06-004482 Department Of Business And Professional Regulation, Division Of Florida Land Sales, Condominiums, And Mobile Homes vs. Eden Isles Condominium Association, Inc. Status: Closed Recommended Order on Friday, May 11, 2007.

Summary: Sanctions should be imposed against Respondent, for failing timely to mail or hand deliver to unit owners either a copy of the annual financial report for 2004 or, alternatively, a notice stating that a copy would be provided free of charge, upon request.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF FLORIDA LAND SALES, )

CONDOMINIUMS, AND MOBILE HOMES, )

)

Petitioner, ) Case No. 06 - 448 2

)

vs. )

)

EDEN ISLES CONDOMINIUM )

ASSOCIATION, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

This case came before Administrative Law Judge John G.

Van Laningham for final hearing by video teleconference on

February 1 and 2, 2007, at sites in Tallahassee and Lauderdale

Lakes, Florida.

APPEARANCES

For Petitioner: David J. Tarbert, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32399 - 2202

For Responden t: Leonardo G. Renaud, Esquire

Leonardo G. Renaud, P.A.

8105 Northwest 155 Street

Miami Lakes, Florida 33016

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent condominium

association timely mailed or hand delivered to unit owner s

either a copy of the annual financial report for the year 2004

or, alternatively, a notice stating that a copy of the report

would be provided to any owner, free of charge, upon request.

PRELIMINARY STATEMENT

On August 21 , 200 6 , Petitioner Department of Business and

Professional Regulation, Division of Florida Land Sales,

Condominiums, and Mobile Homes, entered a Notice to Show Cause

directing Respondent Eden Isles Condominium Association, Inc. ,

to rebut the charge that it had failed timely to provide eac h

unit owner with either the annual financial report for the year

2004 or, alternatively, a notice stating that a copy of such

report would be delivered, without charge, to any owner who

requested one, which failure violated Section 718.11 1 ( 13 ),

Florida St atutes . Respondent disputed the allegations and

timely requested a formal hearing.

On November 6, 2006, t he case was referred to the Division

of Ad ministrative Hearings ("DOAH"), where it was docketed as

Case No. 06 - 448 2 and assigned to an administrative law judge

("ALJ"). The ALJ soon consolidated this case with DOAH Case

Nos. 06 - 448 1 and 06 - 4483 , finding that the parties and counsel

were the same in all three cases, which also presented similar

issues.

The final hearing respecting the consolidated cases took

place on February 1 and 2 , 2007, as scheduled, with all parties

present. Petitioner called two witnesses, its employees Patrick

Flynn and Boyd McAdams, and introduced three composite exhibits,

which were received in evidence. Respondent presented t hree

witnesses: Louis Claps, a certified public accountant; Suzanna

Rockwell, an employee of Respondent; and Jonathon Marks, the

president of Respondent's Board of Directors. In addition,

Respondent's Exhibits 1 through 7 were admitted .

The two - volume fi nal hearing transcript was filed on

February 28 , 2007, making the Proposed Recommended Orders due on

March 30 , 2007, pursuant to the schedule established at the

conclusion of the final hearing. At the parties' joint request,

this deadline was later enlarg ed, to April 20, 2007.

Thereafter, e ach party timely filed a Proposed Recommended

Order , and these were carefully considered during the

preparation of this Recommended Order.

Although the consolidated cases share a common evidentiary

record, the undersi gned has elected to issue a separate

Recommended O rder for each one .

Unless otherwise indicated, citations to the Florida

Statutes refer to the 2006 Florida Statutes.

FINDINGS OF FACT

1. Respondent Eden Isles Condominium Association, Inc.

("Association") is the entity responsible for operating the

common elements of the Eden Isles Condominium ("Condominium") ,

which consists of seven buildings comprising 364 units . As

such, the Association is subject to the regulatory jurisdiction

of Petitioner Division o f Florida Land Sales, Condominiums, and

Mobile Homes ("Division").

2. The Association retained Louis John Claps, C.P.A. &

Associates, P.A. ("Claps") to audit the Association's books and

prepare a financial statement respecting the year e nding

December 3 1, 2004. Thereafter, under a cover letter dated

May 2, 2005, Claps delivered to the Association a financial

report for the year 2004.

3. This financial report was readily available to the

members of t he Association's governi ng Board of Directors

("Boar d"), who in turn could make copies thereof for delivery to

the unit owners in their respective buildings . (The owners in

each building elect a "building director" to serve on the

Board.) In addition , the financial report was available for

inspection and copying at the Association's office; any unit

owner who asked for a copy was given one . The Association,

however, did not mail or hand deliver to each unit owner either

a copy of the financial report or, alternatively, a notice

stating that a copy of such report could be had, at no charge,

upon request.

CONCLUSIONS OF LAW

4 . DOAH has personal and subject matter jurisdiction in

this proceeding pursuant to Sections 120.569 and 120.57(1),

Florida Statutes.

5 . Upon finding reasonable cause to believe that a

violation of the Condominium Act or any rule promulgated

thereunder has occurred, the Division is authorized to institute

an administrative enforcement proceeding through which various

coercive means of securing compliance may be imposed , including

" a civi l penalty [of up to $5,000] against a developer or

association, or its assignee or agent . . . ."

