Valencia Reserve Homeowners Ass'n, Inc. v. Boynton Beach Assocs., XIX, LLLP

• Decision Date: 28 August 2019
• Docket Number: No. 4D18-1320,4D18-1320
• Parties: VALENCIA RESERVE HOMEOWNERS ASSOCIATION, INC., Appellant, v. BOYNTON BEACH ASSOCIATES, XIX, LLLP, Appellee.
• Court: Florida District Court of Appeals

278 So.3d 714

VALENCIA RESERVE HOMEOWNERS ASSOCIATION, INC., Appellant,

v.BOYNTON BEACH ASSOCIATES, XIX, LLLP, Appellee.

No. 4D18-1320

District Court of Appeal of Florida, Fourth District.

[August 28, 2019]

Robert Rivas of Sachs Sax Caplan, P.L., Tallahassee, for appellant.

Mark F. Bideau and Robert R. Kane III of Greenberg Traurig, P.A., West Palm Beach, and Julissa Rodriguez and Jay A. Yagoda of Greenberg Traurig, P.A., Miami, for appellee.

Boatwright, Joe, Associate Judge.

Appellant, Valencia Reserve Homeowners Association, Inc. ("HOA"), appeals the circuit court's final order granting partial summary judgment in favor of Appellee, Boynton Beach Associates XIX, LLLP ("Developer"). The HOA challenges the Developer's use of certain monies collected from homeowners to offset the Developer's financial obligation to the HOA. Specifically, the HOA claims that the Developer's use of the "working fund contribution" to offset its financial obligation to the HOA is prohibited by the Homeowners' Association Act ("HOA Act"), codified in Chapter 720, Florida Statutes. We hold that the Developer's use of the working fund contributions to offset its financial obligation to the HOA does not contravene Chapter 720. Therefore, we affirm the decision below.

BACKGROUND

Valencia Reserve is a single-family home residential community located in Palm Beach County. Valencia Reserve's HOA was established and governed pursuant to a Declaration of Covenants, Restrictions and Easements ("declaration") and the HOA Act. The Developer controlled the HOA from its inception until the date of turnover, when the Developer gave control of the HOA to the community's homeowners.

According to the declaration, the Developer was required to pay its share of assessments on any lot owned by the Developer while the Developer was in control of the HOA. Pursuant to the declaration and the HOA act, the Developer had the right to excuse itself from payment of its share of assessments related to its lots so long as the Developer obligated itself to pay the deficit—i.e. , any operating expenses incurred during the guarantee period which exceeded the assessments receivable from other members. The guarantee period began when the Developer recorded the declaration and ended upon the turnover date.

The declaration defined the term "deficit" as the difference between the operating expenses incurred by the HOA during the guarantee period and the sum of: 1) the amounts assessed as guaranteed assessments against owners during the guarantee period; 2) the "working fund contributions"; and 3) any other income of the HOA.

In order to offset the deficit obligation, the Developer used a provision in the declaration called the "Working Fund Contribution." The declaration's section entitled "Working Fund Contribution" states as follows:

Each Owner who purchases a Lot with a Home thereon from [the Developer] shall pay to the [HOA] at the time legal title is conveyed to such Owner, a "Working Fund Contribution." The Working Fund Contribution shall be an amount equal to a three (3) months' share of the annual, non-abated Operating Expenses applicable to such Lot pursuant to the initial Budget .... The purpose of the Working Fund Contribution is to insure that the [HOA] will have cash available for initial startup expenses, to meet unforeseen expenditures and to acquire additional equipment and services deemed necessary or desirable by the Board. Working Fund Contributions are not advance payments of Individual Lot Assessments and shall have no effect on future Individual Lot Assessments, nor will they be held in reserve.... Working Fund Contributions ... may also be used to offset Operating Expenses, both during the Guarantee Period ... and thereafter.

The Developer elected to excuse itself from paying its share of assessments and thereby obligated itself to pay the deficit incurred during the guarantee period. Before the turnover, the Developer used the working fund contributions to satisfy the deficit, as authorized by the above provision.

