ELENA COLLADO, ETC. v. BRIGITTE BAROUKH

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ELENA COLLADO,
Appellant,
v.
BRIGITTE BAROUKH, RICHARD ROSEN, MILDRED ZERBARINI,
RONALD BUCHHOLZ, JESUS RODRIGUEZ, TARA DALU, NICK
DAMASCENO, RAMBLEWOOD EAST REALTY HOLDING FNC, LLC,
RAMBLEWOOD EAST REALTY HOLDINGS, LLC, and RAMBLEWOOD
EAST CONDOMINIUM ASSOCIATION, INC.,
Appellees.
No. 4D16-2075
[August 30, 2017]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Michael L. Gates, Judge; L.T. Case No. CACE15022331
(12).
Joseph D. Garrity of Garrity Traina, PLLC, Coconut Creek, for
appellant.
Karen M. Nissen and Andrea Sconzo of Vernis & Bowling of Palm Beach,
P.A., North Palm Beach, and E.J. Generotti of Frank, Weinberg & Black,
P.L., Plantation, for appellees.
MAY, J.
A condominium unit owner appeals the dismissal with prejudice of her
shareholder derivative suit against a condominium association (of which
the owner is a shareholder), members of the association’s board of
directors, and two holding companies (collectively referred to as
“defendants”). She argues the trial court erred in dismissing her complaint
with prejudice. We agree with her in part and reverse in part.
Prior to filing suit, the owner emailed the association demanding to
inspect the association’s records, pursuant to section 607.07401(2),
Florida Statutes (2016). The association’s counsel responded that “the
[a]ssociation is not incorporated under, and consequentially is not subject
to, Chapter 607, Florida Statutes,” and a demand under section
607.07401 was “legally invalid.” By demand letter sent on October 7,
2015, the owner corrected the error by citing section 617.07401, Florida
Statutes (2015), and demanded to inspect the association’s records. The
association responded that it would consider appointing an independent
committee to investigate the owner’s allegations at its next Board of
Directors meeting.
On December 14, 2015, the owner filed a verified complaint, pursuant
to section 617.07401, alleging: (1) breach of fiduciary duty; (2) negligence
in failing to properly manage the association’s funds and allowing its
buildings to deteriorate; and (3) improper management of the association
by the board of directors. The wherefore clause asked for relief from the
“defendants” although the counts primarily made allegations only against
the board members and the association. 1
Following the filing of the verified complaint, the owner moved to
enforce the condominium association bylaws, which provide term limits
for board members of two, two-year terms. The motion claimed the bylaws
prohibited the then-current members of the board from running again as
each member had already served more than two terms.
The association and the three board members who had been served
filed multiple motions to dismiss the complaint with prejudice, arguing: (1)
the owner failed to properly comply with the statutorily required ninety-
day waiting period prior to filing the derivative action; (2) the counts
alleging breach of fiduciary duty and negligence against the association
and its board of directors did not seek relief against the two holding
companies; (3) the count seeking declaratory relief against all defendants
did not make specific allegations against the holding companies; (4) the
owner failed to properly form her pleadings; and (5) the association does
not have a fiduciary duty to its unit owners.
The trial court held a hearing on the owner’s motion to enforce bylaws
and the defendants’ motions to dismiss. It denied the owner’s motion to
enforce and granted the defendants’ motions to dismiss with prejudice.
The owner moved for rehearing, which the trial court denied. From the
dismissal order and the order denying the motion for rehearing, the owner
now appeals.
The owner argues the trial court erred in dismissing the case with
prejudice without leave to amend because the complaint clearly stated a
cause of action and alleged all elements of the causes of action. The
1 The trial court found that only three of the seven board members were served.
2
defendants respond the court correctly dismissed the verified complaint
without leave to amend because the suit was prematurely filed, improperly
pled, and failed to state a cause of action.
We have de novo review. Haslett v. Broward Health Imperial Point Med.
Ctr., 197 So. 3d 124, 127 (Fla. 4th DCA 2016).
Because the association is a not-for-profit Florida corporation, it is
governed by Chapter 617. Section 617.07401(2), Florida Statutes,
provides that a suit cannot be filed before the expiration of ninety days
after “the date of the first demand.” Here, the owner first made a demand
for action by the association pursuant to Chapter 607. The association
advised her that she had referenced the wrong chapter. The owner then
corrected the demand to reflect the correct chapter in a letter to the
association on October 7, 2015. The owner then filed suit on December
14, 2015.
As the trial court found, the owner’s October 7, 2015 letter served as a
new demand for action and marked the beginning of a new ninety-day
waiting period. The ninety days expired on January 5, 2016, but the owner
filed the verified complaint twenty-two days before the ninety days expired.
The trial court properly dismissed the complaint. § 617.07401, Fla. Stat.
The trial court also correctly found the verified complaint failed to
comply with section 617.07401 by failing to plead an exception to the
ninety-day waiting period. The verified complaint failed to allege that the
demand was “refused or ignored” by the association, that the demand was
rejected in writing by the association prior to the ninety-day period, or that
the waiting period would cause irreparable harm to the association.
Noncompliance with the pre-suit requirements of section 617.07401
mandates dismissal of the suit. See, e.g., Sharma v. Ramlal, 76 So. 3d
955, 957 (Fla. 2d DCA 2011) (LaRose, J., concurring).
