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Insider Real Estate and Community Association Law Update July 2020

FLORIDA SUPREME COURT RULES PANDEMIC CONSTITUTES EMERGENCY

Abramson v. DeSantis, SC20-646, 2020 WL 3464376 (Fla. June 25, 2020)

In a suit challenging the validity of executive orders issued by  Governor Ron Desantis under the State Emergency Management Act, a unanimous Florida Supreme Court ruled that the pandemic is a “natural emergency” and that the Governor has the authority to issue executive orders to address it.  Given the multitude of orders that have been issued on an “emergency” basis, including those pertaining to condominium associations, this decision will likely be a very important one moving forward.  Associations and managers confronted with issues regarding emergency issues and the pandemic should consult with knowledgeable counsel.

“DEADBEAT LIST” RESULTS IN CLASS ACTION AGAINST ASSOCIATION  

Williams v. Salt Springs Resort Ass’n, Inc., 5D18-3913, 2020 WL 3116330, at *4 (Fla. 5th DCA June 12, 2020)

Many associations have at one time or another posted lists of delinquent unit owners in an effort to shame them into paying their monetary obligations.  In light of a recent en banc decision of Florida’s Fifth District Court of Appeal, such lists should not be published as doing so will almost certainly lead to suit brought against the association and any management company involved.

In Williams, the association through its management company posted a list of over one hundred unit owners who owed the association money, along with the amounts owed. Ms. Williams on behalf of herself and the other unit owners on the list sued the association and the management company for violation of the Florida Consumer Collection Practices Act.  The trial court dismissed the complaint based on a 1997 decision of the Fifth District which held that assessments did not qualify as consumer debt.

Ms. Williams appealed the dismissal of her complaint.  On appeal, the Fifth District re-examined its earlier decision and decided to recede from it, ruling that an ongoing obligation to pay assessment is  “consumer debt” under the Consumer Collection Practices Act subjecting both the association and management company to liability.  This decision illustrates the importance of consulting with counsel regarding collections practices which if improperly undertaken can lead to liability for associations and management alike.

NO SETTLEMENT WITHOUT SIGNED AGREEMENT

DeJour v. Coral Springs KGB, Inc., 293 So. 3d 502(Fla. 4th DCA 2020)

A former employee sued his former employer for breach of contract and the attorneys for the respective sent emails to one another regarding settlement.  The attorney for the former employer sent the former employee’s attorney a settlement agreement which he had signed, along with a written release and a check for the settlement proceeds.  The former employee did not sign the agreement nor return the release.

The case remained pending and the former employer sought enforcement of this “settlement agreement”.  The trial court found that there was an enforceable settlement and ordered its enforcement.  On appeal, Florida’s Fourth District held that in fact there was no enforceable settlement because there was no meeting of the minds and the former employer failed to establish that the former employee’s attorney had authority to settle the case on his client’s behalf.

This case illustrates, among other things, the importance of clear lines of communication between attorney and client, especially when faced with critical issues such as settlement.

FACE-TO-FACE MEETING NOT REQUIRED BEFORE FORECLOSURE

Bank of Am., N.A. v. Jones, 45 Fla. L. Weekly D699 (Fla. 4th DCA Mar. 25, 2020)

The Joneses obtained a loan backed by the Federal Housing Administration which required that the lender’s right to foreclose the mortgage was conditioned upon a face-to-face interview with the borrowers or a reasonable effort to arrange such a meeting.  However, after they defaulted  but prior to any foreclosure being filed, the borrowers sent Bank of America a cease and desist letter demanding the Bank stop all communication with them and threating the Bank with violations of the Fair Debt Collection Practices Act.

The Fourth District Court of Appeal held that Bank of America could proceed with the foreclosure even though it did not conduct the otherwise required face-to-face interview.  The Court interpreted the letter as indicia of an unwillingness to commit to such a meeting, thereby excusing the Bank from the interview requirement, paving the way for it to foreclose.

CONDOMINIUM ASSOCIATION PURSUES CLASS ACTION ON BEHALF OF UNIT OWNERS                                                                                                                                                

Allied Tube & Conduit Corp. v. Latitude on River Condo. Ass’n, Inc., 3D19-2044, 2020 WL 3444902, at *1 (Fla. 3d DCA June 24, 2020)

Florida’s Condominium Act and Florida Rule of Civil Procedure 1.221 expressly authorize condominium associations to institute, maintain, settle, or appeal actions or hearings in its name on behalf of all association members concerning matters of common interest to the members.  In Allied Tube a condominium association brought suit on behalf of its members against nine defendants for damages resulting from the removal and replacement of a defective fire-sprinkler system.  The defendants challenged the trial judge’s certification of the class.

Florida’s Third District Court of Appeal reviewed the case and held the trial judge acted correctly in certifying the unit owners as a class.  The Court explained that the common interest provision in the rule has been interpreted to permit a class action by an association for a construction defect located physically within a unit, rather than on common elements, provided the defect is prevalent throughout the building, as it was in the case.

Class actions are a very powerful tool that associations can exercise on behalf of their unit owners in appropriate situations.  Affected associations should confer with experienced counsel, especially when construction defect claims are involved.

UNIT OWNER WAIVES RIGHT TO DEMAND ARBITRATION

CWELT-2008 Series 1045 LLC v. Park Gardens Ass’n, Inc., 45 Fla. L. Weekly D1001 (Fla. 3d DCA Apr. 29, 2020)

Florida Statute § 718.1255 provides for mandatory non-binding arbitration of disputes between associations and unit owners, but as demonstrated by this recent decision may be waived.  A condominium unit owner filed an action in state circuit court against the condominium association for breach of declaration of condominium and for declaration that amendment to declaration restricting leasing of units was void. The unit owner and the association litigated the claims for 29 months, after which the association filed a counterclaim alleging breach of the association’s declaration and seeking declaratory relief.

The unit owner moved to dismiss the counterclaim on the basis that the association had failed to proceed with arbitration pursuant to § 718.1255.  Because the dispute raised by the unit owner which it prosecuted for nearly three years and the counterclaim raised by the association related to the very same subject matter, the Court ruled that the association was not required to pursue arbitration and was free to pursue its counterclaim in the pending circuit court action.

Jed Frankel is a shareholder with Eisinger Law. He is a Florida Certified Circuit Mediator and is Board Certified in Condominium and Planned Development Law, as well as Civil Trial Law, by The Florida Bar. He focuses his practice on community association law, litigation and dispute resolution. He can be reached at jfrankel@eisingerlaw.com or 954-894-8000 x 301.

Eisinger Law is a full-service Florida law firm focusing on community association law, real estate law, developer representation, commercial litigation and insurance law. Visit eisingerlaw.com