Penthouse North Ass'n, Inc. v. Lombardi

• Decision Date: 06 December 1984
• Docket Number: No. 64380,64380
• Citation: 461 So.2d 1350
• Parties: PENTHOUSE NORTH ASSOCIATION, INC., Petitioner, v. Remo M. LOMBARDI, et al., Respondents.
• Court: Florida Supreme Court

Page 1350

461 So.2d 1350

PENTHOUSE NORTH ASSOCIATION, INC., Petitioner, v. Remo M. LOMBARDI, et al., Respondents.

No. 64380.

Supreme Court of Florida.

Dec. 6, 1984.

Rehearing Denied Feb. 5, 1985.

Mark B. Schorr of Becker, Poliakoff & Streitfeld, Fort Lauderdale, for petitioner.

Levy, Shapiro, Kneen & Kingcade, Palm Beach, Coleman, Leonard & Morrison, Fort Lauderdale, and Larry Klein, West Palm Beach, for respondents.

McDONALD, Justice.

We have for review Penthouse North Association, Inc. v. Lombardi, 436 So.2d 184 (Fla. 4th DCA 1983), based upon express and direct conflict with Burleigh House Condominium, Inc. v. Buchwald, 368 So.2d 1316 (Fla. 3d DCA), cert. denied, 379 So.2d 203 (Fla.1979). We have jurisdiction. Art. V, § 3(b)(3), Fla. Const.

The question presented is whether an action by a condominium association against its directors for an alleged breach of fiduciary duty in reference to a rent escalation agreement brought thirteen years after the execution of the agreement, but before the escalated rent was demanded, is timely. We hold that it is.

Penthouse North Association, Inc. (association), a condominium association, filed its second amended complaint in 1980 against Remo Lombardi, Alfred Anderson, and the estate of Joseph Novotny (lessors) for breach of the lessors' fiduciary duties as officers and directors of the association. In 1966 the lessors executed a ninety-nine-year recreation lease containing a rent escalation clause tied to the consumer price index. The association alleged that the lessors, who were simultaneously directors of the association, breached their fiduciary duties by including the escalation clause without disclosing it to the association members and by using their position to enrich themselves at the expense of the association. The association alleged timely filing of the original complaint because the lessors did not relinquish control of the association until 1968, and Florida case law precluded this cause of action until 1977. The association brought the action promptly after being notified in 1979 that the escalation clause would be enforced. The trial court, finding that the action was barred by the statute of limitation, granted the lessors' motion to dismiss the second amended complaint with prejudice. The trial court later struck the lessors' request for attorney's fees, finding that neither section 57.105, Florida Statutes (1979), nor the association's articles of incorporation authorized an award of attorney's fees.

The association appealed the dismissals of its original and second amended complaints; the lessors cross-appealed the order striking their request for attorney's fees. The district court rejected the contrary holding in Burleigh House and affirmed the dismissals, reasoning that Avila South Condominium Association, Inc. v. Kappa Corp., 347 So.2d 599 (Fla.1977), did not revive otherwise time-barred causes of actions by delaying their accrual until Avila South was decided. The district court reversed and remanded the order striking attorney's fees, finding the lessors entitled to attorney's fees either under the indemnification provision in the association's articles of incorporation or under section 607.014, Florida Statutes (1979). While we agree with the district court's interpretation of the effect of Avila South on previously time-barred actions, we quash the rest of the decision under review because it failed to consider when the cause of action accrued.

The association urges us to adopt the Burleigh House holding that a condominium association's cause of action for breach of fiduciary duties and unjust enrichment by its former officers and directors did not accrue until Avila South was decided in 1977. We agree that Avila South had retroactive application. Nevertheless, we disapprove any implication in Burleigh House that Avila South breathed new life into those causes of action previously barred by a statute of limitations or laches. This Court has often changed common-law tort rules or recognized new causes of action without affecting time-barred claims. This may seem unfair to those plaintiffs who would have had viable claims if the change of law had occurred earlier, but potential and actual liability must end with finality at some point. Persons should have the right to conduct their affairs without fear of liability for their actions once an appropriate limitation period has passed. Accordingly, we approve the district court's holding on this point and disapprove any language in Burleigh House to the contrary.

We do not agree, however, that the association's cause of action in this case was time-barred. Because the trial court decided this case on a motion to dismiss, all facts alleged in the complaint must be assumed to be true. Hammonds v. Buckeye Cellulose Corp., 285 So.2d 7 (Fla.1973). The association's second amended complaint alleged a breach of fiduciary duty in 1966 by the lessors when they executed the recreation lease with an escalation clause effective in 1981. The association also alleged it was not notified until 1979 that the escalation clause would be enforced by the lessors. Assuming these allegations to be true, the last element of the association's cause of action, damages, occurred no earlier than either when the association received notice that the rent escalation clause would be enforced in 1979 or when the lessors actually demanded the escalated rent in 1981.

This is so because the obligation to pay rent is a contingent one which becomes an enforceable debt only as the rent is earned through the lessee's use of the property. De Vore v. Lee, 158 Fla. 608, 30 So.2d 924 (1947). A statute of limitation does not commence to run until the cause of action accrues. A cause of action does not accrue until someone has been damaged by the acts complained of. ^*

The alleged wrong took place in 1966 when the defendants, acting as officers and directors of the condominium association, allegedly violated their fiduciary duties. The harm, or damages, did not materialize until the escalated rent was demanded. In this case the association timely filed this action upon notification of the lessors' intent to escalate the recreation lease rent. If anything, the action was premature rather than tardy. The second amended complaint should not have been dismissed, and we quash...