DE SOLEIL SOUTH BEACH RESIDENTIAL CONDOMINIUM ASSOCIATION, INC. v. DE SOLEIL SOUTH BEACH ASSOCIATION, INC., etc. ( 2021 )

Third District Court of Appeal
State of Florida
Opinion filed June 2, 2021.
Not final until disposition of timely filed motion for rehearing.
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Nos. 3D19-2013 and 3D19-617
Lower Tribunal No. 18-2799
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De Soleil South Beach Residential Condominium Association, Inc.,
Appellant,
vs.
De Soleil South Beach Association, Inc., et al.,
Appellees.
Appeals from the Circuit Court for Miami-Dade County, William
Thomas, Judge.
Law Offices of Jason Gordon, P.A., and Jason Gordon (Hollywood),
for appellant.
Genovese Joblove & Battista, P.A., and Richard Sarafan and Michael
Bild, for appellee South Beach Resort Development, LLC; and Young,
Berman, Karpf & Gonzalez, P.A., and Andrew S. Berman and Jamie
Webner, for appellee De Soleil South Beach Association, Inc.
Before LOGUE, HENDON, and BOKOR, JJ.
HENDON, J.
Appellant, De Soleil South Beach Residential Condominium
Association, Inc. (the “Residential Association”), plaintiff below, appeals from
the September 19, 2019 order denying its motion for rehearing of the trial
court's order on Appellees’, South Beach Resort Development, LLC (the
“Developer”), and De Soleil South Beach Association, Inc. (“Master
Association”) (collectively, the “Defendants”) cross-motions for summary
judgment rendered on July 11, 2019, and the July 25, 2019 Final Judgment.
We affirm in part, and reverse in part.
The dispute arises out of the operation of a South Beach hotel, the Z
Ocean Hotel (the “Building”). The Building is composed of three legal
parcels of land: a residential parcel, a commercial parcel, and a garage
parcel, each governed by separate rights, obligations and interrelationships.
The owners of those three parcels are the three members of the Master
Association. The Master Association’s board consists solely of the owners
of these three parcels: the Developer, which is the owner of both the garage
and commercial parcels; and the Residential Association, an entity governed
by a board and a membership consisting of the owners of the eighty
condominium units.
2
Two recorded documents govern the structure and relationships
among the entities in the Building’s ownership and operations, and each unit
owner purchased their properties subject to these documents: (1) the
Declaration of Covenants, Easements, and Restrictions (the “Master
Declaration”), which was recorded first, and (2) the Declaration of
Condominium, which governs the hotel room portion of the Building. The
Master Declaration established the Master Association to operate the
“Shared Facilities” used in common by the three parcels. Under these two
recorded documents, the Master Declaration controls in the event of any
conflicts or inconsistencies. The residential form of property ownership is
condominium, through the Condominium Declaration. The plaintiff
Residential Association is the association governed by the Condominium
Declaration. The residential owners are not parties to the Master Declaration.
The eighty individual hotel rooms in the hotel Building are also the
eighty individual condominium units in the residential parcel. Members of the
Residential Association are entitled to one vote per unit in all Residential
Association matters, equal to eighty member votes. Each unit owner
purchased their unit subject to both Declarations. The Developer of the
condominium currently owns twelve units in the residential parcel, is a
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member of the Residential Association, and has twelve member votes.1
Most of the unit owners, including the Developer, are part of a hotel
unit rental program administered by De Soleil Management (“DSM”), the
management company that pays all the bills. According to the Residential
Association, DSM is controlled by the Developer.
In April 2016, the Developer amended the Master Declaration to allow
the Master Association to collect assessments directly from unit owners,
impose fees and fines, and to evict any unit owner not in compliance with the
Master Declaration, although residential owners are not parties to the Master
Declaration. In June 2016, DSM stopped forwarding assessment money
belonging to the Residential Association paid by unit owners in the rental
program. Then the Residential Association stopped paying its assessments
to the Master Association. The Residential Association also refused to pay
DSM (acting for the Master Association) amounts DSM had paid for the
1
It is unclear how many units were owned by the Developer during the times
relevant to this case but, in its Answer and Affirmative Defenses, the
Developer admitted to owning “13 units…and its affiliates own an additional
2 units….” This gave the Developer a total of 15 votes (which is 18.75% of
the votes) in the Residential Association. As the Developer owns two of the
three parcels, it also had two of the three votes and always controlled the
votes in the Master Association.
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Residential Association’s repair and restoration obligations of common
areas.
