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Collado v. Baroukh

Florida Court of Appeals, Fourth District

August 30, 2017


         Not final until disposition of timely filed motion for rehearing.

         Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Michael L. Gates, Judge; L.T. Case No. CACE15022331 (12).

          Joseph D. Garrity of Garrity Traina, PLLC, Coconut Creek, for appellant.

          Karen M. Nissen and Andrea Sconzo of Vernis & Bowling of Palm Beach, P.A., North Palm Beach, and E.J. Generotti of Frank, Weinberg & Black, P.L., Plantation, for appellees.

          May, J.

         A condominium unit owner appeals the dismissal with prejudice of her shareholder derivative suit against a condominium association (of which the owner is a shareholder), members of the association's board of directors, and two holding companies (collectively referred to as "defendants"). She argues the trial court erred in dismissing her complaint with prejudice. We agree with her in part and reverse in part.

         Prior to filing suit, the owner emailed the association demanding to inspect the association's records, pursuant to section 607.07401(2), Florida Statutes (2016). The association's counsel responded that "the [a]ssociation is not incorporated under, and consequentially is not subject to, Chapter 607, Florida Statutes, " and a demand under section 607.07401 was "legally invalid." By demand letter sent on October 7, 2015, the owner corrected the error by citing section 617.07401, Florida Statutes (2015), and demanded to inspect the association's records. The association responded that it would consider appointing an independent committee to investigate the owner's allegations at its next Board of Directors meeting.

         On December 14, 2015, the owner filed a verified complaint, pursuant to section 617.07401, alleging: (1) breach of fiduciary duty; (2) negligence in failing to properly manage the association's funds and allowing its buildings to deteriorate; and (3) improper management of the association by the board of directors. The wherefore clause asked for relief from the "defendants" although the counts primarily made allegations only against the board members and the association.[1]

         Following the filing of the verified complaint, the owner moved to enforce the condominium association bylaws, which provide term limits for board members of two, two-year terms. The motion claimed the bylaws prohibited the then-current members of the board from running again as each member had already served more than two terms.

         The association and the three board members who had been served filed multiple motions to dismiss the complaint with prejudice, arguing: (1) the owner failed to properly comply with the statutorily required ninety-day waiting period prior to filing the derivative action; (2) the counts alleging breach of fiduciary duty and negligence against the association and its board of directors did not seek relief against the two holding companies; (3) the count seeking declaratory relief against all defendants did not make specific allegations against the holding companies; (4) the owner failed to properly form her pleadings; and (5) the association does not have a fiduciary duty to its unit owners.

         The trial court held a hearing on the owner's motion to enforce bylaws and the defendants' motions to dismiss. It denied the owner's motion to enforce and granted the defendants' motions to dismiss with prejudice. The owner moved for rehearing, which the trial court denied. From the dismissal order and the order denying the motion for rehearing, the owner now appeals.

         The owner argues the trial court erred in dismissing the case with prejudice without leave to amend because the complaint clearly stated a cause of action and alleged all elements of the causes of action. The defendants respond the court correctly dismissed the verified complaint without leave to amend because the suit was prematurely filed, improperly pled, and failed to state a cause of action.

         We have de novo review. Haslett v. Broward Health Imperial Point Med. Ctr., 197 So.3d 124, 127 (Fla. 4th DCA 2016).

         Because the association is a not-for-profit Florida corporation, it is governed by Chapter 617. Section 617.07401(2), Florida Statutes, provides that a suit cannot be filed before the expiration of ninety days after "the date of the first demand." Here, the owner first made a demand for action by the association pursuant to Chapter 607. The association advised her that she had referenced the wrong chapter. The owner then corrected the demand to reflect ...

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