Opinion
No. 3D11-884 Lower Tribunal No. 44-2008-CA-948-K
04-11-2012
Roland B. Clark, etc., et al., Appellants, v. Bluewater Key RV Ownership Park, etc., Appellee.
Becker and Poliakoff and Lilliana M. Farinas-Sabrogal, for appellant. Lewis Brisbois Bisgaard & Smith and Jeffrey A. Mowers and Cindy J. Mischon, for appellee.
Not final until disposition of timely filed motion for rehearing.
An Appeal from the Circuit Court for Monroe County, David J. Audlin, Jr., Judge.
Becker and Poliakoff and Lilliana M. Farinas-Sabrogal, for appellant.
Lewis Brisbois Bisgaard & Smith and Jeffrey A. Mowers and Cindy J. Mischon, for appellee. Before RAMIREZ, SHEPHERD, and SUAREZ, JJ.
RAMIREZ, J.
Roland B. Clark and other owners of lots in a Recreational Vehicle (RV) resort in the Florida Keys (collectively, "Clark") appeal the trial court's judgment in favor of the association governing the resort, Blue Water Key RV Ownership Park Property Owners Association. The trial court ruled that the Association could impose certain requirements upon lot owners through a vote of the Board of Directors, rather than a vote of the lot owners. Because neither the Declaration nor the Association's bylaws include provisions permitting a fee for leasing lots but allow for regulations upon leasing, we reverse in part and affirm in part.
Appellants own lots at Bluewater Key RV Ownership Park, a luxury RV park. The park contains common areas that include a pool, clubhouse, park, and other areas that are available for lot owners' use. The Association operates a rental program that provides cleaning and greeting services to tenants at a fifteen percent commission on the rental rates. Appellants rented their lots without using the Association's rental program.
To regulate owners' rental of their lots, the Association's Board of Directors enacted three Resolutions. In addition to imposing requirements for owners to meet before renting their lots, such as identification requirements and ensuring available liability insurance, Resolution 1 imposed a daily fee upon owners who allowed use of their lots by non-owners. Resolution 2 specified a daily user fee of $11.00. The fee for lot owners who rented through the Association's rental program would be paid through the rental commission charged. For lot owners that did not use the Association's rental program, the fee was charged monthly to the lot owner. Resolution 3 established a penalty for non payment of the fee, as a special assessment against the rented lot. All three resolutions were enacted by the Board of Directors, not the lot owners.
Appellants rented their lots but did not pay the fee. As a result, pursuant to the resolutions, liens were placed against their lots. Clark sued to challenge the user fee and the Association's rental program. Clark claimed the Association exceeded the powers of its governing documents. In the trial court, the Association prevailed. Clark appeals.
Pursuant to its terms, the Declaration imposes covenants and restrictions upon the lot owners' use of the land in the Park, and thus, its interpretation is a matter of contract law. See, e.g., Royal Oak Landing Homeowners Ass'n v. Pelletier, 620 So. 2d 786, 788 (Fla. 4th DCA 1993) (applying principles of contract interpretation to a subdivision's Declaration). Our analysis is de novo. First Equitable Realty III, Ltd. v. Grandview Palace Condo. Ass'n, 40 So. 3d 1008, 1090 (Fla. 3d DCA 2010). Covenants restricting use of real property are strictly construed against the party claiming the restriction. Washington Apt. Hotel v. Schneider, 75 So. 2d 907, 908 (Fla. 1954); Young v. Tortoise Island Homeowners' Ass'n, 511 So. 2d 381, 383-84 (Fla. 5th DCA 1987). Thus, in this case, any doubt regarding the Association's power to enforce the restriction on leasing is construed against the Association. The Declaration is construed as a whole, and specific provisions govern over general provisions. See Volusia Cty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 125, 133 (Fla. 2000); accord Moss v. Inverness Highlands South & West Civic Ass'n, 521 So. 2d 359, 359 (Fla. 5th DCA 1988). In addition, courts cannot rewrite contracts by attaching requirements that were not included in the agreement. Hill v. Deering Bay Marina Ass'n, 985 So. 2d 1162, 1166 (Fla. 3d DCA 2008).
To resolve the parties' dispute, we must examine the governing documents' provisions regarding each power the Association invokes. Clark contends the Resolutions impose amendments to the Declaration covering the Park, which cannot occur without an owner vote. The Association contends the Resolutions are not amendments, but rather, are valid exercises of one of the following already-existing powers: reasonable rules and regulations on leasing; reasonable regulations on use of property in the Park; or assessments for a user fee necessary to fund increase use from rentals.
