S & T ANCHORAGE, INC., APPELLANT AND CROSS/APPELLEE,
v.
JONATHAN LEWIS AND PETER LEWIS, APPELLEES AND CROSS/APPELLANTS

Fla. 3d DCA | 1991-02-05
Nos. 90-1951, 90-1756
Before BASKIN, FERGUSON and LEVY, JJ.
575 So. 2d 696 Florida District Court of Appeal, Third District (1991) Caution
Cited by 22 cases

AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.

Synopsis

S & T Anchorage, Inc. and the Lewises appealed and cross-appealed a summary judgment and dismissal of counterclaims involving waterfront property rights in a residential subdivision. The court reversed the summary judgment barring Jonathan Lewis's waterfront rights claim, finding that the Association lacked authority to assign those rights and that genuine factual disputes existed regarding the Declaration's allocation of property rights.


Holding

The court reversed the summary judgment against Jonathan Lewis, holding that the Assignment was an ultra vires act because the Declaration did not authorize the Association to sell, convey, or assign common areas, and that a genuine issue of material fact exists regarding whether Lewis has individual waterfront rights under the Declaration. The court affirmed dismissal of all abuse of process and breach of fiduciary duty counterclaims.


Headnotes

[1] A homeowners' association's assignment of common areas is invalid if it exceeds the authority granted in the governing documents, constituting an ultra vires act.

[2] A settlement agreement entered into by a homeowners' association does not extinguish the individual rights of a lot owner if the association's actions were ultra vires.

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Key Quotes

“Because the Association is a corporation, it may not act in any way not authorized in its articles of incorporation or bylaws.”

Establishes that the Association's authority is limited to what the Declaration, articles, and bylaws authorize; forms the basis for finding the Assignment ultra vires.

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Facts & Procedural History

Anchorage developed a subdivided property with nine lots (seven inland, two waterfront) and recorded a Declaration of Covenants establishing an Owners…

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Opinion of the Court
BASKIN, Judge.

BASKIN, Judge.

Jonathan Lewis appeals an adverse final summary judgment holding that he has no right to assert a counterclaim to establish his waterfront rights. In addition, S & T Anchorage, Inc. [Anchorage] appeals a final judgment dismissing its counterclaim for abuse of process; Jonathan and Peter Lewis cross-appeal the final judgment, which also dismisses their counterclaims for abuse of process and breach of fiduciary duty. The appeals have been consolidated. We reverse the final summary judgment prohibiting Jonathan Lewis’s claims and remand for further proceedings; however, we affirm the final judgment as to all parties.

Anchorage acquired property which was subdivided into nine lots for individual sale. Seven of the lots were inland; two were on the waterfront. Howard Scharlin, Anchorage’s president and director, wrote and recorded a Declaration of Covenants for the subdivision. The Declaration defined the common areas of the subdivision to include the dock area, and set forth the rights and responsibilities of the owners. The Declaration established the Anchorage Owners Association, Inc., [Association] and named Anchorage as a shareholder. After the seven inland lots had been sold, Scharlin, as president of the Association, executed an Assignment of Harbor, transferring the Association’s waterfront rights to Anchorage. Scharlin also executed the Assignment as president of Anchorage.

Challenging the Assignment, the Association sued Anchorage, but settled the lawsuit and agreed to dismissal with prejudice. The Association relinquished its waterfront rights, and recognized the efficacy of the assignment.1

Anchorage had responded to the Association’s lawsuit by filing a counterclaim against Jonathan Lewis, a lot owner,2 for damages predicated on abuse of process.3 Jonathan Lewis filed a counterclaim against Anchorage to enforce his waterfront rights as an individual lot owner and to obtain an easement by necessity to gain access to the waterfront; he joined with Peter Lewis to claim damages from Anchorage for abuse of process, and damages from Anchorage’s principals for breach of fiduciary duty.

