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October 1, 1994 MEMORANDUM TO CLIENTS
ANNUAL MEETINGS: VOTING AND WAIVER OF RESERVES With "season" approaching it is time to plan for annual meetings. Advance planning is especially important now because nearly all condominium, cooperative, and homeowners associations are required to use ballots rather than proxies for directors' elections. Whether legally required or not, to facilitate owner understanding of the process most associations follow The Condominium Act's balloting requirements. It is imperative that associations plan annual meetings far in advance. The usual rule of thumb allows for annual meetings to be set 100 days in advance of the meeting. This advance effort allows directors to formally approve the meeting date, provide a notice to members seeking nominations, allow a second directors' meeting ratifying the ballot, and to furnish a final notice of meeting. Care should be taken when planning meetings when special topics such as amendments or waiving or reducing reserves will be contemplated. Usually notices and agenda must specifically identify these items. As discussed in the firm's July 1, 1994 Memorandum to Clients, condominium and cooperative associations desiring to waive or reduce statutory reserves must obtain the consent of a majority of all voting interests. Because of scheduling requirements, please contact your association attorney as early as possible to confirm availability for your annual meeting, if desired, and for the preparation of meeting documents. UNEMPLOYMENT COMPENSATION:
PROTECTION FOR EVEN THE LESS THAN PERFECT
A former employee may not be entitled to unemployment compensation benefits if the employee was discharged for work related misconduct. Florida law, specifically §443.036(26) Fla. Stat. (1993) defines misconduct in work as "willful or wanton disregard of an employer's interests" or "carelessness or negligence of such a degree or recurrence as to manifest culpability, wrongful intent, or evil design." As strict as the law may appear, historically the courts have interpreted the law in favor of the employees and against employers when determining if an employee's termination was due to work related misconduct. The decision in Doyle v Florida Unemployment Appeals Commission 19 Fla. L. Weekly D890 (2nd DCA April 22, 1994) reaffirmed the interpretation favoring employees. An employee who is discharged because the employee cannot adequately perform the work is generally entitled to unemployment compensation benefits. An employee's use of poor judgment, inattention, inadvertence or ordinary negligence does not rise to the level of "misconduct" as defined by the statute warranting denial of unemployment compensation benefits. The practical effect of the decision is that while a mistake may justify an employee's dismissal, unless the employees conduct was outrageous, the employee will be entitled to unemployment compensation. If compensation benefits are granted, then the employer's unemployment insurance tax will be increased. Note, for a discussion of employee insubordination and unemployment compensation see the firm's February 1, 1993 Memorandum to Clients. INSURANCE:
INSURERS ARE NOT LIABLE FOR EVERYTHING
Most insurance contracts are lengthy, contain fine print and may be difficult to understand. Under Florida law, ambiguous provisions of an insurance contract which limit liability are interpreted in favor of the insured and against the insurer. Ambiguities may arise when a particular policy provision may be interpreted differently by reasonable persons. When ambiguities cause disputes, judges are called upon to provide a final interpretation. Two insurance policy language disputes of interest to property owners, including associations were recently decided by Florida's appellate courts. First, in State Farm Fire and Casualty Co. v. Metropolitan Dade County and Elias, 19 Fla. L. Weekly D1164 (Fla. 1994) the Supreme Court of Florida decided that an insurance company was not responsible to pay for the increased costs of rebuilding a home when the costs were due to building code amendments. Elias and others sued State Farm for coverage of losses incurred when hurricane Andrew partially destroyed Elias' home. The Appellate Court held that the policy's "Ordinance or Law" and "increased cost limitation" exclusions were clear; therefore, State Farm did not have to pay for increased re-construction costs required by Dade County's new flood elevation requirements. Second, in Scottsdale Ins. Co. v. Deer Run P.O.A., Inc., 19 Fla. L. Weekly (Fla. 4th DCA, 1994), the Deer Run Association sought coverage from Scottsdale Insurance concerning an owner's claim. Scottsdale provided a legal defense to the claim, but the owner prevailed and the owner obtained an attorney's fee award against the Deer Run Association. The Appellate Court held that the policy providing for coverage of the costs of litigation and for property damage was clear and unambiguous. Scottsdale would have to pay for costs, such as deposition charges. Because attorney's fees are different from costs or property damage, Scottsdale would not have to pay for the Deer Run Association's attorney's fees. All property owners, including associations, are urged to review their insurance policies. The policy provisions discussed in these two cases are similar to provisions in many owner and association policies. Because of the nature of owners and association efforts, policies may have to be amended to provide proper and complete coverage.
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