Carlandia Corp. v. Obernauer, 96-0132

• Decision Date: 14 May 1997
• Docket Number: No. 96-0132,96-0132
• Citation: 695 So.2d 408
• Parties: 22 Fla. L. Weekly D1207 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.
• Court: Florida District Court of Appeals

Page 408

695 So.2d 408

22 Fla. L. Weekly D1207

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.

No. 96-0132.

District Court of Appeal of Florida,

Fourth District.

May 14, 1997.

Rehearing, Rehearing En Banc,

and Certification Denied

June 23, 1997.

J. Kory Parkhurst of Boose Casey Ciklin Lubitz Martens McBane & O'Connell, West Palm Beach, for Appellant.

G. Bart Billbrough and Geoffrey B. Marks of Walton Lantaff Schroeder & Carson, Miami, for Appellees.

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 Act ¹ 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). Carlandia, the unit owner, appeals. This court has jurisdiction. Fla. R.App. P. 9.130(a)(3)(C)(v).

We reverse the dismissal ² 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...