Document Sample
					                             STATE OF FLORIDA


Kimberly Rodstein,


v.                                                         Arb. Case No. 02-4250

Rimini Beach Condominium
Association, Inc.,


                         SECOND SUMMARY FINAL ORDER

       Comes now, the undersigned arbitrator, and enters this second summary final

order as follows:

       The arbitrator entered a summary final order in this case on April 12, 2002,

finding that the developer, entitled under the statute and documents to one seat on

the board in this post-transition association, could not properly run for a second seat

on the board by deeding a unit to his wife who would then become a candidate for

one of two seats to be filled by unit owners other than the developer. The arbitrator

ruled that to permit this to occur would allow the developer to control the board after

transition from developer control had already occurred, which would defeat the intent

of s. 718.301, F.S.

       After issuance of the summary final order, the association filed a motion for

rehearing, arguing that since the developer at this point no longer owns or offers any

units in the condominium for sale or lease, the developer should be required to

relinquish its one seat on the board in mid-term. This issue was not addressed in the

initial final order as the parties had agreed at that time that the developer

representative on the board would be permitted to stay on the board. The arbitrator

agreed to hear this additional issue and permitted the parties to file arguments on this

issue, the last of which was filed on May 28, 2002.

         The arbitrator found in the prior final order that, at the time of the December

2001 election, the developer was entitled to elect or appoint one representative to

the board of the association. At pertinent times leading up to the last election, the

developer still owned at least 5% of the units in the condominium. Subsequent to

the election, the developer sold all its remaining units in the condominium and

currently neither owns any units nor offers any units in the condominium for sale or


         Respondent argues that pursuant to article III.A.3. of the declaration, directors

shall hold office until the next annual meeting, and that consequently the developer

representative cannot be removed in mid-term. Respondent also argues that there is

no provision in the statute or documents that would require the developer to

relinquish its seat on the board prior to the next scheduled election.       Respondent

further appears to argues that the various positions of the association are inherently

inconsistent in this case; viz., that it is inconsistent for the association to take the

position on the one hand that the developer’s wife, a unit owner, should be counted

as a developer representative for purposes of preventing her from running for a unit

owner board position, while at the same time arguing now that since the developer

owns no units, it must relinquish its minority position on the board.

        The association argues with some persuasive force that the intent of the

statute in providing for minority developer representation is to offer to the developer,

who still has an ownership stake in the condominium, some voice in the operation of

the association and some way to protect its investment. The association also argues

that this particular developer is odious and detrimental to the well-being of the

owners. It is alleged that the developer has caused the filing of 20 lawsuits in this

condominium containing 55 units, has not paid capital contributions, blocks the

association’s efforts to secure loans, and has committed other transgressions.

        Each party has made compelling arguments in this case.                     Undoubtedly, the

intent of s. 718.301, F.S., in permitting the post-transition developer minority

representation on the board where the developer holds a certain number of units for

sale, was intended to give the developer a continuing voice in the operation of the

association.1 Where the developer no longer owns units in the condominium, the

developer has no apparent financial interest2 to protect.                 On the other hand, the

statute and documents do not specifically require that once the developer no longer

owns the minimum number of units in the condominium, the developer representative

must step off the board at that instant that title transfers to the last unit. Section

718.301(1), F.S. simply states that the developer “is entitled to elect” at least one

  c.f., Bishop Associates Ltd. v. Belkin, 521 So. 2d 158 (Fla. 1st DCA 1988).
  Respondent has not indicated why the developer desires to retain its seat on the board and has not
identified what stake, if any, the developer continues to have in the project, although if in fact there
are a number of lawsuits pending against the developer or related entities, it may serve the litigation
interests of the developer to continue to attend board meetings.
member of the board so long as the requisite number of units are held for sale. By

way of contrast, the same statute does provide with regard to turnover of the

association from developer control, that once turnover is triggered, for example by

the developer having sold a stated percentage of units in the condominium, the

developer-controlled board must affirmatively call and hold a meeting within the time

parameters set forth in the statute. In this respect, the statute is seen as deliberately

interrupting the regular terms of the developer appointed board majority to require the

scheduling and holding of the turnover election.                There is no similar provision

contained     in   the   statute    with    regard    to   post-turnover     developer     minority

representation. This is somewhat suggestive of legislative intent but is not found to

be dispositive of the issue presented.

