10-006483 Department Of Business And Professional Regulation, Division Of Florida Condominiums, Timeshares And Mobile Homes vs. Carillon Condominium, Inc. Status: Closed Recommended Order on Monday, August 1, 2011.

Summary: Petitioner failed to establish by clear and convincing evidence that Respondent failed to use its best efforts to obtain and maintain adequate insurance protection. Recommend rescinding Notice to Show Cause.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF FLORIDA )

CONDOMINIUMS, TIMESHARES AND )

MOBILE HOMES, )

)

Petitioner, )

)

vs. ) Case No. 10 - 6483

)

CARILLON CONDOMINIUM, INC., )

)

Respondent. )

_______________________________ )

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on October 15 , 2010, by video teleconference with connecting

sites in Miami and Tallahassee , Florida, before Errol H. Powell,

an Administra tive Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: William R. Wohlsifer , Esquire 1

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32399 - 2202

For Respondent: Jill Anne Hillman, Esquire

4640 Lankershim Boulevard, Suite 600

North Hollywood, California 91602 - 1818

STATEMENT O F THE ISSUE

The issue for determination is whether Respondent used its

best efforts to obtain and maintain adequate property insurance

and whether adequate property insura nce includes windstorm

coverage .

PRELIMINARY STATEMENT

The Department of Business and Professional Regulation,

Division of Florida Condominiums, Timeshares and Mobile Homes ,

hereinafter Department, is sued a Notice to Show Cause to

Carillon Condominiums, Inc., hereinafter Carillon Association ,

on June 25, 2010 . The Notice to Show Cause all eged, among other

things, that Carillon Association failed to use its best efforts

to obtain or maintain adequate hazard insurance to protect the

Carillon Association , the Carillon Association 's property, the

common elements, and the Carillon C ondominium 's property that is

required to be insured, specifically, failing to maintain

windstorm insurance, in violation of section 718.111(11)(d),

Florida Statu tes. Furthermore, the Notice to Show Cause

directed the Carillon Association to show cause why the

Depart ment should not enter a cease and desist order, impose

civil penalties, and take such other affirmative action as

deemed necessary by the Department to carry out the purposes of

chapter 718, Florida Statutes. The Carillon Association filed a

petition for an administrative hearing, disputing the material

allegations of fact and re questing a hearing. On July 28 , 2010 ,

this matter was referred to the Division of Administrative

Hearings.

Prior to hearing, the parties filed a Joint Pre - Hearing

Stipulation and memorandum of law on their respective positions .

At hearing, the Department presente d the testimony of three

witness es and entered 27 exhibits ( Petitioner' s Exhibits

numbered 1 through 27 ) into evidence. The Carillon Association

presented no witnesses t o testify and entered 40 exhibit s

(Respondent's Exhibit numbered 1 through 40 ) into evidence.

A transcript of the hearing was not ordered. At the

request of the parties, the time for filing post - hearing

submissions was set for more than ten days follow ing the

conclusion of the final hearing . The parties timely filed their

post - hearing submission s, which have been considered in the

preparation of this Recommended Order. 2

After the filing of post - hearing submissions, Carillon

Association filed Exceptions to the Department's post - hearing

submission. In response, the Department filed a Motion to

Strike the Exceptions and requested attorney's fees. The

Carillon Association immediately filed a Motion to Withdraw the

Exceptions. The Motion to Withdraw Exceptio ns is granted; the

Motion to Strike Exceptions is denied as moot ; and the reques t

for attorney's fees is denied .

FINDINGS OF FACT

1. The Carillon Association is a Florida not - for - profit

corporation organized in 1966.

2 . Carillon Condominium consists of e ight units . The

units are owned by seven unit owners and controlled by the

Carillon Association. 3

3. Carillon Condominium is located i n Miami Beach,

Flo rida. During its existence of more than 40 years , Carillon

Condominium has survived Florida's tropica l storms, depressions,

hurricanes , and other forms of wind and rain.

