CARLANDIA CORPORATION, A DELAWARE CORPORATION, INDIVIDUALLY AND FOR THE USE AND BENEFIT OF ALL MEMBERS OF THE TWO NORTH BREAKERS ROW CONDOMINIUM ASSOCIATION, APPELLANT,
v.
MARNE OBERNAUER, MYRNA DANIELS, JOHN THEROUEX, MARY GOUIARTE, JULIAN COHEN, AUDREY LARMAN, LEWIS SCHOTT, NATHAN MONUS, RICHARD FENNEL, ROBERT HIGGINSON, CHRIS MARDEN AND PAUL MILSTEIN, DIRECTORS, PAST AND PRESENT, OF THE TWO NORTH BREAKERS ROW CONDOMINIUM ASSOCIATION, AND THE TWO NORTH BREAKERS ROW CONDOMINIUM ASSOCIATION, INC., APPELLEES

Fla. 4th DCA | 1997-05-14
No. 96-0132
STEVENSON, J., concurs., SHAHOOD, J., concurs in part and dissents in part with opinion.
695 So. 2d 408 Florida District Court of Appeal, Fourth District (1997) Positive Treatment
Cited by 13 cases

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Synopsis

Carlandia Corporation, a unit owner in a condominium, sued the association and its directors for failing to pursue claims against the developer for construction defects. The trial court dismissed for failure to arbitrate under Florida's condominium dispute resolution statute, but the appellate court reversed, holding that construction defect warranty claims fall outside the mandatory arbitration requirement.


Holding

Arbitration is not mandatory under these facts because the disagreement primarily involves the interpretation and enforcement of warranty claims, which are expressly excluded from the definition of 'dispute' under section 718.1255(1). Construction defect cases sounding in warranty are too complex and fact-intensive for the type of nonbinding arbitration contemplated by the statute.


Headnotes

[1] A "dispute" under section 718.1255, Florida Statutes, does not include any disagreement that primarily involves the interpretation or enforcement of any warranty.

[2] A condominium unit owner's claim alleging breach of statutory or fiduciary duties by the association and its directors for failing to investigate and pursue legal action…

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Key Quotes

“We reverse the dismissal because the disagreement framed by the complaint did not constitute a "dispute" within the meaning of section 718.1255, Florida Statutes (Supp.1992).”

Establishes the court's core holding that construction defect warranty claims fall outside the mandatory arbitration requirement.

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Facts & Procedural History

Carlandia Corporation owned a unit at The Two North Breakers Row Condominium and filed suit in May 1992 against the condominium association and board …

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Opinion of the Court
GROSS, Judge. SHAHOOD, Judge, concurring in part, dissenting in part.

GROSS, Judge.

The question posed in this case is whether section 718.1255, Florida Statutes (Supp. 1992), requires nonbinding arbitration before suit can be filed for the causes of action here at issue. We hold that arbitration is not mandatory under the facts of this case and reverse the trial court’s order of dismissal.

Appellant Carlandia Corporation is a unit owner at The Two North Breakers Row Condominium. In May, 1992, Carlandia filed suit against the condominium association and various members of its board of directors. The complaint alleged the existence of construction defects in common elements and common areas which were subject to redress under “the warranty provisions of the Condominium Act1 as well as under other legal theories.” The dominant legal theories of the complaint were that the directors and the association breached statutory and fiduciary duties by failing to properly investigate and pursue legal actions against the developer and general contractor for construction defects. In addition to damages, the complaint also sought credit against past and future assessments attributable to the defects.

The trial court granted the defendants’ motion to dismiss the complaint for failure to conduct nonbinding arbitration prior to filing suit pursuant to section 718.1255(4)(a). Car-landia, the unit owner, appeals. This court has jurisdiction. Fla. R.App. P. 9.130(a)(3)(C)(v).

We reverse the dismissal2 because the disagreement framed by the complaint did not constitute a “dispute” within the meaning of section 718.1255, Florida Statutes (Supp.1992).

Section 718.1255(4)(a) mandates that the parties to a “dispute” submit to nonbinding arbitration prior to the institution of court litigation. Blum v. Tamarac Fairways Ass’n, Inc., 684 So. 2d 826, 827 (Fla. 4th DCA 1996).

Section 718.1255(1) defines a “dispute” as any disagreement between two or more parties that involves: (a) The authority of the board of directors, under any law or association document to: 1. Require any owner to take any action, or not to take any action, involving that owner’s unit.

2. Alter or add to a common area or element. (b) The failure of a governing body, when required by law or an association document, to: 1. Properly conduct elections.

2. Give adequate notice of meetings or other actions.

3. Properly conduct meetings.

4. Allow inspection of books and records. “Dispute” does not include any disagreement that primarily involves title to any unit or common element; the interpretation or enforcement of any warranty; or the levy of a fee or assessment, or the collection of an assessment levied against a party. The statute excludes from the definition of “dispute” any disagreement that “primarily involves ... the interpretation or enforcement of any warranty.” A “warranty” under section 718.1255(1) includes those enumerated in section 718.203. By its use of the word “interpretation,” the statute expands the exclusion beyond warranty causes of action to include those legal theories where the application of a warranty is a critical element. Because the determination of defendants’ statutory or fiduciary liability first requires a finding that there were actionable warranty violations in the common elements and common areas, this case falls within this statutory exclusion. As the causes of action are framed by the complaint, if there were no warranty violations, then the defendants breached no legal duty by failing to sue the developer or general contractor. The most significant and difficult portion of the breach of fiduciary duty action as pled is the existence of any warranty violations.

