STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR BINDING ARBITRATION - HOA Seahawk At Aquarina Homeowners Association, Inc. Petitioner, v. Aquarina Community Services Association, Inc., Case No. 2010-00-6996 Respondent. / SUMMARY FINAL ORDER Procedural History On February 3, 2010, Petitioner Seahawk At Aquarina Homeowners Association, Inc. ( Seahawk ) filed the instant action against Aquarina Community Services Association, Inc. ( Community Services ). Seahawk s Petition alleges an election dispute stemming from an election of 5 directors at an annual meeting on May 29, 2008. Seahawk asserts that the 2008 election of the 5 directors was a nullity because the meeting did not have quorum present. On April 6, 2010, Community Services responded to the Petition by 1. Denying that the meeting failed to acquire a quorum; and, 2. Countering that a. five directors were properly elected; and, b. the dispute alleged is moot because another election of directors was held on April 3, 2009. 1
The facts of the 2008 election are not disputed. Accordingly, entry of a Final Order is appropriate. Rule 61B-80.114, Fla. Admin. Code (2010). FINDINGS OF FACT 1. Seahawk is a corporate entity that manages a homeowner s association in Brevard County, Florida; it is a sub-association of Community Services, 2. Community Services is a corporate entity that administers association land; it is the master association of various homeowners associations, including Seahawk. 3. On May 29, 2008, Community Services held its annual meeting; the order of business included the annual election of 5 directors. 4. The total number of voting interests was 650. 5. Three-hundred twenty-four voting interests were present at the meeting, which totaled 49.8% of the voting interests. 6. The minutes of the 2008 annual meeting reflect that the following individuals were elected to the Board of Directors on May 29, 2008: A. Lou Ruppert 324 votes; B. Paul Levesque 300 votes; C. Barbara Beck 282 votes; D. Herb Bruno 238 votes; and, E. Ed Muendel 235 votes. 7. The 2009 annual meeting was held on April 3, and the voting members present elected a new Board of Directors; this election is not in dispute. 2
CONCLUSIONS OF LAW The Division has jurisdiction over this matter pursuant to 720.311, Fla. Stat. (2010) to remedy the failure of a governing body, when required by an association document to properly conduct elections. Quorum at the 2008 Annual Meeting Seahawk asserts that the 2008 election was invalid because a quorum was not present. In support of this position Seahawk points to the Declaration and By-Laws of Community Services, which require a majority of the total votes of the Voting Membership of the Association to constitute a quorum at a meeting of the members. The Declaration and By-Laws of Community Services were drafted and effective in 1983. Community Services was incorporated under Chapter 617, Florida Statutes, a fact that is reflected in the preamble to its Articles of Incorporation: We, the undersigned, for the purpose of forming a corporation not for profit, in accordance with the laws of the State of Florida, acknowledge and file these Articles of Incorporation in the Office of the Secretary of State of the State of Florida. Twelve years after the corporation was created by its Articles of Incorporation, 720.306(1)(a), Florida Statutes was enacted. It states: Unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be 30 percent of the total voting interests. This statute, since its enactment in 1995, and has been re-enacted and effective every year since then, including 2008. At first blush, it seems that 720.306(1)(a), Florida Statutes, enacted in 1995, would not apply to the 1983 Community Services quorum requirement of a majority of 3
voting interests. However, 720.306(1)(a), Florida Statutes, does apply to Community Services for the following reasons: 1. Section 720.306, Florida Statutes, was relocated from Chapter 617 of the Florida Statutes governing non-profit corporations. Although Chapter 617 allowed homeowners associations to have a quorum larger than 30%, that fact was changed when 617.307, Florida Statutes was relocated to 720.306, Florida Statutes. 2. Section 617.0102, Florida Statutes (2008), which is the Reservation of Power Clause: 617.0102 Reservation of power to amend or repeal. The Legislature has the power to amend or repeal all or part of this act at any time, and all domestic and foreign corporations subject to this act shall be governed by the amendment or repeal. 3. Section 720.302(5), Florida Statutes (2008), which states: (5) Unless expressly stated to the contrary, corporations that operate residential homeowners associations in this state shall be governed by and subject to chapter 607, if the association was incorporated under that chapter, or to chapter 617, if the association was incorporated under that chapter, and this chapter. This chapter is intended to clarify existing law. Although Community Service was incorporated under Chapter 617 of the Florida Laws, the provisions of 720.306, Florida Statutes (2008 2010) apply to it. This statute allows homeowners associations to have a quorum 30% or lower, but it prohibits having a quorum higher than 30%. To the extent that the governing documents of Community Services violate the statutory prohibition against requiring a quorum greater than 30%, such requirement is null and void. The quorum requirement at the 2008 annual meeting was 30% of the 650 voting interests, which is 195 voting interests. A quorum was present at the meeting. Ninety-eight votes were required to determine who would be a member of the Board of Directors. The 2008 election of the Community Service Board of Directors was valid. 4
Election Dispute is Moot The 2009 annual election was held on April 3, 2009, and the 5 members of the Board of Directors who were the subject of the election dispute asserted by Seahawk were again subject to election, and there is no allegation of impropriety in that election. Accordingly, the dispute is moot. Florida. Based upon the foregoing, the relief requested is DENIED. DONE AND ORDERED this 20 th day of April 2010, at Tallahassee, Leon County, Shirley J. Whitsitt, Arbitrator Dept. Bus. and Prof. Reg., Arbitration Section 1940 North Monroe Street Tallahassee, Florida 32399-1029 Fax: (850) 487-0870 Attorney s Fees The prevailing party is entitled to have the other party pay reasonable costs and attorney s fees. Any such request must be filed within 30 days of the date of the Final Order. CERTIFICATE OF SERVICE On the 20 th day of April a copy of the foregoing Final Order was sent by facsimile and by first-class U.S. Mail, postage prepaid, to the following: Dennis Fairbanks, Esq. 1600 Sarno Rd., Ste. 1 Melborne, FL 32935 Edward J. Kinberg, Esq. 1290 W. Eau Gallie Blvd. Melbourne, FL 32935 5
Shirley J. Whitsitt 6