§ 718.501(1)(d)4., Fla. Stat. The Division may also

issue an order requiring the developer,

association, officer, or member of the board

of administration, or its assignees or

agents, to cease and desist from the

unlawful practice and take such affirmative

action as in the judgment of the division

will carry out the purposes of this chapter.

§ 718.501(1)(d)2., Fla. Stat.

6 . Because the imposition of a fine is (obviously)

punitive in nature and implicates significant property rights,

the D ivision has the burden, in an enforcement proceeding

brought for that purpose , of proving the alleged violation by

clear and convincing evidence. Department of Bankin g and

Finance, Div. of Securities and Investor Protection v. Osborne

Stern & Co. , 670 So. 2d 932, 935 (Fla. 1996).

7 . Regarding the standard of proof, in Slomowitz v.

Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983), the Court of

Appeal, Fourth District, c anvassed the cases to develop a

"workable definition of clear and convincing evidence" and found

that of necessity such a definition would need to contain "both

qualitative and quantitative standards." The court held that:

clear and convincing evidence re quires that

the evidence must be found to be credible;

the facts to which the witnesses testify

must be distinctly remembered; the testimony

must be precise and explicit and the

witnesses must be lacking in confusion as to

the facts in issue. The evidence must be of

such weight that it produces in the mind of

the trier of fact a firm belief or

conviction, without hesitancy, as to the

truth of the allegations sought to be

established.

Id. The Florida Supreme Court later adopted the F ourth

D istrict's descr iption of the clear and convincing evidence

standard of proof. Inquiry Concerning a Judge No. 93 - 62 , 645

So. 2d 398, 404 (Fla. 1994). The First District Court of Appeal

also has followed the Slomowitz test, adding the interpretive

comment that "[a]lthoug h this standard of proof may be met where

the evidence is in conflict, . . . it seems to preclude evidence

that is ambiguous." Westinghouse Elec. Corp., Inc. v. Shuler

Bros., Inc. , 590 So. 2d 986, 988 (Fla. 1st DCA 1991), rev .

denied , 599 So. 2d 1279 (Fla . 1992)(citation omitted).

8. In this case, the Division has alleged that the

Association failed timely to deliver to each unit owner either

the financial report for the year 2004 or, alternatively, a

notice stating that a copy of the report would be del ivered,

free of charge, to any owner who requested one . Based on this

allegation , the Association stands accused of having violat ed

Section 718.11 1 ( 13 ), Florida Statutes, which provides in

pertinent part as follows :

Within 90 days after the end of the fis cal

year, or annually on a date provided in the

bylaws, the association shall prepare and

complete, or contract for the preparation

and completion of, a financial report for

the preceding fiscal year. Within 21 days

after the final financial report is

com pleted by the association or received

from the third party, but not later than 120

days after the end of the fiscal year or

other date as provided in the bylaws, the

association shall mail to each unit owner at

the address last furnished to the

association by the unit owner, or hand

deliver to each unit owner, a copy of the

financial report or a notice that a copy of

the financial report will be mailed or hand

delivered to the unit owner, without charge,

upon receipt of a written request from the

unit owner .

9. Here, t he deadline for providing the report (or a

notice of its availability) to unit owners was the 120th day

after the end of the fiscal year on December 31, 2004, which

happened to fall on Saturday, April 30, 2005 . However, because

t he Associa tion receive d the financial report , at the earliest,

on Monday, May 2, 2005 , strict compliance with the statute was

impossible . i Regardless, it is undisputed, as a matter of fact,

that the Association never mailed or hand delivered to each unit

owner eith er a copy of the report or a notice of its

availability as required by the statute.

10. It is concluded, therefore, that the Association

violated Section 718.111(13), Florida Statutes, as charged.

11. Under the Division's penalty guidelines, a " failure to

timely provide the annual financial report " in violation of

Section 718.111(13) is classified as a "minor violation." See

Fla. Admin. Code R. 61B - 21.003(7)(a). ii

12. The penalty for a minor violation is to be determined

in accordance with the following :

If an enforcement resolution is utilized,

the division shall impose a civil penalty

between $1 and $5, per unit, for each minor

violation. The penalty will be assessed

beginning with the middle of the specified

range and adjusted either up or down based

upon any accepted aggravating or mitigating

factors. An occurrence of six or more

aggravating factors or five or more

mitigating factors will result in a penalty

being assessed outside of the specified

range. The total penalty to be assessed

shall be ca lculated according to these

guidelines or $100, whichever amount is

greater. Finally, in no event shall a

penalty of more than $2,500 be imposed for a

single violation.

13. With regard to aggravating and mitigating factors,

Rule 61B - 21.003(3) provides a s follows:

The division will consider aggravating and

mitigating factors in determining penalties

for violations listed in this rule chapter.

The factors are not necessarily listed in

order of importance, and they shall be

applied against each singl e count of the

listed violation.

(a) Aggravating Factors:

1. Filing or causing to be filed any

materially incorrect document in response to

any division request or subpoena.