In December 2017, the Residential Association held a board meeting
and purported to suspend the voting rights of roughly 60% of its members
for the alleged nonpayment of assessments to the Residential Association
(the “First Suspension”). By suspending the voting rights of most of the
owners (including the Developer’s), the Residential Association believed this
would eliminate the need to satisfy the 75% membership approval condition
precedent needed to file a lawsuit. In January 2018, the Residential
Association filed suit seeking declaratory judgment against the Defendants.
The Second Amended Complaint sought, among other things, declaratory
relief for a conflict of interest between the Residential Association and the
Master Association, alleging that the Defendants amended the governing
documents to directly assess fees and fines in order to circumvent the
Residential Association's purportedly exclusive statutory and contractual
powers to do those things regarding its membership. 2
2
Because the Master Association's Board had three votes, two of which
belonged to the Developer (who owned two of the three parcels), the
Residential Association's powers were allegedly at the mercy of entities that
did not represent condominium owners.
5
In October 2018, the Defendants moved for summary judgment,
arguing that the Residential Association's December 2017 First Suspension
of member voting rights was unlawful and invalid because the Residential
Association had failed to satisfy the condition precedent necessary to file a
suit, and thus lacked standing because it had failed to obtain a three-fourth’s
vote of its members necessary to file suit.
The trial court entered summary judgment and dismissed the suit in
favor of the Defendants, concluding:
• Both Master Association and Developer had standing to contest the
suspension of voting rights;
• The Developer’s voting rights were not properly terminated because no
proof of the delinquency was given 30 days before suspension of the
voting rights and because the Board meeting where the suspension took
place was improperly noticed as it did not specify that suspension of
voting rights was on the agenda; and
• Thus, the required 75% vote to initiate litigation was not obtained.
On appeal, this Court held that the Master Association did not have
standing to assert the Residential Association's failure to satisfy the three-
fourths authorizing vote requirement, but because the Developer was part of
the Residential Association by virtue of owning certain units, the Developer
did have standing. De Soleil S. Beach Residential Condo. Ass'n, Inc. v. De
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Soleil S. Beach Ass'n, Inc., No. 3D18-1423, 45 Fla. L. Weekly D115 (Fla. 3d
DCA Jan. 15, 2020) (“De Soleil 1”). 3
On November 23, 2018, the Residential Association's board held a
meeting at which it again purported to suspend the voting rights of its
members, including the Developer’s (the “Second Suspension”). The
Residential Association also sought to remove two of the four board
members from the Residential Association board and to replace them with
their own choices. Subsequently, the Residential Association's board
declined to recognize the recall.
On January 17, 2019, the trial court granted the Defendants’ motion
for summary judgment, concluding that the suspension of voting rights was
invalid and that the Residential Association failed to satisfy the condition
precedent that it obtain 75% member approval prior to filing this lawsuit. The
3
In De Soleil 1 (Emas, J.), the Residential Association appealed from the
trial court's first entry of summary judgment and dismissal of the declaratory
action below in favor of the Defendants upon a determination that the
Residential Association lacked standing to sue the parties by failing to satisfy
a condition precedent contained in the Declaration of Condominium. This
Court found that the Master Association does not have standing to challenge
the Residential Association’s invalid vote-elimination strategy because the
Master Association is not a party to the Declaration of Condominium that
governs the Residential Association. Because the Master Association was
not a unit owner, this Court reversed the summary judgment entered in its
favor. Id. at *4
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Residential Association sought reconsideration and rehearing; the matter
was reheard; the order stood. The Residential Association has appealed.
On January 28, 2019, the Defendants asked the trial court to invalidate
the Second Suspension of voting rights and to validate the recall, and filed
counterclaims seeking the same relief.
Prior to entry of final judgment, the Developer moved for leave to
amend to add counterclaims. The trial court rendered its Final Judgment on
March 4, 2019 based on the summary judgment determination that the First
Suspension was invalid, and that the Residential Association failed to obtain
the votes required to the file the action. The trial court held, however, that
the Residential Association was deprived of the opportunity to be heard
regarding the Second Suspension of voting rights, as that action by the
Residential Association took place before the summary judgment order was
entered. Eighteen days after final judgment was entered, the trial court
granted the Developers’ Motion for Leave to Amend that was filed prior to
entry of the March 4 final judgment, to allow the Defendants to add
counterclaims.
On July 11, 2019, the trial court entered summary judgment in favor of
the Defendants on Counts V, VI and VII of their counterclaim, setting aside
both the First and Second suspensions of voting rights, unwound certain
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ultra vires actions, and recognized the validity of the recall. The Residential
Association has appealed.
In December 2019, this Court entered an order consolidating the two
appeals: 3D19-617 (summary judgment re. First Suspension) and 3D19-
2013 (summary judgment re. Second Suspension).
Standard of review
We review de novo a trial court's interpretation of a condominium
declaration. Lenzi v. Regency Tower Ass'n, Inc., 250 So. 3d 103, 104 (Fla.
