Tuesday, November 15, 2005
The Directors Cut/ Return of the Jenn-i
Howdy neighbor,
If you have enjoyed the return of the Jenn-i parts I - IV then you might want to read the full document. The Jenn-i is Jennifer Wintrode, the attorney for the plaintiff(s).
IN THE CIRCUIT COURT IN AND FOR WALTON COUNTY, FLORIDA
JACK ARONSON, NICKI ARONSON,
LAWRENCE BURLEIGH, CHERYL FOSS,
WILLIAM FOSS, DOROTHY GRIGSBY,
JOHN HOGAN, NANCY HOGAN,
JEFFREY HUGHES, STACEY HUGHES,
SHAWN O’NEAL, CRAIG PATTERSON,
Plaintiff(s), CASE NO: 050A000437
v.
THE RETREAT OF SOUTH WALTON COUNTY
HOMEOWNERS ASSOCIATION, INC.
Defendant.
__________________________________________/
RESPONSE TO DEFENDANT’S MOTION TO DISMISS
Plaintiffs JACK ARONSON, NICKI ARONSON, LAWRENCE BURLEIGH, CHERYL FOSS, WILLIAM FOSS, DOROTHY GRIGSBY, JOHN HOGAN, NANCY HOGAN, JEFFREY HUGHES, STACEY HUGHES, SHAWN O’NEAL and CRAIG PATTERSON (“HOMEOWNERS”), by and their undersigned counsel, hereby request that this Court deny Defendant, THE RETREAT OF SOUTH WALTON COUNTY HOMEOWNERS ASSOCIATION, INC. (“ASSOCIATION”)’s Motion to Dismiss, and state as follows:
I. THE HOMEOWNER’S INTERPRETATION OF ARTICLE VIII IS SUPPORTED BY A THOROUGH READING OF THE ASSOCIATION’S GOVERNING DOCUMENTS
Chapter 86 of the Florida Statutes gives circuit and county courts jurisdiction to declare “the rights, status, and other equitable and legal relations” between parties. In particular, F.S. 86.021 gives “any person claiming to be interested or who may be in doubt about his or her rights under…an instrument in writing…” the power to ask a court for a declaratory ruling to determine “any question of construction or validity arising under...the instrument in writing.” In accordance with this chapter of Florida Statutes, HOMEOWNERS have asked for this court’s construction of their homeowners association governing documents.
Article VIII of the ASSOCIATION’s Declaration provides for amendments, “by approval at a meeting of Owners holding not less than 66 2/3rds vote of the entire membership in the Association (as opposed to only those Members represented at a meeting of the Association…”
The ASSOCIATION argues that Count I fails to state a cause of action because the language of this provision of the Declaration is clear on its face. The ASSOCIATION has interpreted this language to require a vote by a majority of members holding two-thirds Member voting interests. An honest examination of the language demonstrates that it is capable of another interpretation – that being that an amendment requires an affirmative vote of two-thirds of all Member voting interests.
The HOMEOWNER’s interpretation of Article VIII is supported by a thorough reading of the ASSOCIATION’S governing documents. According to Section 12.2(a) of the ASSOCIATION’s Bylaws, an amendment to the Bylaws (as opposed to the Declaration) must be approved:
by not less than a majority of the votes of all Members of the Association (as opposed to only those represented at a meeting at which a quorum has been attained) and by not less than 66-2/3rds of the entire Board of Directors….
If the ASSOCIATION’s interpretation of the language for amending the Declaration is accepted, theoretically it could take more votes to amend the Bylaws than the Declaration. For example, according to the ASSOCIATION, it would take 31 votes at a meeting of two-thirds of the Members (i.e. 60) to amend the Declaration and 46 votes at the same meeting (a majority of all Members) to amend the Bylaws. This makes no sense because the Declaration is controlling over the Bylaws as a governing document. This is stated in Article XIII, Section 7 of the Declaration, which says, “This Declaration shall take precedence over conflicting provisions in the Articles of Incorporation and Bylaws…”
It is illogical to require a lesser vote requirement to amend the Declaration than to amend the Bylaws. However, if the HOMEOWNERS are correct in their interpretation, there is no conflict because the vote requirements are in keeping with the relative importance of each governing document.