The HOA then sued the Developer, claiming that the working fund contributions could not be used to offset the deficit obligation under the HOA Act. Both parties filed cross motions for summary judgment. The circuit court granted summary judgment in favor of the Developer, finding that the working fund contributions could be used to offset the deficit amount. This appeal follows.

STANDARD OF REVIEW

A trial court's interpretation of a declaration of a homeowners' association is subject to de novo review. Klinow v. Island Court at Boca W. Prop. Owners' Ass'n, Inc., 64 So. 3d 177, 180 (Fla. 4th DCA 2011). "The constitution and by-laws of a voluntary association, when subscribed or assented to by the members, becomes a contract between each member and the association." Waverly 1 & 2, LLC v. Waverly at Las Olas Condo. Ass'n, Inc. , 242 So. 3d 425, 428 (Fla. 4th DCA 2018) (citation omitted). "Issues of contract and statutory interpretation are reviewed de novo as they raise questions of law."

MacKenzie v. Centex Homes , 208 So. 3d 790, 793 (Fla. 5th DCA 2016).

APPLICABLE LAW

"When the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning." A.R. Douglass, Inc. v. McRainey , 102 Fla. 1141, 137 So. 157, 159 (1931). "This court is without power to construe an unambiguous statute in a way which would extend, modify, or limit its express terms or its reasonable and obvious implications. To do so would be an abrogation of legislative power." Am. Bankers Life Assur. Co. of Fla. v. Williams , 212 So. 2d 777, 778 (Fla. 1st DCA 1968). "When a statute is susceptible to only one reasonable interpretation, the plain language of the statute controls. Only where the plain language of a statute is ambiguous—where a reasonable person could find two different meanings leading to two different outcomes—will this Court resort to the tools of statutory construction." See MacKenzie , 208 So. 3d at 793 (citation omitted). Finally, "[a] statute should be interpreted to give effect to every clause in it, and to accord meaning and harmony to all of its parts." Giamberini v. Dep't of Fin. Servs. , 162 So. 3d 1133, 1136 (Fla. 4th DCA 2015) (citation omitted). "A single word or provision of a statute cannot be read in isolation." Id.

"The purposes of [the HOA Act] are to give statutory recognition to corporations not for profit that operate residential communities in this state, to provide procedures for operating homeowners' associations, and to protect the rights of association members without unduly impairing the ability of such associations to perform their functions." § 720.302(1), Fla. Stat. (2018). To this end, Section 720.309(1), Florida Statutes (2018), states:

Any grant or reservation made by any document, and any contract that has a term greater than 10 years, that is made by an association before control of the association is turned over to the members other than the developer, and that provides for the operation, maintenance, or management of the association or common areas, must be fair and reasonable.

With regard to a developer's financial obligation to an HOA before turnover, Section 720.308(1)(b), Florida Statutes (2018), provides:

While the developer is in control of the homeowners' association, it may be excused from payment of its share of the operating expenses and assessments related to its parcels for any period of time for which the developer has, in the declaration, obligated itself to pay any operating expenses incurred that exceed the assessments receivable from other members and other income of the association.

Thus, Section 720.308(1)(b) allows a developer to forego paying HOA assessments on lots which it owns provided that the developer agrees "to pay any operating expenses incurred that exceed the assessments receivable from other members and other income of the association." Id.

If a developer chooses to rely upon Section 720.308(1)(b), the developer's potential financial obligation to the HOA is calculated using a formula outlined in Section 720.308(5), Florida Statutes (2018). Section 720.308(5) provides:

The guarantor's total financial obligation to the association at the end of the guarantee period shall be determined on the accrual basis using the following formula: the guarantor shall pay any deficits that exceed the guaranteed amount, less the total regular periodic assessments earned by the association from the members other than the guarantor during the guarantee period regardless of whether the actual level charged was less than the maximum guaranteed amount.

In other words, at the end of the guarantee period, when the developer turns over control of the HOA to the homeowners,...