4 . At the time of the hearing, the Carillon Association

wa s governed by a three - member board, consisti ng of a president,

secretary, ( who is also the legal counsel ) , and treasurer.

5 . Se ction XXVI of the Carillon Condominium's Declaration

of Restrictions, Reservations, Covenants, Conditions and

Easements (Declaration), titled "Casualty Insurance," provides

in pertinent part:

(1) Purchase of Insurance : The association

shall obtain fire an d extended coverage

insurance and vandalism and malicious

mischief insurance insuring all of the

insurable improvements within the

condominium, together with such other

insurance as the association deems necessary

in and for the interest of the association ,

all unit owners, and their mortgagees, as

their interests may appear, in a company,

Triple A - best rating or better, in an

amount which shall be equal to the maximum

insurable replacement value as determined

annually; and the premiums for such coverage

and other expenses in connection with said

insurance shall be assessed against the unit

owners as part of the common expenses.

* * *

(4) Loss Less than "Very Substantial" :

Where a loss or damage occurs to more than

one unit, or to the common element s, or to

any unit or units, and the common elements,

but said loss is less than "very

substantial" (as hereinafter defined), it

shall be obligatory upon the association and

the unit owners to repair, restore and

rebuild the damage caused by said loss.

Whe re such loss or damage is less than "very

substantial":

* * *

(f) In the event the insurance proceeds are

sufficient to pay for the cost of

restoration and repair, or in the event the

insurance proceeds are insufficient but

additional funds are rais ed by special

assessment within forty - five days after the

casualty, so that sufficient funds are on

hand to fully pay for such restoration and

repair, then no mortgagee shall have the

right to require the application of

insurance proceeds to the payment of its

loan; provided, however, that this provision

may be waived by the Board of Directors in

favor of any institutional first mortgages

upon request thereof at any time. To the

extent that any insurance proceeds are

required to be paid over to such mortga gee,

the unit owner shall be obliged to replenish

the funds so paid over, and said unit owner

and his unit shall be subject to special

assessment for such sum.

(g) Notwithstanding the foregoing

provision, any institutional mortgagee shall

have the right to require payment to it, and

apply against the mortgage, any insurance

funds to the extent of its interest therein.

6 . The Carillon Condominium's By - Laws provides in

pertinent part:

Article II

Directors

* * *

Section 5. Powers : The property an d

business of the corporation shall be managed

by the Board of Directors, which may

exercise all corporate powers not

specifically prohibited by statute, the

Certificate of Incorporation, or the

Declaration to which these By - Laws are

attached. The powers of the Board of

Directors shall specifically include, but

not be limited to, the following:

A. To make and collect assessments and

establish the time within which payment of

same are due;

B. To use and expend the assessments

collected to maintain, care for and preserve

the units and condominium property, except

those portions thereof which are required to

be maintained, cared for and preserved by

the unit owners;

* * *

E. To insure and keep insured said

condominium property in the manner set fort h

in the Declaration, against loss from fire

and/or other casualty, and the unit owners

against public liability, and to purchase

such other insurance as the Board of

Directors may deem advisable . . . .

* * *

Section 7. Meetings :

* * *

B. Sp ecial meetings shall be held whenever

called by the direction of the President or

a majority of the Board. The Secretary

shall give notice of each special meeting

either personally, by mail or telegram, at

least three (3) days before the date of such

meet ing, but the directors may waive notice

of the calling of the meeting;

C. A majority of the Board shall be

necessary and sufficient at all meetings to

constitute a quorum for the transaction of

business, and the act of the majority

present at any meeting at which there is a

quorum shall be the act of the Board. . . .

* * *

Article VII

Finances

* * *

Section 3. Determination of Assessments

A. The Board of Directors of the

corporation shall fix and determine from

time to time the sum or sums necessary and

adequate for the common expense of the

condominium property. Common expenses shall

include expenses for the operation,

maintenance, repair or replacement of the

common elements . . . all insurance premiums

and expenses relating thereto, inc luding

fire insurance, and any other expenses

designated as common expense from time to

time by the Board of Directors of the

corporation. . . Funds for payment of common

expenses shall be assessed against the unit

owners in the proportions or percentages of

sharing common expenses provided in the

Declaration . . . Special assessments,

should such be required by the Board of

Directors, shall be levied and paid in the

same manner as heretofore provided for

regular assessments. . . .