This application of the exclusion is consistent with the legislative findings set forth in section 718.1255(3).

The statute is designed to protect unit owners from the high cost and significant delay of circuit court litigation with their condominium association. Blum, 684 So. 2d at 828. The legislature did not require arbitration in all types of condominium disputes; section 718.1255(1) limits the statute’s application to specific types of disagreements and excludes other categories of claims from arbitration. The nonbinding arbitration required by section 718.1255(4) is well suited to deal with everyday condominium disputes such as keys, pets, proxies, renters, election violations and offensive exterior decoration or maintenance of a unit. These types of cases are factually simple. They can be presented to an arbitrator without extensive discovery, expert testimony or sophisticated legal assistance.

Construction defect cases sounding in warranty are an altogether different beast. Because of their factual and legal complexity, they are less amenable to the type of nonbinding arbitration contemplated by the statute than other types of unit owner/association disputes. A bevy of construction defect cases might overwhelm the administrative mechanism, and perhaps the funding for it, described in section 718.1255(4).

The case cited by appellees, Woodlake Redevelopment Corp. v. Woodlake Condominium Association of Marco Shores, Inc., 671 So. 2d 253 (Fla. 2d DCA 1996), does not compel a different result. In that ease, the second district held that a unit owner’s count for breach of fiduciary duty against a condominium association and its directors was a “dispute” under section 718.1255 that was subject to arbitration. The nature of the fiduciary duty involved is not mentioned in the opinion. The case appears to involve common element maintenance and the fiduciary duty there at issue could well have been a failure to maintain resulting in waste to common areas, a dispute arguably falling under section 718.1255(l)(a)(2). There is no indication that Woodlake entailed any type of warranty claim.

REVERSED AND REMANDED.

STEVENSON, J., concurs.

SHAHOOD, J., concurs in part and dissents in part with opinion.

SHAHOOD, Judge, concurring in part, dissenting in part.

I concur in the reversal of the trial court’s order of dismissal, but would remand with directions to the court to enter a stay pending arbitration. See Blum v. Tamarac Fairways Ass’n Inc., 684 So. 2d 826 (Fla. 4th DCA 1996).

Contrary to the majority, I interpret Section 718.1255(4)(a), Florida Statutes, to require arbitration in this case. The allegations of the complaint indicate that this litigation involves the board of director’s failure to take action against the developer or general contractor in an attempt to repair or remedy construction defects in the common elements and common areas and improvements of the condominium. Therefore, the gravamen of this lawsuit involves the authority of the board of directors to “alter a common area or element”, as well as the board’s inherent duty to act on that authority. In my opinion, the primary issue is not the enforcement of a warranty, which is excluded from the statute.

. See § 718.203, Fla. Stat. (1995).

. Were arbitration required under section 718.1255, the proper remedy would not be dismissal, but a stay of the case pending arbitration. See Blum v. Tamarac Fairways Ass'n, Inc., 684 So. 2d 826 (Fla. 4th DCA 1996).


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Citator

Cited By

  • Gomez v. Fradin, 41 So. 3d 1068 (Fla. 4th DCA 2010)
    …st be accepted as true for purposes of our review, were not of the type normally associated with “disputes” as defined by Florida’s Condominium Act and thus, not subject to mandatory pre-suit non-binding arbitration. See Carlandia Corp. v. Obemauer, 695 So. 2d 408, 410 (Fla. 4th DCA 1997), receded from on other grounds by Neate, 718 So. 2d at 390 (“The nonbinding arbitration required by section 718.1255(4) is well suited to deal with everyday condominium disputes such as keys, pets, proxies, renters, election…
  • Ruffin v. Kingswood E. Condo. Ass'n, Inc., 719 So. 2d 951 (Fla. 4th DCA 1998)
    …lternative dispute resolution procedure was adopted in part to reduce the disadvantages to unit owners when litigating against the superior financial resources of condominium associations. See § 718.1255(3), Fla. Stat.; Carlandia Corp. v. Obernauer, 695 So. 2d 408, 410 (Fla. 4th DCA 1997). Even assuming, without deciding, that the Division may have authority to make a tenant a party to a dispute, if the person is not a tenant, we fail to see any jurisdictional basis whereby that person can be made a party to…
  • Neate v. Cypress Club Condo., Inc., 718 So. 2d 390 (Fla. 4th DCA 1998)
    …authorized filing in court without prior arbitration should not be dismissed. In later cases, we have simply cited Blum without comment. See Summit Towers Condo. Ass’n, Inc. v. Coren, 707 So. 2d 416 (Fla. 4th DCA 1998); Carlandia Corp. v. Obernauer, 695 So. 2d 408 (Fla. 4th DCA 1997). We read these provisions in section 718.1255 to create a condition precedent to filing an action in court, and conclude that this condition precedent operates similarly to comparable provisions in other statutes. For example in…
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