4th DCA 2018). We review the grant of summary judgment de novo. Volusia
Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).
Summary judgment is proper when there are no genuine issues of material
fact, and the moving party is entitled to judgment as a matter of law. Id.; Cia.
Ecuatoriana de Aviacion C.A. v. US. & Overseas Corp., 144 So. 2d 338, 340
(Fla. 3d DCA 1962) ("The fundamental purpose of the summary judgment
procedure is to expedite litigation"); Fla. R. Civ. P. 1.510.
The Second Voting Rights Suspension
The trial court held that, as a matter of law, the Residential Association
lacked the power to suspend its members’ voting rights for non-payment of
assessments (the Second Suspension). It based its conclusions on the
following:
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1) Because condominium declarations are creatures of contract,
amendments to the Condominium Act, Ch. 718, Florida Statutes, do not
apply retroactively without express statutory intent. See Dimitri v. Com. Ctr.
of Miami Master Ass'n, Inc., 253 So. 3d 715, 719 (Fla 3d DCA 2018);
Tropicana Condo. Ass'n, Inc. v. Tropical Condo., LLC, 208 So. 3d 755, 758
(Fla 3d DCA 2016) (retroactive application of amendment to Condominium
Act "impermissible" because it would alter and thereby detract from unit
owner rights).
2) The Declaration of Condominium here does not contain Kaufman
language, i.e., the “as amended from time to time” language subjecting it to
future statutory changes to the Condominium Act. Rather, it specifically
incorporates only the version of the Condominium Act that existed when the
Declaration was recorded, expressly disavowing the application of later
amendments to the Condominium Act. 4 Kaufman v. Shere, 347 So. 2d 627,
628 (Fla. 3d DCA 1977) (holding condominium declaration containing "as it
4
Section 1 of the Declaration of Condominium provides: "Developer is the
owner of record of the 'Condominium Property' and does hereby submit
same to condominium ownership pursuant to the Condominium Act, Chapter
718, Florida Statutes, as amended through the date of recording this
Declaration". (emphasis added). Identically, subsection 3.1 of the
Declaration of Condominium defines "Act" as "the Condominium Act,
Chapter 718, Florida Statutes, as amended through the date of recording
amongst the Public Records of the County". (emphasis added).
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may be amended from time to time" language incorporated and rendered
applicable later amendments to Condominium Act); see also Cohn v. Grand
Condo. Ass'n, Inc., 62 So. 3d 1120, 1121 (Fla. 2011) (quoting Woodside VIII
Condo. Ass'n v. Jahren, 806 So. 2d 452, 456 (Fla. 2002)).
3) The Declaration of Condominium at issue here was recorded and became
effective in 2006. The Condominium Act, Section 718.303, Florida Statutes,
was amended in 2010 to add subsection (5), for the first time permitting an
association to "suspend the voting rights of a member due to nonpayment of
any monetary obligation." Prior to that amendment, the Condominium Act
did not give an association that right or remedy to impair or suspend the
voting rights of its members for nonpayment.
4) Here, the Declaration of Condominium provides for specific remedies
when a unit owner becomes delinquent in the payment of fees to the
Residential Association, and voting rights suspension is not among them.
Thus, the Residential Association lacks the power, pursuant to its own
Declaration, to suspend the voting rights of its members for non-payment of
assessments.
Thus, the trial court concluded that clear and binding Florida law
prohibits application of section 718.303(5) of the Condominium Act to this
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Condominium Declaration, Residential Association, or its members, and the
Second Suspension of members’ voting rights was invalid as a matter of law.
The Board Member Recall issue
The Residential Association did not dispute that if members’ votes had
not been improperly suspended, the majority required to recall ousted board
members and remove from office the replacement board members would
have been met. Because the trial court determined that the suspension of
voting rights was invalid, it followed that the recall of the ousted board
members was not facially invalid on the ground that the majority of the
members who voted for recall had their voting rights suspended.
The court noted that the Residential Association's board raised only
two reasons why it concluded that the recall was not facially valid: (1) the
majority of the members who voted for the recall had had their voting rights
suspended, and (2) by statute the board, and not the members, fills
vacancies. It was undisputed that less than a majority of the board members
were sought to be removed and, upon the Court's finding that the recall was
valid, two vacancies were created on the board. Pursuant to the statute, the
vacancies created may be filled by the affirmative vote of the majority of the
remaining board members. Thereafter, the board is entitled to take the
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actions it deems appropriate and that comport with the Condominium Act
and Condominium Documents.