7. At all times materia l hereto, John Hillman was

president of the Carillon Association. He has served as

president for the past ten years. Additionally, he owns two

units and has owned one of his two units for approximately 20

years.

8. At all times material hereto, Lily Car ico was treasurer

of the Carillon Association.

9. At all times material hereto, except from March 2010

forward, Peter Neofotistos was vice president of the Carillon

Association. In March 2010, he resigned as vice president.

10 . At the end of each year f or the p ast 20 years, the

treasurer prepared a financial statement , i.e., an Annual

Report, setting forth the annual budget based upon credits and

de bits , which was provided to each unit owner . The next year's

budget was determined based upon the previous year ' s , resulting

in essentially last year's budget becoming the next year's

budget, and wa s financed by each of the owner's respective

quarterly maintenance payments.

11 . For the past ten years, n o annual budget meetings were

noticed and held.

12 . Any extraordinary expenses for the past 20 years

resulted in a special assessment to each unit owner, based upon

each unit owner's ownership interest in the Carillon

Condomini um .

13. For the past 20 years, t he Carillon Association never

charged or collected r eserves for re pair or replacement of

items. Furthermore, for that same period of time, n one of the

unit owners requested a meeting to establish a reserve account.

No evidence was presented as to whether , during the 20 - year

period or prior thereto, a majo rity of the unit owners voted to

have no reserves .

14 . At all times material hereto, the Carillon Association

purchased and maintained general prem ises liability coverage and

all - risk coverage, including, but not limited to, fire, theft

vandalism, vehicle , collapse, lightning, terrorism, and

equipment breakdown coverage on the Carillon Condominium.

15 . The insurance premium for the all - risk policy in 2009

was $2,390.00 and in 2010 was $2,331.37.

16. Sometime in 2006, Mr. Neofotistos suggested to

Mr. Hill man the obtaining of insurance, covering wind and flood

damage, by the Carillon Association in light of the recent

hurricane activity. Mr. Hillman agreed in principle and that

such insurance coverage might be something to explore.

17 . In 2006, unit owner Peter Neofotistos elected to use

his one unit as collateral to secure a bank loan. He advised

Mr. Hillman that his lender required a wind and flood insurance

policy for the Carill on Condominium and that he

(Mr. Neofotistos) acquired a master wind and flo od insurance

policy covering the Carillon Condominium at a cost of $3,740.00.

Subsequently, Mr. Neofotistos made a demand for reimbursement of

the $3,740.00. Mr. Hillman refused to reimburse Mr. Neofotistos

mainly because the directors of the Carillon As sociation had not

authorized and approved for Mr. Neofotistos to obtain the

coverage for the Carillon Association.

18 . In 2009, unit owner Mario Sesma elected to use his one

unit as collateral to secure a bank loan. The Carillon

Association agrees that M r. Sesma advised Mr. Hillman (a) that

h is lender was requiring a windstorm insurance policy for the

loan; (b) that he (Mr. Sesma) was unable to pay for the

windstorm insurance coverage ; and (c) that the coverage would be

considerably less if the Carillon A ssociation had a master

windstorm policy . Mr. Sesma advised Mr. Hillman further that

t he lender obtained a lender - placed flood insurance policy at a

cost of $3,090.00 to Mr. Sesma.

19 . In April 2009, the roof at the Carillon Condominium

required replacin g due to leaks and age (ten years old). The

unit owners were given notice of a special assessment in the

amount of $15,285.70 for replacement of the roof.

20 . In 2009, Ms. Carico contacted the Carillon

Association's long - t ime and current insurance agent for a quote

on windstorm and hail insurance for the Carillon Association.

She contacted the insurance agent upon learning of Mr. Sesma's

request for the Carillon Associati on to obtain windstorm

insurance.