Under the Declaration, an owner's lease or rental of a lot in the park is subject to "the reasonable rules, regulations and procedures promulgated by the Association." However, "in no event may the Association restrict the length of the term or duration of tenancy" of a leased or rented lot. There is no provision in the Declaration or the bylaws authorizing fees for leasing.
The Association's bylaws provide that the Board of Directors may adopt amend, modify, or rescind rules and regulations for operation and use of the Association's property. Under the Declaration, Association property includes the common areas of the RV park, but not the lots. Thus, under the bylaws the Board of Directors may "adopt and publish rules and regulations governing the use of the common areas and the personal conduct of the members and their guests thereon." There are no provisions in the bylaws regarding fees for use of the common areas. Use and occupancy rules in the Declaration "cannot be amended or added to without the consent of seventy-five percent (75%) of all Lot owners."
The Declaration provides that the Association may fund the tasks necessary to meet its duties through assessments. Under the Declaration, "except as otherwise provided, all assessments shall be equally assessed against all lots within the Properties." Moreover, all assessments are "to be fixed, established, and collected from time to time" as provided in the Declaration. Assessments are a charge on the land upon which the lots lie and give rise to a lien against a lot if not paid. There are three types of assessments: regular annual assessments; special assessments; and capital improvement assessments.
Annual assessments are fixed in the Association's yearly budget. Under the Declaration, annual assessments "shall be used exclusively for the general expenses of the association," which are "any and all charges for the maintenance of the common areas and easements," along with "any expense necessary to promote the health, safety, welfare, and recreational opportunities of the Members of the Association, [and] their guests and tenants." Each year, the Board of Directors, by a majority vote, "shall adopt an annual budget for the subsequent fiscal year."
The Declaration also permits the Board of Directors to adjust the assessment. Special assessments are levied against a specific lot or lots. Under the Declaration, a special assessment may be levied for:
Special services to a specific lot or lots . . . requested by the owner; Charges for expenses of the Association which are not general expenses but which are attributable to a specific lot or lots but which are designated as a special charge;Thus, special assessments are tied to specific obligations connected to the assessed lot or lots, and are related to payment of those obligations.
Reimbursement for damages caused by a lot owner or owners, their family members, guests, invitees, or tenants;
Late charges, user fees, fines, and penalties;
Any other charge which is not a general expense;
Charges for common expenses to the extent that such charges exceed the budget.
The Association may also levy assessments for capital improvements, but "any such assessment shall have the assent of three fourths (3/4) of the members of the Association."
Under the Declaration, the Association may regulate use of lots and Association property, but not charge lot owners to lease their lots. The Declaration addresses only the term of leases and empowers the Association to impose reasonable regulations upon leasing of lots, but not fees. The Association's bylaws allow the Board to pass regulations that relate to the general welfare of the members. Here, the challenged Resolutions include provisions for insurance, identification of users and tenants, and other requirements consistent with safety and regulatory requirements. These administrative requirements relate to the general welfare of the members, and thus are valid.
However, the fee for rentals is not within the Association's power to regulate leasing or impose assessments. The fee is not a general assessment, as those who use the Association's program do not pay the fee, because it is part of the commission paid to the Association for renting the lot, and those who do not rent or lease their lots are unaffected. Additionally, even if the fee is charged to fund general expenses, under the Declaration assessments relating to general resident welfare expenses must be part of annual, rather than special, assessments. When the Declaration is construed against the Association's interpretation, the fee is not a regulation or assessment, but rather, an additional restriction upon leasing or rental. To rent a lot, an owner must pay the Association, which creates a condition to lot rental that is not in the Declaration.
Despite the Resolutions' effect upon leasing, the Association contends the lease fee is a user fee special assessment charged to those who choose to rent their lots. But the Declaration requires assessments to be assessed equally, and this assessment was assessed against specific lots, those lots that are leased without use of the Association's rental program. The triggering event for the fee at issue in this case is leasing, not use, since a non-leasing owner does not pay the fee. The fee is not tied to use of the common elements. Rather, the record demonstrates the Association concluded, without any comparison between the leased and non-leased lots, that leased lots consume a larger share of common services and expenses. Thus, the leasing fee does not qualify as a special assessment for payment of a user fee.
