense of a condominium unless all unit owners are likewise proportionately excused from payment, except ... in the following cases: If the declaration so provides, a developer or other person who owns condominium units offered for sale may be excused from the payment of the share of the common expenses and assessments related to those units for a stated period of time subsequent to the recording of the declaration of condominium. The period must terminate no later than the first day of the fourth calendar month following the month in which the closing of the purchase and sale of the first condominium unit occurs ... The closing of the purchase and sale of the first unit at Glenwood Manor occurred on October 20, 1981. Reserves are monies put aside each month to provide for future replacement or repair of major items. The original budget provided for funding of reserves in the amount of $6.00 per unit per month. Funding of reserves at Glenwood Manor for 1981 was waived at a meeting of unit owners on January 10, 1982; for 1982, on January 10, 1982; for 1983 on January 10, 1983, and for 1984, on August 16, 1985. If the reserves cannot be waived retroactively, the respondent would owe $3,036.55 for reserves that were not properly waived. However, respondent made one deposit to reserves in the amount of $1,800; therefore, respondent's total liability for underfunded reserves would be $1,236.55. Between May 19, 1983, and May 20, 1985, the developer made the following loans to the association: June 19, 1983 $ 500 at 13 percent interest June 3, 1983 $ 500 at 13 percent interest August 6, 1984 $1200 at 12 1/2 percent interest September 7, 1984 $1500 at 12 1/2 percent interest September 28, 1984 $2300 at 12 1/2 percent interest March 2, 1985 $ 600 at 12 1/2 percent interest May 20, 1985 $1400 at 12 percent interest On July 14, 1983, the first two loans were repaid with interest. The loans made from the developer to the association during the years 1983, 1984 and 1985 were necessary to provide operating funds for the association. At a meeting of unit owners on August 25, 1985, it was decided that repayment of these loans would take place after turnover of control of the association to the non-developer owners. On the dates these loans were made, the percentages of units which had been sold by the developer were as follows: August 6, 1984 - 56.4 percent; September 7, 1984 - 56.4 percent; September 28, 1984 - 56.4 percent; March 3, 1985 - 60 percent; and May 20, 1985 - 61.8 percent. If the repayment of the loans were based on the percentage of units owned by the developer vis-a-vis the non- developers on the date of the loan, the developer would owe $2954.80 and the non-developer unit owners would owe $4045.20. Respondent offered 33 condominium units for sale, and entered into purchase contracts for units in Phases II, III, V, VI and VII of Glenwood Manor Condominiums, prior to February 5, 1986. Respondent closed on the sales of 33 units in Phases II, III, V, VI and VII of Glenwood Manor Condominiums prior to February 10, 1986. Respondent first filed subsequent phase documents with the Division of Florida Land Sales, Condominiums and Mobile Homes for Phases II, III, V, VI and VII of Glenwood Manor Condominium on February 5, 1986. On August 11, 1985, Venice Realty accepted a deposit from the Days for the purchase of Unit 605 at Glenwood Manor Condominium. Ms. McKinney testified that the Division's records indicated only that the Law Firm of Rosen, Able and Bryant would serve as escrow agent for sales of units at Glenwood Manor Condominium. In its answer to the charges, respondent admitted that Venice Realty was not the proper escrow agent for respondent.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered finding that respondent committed the violations alleged in Charges 1-7, finding that respondent did not commit the violation alleged in Charge 8, and imposing a civil penalty against respondent of Four Thousand, Two Hundred Fifty Dollars ($4,250), assessed as follows: For the violations set forth in the first charge, $1,000; for the violations set forth in the second charge, $1,000; for the violations set forth in the third charge, $1,000; for the violations set forth in charges four and five, $750; and for the violations set forth in charges six and seven, $500. It is further RECOMMENDED that the Final Order require that the respondent take the following affirmative action: Within sixty (60) days of the Final Order, file the appropriate documents in the public records of Sarasota County, Florida, indicating that Glenwood Manor Condominium consists of 55 units, and that each unit's share of the common elements, expenses, and surplus is 1/55th. The filing of such amendments shall comply fully with the provisions of Chapter 718, Florida Statutes, and Rule 7D-17, Florida Administrative Code. Within thirty (30) days of issuance of the Final Order, remit permanently and irretrievably to Glenwood Manor Owners' Association, Inc., the respondent's liability for assessments and reserves in the amount of $19,210.16 for assessments and $1,236.55 for reserves. Accept as full repayment of the loans made by respondent to the association, the sum of $4,045.20. DONE AND ENTERED this 4th day of March, 1988, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1988.
