LENNAR HOMES, LLC, etc. v. MARTINIQUE AT THE OASIS NEIGHBORHOOD ASSOCATION, INC., etc. ( 2021 )

Third District Court of Appeal
State of Florida
Opinion filed December 22, 2021.
Not final until disposition of timely filed motion for rehearing.
________________
No. 3D20-1732
Lower Tribunal No. 20-14970
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Lennar Homes, LLC, etc.,
Appellant,
vs.
Martinique at the Oasis Neighborhood Association, Inc., etc.,
Appellee.
An Appeal from a non-final order from the Circuit Court for Miami-Dade
County, Barbara Areces, Judge.
Gordon & Rees Scully Mansukhani, and David M. Gersten, Richard P.
Freud (Portland, OR) and Ryan M. Wolis; Watt Tieder Hoffar & Fitzgerald,
LLP, and Mariela M. Malfeld, for appellant.
Morgan & Morgan, P.A., and Roger C. Brown (West Palm Beach), for
appellee.
Before EMAS, LOGUE and SCALES, JJ.
EMAS, J.
INTRODUCTION
Lennar Homes, LLC (Lennar), the developer and defendant below,
appeals from the trial court’s order denying its motion to dismiss and to
compel arbitration of the claims filed by Martinique at the Oasis
Neighborhood Association, Inc. (the Association). The Association sued
Lennar on behalf of its members for alleged construction defects to the front
exterior of the individually owned homes. See § 720.303(1), Fla. Stat.
(2020); see also Fla. R. Civ. P. 1.221. 1 Lennar, in response, sought to
enforce the arbitration provision in the members’ individual purchase and
sale agreements and special warranty deeds; however, the trial court denied
Lennar’s motion finding, among other things, that arbitration was not required
because “[t]here is no agreement between [The Association] and [Lennar]
that requires arbitration.”
We reverse and hold that, consistent with our sister court’s decision on
this issue, the Association’s right to sue in its representative capacity
requires it “to comply with the arbitration agreements signed by each of its
members,” Pulte Home Corp. v. Vermillion Homeowners Ass'n, Inc., 109
So. 3d 233, 235 (Fla. 2d DCA 2013). Because the arbitration provision’s
1
The statute and rule each provide that a condominium association can bring
a cause of action “in its name on behalf of all [association] members
concerning matters of common interest to the members.”
2
plain language requires arbitration of the alleged construction defects, the
trial court erred in denying Lennar’s motion to dismiss and to compel
arbitration. 2
FACTS AND BACKGROUND
Lennar developed Martinique at Oasis, a residential community
located in Homestead, consisting of twenty-six “townhouse style” buildings,
subdivided into 241 individual units. Between 2013 and 2016, Lennar sold
the units that would comprise Martinique. Prior to closing on each unit,
Lennar and Martinique purchasers executed a purchase and sale agreement
containing an arbitration provision:
The parties to this Agreement specifically agree that
this transaction involves interstate commerce and
2
We decline to reach the additional claim, raised by Lennar, that the
individual homeowners, rather than the Association, are the proper parties
to this dispute; the record is not adequately developed, nor is the
Association’s standing to bring its cause of action under section 720.303(1)
and rule 1.221 directly before us on appeal from this nonfinal order. See Fla.
R. App. P. 9.130(a)(3)(C)(iv) (authorizing appeal of nonfinal orders that
“determine. . . the entitlement of a party to arbitration”); Morton & Oxley, Ltd.
v. Charles S. Eby, M.D., P.A., 916 So. 2d 820, 821 (Fla. 2d DCA 2005) (“The
denial of a motion to dismiss a complaint is a nonfinal order, and the denial
of a motion to dismiss for failure to name indispensable parties or for lack of
standing is not listed as an appealable nonfinal order in rule 9.130(a).”)
(emphasis added). See also Caribbean Transp., Inc. v. Acevedo, 698 So.
2d 604, 605 (Fla. 3d DCA 1997); Fla. Ins. Guar. v. Still, 154 So. 3d 422 (Fla.
