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Article by Michael Hyman in Today’s Daily Business Review: “Ruling: Community Associations Can Take Owners to Court Without Completing Arbitration”

MichaelHymanThe firm’s Michael L. Hyman authored an article that is featured as the “Board of Contributors” expert guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Ruling: Community Associations Can Take Owners to Court Without Completing Arbitration,” discusses how Florida law calls for associations to file for nonbinding arbitration with the state agency that regulates condominiums prior to going to court.  Michael notes that the law, which is designed to relieve Florida’s courts from routine disputes between community associations and their unit owners, certainly does not mean such arbitration proceedings under the Department of Business and Professional Regulation’s Division of Condominiums must completely run their course prior to seeking emergency relief in local circuit court, as a recent ruling by the state’s Fourth District Court of Appeal reaffirmed.  His article reads:

. . . In Aquarius Condominium Association v. Boris Goldberg, the owners of a unit refused to grant the association’s contractor access to their residence for the purposes of initiating a balcony renovation project as part of a mandated 40-year recertification for the property. In response, the association filed a petition for arbitration with the Division of Condominiums, Timeshares and Mobile Homes as prescribed under Florida law. On the very same day, it also filed an “emergency motion to abate arbitration and temporarily relinquish jurisdiction” in Broward County circuit court against the unit owners to seek injunctive relief to secure immediate access to the residence.

dbr-logo-300x57Apparently in light of the emergency court proceedings over the injunction, the arbitrator with the state agency abated the matter for three months and noted that the association would need to file a status report or the arbitration petition would be dismissed.

A hearing on the emergency motion was set and then cancelled, and no order with respect to that relief was ever entered. Instead, the unit owners filed an answer and affirmative defenses to the complaint, alleging their balcony had already been demolished by the association’s contractor so access to the unit was no longer necessary at the time of the filing.

The association responded by filing a motion to compel mediation, explaining that access to both the exterior and interior of the unit was necessary to determine the scope of work under the recertification. The subsequent mediation resulted in a settlement agreement, after which the association filed motions to enforce the agreement and receive attorney’s fees and costs.

The unit owners then filed a motion to dismiss the case for lack of subject matter jurisdiction and asked the court to declare all prior orders and proceedings null and void. The lower court initially denied the motion to dismiss, but it then granted the unit owners’ motion for rehearing and dismissed the case, ultimately concluding that the court lacked subject matter jurisdiction because the dispute must have first been arbitrated by the state agency.

In the subsequent appeal, the appellate panel examined the statute calling for presuit arbitrations under the Division of Condominiums. After a careful review and analysis, it concluded the statute does not divest jurisdiction from the court, but rather it merely establishes a condition precedent to litigation.

The unanimous appellate opinion goes on the cite several cases also similarly holding that the arbitration provided in Section 718.1255 created a condition precedent to filing an action in court, and compliance with a condition precedent may be waived by a defendant.

In addition to concluding that nonbinding arbitration pursuant to Florida law was a condition precedent to the filing of the association’s suit, not a matter of jurisdiction, the ruling also reads:

“In fact, the association did file for arbitration pursuant to that provision. The arbitrator granted its motion to abate to pursue emergency relief, and the association filed its complaint for injunction. The parties proceeded to litigate in the circuit court. The unit owners filed an answer and affirmative defenses but did not raise the failure to arbitrate pursuant to Section 718.1255, nor did they request that the court abate the suit to return the parties to the previously invoked arbitration proceeding. Having failed to raise the noncompliance with a condition precedent, as well as their continued litigation, they have waived it.”. . .

By reversing this ruling and remanding the case back to the trial court for further proceedings, Michael concludes that the Fourth DCA has reaffirmed that Florida’s courts will not look favorably on efforts to subvert associations’ rights to pursue emergency relief by arguing that the courts lack jurisdiction over disputes that have not completed their nonbinding arbitration proceeding.  He suggests that associations involved in disputes with unit owners would be well advised to trust only in the guidance of extremely well qualified and experienced association law attorneys who understand and make effective use of actions both before Florida’s courts and its condominium regulator.

Our firm salutes Michael for sharing his insights into the takeaways for community associations from this recent appellate opinion with the readers of the Daily Business ReviewClick here to read the complete article in the newspaper’s website (registration required).

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