The Issue The issues are whether the Petitioner lawfully revoked John Brotherton’s exemption for the repair or replacement of a dock in submerged lands and whether Respondent timely requested a hearing.
Findings Of Fact Intervenor is the successor by merger with Bankers Real Estate Investment Company. References to Intervenor shall include Bankers Real Estate Investment Company. Intervenor submitted to condominium ownership the property that, following condominium construction, has become known as Sportsman’s Riverside Townhomes Association (Sportsman’s). This property borders the Homosassa River. Subject to the legal effect of the transactions described below, Sportsman’s owns the riparian rights to the area upon which a dock owned by Respondent is located. By warranty deed dated February 1, 1984, David J. Steward acquired Sportsman’s condominium unit five. The deed contains no reference to a dock, but conveys only unit number five and an undivided share in the common element. However, by letter to Mr. Steward dated June 19, 1984, the Chairman of Bankers Real Estate Investment Corp. agreed that, in consideration of Mr. Steward’s execution of amended condominium documents, the developer “will” assign Mr. Steward more parking spaces and “[y]our boat dock will remain permanently assigned to your unit as a limited common element reserved for use by your unit.” On October 12, 1990, David J. Steward conveyed Sportsman’s condominium unit number five to Respondent. The deed conveyed “items of personal property including the private dock thereon.” On April 20, 1993, Respondent applied to Petitioner for an exemption to repair the dock that Mr. Steward had sold him. The dock had been damaged in a storm the prior month. The application includes a copy of the warranty deed to Respondent. The deed reveals that Respondent owns only a single unit of a condominium project, but the application does not name the condominium association as an adjacent property owner. Respondent checked the form on the application stating that he was the record legal owner of the “property on which the proposed project is to be undertaken.” The application states that the dock is a floating dock for the private docking of Respondent’s boat. The application reports that the dock is 128 square feet in area. By letter dated June 1, 1993, Petitioner granted Respondent the requested exemption from permitting, “[b]ased solely upon the documents submitted to the Department ” The letter adds that the exemption constitutes “authorization from the Board of Trustees Pursuant to a Memorandum of Agreement entered into on November 23, 1992.” The letter warns that Petitioner may revoke the exemption determination “if the basis for the exemption is determined to be materially incorrect . . ..” The Memorandum of Agreement dated November 23, 1992, (MOA) is between the predecessor agency to Petitioner and the Board of Trustees of the Internal Improvement Trust Fund (Board of Trustees). In the MOA, the Board of Trustees authorizes the use of state-owned submerged lands for all activities (subject to irrelevant exceptions) for which Petitioner grants exemptions from environmental resource permitting. By letter dated April 24, 1996, Petitioner informed Respondent that it had learned that Respondent had supplied “materially incorrect” information in the application submitted with the April 20, 1993, letter. The April 24 letter explains that Respondent asserted in the application that it was the record owner of the property, but the warranty deed revealed that he was not. The April 24 letter gives Respondent 21 days from receipt within which to file a petition requesting a formal administrative hearing. Respondent timely filed his request for a hearing. The facts do not establish a waiver of Respondent's right to demand a hearing. Petitioner did not rely on Respondent’s representation that he was the owner of the property on which the dock was located. The warranty deed attached to the application clearly revealed that Respondent owned only a condominium unit and undivided interest in the common element. Petitioner also knew that the state owned the submerged land at the dock.
