Last week, we spoke about how difficult it is to obtain personal
liability against an individual director of a community
association. The plaintiff would basically need to show a
crime, fraud or self-dealing. What about when the directors
make decisions that may ultimately be incorrect but were made in
good faith at the time? Can a director be faced with individual
liability simply because they made a bad or wrong decision?
Let’s talk about a case called, Hollywood Towers Condominium
Association v. Hampton 40 So.3d 784 (4th DCA,
2010). In that case, the Board wanted to make balcony repairs
that would require tearing up the floor inside the owner’s
unit. The unit owner said such a repair was not necessary.
Each side had their own experts. The trial court thought the
association did not meet its burden of proving that it was
necessary to enter the owner’s unit and denied the
association’s request for an injunction which would have allowed
the association to enter the unit. The association then
appealed.
The 4th District Court of Appeal looked to a
California case for help and held that Where a duly constituted
community association board, upon reasonable investigation, in
good faith and with regard for the best interests of the
community association and its members, exercises discretion
within the scope of its authority under relevant statutes,
covenants and restrictions to select among means for discharging
an obligation to maintain and repair a development's common
areas, courts should defer to the board's authority and presumed
expertise. Lamden v.
La Jolla Shores Clubdominium Homeowners Ass'n,
21 Cal.4th 249, 87 Cal.Rptr.2d 237, 980 P.2d 940, 942 (1999).
We adopt the test set forth inLamden,
and hold that courts must give deference to a condominium
association's decision if that decision is within the scope of
the association's authority and is reasonable—that is, not
arbitrary, capricious, or in bad faith.
In the instant case, there was no dispute that the association
had the authority to repair the concrete on Hampton's balcony, which
is a common element under the declaration of condominium. See
718.113(1), Fla. Stat.
(2009) (“Maintenance of the common elements is the
responsibility of the association.”). The association may repair
and maintain common elements as long as its decision to do so is
reasonable. Thus, the trial court's focus was misplaced when it
denied the injunction because there was a question as to whether
the excavation and rebar work was necessary.
However, in order to access Hampton's unit to perform the
repairs, Hollywood Towers was obligated to show that such access
was necessary. See§
718.111(5), Fla. Stat.
(2009) (“The association has the irrevocable right of access to
each unit during reasonable hours, when necessary for the
maintenance, repair, or replacement of any common elements or of
any portion of a unit to be maintained by the association
pursuant to the declaration or as necessary to prevent damage to
the common elements or to a unit or units.”).1
The trial court, on remand, must perform the Lamden
test and determine whether the association had the authority to
access Hampton's unit to repair her balcony, and, if so, whether
it acted reasonably—that is, not arbitrarily, capriciously, or
in bad faith—in choosing to perform the repair work from inside
Hampton's unit.
Courts don’t want to get into the business of in effect,
managing corporations and second guessing the decisions of their
Boards of Directors. Therefore, courts will yield to the
business judgment of these directors, as long as their decisions
are made in good faith.
One again…..if you’re a director on a Florida community
association Board, it will be difficult to ever get a judgment
against you individually, as long as you’re not stealing, taking
kick backs, acting maliciously toward a fellow owner, or
deliberately disregarding life safety issues. Keep your nose
clean and you’re good.
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 eight
attorney law firm with offices in Fort Lauderdale, Orlando and
Naples.
The
firm also has satellite offices in Tampa and Fort Myers.
Since 2009, Eric has been the host of Condo Craze and
HOAs, a weekly one hour radio show on 850 WFTL.
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 8,000 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.
