September 2002

WAKE-UP CALL FOR ALL DIRECTORS AND OFFICERS

Enron, Worldcom, Adelphia, .... what do these companies have in common? People entrusted with running these companies are being carted off to jail. People are now asking, where were their Boards of Directors?

The same talk can be heard at community associations when things go wrong. This should serve as a wake-up call to directors and officers of associations to not just show up at meetings, but be prepared to actually make decisions. And learn how to say NO when necessary!!!!

Trustees and Florida community association directors owe a fiduciary duty to beneficiaries and members respectively. The recent decision of Anton v. Anton, 27 Fla. L. Weekly D1090 (Fla. 4^th DCA, May 8, 2002), reinforces the importance of a director to actively participate in the management of the association. Mitchell Anton was a co-trustee of a trust with his brother. Anton’s brother, who was also a lawyer, converted money from the trust for his own personal use. Anton’s brother carried out his scheme to siphon funds from the trust by having Anton sign blank checks on the trust bank account. Anton never reviewed the bank statements, cancelled checks or bills which his brother allegedly had been paying. The court found Anton liable to the trust for the loss caused by his brother.

The court pointed out that a trustee is under a duty to administer a Florida trust diligently for the benefit of the beneficiary. The court explained that each trustee is under a duty to participate fully in the administration of the trust. "One trustee who delegates to another the administration of a trust breaches the duties of a trustee," the court stated. "The fact that the co-trustee was a lawyer does not relieve appellant from his personal responsibility to the trust."

This case points out the importance for all directors and officers to fulfill their fiduciary duty to Florida community association members just as a trustee owes a fiduciary duty to a Florida trust’s beneficiaries. Pay attention and be vigilant. Do not delegate your responsibilities. Come to meetings prepared. Raise questions, do not merely rubber stamp actions of others.

Now may be a good time for associations to re-evaluate current accounting methods and procedures. If necessary, adopt new accounting methods and procedures to provide a clearer and more accurate picture of expenditures and revenues. Directors should review financial reports. Directors also have a duty to make sure the association has the appropriate fidelity bonds.

TORTS: WHEN IS A LANDOWNER LIABLE FOR LIGHTNING STRIKES?

Now that we are in the midst of the summer storm season, hardly a day goes by without lightning in the area. It goes without saying that one wants to avoid being struck by lightning. But do you have duty to warn others of the risk of lightning?

In Seelbinder v. County of Volusia, 27 Fla. L. Weekly D1281 (Fla. 5^th DCA, May 31, 2002), the Fifth District Court of Appeal recently held that the County was not liable to a beach-goer who was struck by lightning. In September 1994, Marlene Seelbinder went to the north end of New Smyrna Beach with her family. When the clouds came and the sky darkened, the Seelbinders decided to leave. While packing up but still on the beach, Marleen Seelbinder was struck by lightning at 3:29 p.m. The Seelbinders sued the County, alleging that the lifeguards were negligent in failing to warn her of the risk of lightning.

Although the supervisor at the south end of the beach gave a warning for the south beach at 3:14 p.m., the lifeguard on duty at the north end of the beach testified he saw the storm from the south move out to open water. It was a different storm from the west that caused the north end to warn people at 3:24 p.m. to get out of the water. The court ruled the County did not breach any duty owed to Marleen Seelbinder because the County did not fail to exercise reasonable care in executing the County’s procedure for warning beach-goers of the risk of lightning. The court pointed out that the warnings of the risk of lightning relies partly on human observation.

Generally, the court held that a Florida landowner does not have a duty to warn people he or she has invited upon his or her property that there is a risk of being struck by lightning. It is only when a landowner undertakes to provide such warning that the landowner must exercise reasonable care in providing warnings. For example, a golf club may have a system in place to warn golfers of lightning in the area. If so, then the golf club has undertaken to provide warnings of lightning to the golfers; thus, it must exercise reasonable care in providing the warnings.

ELECTIONS: SEPTEMBER 10, 2002

Remember to vote. Many decisions will be made that will impact all of us, including the selection of judges and school board members. If you are not familiar with judicial candidates, ask your attorney.

FIRM NEWS

The University of Miami has announced that Michael J. Gelfand will be speaking at the University’s 27^th Institute on Condominium and Cluster Developments. He will be the lead-off speaker for the two day seminar to be held October 24 - 25, 2002. Anyone interested in attending should contact the University directly at 305-284-6276. The firm cannot provide tickets or reservations.

The firm is pleased to announce Susan Goldenstar will be Mr. Gelfand’s new assistant and Chrissy Fortin will be Mary Arpe’s new assistant.

This information is provided for public information purposes only and is provided without obligation or fee. It is distributed to the firm's association clients to provide a general notice of recent legal changes. This information is not to be considered as legal advice. The changes in the law may not have been reviewed by Florida courts and may be subject to further challenge. Before taking any action you are urged to consult with counsel to ensure that your legal rights are protected.

© 2002 by Gelfand & Arpe, P.A.