Recommendation It is RECOMMENDED that the Department of Environmental Protection enter a final order dismissing the proceeding seeking the revocation of the exemption from the Department and consent from the Board of Trustees. ENTERED in Tallahassee, Florida, on June 10, 1997. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings on June 10, 1997. COPIES FURNISHED: Perry Odom, General Counsel Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Albert E. Ford, II, Esquire Mail Station 35 3000 Commonwealth Boulevard Tallahassee, Florida 32399-3000 John Brotherton 6304 North Otis Avenue Tampa, Florida 33604 Robert G. Southey, Esquire Delano & Southey Post Office Box 15707 St. Petersburg, Florida 33701-5707 Kathy Carter, Agency Clerk Department of Environmental Protection Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
The Issue The issues are whether Respondents are guilty of the following: (a) breach of fiduciary relationship in violation of Section 718.111(1)(a), Florida Statutes; (b) failure to respond in writing to written inquiries in violation of Section 718.112(2)(a)2., Florida Statutes; (c) failure to properly notice a meeting in which regular assessments were discussed in violation of Section 718.112(2)(c), Florida Statutes; (d) failure to proportionately excuse payment of common expenses for all units owners after doing so for one unit owner in violation of Section 718.116(9)(a), Florida Statutes; and (e) willfully and knowingly violating Chapter 718, Florida Statutes, in violation of Section 718.501(d)(4), Florida Statutes.
Findings Of Fact Ocean Gate is a unit-owner controlled condominium located in St. Augustine, Florida. A three-member board of directors governs Ocean Gate. However, Article V of Ocean Gate's Articles of Incorporation states as follows in relevant part: This corporation shall have three (3) directors initially. Thereafter, the number of directors may be increased from time to time in the manner provided by the Bylaws, but shall never be fewer than three. Ocean Gate's original developer was Robert Laurence/Ocean Gate Development, Inc. On or about June 16, 1999, the developer recorded Ocean Gate's Declaration of Condominium in the official record book 1417, page 1932, of the public records of St. Johns County, Florida. At that time, Ocean Gate's directors, as set forth in the Articles of Incorporation, were Roger W. McClain, Leslie Gallagher, and Robert J.L. Laurence. The property at issue includes two buildings (2.1 and 2.2) containing a total of 10 units. Units 600, 604, 608, 612, 616, and 620 are located in Ocean Gate's 2.1 building. Units 605, 609, 613, and 617 are located in Ocean Gate's 2.2 building. On June 16, 1999, the following deeds were recorded in the official record book of St. Johns County, Florida: (a) unit 600 to Mr. and Mrs. Grissom (later sold to the Mr. Barrow/Flag Development Corporation); (b) unit 604 to Mr. and Mrs. McNeely; (c) unit 608 to Dr. and Mrs. Blankenship; (d) unit 612 to Mr. and Mrs. Klinehoffer; (e) unit 616 to Mr. and Mrs. Pittman (later sold to Mr. and Mrs. Weaver); and (f) unit 620 to Mr. and Mrs. Carabetta. The unit owners in the 2.1 building had to lend the developer funds to complete the construction of their units. Even so, these unit owners had to foreclose on that loan and spend additional funds to complete the construction on their units. On or about July 1, 1999, Ocean Gate issued a Notice of Owners Meeting. The meeting was scheduled for July 17, 1999. The agenda attached to the notice included the following: (a) call to order; (b) establish a quorum; (c) waiver of 60-day notice; (d) introduction of May Management Services, Inc. (May Management); (e) official approval of management contract; (f) discussion of board members; (g) discussion of contract; and (h) adjournment. Ocean Gate held its first unit owners' meeting on July 17, 1999. Mr. Klinehoffer, Mr. and Mrs. Pittman, Dr. and Mrs. Blankenship, Mr. and Mrs. McNeely, Mr. Grissom, and Mr. and Mrs. Carabetta attended the meeting. The developer did not attend the meeting. During the July 17, 1999, meeting, the unit owners accepted the resignation of Les R. Gallagher, as a director, and elected the following directors/officers: Mr. Grissom, president; Mr. Kleinhoffer, vice president; and Mrs. Pittman, secretary/treasurer. The representative of May Management announced that the developer had turned over $8,308.44 to the unit owners. Ocean Gate conducted a unit owners meeting on December 4, 1999. Mr. Grissom and Dr. Blankenship attended the meeting. Mrs. Pittman attended by proxy. A representative of the developer was also in attendance. During the meeting, the unit owners approved Ocean Gate's 2000 operating budget. On or about January 14, 2000, Mrs. Pittman resigned as a director and secretary/treasurer. A unit owners meeting took place on January 29, 2000. Mr. Grissom, Dr. and Mrs. Blankenship, Mr. Carabetta, Mr. and Mrs. McNeely, and Mr. Weaver were in attendance. In a notice dated March 22, 2000, Ocean Gate scheduled