5th DCA 2014). Our holding is limited to a determination, consistent with
Pulte Home Corp. v. Vermillion Homeowners Ass'n, Inc., 109 So. 3d 233,
235 (Fla. 2d DCA 2013), that the trial court erred in denying Lennar’s motion
to compel arbitration of the dispute.
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that any Dispute (as hereinafter defined) shall first be
submitted to mediation and, if not settled during
mediation, shall thereafter be submitted to binding
arbitration as provided by the Federal Arbitration Act
(9 U.S.C. §§1 et seq.) and not by or in a court of law
or equity. ‘Disputes’ (whether contract, warranty, tort,
statutory or otherwise), shall include, but are not
limited to, any and all controversies, disputes or
claims (1) arising under, or related to, this
Agreement, the Property, the Community or any
dealings between Buyer and Seller; (2) arising by
virtue of any representations, promises or warranties
alleged to have been made by Seller or Seller's
representative; (3) relating to personal injury or
property damage alleged to have been sustained by
Buyer, Buyer's children or other occupants of the
Property, or in the Community; or (4) issues of
formation valididty [sic] or enforceability of this
section. […]
(Emphasis added). A special warranty deed was recorded upon each home
sale and included a virtually identical arbitration provision. 3
3
The special warranty deed provides:
‘Disputes’ (whether contract, warranty, tort, statutory
or otherwise) shall include, but are not limited to, any
and all controversies, disputes or claims (1) arising
under, or related to, this Deed, the underlying
purchase agreement for the sale and conveyance of
the Property, the Property, the community in which
the Property is located, or any dealings between
Grantee and Grantor; (2) arising by virtue of any
representations, promises or warranties alleged to
have been made by Granter or Grantor's
representative; (3) relating to personal injury or
property damage alleged to have been sustained by
Grantee, Grantee’s children or other occupants of the
4
In 2018, the Association “became aware of potential latent construction
defects . . . in the exterior wall cladding system of the buildings” when it
noticed discolorations in the paint on the exterior stucco. Following an
investigation, the Association sued Lennar in a complaint (and thereafter an
amended complaint) alleging, inter alia, construction defects to “the stucco,
stone cladding, and foam moldings/decorative shapes on the exterior of the
buildings.” The defects, the Association contended, “do not relate to any
areas or damages within any individual unit owner’s home and, instead,
relate only to exterior common areas as defined by the Declaration.”
(Emphasis added).
Lennar moved to dismiss the complaint and compel arbitration. It
asserted that the Association, acting in its representative capacity,
improperly filed suit because individual homeowners—through the purchase
and sale agreement and the special warranty deed—agreed to arbitrate their
disputes.
Following a hearing, the trial court denied the motion, finding: “[t]here
is no agreement between [the Association] and [Lennar] that requires
arbitration;” “[t]he Amended Complaint only alleges defects in the common
Property, or in the community in which the Property
is located; or (4) issues of formation, validity or
enforceability of this Section.
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elements, which [the Association] has an obligation to maintain;” “[the
Association] has an easement over the property, including individual homes,
as necessary to fulfill its maintenance obligations;” and “[t]he arbitration
provision that [Lennar] is attempting to enforce, even if it had been included
in an agreement to which [the Association] was a party, would be rendered
null and void as against public policy pursuant to section 720.3075(1)(b),
Florida Statutes, because it would have the effect of prohibiting or restricting
[the Association’s] right to maintain a lawsuit against [Lennar], the
developer.”
This appeal followed.
ANALYSIS AND DISCUSSION
Relying on Pulte, 109 So. 3d at 235, Lennar contends that, because
the Association is suing in its representative capacity, on behalf of its
members, and because those members each signed a purchase and sale
agreement by which they agreed to arbitrate their disputes with Lennar, the
Association is likewise bound by that provision to arbitrate the instant dispute
with Lennar. We agree.