Not only does an examination of the governing documents support the HOMEOWNERS’ interpretation, it is common for homeowners associations, in general, to require a two-thirds vote of all membership interests in order to amend the Declaration. One reason for such a high percentage could be because of the importance of the governing documents in providing notice to homeowners of their rights and responsibilities. Requiring a two-thirds membership vote is most likely derived from Florida Statute 720.306(1)(b), which states: “Unless otherwise provided in the governing documents or required by law…any governing document of an association may be amended by the affirmative vote of two-thirds of the voting interests of the association.”
The purpose of this statute is to provide a default in case governing documents fail to specify what percentage requirement is needed for amendment of the documents. The HOMEOWNERS acknowledge that this statute does allow homeowners associations to specify a lesser percentage vote requirement. However, the question presented to this court is whether providing a less than two-thirds vote requirement of all Members is the true intent of the ASSOCIATION’s Declaration. Given the language of the Declaration itself, and an overall analysis of the ASSOCATION’s governing documents and the statutes governing this issue, it is logical to interpret the Declaration as requiring an affirmative vote of two-thirds of all the ASSOCIATION’s Member interests.
The HOMEOWNERS have raised a legitimate question as to the correct interpretation of the ASSOCIATION’s governing documents and this question is properly before this court in a request for declaratory judgment. Therefore, the ASSOCATION’s Motion to Dismiss Count I should be denied.
THE HOMEOWNERS HAVE RAISED LEGITIMATE QUESTIONS ABOUT INTERPRETATION OF THEIR GOVERNING DOCUMENTS AND ABOUT WHETHER THE PROPOSED ASSESSMENT VIOLATES F.S. 720.308
The ASSOCIATION relies on F.S. 720.308 to argue that the disputed assessment is legal on its face and that Count II should be dismissed: 1) as a matter of law; and 2) because it fails to state a cause of action. The HOMEOWNERS acknowledge the statute cited by Defendant, which provides that special assessments “must be in the member’s proportional share of expenses” and that shares may vary by member based on certain factors. This statute goes to the heart of the HOMEOWNERS challenge to the disputed assessment.
The HOMEOWNERS have requested, but have never received, a substantive analysis to support the ASSOCIATION’s supposed calculation of each parcel’s proportionate share of the disputed assessment. This assessment derives from adoption of an amendment to the Declaration, which states:
Lots 1 through 24, including but not limited to the area of the Common Recreation Use Easement, and the Common Area, may be made a part of a remediation plan and subject to a remediation plan to the extent necessary to achieve remediation of beach and dune areas. It is recognized that beach and dune areas benefit all Owners in the Retreat.
Upon approval of the plan by the Board of Directors, and a duly approved assessment, the Association shall enter into such agreements as are necessary to achieve remediation of the beach and dune areas, including those portions of Lots 1 through 24 that are a part of the beach and dune areas, whether within the Common Recreation Use Easement or not. The Association must put the plan out for bid and choose the proposal that best addresses the remediation…
Assessments for the remediation of the beach and dune areas shall be as for Capital Improvements pursuant to Article V, Section 4 of the Declaration, and shall be levied by the Association as assessments only upon approval of a majority of the Board of Directors of the Association and upon approval by two-thirds (2/3) favorable vote of Members of the Association voting at a meeting or by ballot as may be provided in the By-laws of the Association.
Assessments shall be levied based on a four to one ratio (4:1) with three zones…
This amendment allows the ASSOCIATION to assess all Members and use the assessment to perform dune remediation on both private property and Common Area. The first problem with this amendment is that it is placed in an Article of the Declaration that deals with maintenance of private lots. The amendment therefore, appears to conflict with another section of the Declaration that specifies that Capital Improvements and assessments are for work performed on Common Areas. The ASSOCIATION responds to this conflict by arguing that it is economical and prudent to combine all planned dune remediation. This may be a fair argument but the question presented to this court is whether the ASSOCIATION properly amended its Declaration to allow assessments to be used for improvements to private property.
The next question presented to this court is whether the ASSOCIATION has fairly allocated each Member’s proportionate share in accordance with F.S. 720.308. The ASSOCIATION has repeatedly assured the HOMEOWNERS that Lots 1-24 will pay for all of the work performed on their private property and that there will be no “common” monies used to improve private property. However, when the HOMEOWNERS requested an analysis from the ASSOCIATION as to how it quantified work proposed on private versus common land, the ASSOCIATION responded by stating that this was too hard to calculate. Therefore, it appears that the ASSOCIATION in effect “guessed” as to an equitable formula by which to calculate each member’s proportional share. The HOMEOWNERS suggest that a proportionate analysis could be performed, and that it could be based an analysis of the plat, land descriptions and by a survey of the contemplated work area.
