March 2002

MEMORANDUM TO CLIENTS

Two recent Florida appellate court decisions concern events that resulted from, as we observe with hindsight, a probable lack of advance planning. These decisions should reinforce the need to use foresight to minimize trouble down the road.

INDEPENDENT CONTRACTOR: LIABILITY FOR NEGLIGENT HIRING

Picture this: A building owner hires an independent contractor without checking the worker=s background. The independent contractor is incompetent and an occupant is injured as a result of the contractor=s sloppy work. As a result of such a situation, a Florida building owner is no longer able to rely on the Aautomatic@ defense that owners are not liable for independent contractors= negligence.

In Suarez v. Gonzalez, 27 Fla. L. Weekly D104 (Fla. 4^th DCA, January 2, 2002), the court ruled a landlord negligently hired a contractor to install kitchen cabinets. As a result, the court found the landlord vicariously liable for damages Jose Gonzalez sustained when a kitchen cabinet fell off a wall and striking Mr. Gonzalez in the head and causing a spinal cord injury. The landlord did not know who the independent contractor was because he was hired Aoff the street@ by a relative and paid Ain cash.@ The jury awarded Gonzalez $2.7 million.

Generally, a Florida employer is not liable for the negligence of an independent contractor. Here, however, the owner Anegligently selected the anonymous >phantom= contractor who installed the cabinets.@ The court followed the rule that where there is a foreseeable risk of harm to others:

[I]t is the duty of an employer of an independent contractor Ato exercise reasonable care to employ only contractors competent to do the work with reasonable assurance of safety to others.@

The Suarez decision points out the importance of doing your homework before hiring independent contractors. In the past, property owners could avoid liability by delegating responsibility to an independent contractor. After this decision, Florida associations should require at a minimum properly licensed contractors with an assurance of competency appropriate for the work to be completed.

FORECLOSURES: THE IMPORTANCE OF FOLLOWING YOUR OWN RULES

Did you give all association members notice of your annual meeting? Did you post the notice of the annual meeting on the association=s property? Did the Board approve the budget? Did you keep minutes of all annual meetings? If not, you may find yourself up a creek (and without a paddle) in your next foreclosure action.

In Berg v. Bridle Path Homeowners Association, 27 Fla. L. Weekly D305 (Fla. 4^th DCA, January 30, 2002), the court held that in this assessment lien foreclosure action, the homeowners= association must show that the association properly levied the claimed assessments in accordance with the association=s own recorded documents. Bridle Path Homeowners Association filed a foreclosure action against the owner of two lots who failed to pay assessments for several years. The owner argued the liens were improper because the association failed to comply with its own requirements set forth in its Declaration of Covenants, Conditions, and Restrictions in making the assessment. The owner claimed:

1. The property manager determined the budget instead of the Board of Directors.

2. There was no evidence that Board meetings were held where the budgets were adopted.

3. There was no evidence she received her notice of the annual meeting.

4. There was no evidence the notice of the annual meeting was placed on the property.

5. Minutes of the meetings were not kept.

The court stated, Aa homeowner association is obligated to show that it has properly levied the assessment in accordance with the community=s declaration of restrictive covenants and by-laws when the defendant challenges the lack of compliance >specifically and with particularity=.@

The Berg decision points out how important it is for associations to follow their own rules and regulations particularly when it comes to the levy of assessments. Keep in mind the problems that may arise if the association fails to follow its own rules. The association may find itself in the unfortunate position of being unable to foreclose a claim of lien or worse! Feel free to contact the firm if you have any questions with regard to the requirements for annual members= meetings, budget meetings, and budgets as set forth in your association=s declaration or by-laws.

FIRM NEWS

Mr. Gelfand will be participating in the Palm Beach County Bar Association=s Law Week Seminars the week of April 29 - May 3, 2002. He will be covering community association law topics. The firm is not scheduling the event; thus, it has no control over seating availability. Anyone interested in attending should contact the Bar Association offices for information at 561-687-2800.

The firm is pleased to announce Rena Uzzi has been promoted to paralegal. Rena, who has been with the firm for almost two years, will continue assisting with lien foreclosures and other general association matters.

8 2002 by Gelfand & Arpe, P.A.