a unit owners meeting for April 15, 2000. The agenda included the following: (a) call to order; (b) establish a quorum; (c) approval of minutes of January 29, 2000; (d) financial report; (e) old business (release of lien payment for John M. Williams); (f) new business, including election of director; (g) date of next meeting; and (h) adjournment. During the meeting, Mr. Weaver was elected to fill a vacancy on Ocean Gate's board of directors. The Carabettas' unit, which is located in the 2.1 building, is the largest unit on the property. Mr. Carabetta refused to pay some of Ocean Gate's assessments because he did not believe Ocean Gate was properly maintaining his unit. In time, he filed at least one lawsuit against Ocean Gate and its board of directors. He also filed defamation and discrimination lawsuits against some of the unit owners in their individual capacities. Mr. Carabetta testified at hearing that Ocean Gate failed to maintain his unit while expending funds to maintain the units of the Weavers, the Blankenships, the McNeelys, and the Klinehoffers. There is no persuasive evidence that the directors of Ocean Gate improperly refused to pay for maintenance/repair of the common elements in the 2.1 building, including the limited common elements directly affecting Mr. Carabetta's unit. The 2.2 building was the subject of a foreclosure suit. It was sold on the courthouse steps to Flag Development Corporation on June 13, 2000. Pursuant to that sale, Flag Development Corporation also bought two additional condominium developments, Ocean Gate Phase II and Ocean Gate Phase III, which are not a part of the property at issue here. The record contains a Certificate of Title conveying real and personal property to Flag Development Corporation. The certificate refers to a description of real and personal property, "Exhibit A," which is not attached to the copy of the certificate in the record. John Williams and Mr. Barrow are business associates affiliated with Flag Development Corporation. After receiving title to the 2.2 building, their company did nothing more than clean up the property. They did no construction, maintenance, or repair work. In two letters, Jones & Pellicer, Inc., civil engineers and land surveyors, responded to Mr. Weaver's request for a survey to determine the square footage for each unit. The first letter dated May 31, 2000, referred to the survey of units 600, 604, 608, 612, 616, and 620 in the 2.1 building. The second letter dated July 31, 2000, referred to the survey of units 605, 609, 613, and 617 in the 2.2 building. According to the letters, the surveys determined the square footage for each unit using the floor area, as defined by Section 4.7-Unit Boundaries "A" and "B" in the Ocean Gate Declaration of Condominium. Mr. Walters purchased the four units in Ocean Gate's 2.2 building from John Williams/Flag Development Corporation in late July or early August 2000. The purchase price was approximately one million dollars. The record contains a copy of the corporate warranty deed conveying the 2.2 building to Mr. Walters. The deed states that the transfer of title is "subject to taxes for the current year, covenants, restrictions, and easements of record, if any." The attachments to the deed describing the property include Schedule A, Exhibit A, and Exhibit A Continued. The document identified as Exhibit A Continued, and which appears to be signed by the original developer, is not legible. When Mr. Walters bought the four units, the 2.2 building had a roof, windows, walls, and doors from which the square footage of each unit could be determined. The building was about 45 percent complete but not sufficiently complete to qualify any of the units in the building for a certificate of occupancy. Mr. Walters hired a contractor to complete the construction on his units. The construction, which involved a considerable sum of money, included work on the common elements and the interior of the units. There were liens on the 2.2 building for Ocean Gate's assessments when Mr. Walters purchased his four units. Mr. Walters refused to pay any past or ongoing assessments on his four units. In turn, Ocean Gate refused to expend any funds to maintain or repair the 2.2 building. Ocean Gate continued to impose assessments on all unit owners, including Mr. Walters and Mr. Carabetta. Ocean Gate also had to impose special assessments on some unit owners to make up the shortfall when Mr. Walters and/or Mr. Carabetta refused to pay their regular assessments. On October 17, 2000, Ocean Gate filed a Revised Claim of Lien against Mr. Walters for unpaid assessments and late charges. The Revised Claim of Lien alleged that Mr. Walters owed Ocean Gate a balance of $20,983.42. In a letter dated October 18, 2000, Ocean Gate advised Mr. Walters that a foreclosure suit would be