Florida law provides that homeowner associations may maintain
lawsuits on behalf of their members against the developer “concerning
matters of common interest to the members,” e.g., “the common areas,”
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“structural components of a building,” or “other improvements for which the
association is responsible.” § 720.303(1). See also Fla. R. Civ. P. 1.221
(providing that a homeowners association, “after control of such association
is obtained by homeowners or unit owners other than the developer, may
institute . . . actions . . . in its name on behalf of all association members
concerning matters of common interest to the members, including, but not
limited to: [] the common property, area, or elements . . . structural
components of a building or other improvements . . . for which the
association is responsible”). 4 “The sole requirement for the bundling of a
class is that the members of the association have a common interest
regarding the common elements of the property.” Homeowner's Ass'n of
Overlook, Inc. v. Seabrooke Homeowners' Ass'n, Inc., 62 So. 3d 667, 670
(Fla. 2d DCA 2011). This appeal involves whether—and the extent to
4
Conversely, the Florida Supreme Court has held that—notwithstanding a
condominium association’s statutory right “to sue for damages to common
elements of the condominium”—“a unit owner can maintain an action against
the developer or general contractor for alleged breaches of duties owed in
common to all the unit owners with respect to construction defects in the
common areas or common elements” as long as “the interests of the other
unit owners are represented in the action,” i.e., intervention by an
indispensable party under Florida Rule of Civil Procedure 1.210(a). Rogers
& Ford Const. Corp. v. Carlandia Corp., 626 So. 2d 1350, 1355 (Fla. 1993)
(noting: “Any person may at any time be made a party if that person's
presence is necessary or proper to a complete determination of the cause.”)
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which—an association suing in this representative capacity is bound by an
arbitration agreement between its members and the developer.
In analyzing this issue, we find instructive our sibling court’s analysis
in Pulte, 109 So. 3d at 235, wherein the builder appealed an order denying
its motion to compel arbitration of the condominium association’s claims,
which alleged “certain construction defects” to the property. Id. at 234. The
Second District reversed, explaining that the complaint was “carefully
crafted” in its description of the alleged defects and therefore it was
“impossible to know what defects [were] at issue.” Id. at 234-35. Importantly,
the court noted:
From the transcripts in the record, it appears likely that the
primary issues relate to the exterior of the homes and to the
roofs. If there are problems with the roads or the drainage ponds,
for example, that cannot be ascertained from the complaint. . . .
[W]hen the Association brings an action for damage to a
roof or the exterior of a home that is individually owned by
a member, we are unconvinced that its rights are superior
to those of the actual owner.
Id. at 235 (emphasis added). The Second District further explained:
We reverse the order to the extent that the Association is suing
as a representative of the homeowners, all of whom agreed to
arbitrate their claims. In so ruling, we leave open the possibility
that the Association could amend its complaint to allege a more
limited claim involving property owned by the Association.
Although the claims of the homeowners must be arbitrated, it is
possible that a claim concerning property owned by the
Association would not require arbitration.
8
Id. at 234 (emphasis added). See also Oakmont Custom Homes, LLC v.
Billings, 310 So. 3d 59, 60 (Fla. 4th DCA 2021) (describing the holding in
Pulte: “The Second District explained that the homeowners association was
required to arbitrate even though it did not sign a purchase agreement or
limited warranty because it was suing in its representative capacity.”)
The Pulte court also rejected a similar argument advanced by the
Association in the instant case: that because the association “did not sign a
purchase agreement or a limited warranty” with the builder, it was “free to
litigate its claims and should not be compelled to arbitrate them.”5 Pulte, 109
So. 3d at 235. In rejecting this argument, the Second District explained that
the association’s right to sue in its representative capacity under rule 1.221
comes with “an obligation to comply with the arbitration agreements signed
by each of its members.” Id. Similarly, the Association here cannot avoid
the arbitration agreement signed by its members. If the Association’s
5
The Association’s argument pertaining to whether the purchase and sale
agreement was incorporated into any contracts between Lennar and the
Association is also unavailing. See GE Energy Power Conversion France
SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1643-44
(2020) (noting: “arbitration agreements may be enforced by nonsignatories
through ‘assumption, piercing the corporate veil, alter ego, incorporation by
reference, third-party beneficiary theories, waiver and estoppel’”). While it is
correct insofar as there does not exist a contract between the Association
and Lennar incorporating the purchase and sale agreements between the
individual owners and Lennar, such is not required under these
circumstances nor did Lennar ever make this argument below or on appeal.