21 . In September 2009, t he insurance agent advis ed

Carillon Association t hat one of the eligibility requirements

for the insurance was an appraisal of the Carillon Condominium .

Mr. Hillman requested the unit owners, who had forced - coverage

by the lending institutions, to provide a copy of their

apprais al in an effort to save money on the appraisal. The unit

owners did not respond to his request.

22 . Additionally, in September 2009, the insurance agent

provided a quote for the insurance coverage -- the total estimated

cost of the insurance was $4, 012.00. However, he advised the

Carillon Association that the estimate would fluctuate up or

down depending upon the appraisal.

23 . The Carillon Association did not obtain an appraisal

on the Carillon Condominium's common property.

24 . The Carillon Association 's legal counsel, Jill

Hillman, who was the daughter of Mr. Hillman and also a unit

owner, advised the Carillon Association that windstorm insurance

was not mandated by law.

25 . Ms. Carico conducted an informal poll of unit owners

as to whether they wishe d the Carillon Association to purchase

windstorm insurance for the Carillon Condominium. She did not

want to purchase the insurance and was aware that Mr. Hillman

and Ms. Hillman did not . Also, Ms. Carico asked two other unit

owners, who indicated that t hey , too, did not want to purchase

the insurance . As a res ult, five of the seven unit owners (also

equating to six of the eight units) , a majority, did not want to

purchase windstorm insurance for the Carillon Condominium.

26 . After consultation with Ms. Hillman, acting as the

Carillon Association's legal counsel , and the insurance agent,

Mr. Hillman and Ms. Carico decided not to purchase the windstorm

insurance quoted by the insurance agent.

27 . At all times material hereto , the Carillon Association

did not have sufficient funds to purchase windstorm insurance.

Moreover, the majority of the unit owners were unwilling to pay

an assessment to purchase the windstorm insurance.

28 . The issue as to whether to purchase the windstorm

policy quoted by the insu rance agent or a windstorm policy from

any other source was never brought to a formal board meeting as

an agenda item at a duly called board of directors meeting or to

a unit owner meeting.

29 . In or around June 2010, the water heater at C arillon

Condomin ium required replacing on an emergency basis. The

replacement cost was $5,200.00, which was funded with a special

assessment upon all of the unit owners. Due to the immediacy of

the situation, no board meeting and no unit owner's meeting was

held; the re placement decision was made by the Carillon

Association's president and treasurer.

30 . On or about July 29, 2010, Mr. Hillman sent a notice

and the 2009 Annual Report to unit owners. The notice

indicated, among other things, that three unit owners were i n

arrears, with two of the unit owners being Messrs. Neofotistos

and Sesma. Mr. Neofotistos' arrearage was in the amount of

$3,219.74, and Mr. Sesma's arrearage was in the amount of

$2,586.40.

31 . Three board members of the Carillon Association own ,

cumu latively , four of the eight units. Only their units are

free and clear of any mortgage.

CONCLUSIONS OF LAW

32 . The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and t he

parties thereto pursuant to s ection s 120.569 and 1 20.57(1),

Florida Statutes (2011 ).

33. Section 718.111, Florida Statutes (2010), provides in

pertinent part:

(11) Insurance. -- In order to protect the

safety, health, and welfare of the people of

the State of Florida and to ensure

consisten cy in the provision of insurance

coverage to condominiums and their unit

owners, this subsection applies to every

residential condominium in the state,

regardless of the date of its declaration of

condominium. It is the intent of the

Legislature to encour age lower or stable

insurance premiums for associations

de scribed in this subsection.

(a) Adequate property insurance, regardless

of any requirement in the declaration of

condominium for coverage by the association

for full insurable value, replacement c ost,

or similar coverage, must be based on the

replacement cost of the property to be

insured as determined by an independent

insurance appraisal or update of a prior

appraisal. The replacement cost must be

determined at lea st once every 36 months.

1. A n association or group of associations

may provide adequate property insurance

through a self - insurance fund that complies

with the requirements of ss. 624.460 -

624.488.