Florida Rule of Civil Procedure 1.420(b) also provided a basis for
dismissal of the complaint. It provides that an action may be dismissed
for failure to comply with the Florida Rules of Civil Procedure. The rules
provide that a complaint “shall contain . . . a short and plain statement of
the ultimate facts showing that the pleader is entitled to relief.” Fla. R.
Civ. P. 1.110(b).
Commingling various claims against all defendants together may also
warrant dismissal of a complaint. Fla. R. Civ. P. 1.110(f); see also Aspsoft,
Inc. v. WebClay, 983 So. 2d 761, 768 (Fla. 5th DCA 2008) (commingling
separate and distinct claims against multiple defendants warrants a
3
dismissal of the complaint).
Here, the owner made blanket references to “defendants” throughout
the complaint, specifically under counts two and three for negligence and
improper management, respectively. By commingling separate and
distinct claims against multiple defendants, the owner violated Rule
1.110(f) for failing to state in a separate count “[e]ach claim founded upon
a separate transaction or occurrence.” Fla. R. Civ. P. 1.110(f). Because
the owner failed to comply with the Florida Rules of Civil Procedure, the
action was properly dismissed under Rule 1.420(b).
The verified complaint also failed to clearly allege how each defendant
caused the injury and damages alleged. Count two broadly mentions the
board of directors and their alleged duty and breach, but does not allege a
duty, breach, or wrongdoing on the part of the association as an entity.
Count three likewise broadly mentions the association without specifying
the wrong committed by each defendant.
Count one improperly alleged the association breached a fiduciary duty
to its unit owners even though as a corporate entity, it does not have a
duty to its unit owners. See § 718.111(1), Fla. Stat. (2016) (only officers
and directors of a corporate entity have a fiduciary duty, not the corporate
entity). In short, the trial court properly dismissed the breach of fiduciary
claim against the association. And, while the holding companies are
alleged to have title to apartments purchased by the association, there is
no allegation that these entities either breached a fiduciary duty or were
negligent.
Notwithstanding the failure to comply with the pre-suit notice
requirement and the pleading requirements of the Florida Rules of Civil
Procedure, Rule “1.190(a) provides that leave to amend ‘shall be given
freely when justice so requires.’” Cousins Restaurant Assocs. ex rel.
Cousins Mgmt. Corp. v. TGI Friday’s, Inc., 843 So. 2d 980, 982 (Fla. 4th
DCA 2003) (quoting Fla. R. Civ. P. 1.190(a)). “[L]eave to amend should not
be denied unless the privilege has been abused, there is prejudice to the
opposing party, or amendment would be futile.” Life Gen. Sec. Ins. Co. v.
Horal, 667 So. 2d 967, 969 (Fla. 4th DCA 1996).
Here, the owner acknowledged some of the pleading deficiencies and
requested leave to amend. Because this is not a case where the owner
filed repetitive motions to amend and abused the privilege, and because
there was no finding that an amendment would be futile, the trial court
erred in dismissing the case with prejudice.
4
For this reason alone, we reverse and remand the case to the trial court
for the owner to be given an opportunity to amend the verified complaint.
The owner also argued the trial court erred in denying her request to
enforce the association bylaws. The owner maintained that the board
members’ inclusion on the ballot violated the association’s by-laws, as
amended in 1986 to impose board member term limits. The defendants
responded that the 1986 amendments were invalid and had never been
enforced. They further argued the issue was moot as the election took
place before the hearing on the motion. The owner replied that the
defendants’ challenge to the 1986 amendment was barred by the statute
of limitations.
We have de novo review of this issue. Carlin v. State, 939 So. 2d 245,
247 (Fla. 1st DCA 2006).
The owner’s motion to enforce the bylaws sought to prevent the re-
election of the board of directors then scheduled for February 22, 2016.
The hearing on the motion took place in April, 2016. In denying the
owner’s motion, the trial court found the election of the same board of
directors rendered the motion moot. This was a proper basis for dismissal
given that the specific controversy that was the subject of the owner’s
motion, the inclusion of the board directors on the ballot, no longer
existed. See Godwin v. State, 593 So. 2d 211, 212 (Fla. 1992) (defining
mootness and articulating three exceptions to an otherwise moot case, but
holding the issue in the case was not moot). Upon remand, the owner may
address the eligibility of these board members in her amended complaint.
Because we are remanding to give the owner an opportunity to amend
the verified complaint, we note the following pleading deficiencies raised
by the various defendants. Count one alleged a breach of fiduciary duty
against the association, a duty which does not exist. Towerhouse Condo.,
Inc. v. Millman, 475 So. 2d 674, 676 (Fla. 1985).
The dismissal of the holding companies as to counts one and two
appears to have been correct as they are not alleged to have breached any
duty. The dismissal in favor of the three board members individually is
correct as they may be allegedly liable only in their representative capacity
for breach of their fiduciary duty as officers and directors. See § 617.0834,
Fla. Stat. (2016).
Upon remand, the owner shall be given an opportunity to correct these
pleading deficiencies.
5
Affirmed in part; reversed in part; and remanded.
GROSS and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
6