After the settlement of the Association’s lawsuit, Anchorage moved for summary judgment against Jonathan Lewis, arguing that his counterclaim was barred by the Association’s relinquishment of waterfront rights. Jonathan Lewis moved for summary judgment against Anchorage claiming that his refusal to consent to the Association’s relinquishment of its rights preserved his individual rights to the waterfront. Denying Jonathan Lewis’s motion and granting Anchorage’s motion, the trial court entered final summary judgment against Jonathan Lewis on his waterfront rights claim.

Next, the trial court entered a final judgment dismissing the Lewises’ counterclaims for abuse of process and breach of fiduciary duty, and dismissed Anchorage’s counterclaim for abuse of process. Anchorage appeals and the Lewises cross-appeal the judgment.

First, Anchorage argues that Jonathan Lewis is barred from reasserting a claim for waterfront rights in view of the Association’s settlement ratifying the Assignment. Second, Anchorage contends that under the Declaration, Lewis has no individual right to assert an individual claim, as the Declaration grants the Association all rights to the waterfront. We reject both arguments.

Contrary to the trial court’s decision, the settlement agreement and subsequent voluntary dismissal of the Association’s lawsuit do not extinguish Jonathan Lewis’s individual rights. Because the Association is a corporation, it may not act in any way not authorized in its articles of incorporation or bylaws. Randall v. Mickle, 103 Fla. 1229, 138 So. 14 (1931); Sudduth v. St. Andrews Bay Community Hotel Corp., 99 Fla. 151, 126 So. 302 (1930). The articles and bylaws must be consistent with the provisions of the superior document, the Declaration. See Roth v. Springlake II Homeowners Ass’n, 533 So. 2d 819 (Fla. 4th DCA 1988) (approval of each and every lot owner was required, where declaration provided that no structure could be maintained on common areas, to grant easement in contravention to declaration; homeowners’ association could not grant exclusive easement); R. Natelson, Law of Property Owners Associations, § 4.5 (1989).

The binding Declaration does not grant any authority to the Association to sell, convey, assign, or in any way encumber the common areas. The Declaration gives the Association the authority to levy general assessments, Declaration, Art. 5 § 2a, to levy special assessments, Art. 5 § 3, to bid on foreclosed lots,4 sell, acquire, hold, lease, mortgage, and convey the lots, Art. 5 § 5, to enforce monthly maintenance assessments on dock slips, Art. 8 § 1, and to assign to the owners its rights and duties respecting the dock area. Art. 8 § 1. The Declaration defines owners as class A voting stock holders, and Anchorage as a class B stockholder. Art. 3 § 2.

The Declaration does not empower the Association to sell or convey the dock areas or the common areas. The Assignment, executed by Scharlin on behalf of the Association, and the Association’s subsequent ratification of the Assignment are invalid because they exceed the Association’s authority and are ultra vires acts. Wenger v. Breakwater Homeowners Ass’n, 423 So. 2d 619 (Fla. 4th DCA 1982); Barnett & Klein Corp. v. President of Palm Beach—A Condominium, Inc., 426 So. 2d 1074 (Fla. 4th DCA 1983), see Lakes of Emerald Hills v. Silverman, 558 So. 2d 442 (Fla. 4th DCA 1990) (association bylaws do not support association’s entitlement to attorney fees); Roth; see also Harwick v. Indian Creek Country Club, 142 So. 2d 128 (Fla. 3d DCA 1962) (agreement between developer and some property owners invalid where not executed by all lot owners in subdivision).

Even if, as Anchorage asserts, the Assignment and settlement were adopted pursuant to a proper vote as provided by the Association bylaws, the absence of authority to execute such documents renders them ultra vires, Roth; Natelson, and invalid. Barnett & Klein Corp.. Thus, neither the Assignment nor the settlement may operate to deprive Jonathan Lewis of his individual rights.

Next, we address Anchorage’s contention that the Declaration grants the As sociation all waterfront rights. Jonathan Lewis cites language in the Declaration stating that benefits inure to the individual owners.5 Anchorage counters that the Declaration6 vests all property rights in the Association and none in Lewis. Apparently convinced by Anchorage’s argument, the trial court ruled in Anchorage’s favor, finding that Jonathan Lewis, individually, could not reassert claims dismissed by the Association.