The HOMEOWNERS are not arguing that dunes aren’t important or that they are unwilling to pay a proportionate share of dune remediation on and in front of Common Area. However, it is questionable at this point whether work on Common Area can even be performed. The ASSOCIATION has been advised by its own engineer that it may not be able to obtain permits for any of the remediation. Furthermore, when the ASSOCIATON’s contractor applied to Walton County for permits for dune remediation, the County only granted permits for work on private Lots where structures were threatened. This raises the question of whether remediation on Common Areas would ever be permitted and whether the true purpose of the proposed remediation is motivated by a desire to protect structures on private Lots.
The HOMEOWNERS have raised legitimate questions about interpretation of their governing documents and about whether the proposed assessment violates F.S. 720.308. These questions are properly before this Court in the HOMEOWNERS request for a declaratory ruling. Therefore, the ASSOCIATION’s Motion to Dismiss Count II should be denied.
THE HOMEOWNERS WILL DISMISS COUNT III IF THE ASSOCITION HOLDS A PROPER VOTE TO APPROVE THE LOAN
It appears that in response to the HOMEOWNERS Complaint, the ASSOCIATION has decided to hold the vote required by the governing documents in order for the Board of Directors to obtain a loan. Although the ASSOCIATION may argue that it intended all along to obtain the required Member approval, this was not apparent from the minutes of the Board of Directors meeting on August 22, 2005. The minutes merely state that the Board of Directors authorized the ASSOCIATION’S management agency to secure a loan for the ASSOCIATION in the amount of $800,000.00, for use prior to collection of the special assessment – there was no mention of holding any Member vote. See Minutes of 8/22/05 Board of Directors meeting attached to Plaintiff’s Complaint as Exhibit C.
The intended vote will likely take place before this Motion to Dismiss is heard by the court. If the vote is properly taken in accordance with the governing documents, the HOMEOWNERS will dismiss Count III.
THE ONLY THING FRIVILOUS ABOUT THIS CASE IS THE ASSOCIATION’S REQUEST FOR SANCTIONS
In its Motion to Dismiss, the ASSOCIATION argues that it is entitled to an award of attorney’s fees in accordance with F.S. 57.105, or alternatively F.S. 720.305, because the HOMEOWNERS have filed a “baseless and frivolous claim.” The HOMEOWNERS agree that the Condominium Act provides attorney’s fees to the prevailing party in this type of litigation but such an award in accordance with 720.305 is premature. Furthermore, the HOMEOWNERS have clearly demonstrated in both their Complaint and this Response that their claims are, at the very least, legitimate.
F.S. 57.105 allows for an award of sanctions if a claim presented to the court is either not supported by the material facts necessary to establish the claim or would not be supported by the law. The parties in this case have a fair dispute as to interpretation of the ASSOCIATION’s governing documents and Florida statute. It is very difficult to meet the test for sanctions under 57.105. Attorney’s fees will not be awarded, “unless the court finds a total or absolute lack of a justiciable issue, which is tantamount to a finding that the action is frivolous…and so clearly devoid of merit both on the facts and law as to be completely untenable.” Muckenfuss v. Deltona Corp., 508 So.2d 340, 341 (Fla.1987).
Not only is the ASSOCIATION’s call for sanctions unwarranted, it smacks of sour grapes.
For the reasons stated herein, the HOMEOWNERS respectfully request that this court deny Defendant’s Motion to Dismiss and its request for sanctions.
____________________________________
JENNIFER A. WINTRODE
Florida Bar No: 0728810
Law Offices of Lamar A. Conerly, P.A.
P.O. Box 6944
Destin, FL 32550
(850) 837-5118
(850) 837-5187 - facsimile
Attorney for Plaintiffs
I HEREBY CERTIFY that a copy of the foregoing has been served on George R. Mead, II, 220 W. Garden St., 9th Floor, Pensacola, FL 32501 by first class mail this ___day of November, 2005.