instituted if he did not pay the assessments and charges. Early in 2001, Ocean Gate filed a Complaint seeking foreclosure of the liens against Mr. Walters in Case No. CA-01- 85, in the Circuit Court, Seventh Judicial Circuit, in and for St. Johns County, Florida. On or about March 1, 2001, Mr. Walters filed a Motion to Dismiss in Case No. CA-01-85, in the Circuit Court, Seventh Judicial Circuit, in and for St. Johns County, Florida. Mr. Walters took the position that he was not obliged to pay condominium assessment until a certificate of occupancy was issued and that the original developer had never relinquished control of Ocean Gate. Mr. Walters and Mr. Carabetta together owned over 51 percent of the total square footage in all units. Therefore, they controlled a majority of Ocean Gate's voting interests, which are directly proportional to the square footage in each unit. Specifically, Mr. Walters controlled a total of 36.207 percent of the membership voting interests and Mr. Carabetta controlled a total of 15.990 percent of the membership voting interests. Mr. Weaver was Ocean Gate's president in September 2001. Mr. McNeely and Mr. Klinehoffer were also directors/officers. All three of the directors were named as defendants in one or more of Mr. Carabetta's lawsuits. On or about September 26, 2001, Mr. Weaver issued the second notice of Ocean Gate's annual meeting of unit owners. The notice included the following agenda items: (a) roll call; (b) reading of minutes of last meeting; (c) reports of officers; (d) election of directors; (e) unfinished business; (f) original resolutions and new business; and (g) adjournment. The annual meeting of Ocean Gate's unit owners took place on October 27, 2001. During the meeting Mr. Walters and Mr. Carabetta, in concert with one additional unit owner, used their majority voting interests to elect themselves as directors. Mr. Walters and Mr. Carabetta received 64 percent of the votes. Dr. Blankenship, receiving 84.69 percent of the votes, became Ocean Gate's third director and "acting" president. After the election of the directors, Mr. Walters expressed his frustration about the liens on his property and the pending foreclosure action involving at that time approximately $50,000 in assessments and interest. In an effort to resolve the conflict, Dr. Blankenship proposed the following as a global concept: Homer Barrow and the newly elected Ocean Gate Phase I Condo Association Board will attempt to satisfy the concerns of the Carabetta's [sic] with regard to correction of deficiencies on their unit. The Carabettas will dismiss all lawsuits and complaints against other unit owners and boards and pay overdue assessments. Richard Walters will contribute $10,000 to the Phase I Association as final settlement of lien/foreclosure action. Unit owners will end foreclosure action against Richard Walters and forgive existing liens against Richard Walters. It is understood that the above action and commitments are interdependent and sequential in the order listed above. Minutes of Meeting of the Unit Owners, October 27, 2001. Mr. Walters initially objected to paying the $10,000. However, John Williams persuaded Mr. Walters to join in the proposed agreement. After Dr. Blankenship's motion regarding the proposed agreement was seconded, the unit owners who were present at the October 27, 2001, meeting verbally approved the proposed agreement. The unit owners never reduced the proposed agreement to writing. They never signed a copy of the minutes containing the proposed agreement. Mr. Klinehoffer was the only unit owner who was not present at the meeting. Mr. Klinehoffer had not given Mr. Weaver or any other unit owner his proxy to vote in favor of a settlement of the pending litigation against Mr. Walters. More importantly, the consideration of assessments and a settlement agreement regarding the foreclosure suit were not included as agenda items in the notice of the unit owners' meeting. On November 17, 2001, Ocean Gate's directors held another meeting. They elected the following officers: Dr. Blankenship, president; Mr. Walters, vice-president; and Mr. Carabetta, secretary/treasurer. During the November 17, 2001, meeting, Mr. Walters wanted to discuss implementing the proposed settlement agreement from the October 27, 2001, unit owners' meeting. In other words, Mr. Walters wanted Ocean Gate to drop the foreclosure suit against him in exchange for $10,000. However, the minority unit owners asserted that Mr. Carabetta had not dropped his lawsuits against Ocean Gate and the other unit owners in the 2.1 building. Mr. Weaver took the position that the proposed settlement agreement was not valid unless it was implemented sequentially beginning with coming to terms with Mr. Carabetta and Mr. Carabetta dropping all of his lawsuits. Mr. McNeely asserted that