Because the Declaration does not address fees paid for rentals to non-owners, the Resolutions' requirements for payment of fees, and enforcement of such fees through assessments, are beyond the scope of the powers of the Association's Board of Directors. Such a requirement, which restricts leasing to those who either pay the fee or use the Association's rental program, is a material change to the Declaration and is not a reasonable rule or regulation. Consequently, we reverse the trial court's determination regarding the validity of the fee requirement and resulting assessments, but affirm the trial court's remaining determinations regarding the regulations upon leasing.
Affirmed in part; reversed in part. SUAREZ, J., concurs. SHEPHERD, J., dissenting.
I respectfully dissent from the decision of the Court in this case for the reasons set forth in the opinion of the trial judge, upon which I cannot improve and therefore adopt en haec verba:
FINAL JUDGMENT
THIS MATTER came before the Court for trial by the Court on November 16 - 17, 2010, and the Court, having conducted a trial of the issues presented, having taken testimony and received evidence, having weighed the evidence and testimony and having assigned such weight to each piece of evidence and such credibility to each piece of testimony as is appropriate, hereby FINDS and ORDERS as follows: 1. The BLUEWATER KEY RV OWNERSHIP PARK ("PARK") is composed of 81 individual lots, landscaped with utility services, including water, electric, and cable television, in Monroe County, Florida. The park also contains recreational facilities on commonly owned property, including the pool and clubhouse. The BLUEWATER KEY RV OWNERSHIP PARK PROPERTY OWNERS ASSOCIATION, INC. ("ASSOCIATION"), was formed pursuant to Articles of Incorporation filed with the Florida Department of State on or about August 3, 1989. It is a not-for-profit corporation created under the authority of Chapter 617, Florida Statutes. Consistent therewith, the ASSOCIATION'S Articles of Incorporation contemplate no pecuniary gain or profit to the members, and allow no distribution of income to members, directors or officers. (Articles of Incorporation, Article IV). 2. No full time or permanent residential use of the lots is allowed. Owners may use their own lot, allow them to be used by family or friends, or rent them out. 103. To facilitate short term rentals, the ASSOCIATION created a "rental program," which is a voluntary program allowing lot owners to rent their lots through the PARK'S "rental program" or they may rent their lots independently, by themselves or with the help of other professional management. The ASSOCIATION'S rental program charges a 15% fee on the rental income for the services provided, which money is deposited into the PROPERTY ASSOCIATION'S bank account. The PROPERTY ASSOCIATION distributes 85% of the rental income to the respective lot owners, and deposits the remaining 15% of rental income into the ASSOCIATION'S operating account from which general expenses are paid. The 85% of revenue that "passes through" from the PROPERTY ASSOCIATION to the respective lot owners is not income or profit to the PROPERTY ASSOCIATION. It is the return of net revenue to the owners of the lots. The ASSOCIATION does not own the lots in question, nor is it a business partner with the owners, and accordingly, the Court finds that the ASSOCIATION simply acts as an agent of the owners in collecting gross revenues, retaining the management fee of 15%, and paying through the net revenue of 85% to the lot owners in question. 4. On April 17, 2007, the PROPERTY ASSOCIATION passed three resolutions, which have been received in evidence by this Court as Plaintiff's Exhibits 1, 2 and 3. 5. Resolution 1 establishes rules and regulations for the rental of lots in the PARK and was grounded in the authority of Article VII, Section 14of the Declaration of Covenants and Restrictions. Article VII, Section 14 of the Declaration provides: a. "Leasing: No lot shall be leased or rented by an owner except as provided by the reasonable rules, regulations and procedures promulgated by the ASSOCIATION." 6. Resolution 1 requires all owners of lots in the PARK who lease/rent or allow use of their lot by a non-owner to pay a special assessment in the nature of a user fee to the ASSOCIATION, and the failure to pay the non-owner user fees result in subjecting the owner of the lot to non-payment remedies, set forth in Article V, Section 8 of the Declaration. 117. Resolution 2 establishes special assessment user fees for the PARK of $11.00 per day for each lot in the PARK leased or used by a non-owner. Lot owners choosing to participate in the PARK'S voluntary rental program have the $11.00 per day special assessment user fee paid from the 15% rental commission that they have agreed to under the rental program. Those choosing not to participate in the rental program must pay the $11.00 per day special assessment user fee independently. 8. Resolution 3 establishes fines and penalties for violation of rules and regulations adopted by the Board. 