____________________________________
JENNIFER A. WINTRODE
PAGE
PAGE 1
If you have enjoyed the return of the Jenn-i parts I - IV then you might want to read the full document. The Jenn-i is Jennifer Wintrode, the attorney for the plaintiff(s).
IN THE CIRCUIT COURT IN AND FOR WALTON COUNTY, FLORIDA
JACK ARONSON, NICKI ARONSON,
LAWRENCE BURLEIGH, CHERYL FOSS,
WILLIAM FOSS, DOROTHY GRIGSBY,
JOHN HOGAN, NANCY HOGAN,
JEFFREY HUGHES, STACEY HUGHES,
SHAWN O’NEAL, CRAIG PATTERSON,
Plaintiff(s), CASE NO: 050A000437
v.
THE RETREAT OF SOUTH WALTON COUNTY
HOMEOWNERS ASSOCIATION, INC.
Defendant.
__________________________________________/
RESPONSE TO DEFENDANT’S MOTION TO DISMISS
Plaintiffs JACK ARONSON, NICKI ARONSON, LAWRENCE BURLEIGH, CHERYL FOSS, WILLIAM FOSS, DOROTHY GRIGSBY, JOHN HOGAN, NANCY HOGAN, JEFFREY HUGHES, STACEY HUGHES, SHAWN O’NEAL and CRAIG PATTERSON (“HOMEOWNERS”), by and their undersigned counsel, hereby request that this Court deny Defendant, THE RETREAT OF SOUTH WALTON COUNTY HOMEOWNERS ASSOCIATION, INC. (“ASSOCIATION”)’s Motion to Dismiss, and state as follows:
I. THE HOMEOWNER’S INTERPRETATION OF ARTICLE VIII IS SUPPORTED BY A THOROUGH READING OF THE ASSOCIATION’S GOVERNING DOCUMENTS
Chapter 86 of the Florida Statutes gives circuit and county courts jurisdiction to declare “the rights, status, and other equitable and legal relations” between parties. In particular, F.S. 86.021 gives “any person claiming to be interested or who may be in doubt about his or her rights under…an instrument in writing…” the power to ask a court for a declaratory ruling to determine “any question of construction or validity arising under...the instrument in writing.” In accordance with this chapter of Florida Statutes, HOMEOWNERS have asked for this court’s construction of their homeowners association governing documents.
Article VIII of the ASSOCIATION’s Declaration provides for amendments, “by approval at a meeting of Owners holding not less than 66 2/3rds vote of the entire membership in the Association (as opposed to only those Members represented at a meeting of the Association…”
The ASSOCIATION argues that Count I fails to state a cause of action because the language of this provision of the Declaration is clear on its face. The ASSOCIATION has interpreted this language to require a vote by a majority of members holding two-thirds Member voting interests. An honest examination of the language demonstrates that it is capable of another interpretation – that being that an amendment requires an affirmative vote of two-thirds of all Member voting interests.
The HOMEOWNER’s interpretation of Article VIII is supported by a thorough reading of the ASSOCIATION’S governing documents. According to Section 12.2(a) of the ASSOCIATION’s Bylaws, an amendment to the Bylaws (as opposed to the Declaration) must be approved:
by not less than a majority of the votes of all Members of the Association (as opposed to only those represented at a meeting at which a quorum has been attained) and by not less than 66-2/3rds of the entire Board of Directors….
If the ASSOCIATION’s interpretation of the language for amending the Declaration is accepted, theoretically it could take more votes to amend the Bylaws than the Declaration. For example, according to the ASSOCIATION, it would take 31 votes at a meeting of two-thirds of the Members (i.e. 60) to amend the Declaration and 46 votes at the same meeting (a majority of all Members) to amend the Bylaws. This makes no sense because the Declaration is controlling over the Bylaws as a governing document. This is stated in Article XIII, Section 7 of the Declaration, which says, “This Declaration shall take precedence over conflicting provisions in the Articles of Incorporation and Bylaws…”
It is illogical to require a lesser vote requirement to amend the Declaration than to amend the Bylaws. However, if the HOMEOWNERS are correct in their interpretation, there is no conflict because the vote requirements are in keeping with the relative importance of each governing document.