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members agreed to arbitrate disputes relating to the construction defects,
the Association is likewise bound.
Despite its contention otherwise, it is clear the Association is not suing
Lennar in its “own right.” The alleged construction defects in “the stucco,
stone cladding, and foam moldings/decorative shapes” are located in the
front entryways of the homes that comprise each individual homeowner’s
property. The Association has not taken the position that it is suing
“concerning property owned by the Association.” Pulte, 109 So. 3d at 234.
Even if the Association has an obligation to maintain some aspect or portion
of that property, and can therefore bring suit in its representative capacity
under rule 1.221, it is nevertheless the homeowners who are the real parties
in interest. Id. at 235 (citing Yacht Club Se., Inc. v. Sunset Harbour N.
Condo. Ass’n, 843 So. 2d 917, 919 (Fla. 3d DCA 2003)).
Consistent with our sister court’s analysis in Pulte, we hold that the
Association’s right to proceed in its representative capacity in this case
requires it to abide by the members’ agreement with Lennar to arbitrate this
dispute.6
6
The final question—whether this constitutes a “dispute” within the scope of
the applicable arbitration provision—is easily answered here. The
allegations of the Association’s complaint clearly involve a “dispute” as
defined by the purchase and sale agreement (and by similar language in the
special warranty deed, discussed supra), which requires (should mediation
10
Because we hold that the arbitration provision is enforceable against
the Association, we must also address that portion of the trial court’s order
which held the arbitration provision is “rendered null and void as against
public policy pursuant to section 720.3075(1)(b), Florida Statutes, because
it would have the effect of prohibiting or restricting [the Association’s] right to
maintain a lawsuit against [Lennar], the developer.” Section 720.3075(1)(b)
provides in relevant part:
(1) It is declared that the public policy of this state prohibits the
inclusion or enforcement of certain types of clauses in
homeowners' association documents, including declaration of
covenants, articles of incorporation, bylaws, or any other
document of the association which binds members of the
association, which either have the effect of or provide that:
***
(b) A homeowners' association is prohibited or restricted from
filing a lawsuit against the developer, or the homeowners'
association is otherwise effectively prohibited or restricted from
bringing a lawsuit against the developer.
not fully resolve the dispute) arbitration of “any and all controversies,
disputes or claims. . . arising under, or related to, this Agreement, the
Property, [or] the Community. . .; [or] relating to. . . property damage alleged
to have been sustained by Buyer, Buyer’s children or other occupants of the
Property, or in the Community.” See City of Miami v. Fraternal Order of
Police Lodge #20, 248 So. 3d 273, 275 (Fla. 3d DCA 2018) (“A trial court's
role in determining arbitrability under the Revised Florida Arbitration Code is
limited to the following inquiries: (1) whether a valid written agreement to
arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the
right to arbitration was waived.”) (quotation omitted).
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(Emphasis added.)
By its express terms, this statute applies only to “homeowners’
association documents.” The arbitration provision at issue is contained in
the purchase and sale agreement and the special warranty deed, which are
not “declaration[s] of covenants, articles of incorporation, bylaws, or any
other document of the association.” It is well-established: “When the
language of the statute is clear and unambiguous and conveys a clear and
definite meaning, there is no occasion for resorting to the rules of statutory
interpretation and construction; the statute must be given its plain and
obvious meaning.” Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984) (quoting
A.R. Douglass, Inc. v. McRainey, 127 So. 157, 159 (1931)). See also
Hechtman v. Nations Title Ins. of New York, Inc., 767 So. 2d 505, 507 (Fla.
3d DCA 2000) (holding: “Where, as here, the language of a statute is clear
and unambiguous and conveys a clear and definite meaning, there is no
occasion for us to depart from its plain and unambiguous language.”) As our
Supreme Court recognized in Holly, 450 So. 2d at 219, “it is not the court’s
duty or prerogative to modify or shade clearly expressed legislative intent in
order to uphold a policy favored by the court.”
We reverse the order on appeal and remand for further proceedings
consistent with this opinion.
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