he would not agree to participate in the global agreement. Mr. Klinehoffer stated that he did not agree to the global agreement and specifically objected to any change in Mr. Walters' assessment responsibilities or liabilities. On December 10, 2001, Mr. Walters and Mr. Carabetta conducted a board of directors meeting. A facsimile transmission had been sent to Dr. Blankenship as notice of the meeting, but he was out of town and had no actual prior knowledge about the meeting or its agenda. The notice for the December 10, 2001, board of directors meeting was posted on Ocean Gate's property 48 hours in advance of the meeting. The agenda attached to the notice made reference to a non-specific item identified as "approval of resolutions" without reference to the subject matter and without mention of assessments or settlement agreements. During the December 10, 2001, board of directors meeting, Mr. Walters proposed a resolution to allow him to pay $10,000 in lieu of his past due assessments, to release the liens on his four units, and to dismiss the foreclosure action. After Mr. Walters proposed the resolution, Mr. Carabetta provided a second and voted to pass the resolution. Mr. Weaver and Mr. McNeely protested that Mr. Walters could not vote due to a conflict of interest and that without Mr. Walters' vote, the board of directors did not have a quorum. Mr. Walters then recused himself. Next Mr. Weaver contacted Dr. Blankenship by telephone. However, on faulty advice from Mr. Carabetta's personal attorney, Mr. Walters and Mr. Carabetta refused to let Dr. Blankenship vote on the resolution. Mr. Walters and Mr. Carabetta also refused to let Ocean Gate's attorney, Roseanne Perrine, participate in the meeting by telephone. Before the meeting adjourned, Mr. Walters declared that the resolution had passed and the matter was closed based on Mr. Carabetta's sole affirmative vote. Next, Mr. Walters proposed that Ocean Gate terminate its contract with May Management. Mr. Walters then introduced a representative of Coastal Realty and Property Management, Inc. (Coastal). Over Mr. Weaver's objections, Mr. Walters and Mr. Carabetta voted to replace May Management with Coastal. The greater weight of the evidence indicates that May Management was a reputable company with no major complaints from the unit owners. In a letter dated December 11, 2001, Ms. Perrine reminded Mr. Walters and Mr. Carabetta that her firm represented Ocean Gate in the foreclosure action against Mr. Walters. She claimed that the resolution passed on December 10, 2001, was invalid. She asserted that she would withdraw as counsel of record if requested to dismiss the lawsuit based on the December 10, 2001, resolution. In a letter dated December 12, 2001, Mr. Carabatta enclosed a copy of a check made payable to Ocean Gate in the amount of $8,062.54. According to the letter, the check represented the amount of Mr. Carabetta's assessments though year 2001. The letter stated that the check had been delivered to Coastal for deposit into an operating account for Ocean Gate. Finally, the letter demanded that May Management stop all foreclosure proceedings against Mr. Carabetta and release the lien of record against his property. On December 12, 2001, Mr. Carabetta authorized Coastal to open new bank accounts for Ocean Gate using his check as an initial deposit. Dr. Blankenship wrote a letter dated December 13, 2001, to Mr. Walters and Mr. Carabetta. In the letter, Mr. Blankenship objected to the lack of notice regarding the December 10, 2001, board of directors meeting and its agenda. Dr. Blankenship's letter complained that he had not been allowed to vote when he was called during the meeting. On or about December 16, 2001, the Circuit Court Judge in Case No.: CA-01-85, in the Seventh Judicial Circuit, in and for St. Johns County, Florida, entered an Order Granting in Part and Denying in Part Defendants Motion to Dismiss. The order states as follows in pertinent part: Third, the Defendants assert the Plaintiff is without standing to assess maintenance fees, file liens, or foreclose any lien because the developer never turned over control of the association to the unit owners pursuant to Article 8.5 of the Declaration of Condominium of Ocean Gate Phase I, A Condominium. Nothing contained in Article 8.5 of the Declaration supports the Defendant's assertion. The Association was given the authority to assess fees in Paragraph 7 of the Declaration, not Article 8.5. Paragraph 7 states: Assessments. To provide the funds necessary for proper operation and maintenance of the Condominium, the Phase I Association has been granted the right to make, levy, and collect Assessments and Special Assessments against all Unit Owners and Units. Fourth, the Defendants' assert the condominium association had no authority to charge condominium fees