Not only does an examination of the governing documents support the HOMEOWNERS’ interpretation, it is common for homeowners associations, in general, to require a two-thirds vote of all membership interests in order to amend the Declaration. One reason for such a high percentage could be because of the importance of the governing documents in providing notice to homeowners of their rights and responsibilities. Requiring a two-thirds membership vote is most likely derived from Florida Statute 720.306(1)(b), which states: “Unless otherwise provided in the governing documents or required by law…any governing document of an association may be amended by the affirmative vote of two-thirds of the voting interests of the association.”
The purpose of this statute is to provide a default in case governing documents fail to specify what percentage requirement is needed for amendment of the documents. The HOMEOWNERS acknowledge that this statute does allow homeowners associations to specify a lesser percentage vote requirement. However, the question presented to this court is whether providing a less than two-thirds vote requirement of all Members is the true intent of the ASSOCIATION’s Declaration. Given the language of the Declaration itself, and an overall analysis of the ASSOCATION’s governing documents and the statutes governing this issue, it is logical to interpret the Declaration as requiring an affirmative vote of two-thirds of all the ASSOCIATION’s Member interests.
The HOMEOWNERS have raised a legitimate question as to the correct interpretation of the ASSOCIATION’s governing documents and this question is properly before this court in a request for declaratory judgment. Therefore, the ASSOCATION’s Motion to Dismiss Count I should be denied.
THE HOMEOWNERS HAVE RAISED LEGITIMATE QUESTIONS ABOUT INTERPRETATION OF THEIR GOVERNING DOCUMENTS AND ABOUT WHETHER THE PROPOSED ASSESSMENT VIOLATES F.S. 720.308
The ASSOCIATION relies on F.S. 720.308 to argue that the disputed assessment is legal on its face and that Count II should be dismissed: 1) as a matter of law; and 2) because it fails to state a cause of action. The HOMEOWNERS acknowledge the statute cited by Defendant, which provides that special assessments “must be in the member’s proportional share of expenses” and that shares may vary by member based on certain factors. This statute goes to the heart of the HOMEOWNERS challenge to the disputed assessment.
The HOMEOWNERS have requested, but have never received, a substantive analysis to support the ASSOCIATION’s supposed calculation of each parcel’s proportionate share of the disputed assessment. This assessment derives from adoption of an amendment to the Declaration, which states:
Lots 1 through 24, including but not limited to the area of the Common Recreation Use Easement, and the Common Area, may be made a part of a remediation plan and subject to a remediation plan to the extent necessary to achieve remediation of beach and dune areas. It is recognized that beach and dune areas benefit all Owners in the Retreat.
Upon approval of the plan by the Board of Directors, and a duly approved assessment, the Association shall enter into such agreements as are necessary to achieve remediation of the beach and dune areas, including those portions of Lots 1 through 24 that are a part of the beach and dune areas, whether within the Common Recreation Use Easement or not. The Association must put the plan out for bid and choose the proposal that best addresses the remediation…
Assessments for the remediation of the beach and dune areas shall be as for Capital Improvements pursuant to Article V, Section 4 of the Declaration, and shall be levied by the Association as assessments only upon approval of a majority of the Board of Directors of the Association and upon approval by two-thirds (2/3) favorable vote of Members of the Association voting at a meeting or by ballot as may be provided in the By-laws of the Association.
Assessments shall be levied based on a four to one ratio (4:1) with three zones…
This amendment allows the ASSOCIATION to assess all Members and use the assessment to perform dune remediation on both private property and Common Area. The first problem with this amendment is that it is placed in an Article of the Declaration that deals with maintenance of private lots. The amendment therefore, appears to conflict with another section of the Declaration that specifies that Capital Improvements and assessments are for work performed on Common Areas. The ASSOCIATION responds to this conflict by arguing that it is economical and prudent to combine all planned dune remediation. This may be a fair argument but the question presented to this court is whether the ASSOCIATION properly amended its Declaration to allow assessments to be used for improvements to private property.
The next question presented to this court is whether the ASSOCIATION has fairly allocated each Member’s proportionate share in accordance with F.S. 720.308. The ASSOCIATION has repeatedly assured the HOMEOWNERS that Lots 1-24 will pay for all of the work performed on their private property and that there will be no “common” monies used to improve private property. However, when the HOMEOWNERS requested an analysis from the ASSOCIATION as to how it quantified work proposed on private versus common land, the ASSOCIATION responded by stating that this was too hard to calculate. Therefore, it appears that the ASSOCIATION in effect “guessed” as to an equitable formula by which to calculate each member’s proportional share. The HOMEOWNERS suggest that a proportionate analysis could be performed, and that it could be based an analysis of the plat, land descriptions and by a survey of the contemplated work area.