2. The association may also provide

adequate property insurance coverage for a

group of at least three communities created

and operating under this chapter, chapter

719, chapter 720, or chapter 721 by

obtaining and maintaining for such

communities insurance coverage sufficient to

cover an amount equal to the probable

maximum loss for the c ommunities for a 250 -

year windstorm event. Such probable maximum

loss must be determined through the use of a

competent model that has been accepted by

the Florida Commission on Hurricane Loss

Projection Methodology. A policy or program

providing such co verage may not be issued or

renewed after July 1, 2008, unless it has

been reviewed and approved by the Office of

Insurance Regulation. The review and

approval must include approval of the policy

and related forms pursuant to ss. 627.410

and 627.411 , appr oval of the rates pursuant

to s. 627.062 , a determination that the loss

model approved by the commission was

accurately and appropriately applied to the

insured structures to determine the 250 - year

probable maximum loss, and a determination

that complete a nd accurate disclosure of all

material provisions is provided to

condominium unit owners before execution of

the agreement by a condominium association.

3. When determining the adequate amount of

property insurance coverage, the association

may consider deductibles as determined by

this subsection.

* * *

(d) An association controlled by unit

owners operating as a residential

condominium shall use its best efforts to

obtain and maintain adequate property

insurance to protect the association, the

ass ociation property, the common elements,

and the condominium property that must be

insured by the association pursuant to this

subsection.

The 2010 version took effect on July 1, 2010. As a result, the

2010 version is not applicable to the instant case.

3 4 . Section 718.111, Florida Statutes (2009), 4 provides in

pertinent part:

(11) Insurance. -- In order to protect the

safety, health, and welfare of the people of

the State of Florida and to ensure

consistency in the provision of insurance

coverage to condo miniums and their unit

owners, this subsection applies to every

residential condominium in the state,

regardless of the date of its declaration of

condominium. It is the intent of the

Legislature to encourage lower or stable

insurance premiums for assoc iations

de scribed in this subsection.

(a) Adequate hazard insurance, regardless

of any requirement in the declaration of

condominium for coverage by the association

for full insurable value, replacement cost,

or similar cov erage, shall be based up on the

replacement cost of the property to be

insured as determined by an independent

insurance appraisal or update of a prior

appraisal. The full insurable value shall

be determined at least once every 36 months.

1. An association or group of associatio ns

may provide adequate hazard insurance

through a self - insurance fund that complies

with the requirements of ss. 624.460 -

624.488.

2. The association ma y also provide

adequate hazard insurance coverage for a

group of no fewer than three communities

created and operating under this chapter,

chapter 719, chapter 720, or chapter 721 by

obtaining and maintaining for such

communities insurance coverage sufficient to

cover an amount equal to the probable

maximum loss for the communities for a 250 -

year windstorm event . Such probable maximum

loss must be determined through the use of a

competent model that has been accepted by

the Florida Commission on Hurricane Loss

Projection Methodology. No policy or

program providing such coverage shall be

issued or renewed after July 1, 2008, unless

it has been reviewed and approved by the

Office of Insurance Regulation. The review

and approval shall include approval of the

policy and related forms pursuant to ss.

627.410 and 627.411 , approval of the rates

pursuant to s. 627.062 , a determination that

the loss model approved by the commission

was accurately and appropriately applied to

the insured structures to determine the 250 -

year probable maximum loss, and a

determination that complete and accurate

disclosure of all material pr ovisions is

provided t o condominium unit owners prior to

execution of the agreement by a condominium

association.

3. When determining the adequate amount of

hazard insurance coverage, the association

may consider deductibles as determined by

this subsect ion.

* * *

(d) An association controlled by unit

owners operating as a residential

condominium shall use its best efforts to

obtai n and maintain adequate insurance to

protect the association, the association

property, the common elements, and th e

co ndominium property that is required to be

insured by the association pursuant to this

subsection.

* * *

(f) Every hazard insurance policy issued .