since the buildings have not yet been completed, nor have certificates of occupancy been issued. According to Ris Investment Group, Inc. v. Dep't of Business and Professional Regulation, 695 So. 2d 357 (Fla. 4th DCA 1997), the question before the Court is whether, in accordance with the Declaration, the term "unit" was intended to encompass raw land and/or condominiums which had not yet been purchased, or just land upon which the condominium units had already been built and/or purchased. A review of the pertinent portion of the Declaration is necessary to answer the foregoing questions. Paragraph 7 of the Declarations states: Assessments. To provide the funds necessary for proper operation and maintenance of the Condominium, the Phase I Association has been granted the right to make, levy, and collect Assessments and Special Assessments against all Unit Owners and Units. Paragraph 3 of the Declaration states: Definitions. ‘Unit’ means a part of the Condominium Property, which is to be subject to exclusive private ownership as defined in the Condominium Act. ‘Condominium Property’ means the parcel of real property described in Exhibit "A" attached hereto, together with all improvements built or to be built thereon, and the easements and rights appurtenant thereto. A review of Exhibit ‘A’ and ‘A-1’ reveals that the term "Condominium Property" refers to the entire condominium complex, not just one unit. Reading the pertinent portions of the Declaration, in toto, it appears as though the parties intended that the Association could assess fees from "units" which encompass any portion of the condominium property, whether improvements have been built or are to be built thereon. Accordingly the Defendant's assertion is without merit and the Motion to Dismiss in this regard is denied. Around the first of January 2002, Mr. Walters tendered a check to Ocean Gate in the amount of $10,000. The front side of Mr. Walter's check, number 652, indicates that it was for association dues in full through December 31, 2001. The backside of the check states, "Endorsement of this instrument constitutes payment in full for association dues on 605, 609, 613, and 617, Mediterranean Way, thru December 31, 2001." There is no evidence that the $10,000 check was deposited to Ocean Gate's bank account. After the December 2001 meeting, the Weavers, McNeelys, Klinehoffers, and Blankenships sent numerous letters by certified mail to Mr. Walters and Mr. Carabetta. The letters protested the manner in which Mr. Walters and Mr. Carabetta had conducted the December 10, 2001, and subsequent meetings, demanding that they remove themselves as directors, and inquiring about many other matters relating to the operation and management of Ocean Gate. Many of the letters specifically requested Mr. Walters and Mr. Carabetta to respond in writing within 30 days as required by Section 718.112(2)(a)2., Florida Statutes. Mr. Carabetta responded to one of the complaint letters. All subsequent complaint letters were referred to Alan Scott, Esquire. Mr. Scott did not provide a written response to the letters unless specifically directed to do so by Mr. Walters and/or Mr. Carabetta. Mr. Scott responded to one complaint letter. On or about January 24, 2002, Mr. Scott, writing on behalf of Mr. Walters and Mr. Carabetta, sent a letter to Dr. Blankenship and May Management. The letter stated that a majority of Ocean Gate's voting interests (Mr. Walters and Mr. Carabetta) had entered into written agreements to remove Dr. Blankenship from his position as a director. On January 29, 2002, Mr. Carabetta filed a Notice of Voluntary Dismissal without Prejudice in one of his lawsuits naming Ocean Gate as defendant. That case was Case No. CA01-858 in the Circuit Court, Seventh Judicial Circuit, in and for St. Johns County, Florida. Competent evidence indicates the Mr. Carabetta dismissed all of his lawsuits against his neighbors after the December 2001 meeting. Ocean Gate's directors issued a notice dated February 4, 2002. The notice indicated that the directors would meet on February 7, 2002. The agenda for that meeting included the following: (a) call to order; (b) roll call; (c) appointment of new director; (d) fill officer vacancies; (e) consider discharge of association attorneys and appointment of new association legal counsel; (f) consider discharge of May Management and appointment of Coastal; and (g) consider change of association mailing address and resident agent. During the directors' meeting on February 7, 2002, Mr. Walters and Mr. Carabetta appointed Mr. Barrow as a director. The directors then elected Mr. Walters as president, Mr. Barrow as vice-president, with Mr. Carabetta retaining his office as secretary/treasurer. Next, the directors voted to make the following changes: (a) to fire May Management and hire Coastal