2. Financial loss to parties or persons

affected by the violation.

3. Financia l gain to parties or persons who

perpetrated the violation.

4. The disciplinary history of the

association, including such action resulting

in an enforcement resolution as detailed in

Rule 61B - 21.003, F.A.C., or Section 718.501,

F.S.

5. The violation cau sed substiantial harm,

or has the potential to cause substantial

harm, to condominium residents or other

persons.

6. Undue delay in initiating or completing,

or failure to take, affirmative or

corrective action after the association

received the division’ s written notification

of the violation.

7. The violation had occurred for a long

period of time.

8. The violation was repeated within a

short period of time.

9. The association impeded the division’s

investigation or authority.

10. The investigation i nvolved the issuance

of a notice to show cause or other

proceeding.

(b) Mitigating Factors:

1. Whether current members of the

association board have sought and received

educational training, other than information

provided pursuant to Rule 61B - 21.002,

F. A.C., on the requirements of Chapter 718,

F.S., within the past two years.

2. Reliance on written professional or

expert counsel and advice.

3. Acts of God or nature.

4. The violation caused no harm to

condominium residents or other persons.

5. The ass ociation took affirmative or

corrective action before it received the

division’s written notification of the

violation.

6. The association expeditiously took

affirmative or corrective action after it

received the division’s written notification

of the vio lation.

7. The association cooperated with the

division during the investigation.

8. The investigation was concluded through

consent proceedings.

1 4 . The evidence was insufficient, as a matter of fact, to

persuade the undersigned to make a finding con cerning the

existence of any aggravating or mitigating factors.

1 5 . Accordingly, the penalty should be assessed at the

middle of the specified range ( $1 to $5 per unit ), which is $3

per unit. Because there are 364 units within the Condominium,

the appr opriate penalty in this case is $1,092.

1 6 . The Division requests that , in addition to the being

assessed a fine, the Association be ordered to take affirmative

remedial action, which, as mentioned above, the Division is

authorized to require. The corrective actions that the Division

has proposed are reasonable and appropriate ; they will be set

forth in the recommendation below.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the D ivision enter a final order

finding the Association guilty of the charge of failing to

timely provide each unit owner with either the annual financial

report for the year 2004 or, alternatively, a notice stating

that a copy of such report would be delivered, without char ge,

to any owner who requested one. In consequence of the

Association's violation of Section 718.111(13), Florida

Statutes, the Division should: (a) impose a civil penalty

against the Association in the amount of $1,092; (b) order the

Association to mail or hand deliver to each unit owner, within

30 days after the date of the Final Order, either a copy of the

financial report for the year 2004 or, alternatively, a notice

stating that a copy of such report will be provided at no cost

to any owner who reque sts one in writing; and (c) order the

Association to furnish the Division, within 45 days after the

date of the Final Order, with an affidavit attesting that the

remedial action just described has been taken.

DONE AND ENTERED this 1 1 th day of May, 2007 , in

Tallahassee, Le on County, Florida.

S

___________________________________

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Flo rida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1 1 th day of May, 2007.

ENDNOTES

i / I f the deadline were computed as being May 2, 2005, which was

the first business day after April 30, 2005, then the

Association theoretically could have satisfied the statutory

reporting requireme nts, although in fact it did not meet this

alternative deadline either.

ii / Complicating the question of classification , the offense of

failing " to provide year - end financial statements in a timely

manner," in violation of § 718.111(13), Fla. Stat., is li sted in

Fla. Admin. Code R. 61B - 21.003(7)(b) as a "major violation."

The only distinction between the descriptions of the "minor

violation" and the "major violation" is that the former uses the

term "annual financial report" while the latter speaks of "ye ar -

end financial statements." Because the relevant portion of §

718.111(13), Fla. Stat. , uses the term "financial report" and

not "financial statement," however, it is concluded that, as

used in the Rule, t he t wo terms were intended to have the same

mean ing; thus, the "distinction , " such as it is, is immaterial.

The upshot is that the Rule is ambiguous in regard to the

classification of the offense at issue as either "minor" or

"major" in terms of its potential for causing harm to consumers .

That being the case, the undersigned has construed the ambiguity

in favor of the Association, see , e.g. , Munch v. Department of

Professional Regulation, Div. of Real Estate , 592 So. 2d 1136,

1143 (Fla. 1st DCA 1992)( statute imposing penalty "must be

construed strictl y, in favor of the one against whom the penalty

would be imposed."), and found the violation to be a minor one.

This concl u sion, moreover, is consistent with the facts, which

show that the a violation was essentially technical in nature,

inasmuch as the f inancial report was, in fact, available to the

unit owners, albeit not pursuant to the statutorily prescribed

reporting procedure .

COPIES FURNISHED :

David J. Tarbert, Esquire

Departme nt of Business and

Professional Regulation

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32399 - 2202

Ned Luczynski, Gen eral Co unsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Leonardo G. Renaud, Esquire

Leonardo G. Renaud, P.A.

8105 Northwest 155 Street

Miami Lakes, Florida 33016

Michael Cochran, Division Director

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Orde r in this case.