. . on or after January 1, 2009, for the

purpose of protecting the condominium shall

provide primary c overage for:

1. All portions of the condominium property

. . .

2. All alterations or additions made to the

condominium property or association property

. . . .

* * *

(g) Every hazard insurance policy issued .

. . on or after January 1, 2009, to an

individual unit owner must contain a

provision stating that the coverage afforded

by such policy is excess coverage over the

amount recoverable under any other policy

covering the same property. . . .

35. In the instant case, the Department seeks, among other

things, to impose a civil fine against the Carillon Association

in the amount of $5,000.00. See § 718.501(d)6. Such a fine is

penal in nature. Consequently, in order to prevail in the

instant case, the Department must prove the allegation in the

Notice to Show Cause by clear and convincing evidence. Dep't of

Banking & Fin., Div. of Sec. & Investor Prot. v. Osborne Stern &

Co. , 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington , 510 So.

2d 292 (Fla. 1987).

36. Regarding hazard insurance, secti on 718.111 contains

no definition for hazard insurance. Further, section 718.111

does not specifically address windstorm insurance. But , section

718.111(11)(a)2 . provides , among other things, that an

association "may" provide "adequate hazard insurance c overage"

for a group of no fewer than three communities to cover a

probable maximum loss for the communities for a 250 - year

"windstorm" event.

37. The undersigned is persuaded that hazard insurance

includes windstorm insurance under section 718.111(11)(a) 2.

However, the undersigned is also persuaded that the obtaining of

windstorm ins urance coverage is not mandated, but is an option

for associations.

38 . Additionally , noteworthy to the instant case is

chapter 719, Florida Statutes (2009) , which concerns

"Cooperatives . " The Department also has authority over

Cooperatives. Section 719.103(3)(a), concerning insurance

coverage for C oo peratives, specifically addresses windstorm

insurance coverage, but not hazard insurance coverage, for

C ooperatives. The und ersigned is persuaded also that the

Florida Legislature would have specifically addressed windstorm

insurance in section 718.111, as in section 719.103(3)(a), had

the Legislature wanted to.

39 . Consequently, adequate hazard insurance may include

windstorm coverage at the option of the Carillon Association.

40 . The Carillon Association is required to use its "best

efforts" to obtain and maintain "adequate insur ance." Chapter

718 provides no definition for "best efforts." The parties

agree that no establi shed definition for "best efforts" is found

in cour t decisions. However, the case of Faith v. Faith , 709

So. 2d 600 (Fla. 3rd DCA 1998) , provides some guidance. Faith

involved a property settlement agreement wherein it was clear

that the former husband w as to use his "best efforts" in closing

a real property deal. The court determined that the former

husband had used his best efforts to close the real property

deal where the course of action , remaining to him, was not

economically viable and was through no fault of his own .

41 . Applying the principle in Faith , "best efforts" takes

into consideration the economic viability of undertaking a

course of action and the actor's fault in the course of action.

In the instant case, "best efforts" does not require that the

Carillon Association purchase an insurance policy at any cost.

The evidence demonstrates that the Carillon Association did not

have sufficient financial resources to purc hase the casualty

insurance and windstorm coverage. However, the Departmen t

contends that the Carillon Association's failure to have

sufficient financial resources was its own fault.

42 . Regarding the Carillon Association's financial

resources, the Department argues that the lack of financial

resources was the fault of the dire ctors of the Carillon

Association. The Carillon Condominium's By - Laws permit the

directors to purchase insurance, in addition to casualty

insurance, that the directors deem advisable. Further, t he

Carillon Condominium's Declaration requires that casualty

insurance, as well as other insurance that the Carillon

Association deems necessary , to be assessed against the unit

owners as part of the common expenses. Therefore, a s a common

expense, the need for a special assessment is nonexistent.

43. The Departm ent argues that the Carillon Association

failed to have a reserve account. Section 718.112 requires the

by - laws of an association to contain certain provisions , and, if

the by - laws fail to contain the required provisions, the by - laws

are deemed to include the required provisions. An association's

annual budget is required to include, among other things,

reserve accounts for capital expenditures and deferred

maintenance, which includes roof replacement. § 718.112(2)(f)2.