The trial court found that, pursuant to section 718.112(2)(j)5., Florida
Statutes (2019), because the recall was facially valid, the two members
sought to be ousted should have been recalled effective immediately. The
court also found that the second reason provided by the Board to not certify
the recall does not relate to the facial validity of the recall, but to the issue of
who is entitled to fill the vacancies caused by the removal of board members.
The court found that the Residential Association's after-the-fact challenges
to the validity of the recall, which were not reflected as the basis for the
Board's actions, are irrelevant as they were not the grounds upon which the
board decided not to certify the recall.
Discussion
We first address whether the Master Association has standing to
challenge the actions of the Residential Association. We conclude, as we did
in De Soleil 1, that it does not.
The trial court entered summary judgment in favor of the Master
Association and the Developer on their counterclaims, on essentially the
same basis as in De Soleil 1, i.e., the invalidity of the Residential
Association’s suspension of voting rights in order to counter certain
13
assessment actions taken by the Master Association. The Developer and
Master Association argue that De Soleil 1 is distinguishable, because the
behind-the-curtain actions of the Condominium Association in violation of its
governing document impaired substantive property rights (assessments) of
the Master Association, thereby conferring it with the standing that was
lacking in the earlier case.
More specifically, the Master Association argues that the actions of the
Condominium Association in (a) illegally suspending the voting rights of a
majority of owners to reach an artificial 75% threshold calculated upon a
small minority of total voting units and (b) then using that manipulated super-
majority vote to take affirmative action to attempt to cancel the recorded
Master Declaration on real property, were ultra vires acts that substantially
and materially impaired the vested interests of the Master Association. That,
it argues, gives the Master Association standing to challenge the legality of
those actions.
A party has standing when it has such a legitimate interest in a matter
as to warrant asking a court to entertain it. Brown v. Firestone, 382 So. 2d
654, 662 (Fla. 1980) (holding a party must “demonstrate a direct and
articulable stake in the outcome of a controversy” to open the courthouse
doors); Argonaut Ins. Co. v. Com. Standard Ins. Co., 380 So. 2d 1066, 1067
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(Fla. 2d DCA 1981); Jamlynn Invs. Corp. v. San Marco Residences of Marco
Condo. Ass'n, 544 So. 2d 1080, 1082 (Fla. 2d DCA 1989) (holding a party
has standing when it has “a sufficient interest at stake in the controversy
which will be affected by the outcome of the litigation”); Whitburn, LLC v.
Wells Fargo Bank, N.A., 190 So. 3d 1087 (Fla. 2d DCA 2015); Ferreiro v.
Philadelphia Indem. Ins. Co., 928 So. 2d 374, 377 (Fla. 3d DCA 2006)
(holding that absent an existing case or controversy between the parties,
there would not be standing to pursue a class action claim or represent a
class).
The Master Association’s reliance upon Jamlynn for the proposition
that it has standing is misplaced. In that case, both parties were subject to
the condominium declaration. In this case, the Master Association is not
subject to the Condominium Declaration, and consistent with De Soleil 1,
does not have standing to challenge the Residential Association’s
suspension of its members’ voting rights. The Developer, on the other hand,
does have standing because the Developer is also a unit owner and subject
to the Declaration of Condominium.
The underlying facts have not essentially changed since De Soleil 1.
Accordingly, we reverse as to the Master Association because the Master
Association is not a unit owner subject to the Declaration of Condominium.
15
We affirm the final judgment as to the Developer because the Developer is
a unit owner and has standing to challenge the Residential Association’s
actions.
We next address the question of whether the trial court had jurisdiction
to grant the Defendants’ motion for leave to amend the complaint to add
counterclaims after summary judgment was entered. We conclude it did, as
the time for rehearing had not expired.
The Residential Association concedes the court has jurisdiction to
grant leave to amend. “The rule is firmly established in this State that the
trial Court loses jurisdiction of a cause after a judgment or final decree has
been entered and the time for filing petition for rehearing or motion for new
trial has expired or same has been denied.” State ex rel. Am. Home Ins. Co.
v. Seay, 355 So. 2d 822, 824 (Fla. 4th DCA 1978) (quoting Gen. Cap. Corp.
v. Tel Serv. Co., 212 So. 2d 369, 382 (Fla. 2d DCA 1968)); Liberty Ins. Corp.
v. Milne, 98 So. 3d 613, 615 (Fla. 4th DCA 2012). As the deadline to move
for rehearing had not expired, and the Residential Association had not yet
filed a motion for rehearing, the court still retained jurisdiction to consider the
Defendants’ motion to supplement counterclaims and amend the pleadings
regardless of the merit of those counterclaims.
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On de novo review of the record, we affirm the final judgment granting
declaratory relief as to the Developer and reverse as to the Master
Association for the same reasons as stated in De Soleil 1.
Affirmed in part and reversed in part.
17