The strict enforcement of conditions precedent to a derivative action in a condominium association context was addressed in Collado v. Baroukh, Case No:. 4D 16-2075 (Fla. 4th DCA, August 30, 2017). In remanding the Court commented upon the circumstances for when a fiduciary duty exists and when an election claim is moot.

As with many other disputes, this matter began, at least as reported by the Court, when a condominium unit owner demanded Association records pursuant to §607.07401(2) Fla. Stat. (2016). The Association denied access because the Association was not a Chapter 607 corporation. The owner then corrected the demand on October 7, 2015, by citing §617.07401 Fla. Stat. (2015). To the second demand the Association responded that “it would consider appointing an independent committee to investigate the owners’ allegations at the next Board of Directors meeting.” On December 14, 2015, the owner filed a complaint pursuant to Section 617.07401. The trial court dismissed the verified claim complaint without leave to amend.

The appellate court held that as a not-for-profit corporation the owners’ October 7, 2015, letter was a new demand triggering the statute’s 90 day waiting period. Further the verified complaint failed to allege that the demand was refused or ignored, or that the waiting period would cause irreparable harm. Thus, failure to comply with the statutory requirements required dismissal, in addition to convoluted pleading without detail which apparently violated Fla. R. Civ. P. Rule 1.420(b).

The Court did note that leave to amend should not be prematurely denied; thus, the case was remanded to allow for an amended complaint. In doing so the court noted that a claim for breach of fiduciary duty against the Association was improper because there is no fiduciary duty citing Tower House Cd’m, Inc. v. Millman, 475 So. 2d 674, 676 (Fla. 1985). Similarly claims against certain directors individually would have to be dismissed as the court held that they may be liable only “in the representative capacity for breach of fiduciary duty as officers and directors” citing Section 617.0834 Fla. Stat. (2016). Apparently, the complaint did not allege any office-holding status.

A challenge to the including directors on a ballot due to term limits was declared moot because the election occurred; however, the eligibility of directors may still be challenged.

The moral to this story may be the consequences of over-litigating. The opinion does not explain why a records request turned into a derivative action. The court did not take the opportunity to educate the parties as to the mandatory arbitration provisions; however, if the plaintiff was determined to bring this as a breach of duty damages tort claim, then the plaintiff lives with the result.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys