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Fortune Intern. Hospitality, LLC v. M Resort Residences Condominium Ass'n, Inc.

Florida Court of Appeal, Third District

November 23, 2011

FORTUNE INTERNATIONAL HOSPITALITY, LLC, a Florida limited liability company (n/k/a Sunny Isles Hospitality, LLC), and Tangiers Beach Associates, a Florida general partnership, and Edgardo A. DeFortuna, Petitioners,
v.
M RESORT RESIDENCES CONDOMINIUM ASSOCIATION, INC., and Chicago Title Insurance Company, a Missouri for-profit corporation, Respondents.

Page 742

Proskauer Rose, and Matthew Triggs, Lisa B. Markofsky, Andrew L. Hoffman, and C. Sanders McNew, Boca Raton, for petitioners.

Bruce M. Levine, Boca Raton; Lewis Stroud & Deustsch, and Gary Oldehoff, Boca Raton; Becker & Poliakoff, and David H. Rogel, for respondents.

Before SALTER and FERNANDEZ, JJ., and SCHWARTZ, Senior Judge.

SALTER, J.

The three petitioners, defendants below, developed a mixed-use real estate project that included condominium units and a hotel. The respondent is a condominium association of the 210 residential unit owners. The petition seeks to quash three non-final orders authorizing a receiver to pay the attorney's fees of the respondent prior to judgment in the underlying lawsuit. We grant the petition and quash the orders.

Facts and Procedural Background

The condominium association sued the developers to establish that the unit owners had a fee simple interest in the high-rise structure and the ground beneath it, rather than some lesser property interest. The developers had planned and marketed a condominium-hotel property whereby unit owners would have the right under management and rental agreements to allow the use of their units as hotel rooms, and the property would operate as a " Le Meridien" hotel. The primary issue between the respondent condominium association and the developers in the circuit court lawsuit is whether the condominium units were sold as fee simple interests or as air rights, with others retaining ultimate control over the lower parts of the building and the land beneath it.

The lawsuit began in 2008. In late 2009, the condominium association moved for the appointment of a receiver. Ultimately the parties agreed to an amended order whereby a former circuit judge was appointed to manage and operate the condominium and hotel. The receiver's powers were detailed in the eight-page order and included the custody and control of all income, disbursements, and records relating to the properties. Of importance to the issues that ultimately brought the parties here, the receiver was authorized to hire counsel and to preserve and protect the hotel and condominium properties, paying such traditional expenses as property taxes, utility charges, and maintenance, while collecting the various types of revenue generated by the hotel and condominium properties.

Thereafter the receiver entered into an agreement with the respondent condominium association whereby the association's own accountant would hold unit owner assessments in escrow and pay from such funds the condominium-related expenses designated by the association. The escrow agreement included a mechanism for payment of the association's legal fees upon written approval by the receiver, with no provision for (a) notice to the defendants in the lawsuit or (b) approval by the trial court.

Page 743

After approximately $180,000 in payments to the association's attorneys were made, the receiver moved the trial court to approve the escrow agreement. The trial court approved the escrow agreement, but with a proviso that any payments to be made to the association's attorneys would require prior court approval. The defendants opposed the association's motion to approve further payments of attorney's fees and sought disgorgement of those that had been paid to the association's counsel previously. The trial court denied the disgorgement motion and authorized a further payment of the association's attorney's fees that brought the total fees to $345,000. The defendants then sought certiorari here.

Analysis

In order to obtain relief via certiorari, the defendants below are obligated to demonstrate that the orders below depart from the essential requirements of law, cause material injury to them, and effectively leave them no adequate remedy on appeal. Martin-Johnson, Inc. v. Savage, 509 So.2d 1097 (Fla.1987); Phoenix Ins. Co. v. Trans World Forwarding, Inc., 19 So.3d 430 (Fla. 3d DCA 2009).

In this case, the orders are a departure from the essential requirements of Florida receivership law, which establishes a court-appointed receiver of property [1] as a neutral conservator of that property pending the court's disposition of the parties' competing claims to it. The trial court may not authorize the release to a party of property in dispute and under the protection of the receiver unless that action directly benefits the property in care of the receiver as determined by the trial court. Turtle Lake Assoc., Ltd. v. Third Fin. Servs., Inc.,518 So.2d 959, 961 (Fla. 1st DCA 1988). From that well-established principle it follows that an award of fees to an attorney ...


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