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Iezzi Family Ltd. Partnership v. Edgewater Beach Owners Association, Inc.

Florida Court of Appeals, First District

August 1, 2018

Iezzi Family Limited Partnership, Appellant,
Edgewater Beach Owners Association, Inc., a Florida not for profit corporation; Suzanne Harris; Stephen E. Burgin; Robert D. Miller, a/k/a R.D. Miller; William R. Terry, Sr.; Frank T. Foster; Lawrence A. Cox; and Harry E. Logue, Appellees.

          On appeal from the Circuit Court for Walton County. Jeffrey E. Lewis and Thomas R. Santurri, Judges.

         Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331.

          Gary A. Shipman, Robert L. Kauffman, and Lana Hillis, Dunlap & Shipman, P.A., Santa Rosa Beach, for Appellant.

          Mary K. Simpson and Amanda W. Gay, Guilday, Simpson, West, Hatch, Lowe & Roane, P.A., Tallahassee, for Appellees.

          Winokur, J.

         Iezzi Family Limited Partnership ("Iezzi"), owner of a condominium in the Edgewater Beach Condominiums, filed a 27-count complaint against the condominium's Association and seven current or former directors or officers of the Association ("Directors"), seeking both equitable and legal relief. The trial court dismissed Iezzi's action, finding that its claims were derivative and Iezzi did not comply with derivative pre-suit requirements. On appeal, Iezzi argues that its actions were brought under a statute specific to condominiums, outside of the purview of the derivative procedures. We affirm, and hold that members of not-for-profit condominium associations may not avoid pre-suit requirements for derivative actions.

         I. Background

         A condominium[1] association incorporated under chapter 617, Florida Statutes, the "Florida Not For Profit Corporation Act," is generally subject to its laws. § 617.1703, Fla. Stat. The members of these associations are the condominium unit owners, and the officers and directors of the associations owe these members certain fiduciary responsibilities. See § 718.111, Fla. Stat. However, the association has broad powers and duties, including all of those set forth in chapter 617, unless otherwise noted. Id.

         Section 617.07401, Florida Statutes, restricts the ability of members to bring lawsuits "in the right of" their non-for-profit corporation. Members must bring their complaints to the board of directors to allow the corporation to conduct investigations and initiate a lawsuit. Id. If the corporation proves that it has conducted an independent and reasonable investigation, and determines in good faith that a lawsuit is not in the best interests of the corporation, a court may dismiss the proceeding. Id.

         Section 718.303(1), Florida Statutes, provides a cause of action for damages or equitable relief that may be pursued by either an association or unit owner. Liability for violating chapter 718 or the association's governing documents may be imposed on the association, unit owners, directors, and tenants. § 718.303, Fla. Stat. The broad language of this statute encompasses a wide variety of violations.

         Iezzi's complaint alleges that the Association acted improperly and the Directors breached their fiduciary duties, resulting in various illegal expenditures and assessments, and losses of Association funds. Iezzi argues that to limit section 718.303(1) actions by requiring that they comply with the pre-suit requirements of section 617.07401, would necessarily create a conflict between the statutes. As Iezzi asserts, if the sections do conflict, the provisions of chapter 718 must control. See § 617.1703, Fla. Stat.; see also Heron at Destin W. Beach & Bay Resort Condo. Ass'n, Inc. v. Osprey at Destin W. Beach, 94 So.3d 623, 631 (Fla. 1st DCA 2012).

         II. Analysis

         Because it "is axiomatic that statutes must be read with other related statutes," and courts must "construe related statutory provisions in harmony with one another" when possible, we conclude that sections 718.303(1) and 617.07401 do not conflict. See Abbott Labs. v. Mylan Pharm., Inc., 15 So.3d 642, 657 (Fla. 1st DCA 2009) (quoting State v. Negrin, 306 So.2d 606, 607 (Fla. 1st DCA 1975); Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So.2d 452, 455 (Fla. 1992)).

         In Part A, we define derivative actions and note that plaintiffs may not evade pre-suit requirements by labeling their complaints a certain way. In Part B, we examine the application of common-injury claims to condominiums since chapter 718's enactment in 1976. Part C discusses the enactment of section 617.07401 in 2009, and the limited case law following it. We conclude by finding that section ...

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