The HOMEOWNERS are not arguing that dunes aren’t important or that they are unwilling to pay a proportionate share of dune remediation on and in front of Common Area. However, it is questionable at this point whether work on Common Area can even be performed. The ASSOCIATION has been advised by its own engineer that it may not be able to obtain permits for any of the remediation. Furthermore, when the ASSOCIATON’s contractor applied to Walton County for permits for dune remediation, the County only granted permits for work on private Lots where structures were threatened. This raises the question of whether remediation on Common Areas would ever be permitted and whether the true purpose of the proposed remediation is motivated by a desire to protect structures on private Lots.
The HOMEOWNERS have raised legitimate questions about interpretation of their governing documents and about whether the proposed assessment violates F.S. 720.308. These questions are properly before this Court in the HOMEOWNERS request for a declaratory ruling. Therefore, the ASSOCIATION’s Motion to Dismiss Count II should be denied.
THE HOMEOWNERS WILL DISMISS COUNT III IF THE ASSOCITION HOLDS A PROPER VOTE TO APPROVE THE LOAN
It appears that in response to the HOMEOWNERS Complaint, the ASSOCIATION has decided to hold the vote required by the governing documents in order for the Board of Directors to obtain a loan. Although the ASSOCIATION may argue that it intended all along to obtain the required Member approval, this was not apparent from the minutes of the Board of Directors meeting on August 22, 2005. The minutes merely state that the Board of Directors authorized the ASSOCIATION’S management agency to secure a loan for the ASSOCIATION in the amount of $800,000.00, for use prior to collection of the special assessment – there was no mention of holding any Member vote. See Minutes of 8/22/05 Board of Directors meeting attached to Plaintiff’s Complaint as Exhibit C.
The intended vote will likely take place before this Motion to Dismiss is heard by the court. If the vote is properly taken in accordance with the governing documents, the HOMEOWNERS will dismiss Count III.
THE ONLY THING FRIVILOUS ABOUT THIS CASE IS THE ASSOCIATION’S REQUEST FOR SANCTIONS
In its Motion to Dismiss, the ASSOCIATION argues that it is entitled to an award of attorney’s fees in accordance with F.S. 57.105, or alternatively F.S. 720.305, because the HOMEOWNERS have filed a “baseless and frivolous claim.” The HOMEOWNERS agree that the Condominium Act provides attorney’s fees to the prevailing party in this type of litigation but such an award in accordance with 720.305 is premature. Furthermore, the HOMEOWNERS have clearly demonstrated in both their Complaint and this Response that their claims are, at the very least, legitimate.
F.S. 57.105 allows for an award of sanctions if a claim presented to the court is either not supported by the material facts necessary to establish the claim or would not be supported by the law. The parties in this case have a fair dispute as to interpretation of the ASSOCIATION’s governing documents and Florida statute. It is very difficult to meet the test for sanctions under 57.105. Attorney’s fees will not be awarded, “unless the court finds a total or absolute lack of a justiciable issue, which is tantamount to a finding that the action is frivolous…and so clearly devoid of merit both on the facts and law as to be completely untenable.” Muckenfuss v. Deltona Corp., 508 So.2d 340, 341 (Fla.1987).
Not only is the ASSOCIATION’s call for sanctions unwarranted, it smacks of sour grapes.
For the reasons stated herein, the HOMEOWNERS respectfully request that this court deny Defendant’s Motion to Dismiss and its request for sanctions.
____________________________________
JENNIFER A. WINTRODE
Florida Bar No: 0728810
Law Offices of Lamar A. Conerly, P.A.
P.O. Box 6944
Destin, FL 32550
(850) 837-5118
(850) 837-5187 - facsimile
Attorney for Plaintiffs
I HEREBY CERTIFY that a copy of the foregoing has been served on George R. Mead, II, 220 W. Garden St., 9th Floor, Pensacola, FL 32501 by first class mail this ___day of November, 2005.
____________________________________
JENNIFER A. WINTRODE
PAGE
PAGE 1