The ambiguity and conflict in the Declaration preclude us from ascertaining in whom the disputed property rights vested. “[WJhere the terms of the instrument are ambiguous, casting doubt upon the intent of the parties, this intent must be determined by the trier of fact, and is not to be determined upon a motion for summary judgment.” Westchester Fire Ins. Co. v. In-Sink-Erator, 252 So. 2d 856, 858 (Fla. 4th DCA 1971); Commercial Trading Co., Inc. v. Zero Food Storage, Inc., 199 So. 2d 109, 112 (Fla. 3d DCA), cert. denied 204 So. 2d 332 (Fla.1967); Universal Underwriters Ins. Co. v. Steve Hull Chevrolet, Inc., 513 So. 2d 218, 219 (Fla. 1st DCA 1987); Griffin Builders Supply, Inc. v. Jones, 384 So. 2d 265, 266 (Fla. 2d DCA 1980). We find that a genuine issue of material fact exists as to whether Jonathan Lewis has individual rights, separate and distinct from his derivative rights as a member of the Association.

Having determined that Anchorage relies on ultra vires acts of the Association, and that a genuine issue of material fact exists as to Jonathan Lewis’s right under the Declaration to maintain an individual claim against Anchorage, we reverse the final summary judgment and remand for further proceedings.

Finding no merit in the abuse of process or breach of fiduciary duty claims, we affirm the final judgment dismissing all remaining counterclaims. Thomson McKinnon Securities, Inc. v. Light, 534 So. 2d 757 (Fla. 3d DCA 1988); Della-Donna v. Nova University, Inc., 512 So. 2d 1051 (Fla. 4th DCA 1987).

Final judgment affirmed; summary judgment reversed and remanded.

. The Lewises were not parties to or mentioned in the settlement agreement.

. Anchorage also filed a counterclaim against another lot owner who is not a party to this appeal.

. The lots, of course, are distinguishable from the common areas.

. The preamble to the Declaration states:

... the Property shall be held, sold and conveyed subject to the following easements, restrictions, covenants and conditions, ... and shall inure to the benefit of each Owner thereof.

Article 11, section 1 of the Declaration provides:

The covenants and restrictions contained in this Declaration, and as the same may be amended from time to time, shall run with the land and shall inure to the benefit of and be enforceably by the Declarant, the Association, the Owners ...

. Article 4, section 1 provides:

... the Declarant hereby covenants that it shall convey the Common Area to the Association, free and clear of all liens and financial encumbrancess, not later than the termination of Class B membership.

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Citator

Cited By (11 total)

  • The Word OF Life Ministry, Inc. v. Miller, 778 So. 2d 360 (Fla. 1st DCA 2001)
    …g on May 24, 1978, had been authorized to elect directors, the elections were void for failure to observe restrictions imposed by the articles of incorporation which required directors to be members of the corporation.3 See S & T Anchorage v. Lewis, 575 So. 2d 696, 698 (Fla. 3d DCA 1991) (“The Assignment ... and ... subsequent ratification ... are invalid because they ... are ultra vires acts.”); Wolfson v. Cary, 488 So. 2d 864, 869 (Fla. 3d DCA 1986) (holding void “shares issued in excess of the amount of co…
  • Hannah v. Malk Holdings, LLC, 368 So. 3d 1087 (Fla. 2d DCA 2024)
  • Zimmerman v. Fla. Windstorm Underwriting Ass'n, 873 So. 2d 411 (Fla. 1st DCA 2004)
    …rticles of incorporation, or a private entity’s bylaws. See Word of Life Ministry, Inc. v. Miller, 778 So. 2d 360, 363 (Fla. 1st DCA 2001) (holding that corporation must act in accordance with its charter and bylaws); S & T Anchorage, Inc. v. Lewis, 575 So. 2d 696, 698 (Fla. 3d DCA 1991) (holding that an association could not “act in any way not authorized in its articles of incorporation or bylaws”). While, once the statute was amended, FWUA could have amended its Plan of Operation and the Department of Insu…

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Authorities Cited (17 total)

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