9. Subsequent to the effective dates of these resolutions, Plaintiffs rented their lots through Plaintiff RITA CLARK, who operates an independent management business, to manage some of the lot rentals in the PARK. These Plaintiffs who have rented through Mrs. CLARK have been invoiced for the special assessment user fees, but have failed to pay those fees, and the total unpaid special assessment user fees owned by the Plaintiff from the inception of the fee to October, 2010, has been calculated by the ASSOCIATION at $75,766.25 in total, and has been broken down as to each Plaintiff as set forth in Paragraph 68 of the Defendant's closing argument. The ASSOCIATION has placed liens on Plaintiffs' properties for the failure to pay. 10. After carefully reviewing the evidence and the applicable law, the Court finds that the Resolutions in question are valid. The Court finds that these Resolutions do not constitute an amendment of the Articles of Incorporation, the Declaration, or the By-Laws, and accordingly, a 75% vote of the members was not required for their passage. Specifically, the Resolutions in question did not amend or add to any particular use or occupancy rule set forth in the Declaration, and therefore the Article XIV 75% requirement is not applicable. Rather, the Resolutions in question create or establish use and occupancy rules, pursuant to Article VII, Section 14 of the Declaration. 1211. The Court further finds from the evidence in this case that the PARK'S PROPERTY ASSOCIATION is fully authorized pursuant to the governing documents, to operate the rental program in question. Plaintiff's suggestion that Article IV, Section 8 of the Declaration prohibits the ASSOCIATION from operating its own management program, misapprehends that particular section. Article IV, Section 6 is a grant of authority, not a limitation. The ASSOCIATION holds broad powers set forth in the Articles of Incorporation including all common law and statutory powers of a not-for-profit corporation not in conflict with the terms of the Declaration, the Articles, or the By-Laws. The Court finds that there is no conflict between the operation of a rental program as shown in the evidence, with the Declaration, the Articles or the By-Laws, and therefore the ASSOCIATION'S operation of the rental program is not altered by these, and is properly grounded within the governing documents. 12. The Court further finds that Plaintiffs' estoppel argument must fail, because any purportedly inconsistent positions taken by prior boards of directors do not modify or amend the governing documents. Those documents remain the controlling authority, regardless of temporary changes in behavior by the elected Board. 13. Finally, the Court finds that the PROPERTY ASSOCIATION is not a "homeowners' association" within the meaning of Chapter 720 Florida Statutes, because the PARK specifically prohibits mobile homes, permanent or semi-permanent structures, any structure designed, intended or used as permanent living quarters. 13The terms of Section 720.301 do not include this type of development, in that the function of the PARK is the use and rental of recreational vehicle lots, and does not include permanent residency. The fact that the PARK has chosen to use a Declaration of Covenants as a convenient legal vehicle to control usage of the lots does not necessitate a finding that Chapter 720 applies to this development. If the Legislature wishes to apply Chapter 720 to the factual premises set forth in this case, it certainly has the capacity to do so with clarity and specificity, but to imply or infer the limits on private property ownership which are established in the Florida Constitution have been limited by inference or implication, would be inappropriate. 14. Accordingly, for the reasons set forth above, it is hereby, ADJUDGED and ORDERED as follows: a. Judgment is hereby entered in favor of Defendant BLUEWATER KEY RV OWNERSHIP PARK, and against Plaintiffs, on each of Plaintiffs' eleven causes of action, the Court finding that pursuant [to] the applicable law and the evidence produced at trial, Plaintiffs have failed to meet their burden of proving an entitlement, by a preponderance of the evidence, to the relief requested in its Complaint. b. Judgment is hereby entered in favor of the Defendant ASSOCIATION and against Plaintiffs on Defendant's Counter-claim. Judgment for damages is entered in favor of the Defendant ASSOCIATION and against the Plaintiffs for unpaid special assessment user fees in the following amounts: Lot 1 - $12,276.00 (Clark), Lot 2 - $6,600 (Clark), Lot 3 - $7,788.00 (Clark), Lot 4 - $4,048.00 (Clark), Lot 6 - $6,356.25 (O'Carroll), Lot 16 - $7,854.00 (Clark), Lot 54 - $6,512.00 (Ogle), Lot 78 - $8,470.00 (Smith), Lot 80 - $8,206.00 (Ogle), Lot 81 - $7,656.00 (Ogle). 14The Court reserves jurisdiction to modify these amounts, to assess interest, penalties, attorney's fees and costs, to the extent these amounts do not include those items. Counsel are directed to meet and confer regarding the final amount of the Judgment, and to submit an agreed calculation as to these amounts, failing which the Court will set an evidentiary hearing for a final determination of the amount of the Judgment on the counter-claim. I would affirm the judgment.