January 2004

What happens if a Florida condominium association board member is consistently late paying his or her assessments or misses three consecutive board meetings? Can the board of directors remove the board member? Apparently not.

In Schultz v. La Costa Beach Club Resort Condominium Association, Inc., Case No. 2003-08-3347 (Nov. 21, 2003), an arbitrator with the Division of Florida Land Sales, Condominiums, and Mobile Homes ruled that the only valid method for removing a board member is by recall by the unit owners. In Schultz, the board of directors of La Costa Beach Club Resort Condominium Association removed Sandra E. Schultz from the board for being delinquent in the payment of assessments. Ms. Schultz filed a petition for arbitration to be reinstated to the board. Ms. Schultz claimed she did not pay a March 1, 2003 assessment until April 10, 2003 because of an illness.

La Costa Beach Club argued that its bylaws allowed the Association to remove a board member for paying assessments late. The Association’s bylaws provided, "No member shall continue to serve on the board should he be more than thirty days delinquent in the payment of an assessment and said delinquency shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors."

The arbitrator ruled that La Costa Beach Club’s bylaw was invalid and ordered Ms. Schultz to be reinstated to the board. The Condominium Act, Fla. Stat. §718.112(2)(j), permits unit owners to recall their board members. Because the statute does not provide for additional methods by which a board member can be removed, the arbitrator determined that the only method for removing board members is by recall by the unit owners. "Permitting removal of a board member for nonpayment of assessments would open the way to removal for an entire host of other reasons including a violation of the condominium documents or perhaps even a rule adopted by the board, and would create wholesale uncertainty and instability in the composition of the board," the arbitrator said.

It has been reported that the Association has sought a trial court review of the arbitrator’s decision. Whether or not the decision is ultimately changed, it will impact many Florida condominium associations. A rule providing for the automatic resignation by a board member for late assessments is invalid. Additionally, a rule deeming a board member to have resigned for missing consecutive meetings would be invalid. Before removing a board member, make sure you are complying with the statutory procedures.

It should be noted that Florida’s Not-for-Profit Corporation Act has removal provisions applying to homeowner associations which are similar to the removal provisions of the Condominium Act. At his time, no reported Florida appellate court decision has provided a written interpretation of law as applied to homeowner associations.

RELEASES: BOXER DID NOT RELEASE NIGHTCLUB FROM NEGLIGENCE

What happens if someone is injured at a social function on the Association’s property? Can the injured person recover for damages even if the injured person released the Association from liability? It depends on what the release says.

A recent appellate decision emphasizes the importance of reviewing your releases before signing. In Cousins Club Corp. v. Silva, 28 Fla. L. Weekly D2426 (Fla. 4^th DCA, October 22, 2003), a college student was severely injured in a promotional boxing match held in a nightclub. Carlos Silva signed a "Release, Assumption of Risk and Indemnification Agreement" before the match. The Agreement released the club from all dangers inherent in boxing.

During the match, Silva fell and hit his head on a wooden stage located next to the ring. After the third round, a bouncer removed Silva from the ring. Paramedics did not arrive until 45 minutes later. Silva sustained a subdural hematoma due to blows to the head and/or hitting his head and severe brain edema due to lack of oxygen. The jury found the nightclub negligent in failing to provide or obtain medical treatment for Silva, failing to maintain its premises in a reasonably safe condition, and failing to properly supervise the boxing event. The jury awarded Silva over $12 million for the nightclub’s negligence.

The Florida appellate court affirmed the jury award. The court determined the Release did not bar the lawsuit because Silva only assumed the inherent risks in the boxing match. The Release did not release the nightclub from liability for injuries to Silva as a result of its own negligence.

Before signing releases, read them carefully and understand what you are being released from. If you do not want to be sued for negligence, make sure the release clearly states that you are not liable for injuries due to negligence.

Association mailboxes are filling up with claim papers concerning Adelphia Cable Television. Why? Adelphia’s bankruptcy is moving forward.

If you have claims or potential claims, including those based upon contracts, the deadline for filing claims is January 9, 2004. A notice that accompanies many claim papers points out that there are many exceptions to the filing requirements. Exceptions include claimants that are subscribers or are customers seeking customer deposits for Adelphia Services or for claims arising in the ordinary course of business. The notice requires claims to be actually filed, not just mailed, by the deadline.

How do you know whether you have a claim? The first level of analysis normally is whether you have lost money. The second level of analysis usually is to determine whether the loss was a result of Adelphia breaching a duty. If so, then you may be required to file your claim. Because of the relatively short notice period, do not delay in taking action!

© 2004 by Gelfand & Arpe, P.A.