|
NEW CASE MAKES IT HARDER TO SUE A CONDOMINIUM ASSOCIATION
By
Eric Glazer, Esq.
Published October 15, 2018
In Iezzi Family Limited Partnership, v. Edgewater Beach Owners
Association, Inc., the owner of a condominium unit filed a
27-count complaint against the condominium's Association and
seven current or former directors or officers of the
Association, seeking both equitable and legal relief. The trial
court dismissed Iezzi's action, finding that its claims were
derivative and Iezzi did not comply with Florida’s derivative
pre-suit requirements. On appeal, the First DCA affirmed.
A derivative suit has been defined as an action in which a
stockholder seeks to enforce a right of action existing in the corporation; the injury sustained by the stockholder bringing
such suit is basically the same as the injury sustained by other
stockholders in the corporation and any harm is primarily
against the corporation.
Many courts have permitted condominium unit owners to seek
equitable relief (not money) from their associations and
directors, especially when the alleged injury is to common areas
of the condominium. However, where monetary damages will be
sought, and the claims of the plaintiff are no different than a
claim that any other unit owner may bring, the pre-suit
requirements of the derivative statute must be complied with.
Pursuant to Florida Statute 617.07401, those requirements are:
A complaint in a proceeding brought in the right of a domestic
or foreign corporation must be verified and allege with
particularity the demand made to obtain action by the board of
directors and that the demand was refused or ignored by the
board of directors for at least 90 days after the date of the
first demand unless, before the expiration of the 90 days, the
person was notified in writing that the corporation rejected the
demand, or unless irreparable injury to the corporation would
result by waiting for the expiration of the 90-day period. If
the corporation commences an investigation of the charges made
in the demand or complaint, the court may stay any proceeding
until the investigation is completed.
The court may dismiss a derivative proceeding if, on motion by
the corporation, the court finds that one of the groups
specified in paragraphs (a)-(c) has made a good faith
determination after conducting a reasonable investigation upon
which its conclusions are based that the maintenance of the
derivative suit is not in the best interests of the corporation.
The corporation has the burden of proving the independence and
good faith of the group making the determination and the
reasonableness of the investigation. The determination shall be
made by:
(a) A majority vote of independent directors present at a
meeting of the board of directors, if the independent directors
constitute a quorum;
(b) A majority vote of a committee consisting of two or more
independent directors appointed by a majority vote of
independent directors present at a meeting of the board of
directors, whether or not such independent directors constitute
a quorum; or
(c) A panel of one or more independent persons appointed by the
court upon motion by the corporation.
(4) A proceeding commenced under this section may not be
discontinued or settled without the approval of the court. If
the court determines that a proposed discontinuance or
settlement substantially affects the interest of the members of
the corporation, or a class, series, or voting group of members,
the court shall direct that notice be given to the members
affected. The court may determine which party or parties to the
proceeding shall bear the expense of giving the notice.
(5) Upon termination of the proceeding, the court may require
the plaintiff to pay any defendant's reasonable expenses,
including reasonable attorney's fees, incurred in defending the
proceeding if it finds that the proceeding was commenced without
reasonable cause.
(6) The court may award reasonable expenses for maintaining the
proceeding, including reasonable attorney's fees, to a
successful plaintiff or to the person commencing the proceeding
who receives any relief, whether by judgment, compromise, or
settlement, and may require that the person account for the
remainder of any proceeds to the corporation; however, this
subsection does not apply to any relief rendered for the benefit
of injured members only and is limited to a recovery of the loss
or damage of the injured members.
|
|
About
HOA & Condo Blog
 |
Eric Glazer graduated from
the University of Miami School of Law in 1992 after
receiving a B.A. from NYU. He has practiced community
association law for more than 2
|
decades and is the owner of Glazer
and Associates, P.A. a seven attorney law firm with offices in
Fort Lauderdale and Orlando and satellite offices in Naples,
Fort Myers and Tampa.
Since 2009, Eric has been the host
of Condo Craze and HOAs, a weekly one hour radio show that airs
at noon each Sunday on 850 WFTL.
See:
www.condocrazeandhoas.com.
He is the first attorney in the
State of Florida that designed a course that certifies
condominium residents as eligible to serve on a condominium
Board of Directors and has now certified more than 10,000
Floridians all across the state. He is certified as a Circuit
Court Mediator by The Florida Supreme Court and has mediated
dozens of disputes between associations and unit owners. Eric
also devotes significant time to advancing legislation in the
best interest of Florida community association members.
|