       The arbitrator does not agree that the provision in the documents to the effect

that a director shall stay in office until his successor is elected is applicable. This

provision codifies the holdover doctrine3 and does not address this situation where,

quite arguably, a seated developer actually becomes ineligible to serve as a director in

the course of his term as director. Along these lines, one provision of the documents

that does appear applicable is article III of the bylaws stating that directors must be

members of the association.4 Membership in the association terminates upon the

transfer of the unit under article IV(B) of the bylaws. Therefore, it is inescapable that

  Review, Moore v. Board of Commissioners of Leon County, 118 So. 476 (Fla. 1928), where the
Court analogized a municipal election to a corporate election and applied the holdover doctrine such
that an officer or director continues to hold office until his successor is qualified and elected.
  The exception provided in the bylaws that permits developer-appointed persons to serve as
developer representatives on the board does not purport to relieve the developer of the ownership
requirement but merely permits a developer entity, typically a corporation, to designate an employee,
officer, or director of the developer corporation to serve on the association board.
the developer, upon the sale of the last unit, relinquished its membership, and thus its

right to occupy a seat on the board. Once a person looses his eligibility to sit on the

board, the member is no longer entitled to sit on the board, and cannot be considered

a board member.

      A final issue is the effect, if any, of this final order on the first final order

issued in this case prohibiting the wife of the developer from running for the board as

a unit owner representative. The rationale behind the prior holding was that since the

developer, at the time of the past election, was entitled to elect or designate one

position on the three-member board, allowing the developer’s wife to run for a unit

owner entitlement after turnover might permit the developer to thwart the intent of

the turnover provisions of the statute contained in s. 718.301, F.S. The essence of

the prior order was a recognition that after turnover, unit owners are entitled to

control their board, and developers are not entitled to vote as unit owners. Where,

as here, the developer is no longer entitled to fill one position on the board, the

association is under no apparent danger of coming under developer control, but the

quintessential policy behind the prior order, that of granting the owners their

entitlement to run their own affairs, remains intact and valid. Accordingly, the prior

order shall remain in force and effect.

      WHEREFORE, it is concluded that the developer is no longer eligible to sit on

the board, and that the board seat currently occupied by the developer representative

is vacant, and may be filled with a unit owner representative by the remaining board

members or otherwise as provided by the documents or applicable law.

      DONE AND ORDERED this 18th day of June, 2002, at Tallahassee, Leon

County, Florida.

                                      Karl M. Scheuerman, Arbitrator
                                      Department of Business and
                                       Professional Regulation
                                      Arbitration Section
                                      Northwood Centre
                                      1940 North Monroe Street
                                      Tallahassee, Florida 32399-1029

                               Certificate of Service

      I hereby certify that a true and correct copy of the foregoing final order has

been sent by U.S. Mail to the following persons on this 18th day of June, 2002:

Richard K. Stanton, Esquire
Brickell Bayview Centre
80 S.W. 8 Street, Ste. 2804
Miami, Florida 33130

Dennis J. Eisinger, Esquire
4000 Hollywood Blvd.
Suite 265-South
Hollywood, Florida 33021

Jorge L. Piedra, Esquire
The Alhambra West
95 Merrick Way; Ste. 514
Coral Gables, Florida 33134

                                             Karl M. Scheuerman, Arbitrator

                                  Right to Appeal

       As provided by s. 718.1255, F.S., this final order may be appealed by filing a
complaint for trial de novo with a court of competent jurisdiction in the circuit in
which the condominium is located, within 30 days of the entry and mailing of this
final order. This order does not constitute final agency action and is not appealable
to the district courts of appeal. If this final order is not timely appealed, it will
become binding on the parties and may be enforced in the courts.


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