as Ocean Gate's management company; (b) to discharge Ms. Perrine and retain Mr. Scott as Ocean Gate's attorney; and (c) to update the corporate report data showing Mr. Scott as registered agent. In a letter dated February 8, 2002, Mr. Klinehoffer, Mr. Weaver, Mr. McNeely, and Dr. Blankenship advised Mr. Walters and Mr. Carabetta that the February 7, 2002, directors' meeting had not been properly noticed. The letter alleged that the notice had not been posted on the property 48 hours in advance of the meeting and that none of the minority unit owners had received notice by fax, phone, or letter. By letter dated March 1, 2002, Mr. Walters, Mr. Carabetta and Mr. Barrows advised Ms. Perrine's law firm that her services as counsel for Ocean Gate were terminated. The letter directed Mr. Perrine to turn over her foreclosure file to Mr. Scott, who would replace her as counsel for Ocean Gate. By letter dated March 25, 2002, the minority unit owners objected to the termination of Ms. Perrine as Ocean Gate's attorney. During an April 10, 2002, directors' meeting, Mr. Carabetta and Mr. Barrows voted to accept Mr. Walters' payment of $10,000 in satisfaction of his past due assessments, penalties and interest. Thereafter, Mr. Walters tendered his check for $10,000 on the same day that Ocean Gate's new attorney, Mr. Scott, dismissed the foreclosure suit against Mr. Walters. In a letter dated April 17, 2002, Mr. Weaver protested the actions taken by Mr. Walters, Mr. Carabetta, and Mr. Barrows during the April 10, 2002, directors' meeting. Additionally, the minority unit owners continued to send Mr. Walters, Mr. Carabetta, and Mr. Barrow letters complaining about various problems in the management of Ocean Gate and requesting a response within 30 days. The minority unit owners did not receive any responses to these letters. In a letter dated April 17, 2002, Petitioner's investigator, Eurkie McLemore, advised Mr. Walters about the complaints filed against him and Mr. Carabetta by the minority unit owners. Ms. McLemore requested a response to the allegations by April 30, 2002. The letter contained the following warning: Please note that if you as a MEMBER OF THE BOARD OF DIRECTORS AND OFFICER OF THE ASSOCIATION fail to respond to this letter, or if another complaint is received, the Division will pursue an enforcement resolution, which may result in civil penalties of up to $5,000 per violation. Therefore, you are urged to respond appropriately to this warning letter and to use your best efforts to comply with sections 718.111(1)(a), 718.116(9)(a), 718.112(2)(c), 718.112(2)(a)2., Florida Statutes, now and in the future. By letter dated April 30, 2002, Ocean Gate's attorney, Mr. Scott, responded to Ms. McLemore's letter. According to the letter, Mr. Walters and Mr. Carabetta denied the allegations and did not indicate that any corrective action would be taken. In June 2002 Ocean Gate's directors authorized Mr. Scott, as Ocean Gate's counsel, to file a voluntary dismissal with prejudice in the foreclosure suit against Mr. Walters. Mr. Walters sold his units at an on-site auction in July 2002. Mr. Walters executed warranty deeds for the three successful bidders in August 2002. As of January 31, 2002, Mr. Walters owed Ocean Gate past-due assessments plus interest in the amount of $62,943.56. The accrued interest on that amount as of June 16, 2003, was $15,767.36. Mr. Walters paid his quarterly assessments at the end of March and June 2002. He also paid Ocean Gate $10,000 when the foreclosure suit was dismissed in June 2002. Therefore, the total amount that Mr. Walters owed Ocean Gate as of June 16, 2003, was $68,710.92 During the hearing, Mr. Walters presented evidence that he was entitled to an offset for his expense in maintaining and repairing the 2.2 building. However, the evidence presented is insufficient to determine whether Mr. Walters' expenses were related to maintenance and repair of common elements. The greater weight of the evidence indicates that Mr. Walters is not entitled to an offset.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED: That Petitioner issue a final order imposing a civil penalty on Respondents in the amount of $10,000 each and requiring Mr. Walters to make restitution to Ocean Gate in the amount of $68,710.92 plus interest on this amount from June 16, 2003, until the date payment is made. DONE AND ENTERED this 8th day of August, 2003, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of August, 2003. COPIES FURNISHED: John B. Bamberg, Esquire Post Office Box 2210 St. Augustine, Florida 32085 Joseph S. Garwood, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Ross Fleetwood, Division Director Division of Florida Land Sales, Condominiums, and Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0892 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