However, an adopted budget is not required to include reserve

accounts when the members of an association determine, by a

majority vote at a duly called meeting of the association, not

to provide reserves. Id. The evidence in the instant case

demonstrates that the Carillon Association d id not have a

reserve account in any annual budget f or the past 20 years, but

fails to demonstrate that a majority of the unit owners of the

Carillon Association decided at a duly called meeting to not

have a reserve account.

44. Further, the Department a rgues that the Carillon

Association failed to make the decision not to purchase

windstorm insurance at a duly noticed meeting before the unit

owners. The evidence demonstrates that the decision (a) was

made after the treasurer, Ms. Carico, had conducted a n informal

poll in which a majority of the unit owners indicated that they

did not want to purchase the windstorm coverage; (b) was made by

the president, Mr. Hillman, and treasurer of the Carillon

Association after consultation with the secretary and lega l

counsel, Ms. Hillman, and the insurance agent; and (c) was made

by the directors outsi de of a duly noticed meeting.

Additionally , the evidence demonstrates that, f or a meeting to

have taken place regarding the purchase of the windstorm

coverage, the mee ting would have been a special meeting, not an

annual meeting. The decision and voting should have taken place

formally, not informally, at a duly noticed meeting. The

Carillon Condominium's By - Laws provided for the directors to

waive notice of the calli ng of such a meeting ; but , the evidence

fails to demonstrate that a majority of the directors made such

a decision .

45. The evidence is clear and convincing that the Carillon

Association failed to comply with the statutory provisions and

its own By - Laws a s set forth above. However, the evidence is

n ot clear and convincing that such failures by the Carillon

Associa tion caused the financial situation of the Carillon

Association , preventing it from having sufficient funds to

purchase windstorm insurance.

46. To prevail, the Department must show by clear and

convincing evidence that the Carillon Association failed "to use

its best efforts" to obtain and maintain adequate hazard

insurance, specifically windstorm insurance, to protect the

Carillon Association, the Carillon Association's property, the

common elements, and the Carillon Condominium's property that is

required to be insured by the Carillon Association.

47 . Hence, the Department failed to meet its burden of

proof as the evidence did not clearly an d convincingly establish

the allegation in the Notice to Show Cause.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Business and

Professional Regulation, Division of Florida Condomini ums,

Timeshares and Mobile Homes enter a final order:

1. Finding that Carillon Condominiums, Inc. , did not

violate section 718.111(11)(d), Florida Statutes (2009); and

2. Rescinding the Notice to Show Cause.

DONE AND ENTERED this 1st day of August , 2011 , in

Tallahassee, Leon County, Florida.

S

__________________________________

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 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 1st day of August , 2011 .

ENDNOTES

1/ Subsequent to the final hearing, Walt Lierweiler, Esquire,

was substituted as counsel f or William R. Wohlsifer, Esquire.

2 / Both parties include d in their post - hearing submissions

matters that were not presented at hearing, or of which official

recognition was not requested to be taken such as deposition

testimony, the Federal Alliance for Safe Homes, Inc., and the

Insurance Information Institute. No consideration was given to

those matters.

3 / Admitted Fact number 1 of the Joint Pre - Hearing Stipulation

was that the eight units were owned by five unit owners.

However, the evidence at he aring demonstrates that the eight

units were owned by seve n unit owners , with one unit owner owning

two units.

4/ All future references to chapter 718 will be for 2009.

COPIES FURNISHED:

Michael Cochran, Director

Division of Florida Condominiums,

Ti meshares and Mobile Homes

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399

Layne Smith, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 No rth Monroe Street

Tallahassee, Florida 32399 - 0792

Walt Lierweiler , Esquire

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32399 - 2202

Jill Anne Hillman, Esquire

4640 Lank ershim Boulevard, Suite 600

North Hollywood, California 91602 - 1818

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 order in this case.