11-000180 Department Of Business And Professional Regulation, Division Of Florida Condominiums, Timeshares And Mobile Homes vs. Whitehall Condominiums Of The Villages Of Palm Beach Lakes Association, Inc. Status: Closed Recommended Order on Tuesday, May 21, 2013.

Summary: Petitioner demonstrated that Respondent failed timely to deliver its audited year-end financial statement to its unit owners and to make it available or provide notice of its availability to unit owners by mail or hand-delivery. Recommend a $5,000 fine.

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. 11 - 0180

)

WH ITEHALL CONDOMINIUM OF THE )

VILLAGES OF PALM BEACH LAKES )

ASSOCIATION, INC., )

)

Respondent. )

_______________________________ )

RECOMMENDED ORDER

Pursuant to notice, a final hear ing was held in this case

on March 4, 2013, in West Palm Beach , Florida, befo re Errol H.

Powell, an Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petit ioner: Walt Trierweiler , Esquire

Department of Business and Professional

Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

F or Respondent: John R. Sheppard, Esquire

1818 Australian Avenue South, Suite 400

West Palm Beach , Florida 33409

STATEMENT OF THE ISSUE

The issue for determination i s whether Respondent com mitted

the offense s set forth in the Notice to Show Cause , filed on

September 14, 2010 , and, if so, what action should be taken.

PRELIMINARY STATEMENT

On September 14, 2010, t he Department of Business and

Professional Regulation, Di vision of Florida Condominiums,

Timeshare, and Mobile Homes (Department) filed a Notice to Show

Cause ag ai nst Whitehall Condominium of the Villages of the Palm

Beach Lakes Association, Inc. (Whitehall) . The Depar tment

charged Whitehall w ith failing to del iver, in the manner

authorized by statute, a copy of its 2009 year - end financial

statement to all of its unit owners no later than 120 days after

the end of the fiscal year or other date as provided in its

bylaws, in violation of section 718.111( 1 3), Flori da Statutes;

and , when the 2009 year - end financial statement became

available, failing to make it available to unit owners in the

manner authorized by statute. Whitehall disputed the material

allegations of fact , asserted affirmative defenses, an d

request ed a hearing. On January 1, 2011 , this matter was

referred to the Division of Administrative Hearings. 1/

At hearing, the Department presented the testimony of two

witness es and entered 21 exhibits (Petitioner ' s Exhi bits

numbered 1, 2, 3, 4, 8, 9, 10, 11, 12, 19, 21, 22, 23, 26, 27,

28, 36, 38, 40, 41, and 46 ) 2 / into evidence. Whitehall presented

the testimony of three witnesses and entered 12 exhibits

(Res pondent's Exhibits numbered 1, 14, 16, 17, 18, 19, 20, 21,

51, 52, 72, and 97 ) 3 / into evidence .

A t ra nscript of the hearing was ordered . At the r equest of

the parties , the time for filing post - hearing su bmissions was

set for more than ten days following the filing of the

transcript. The t ranscript, consisting of two volume s , was

filed o n March 22 , 2013 . Both parties filed timely their post -

hearing submission s, which have been considered in the

preparation of this Recommended Order.

FINDINGS OF FACT

1. The Department is the state agency charged with

regulating condominiums, including condominium associa tions,

pursuant to chapter 718 , Florida Statutes.

2 . At a ll times mate rial hereto, Whitehall was a

condominium association operating in the State of Florida.

3 . At all times material hereto, Whitehall was responsible

for managing and operating Whitehall Condominium in West Palm

Beach, Florida.

4. Pertinent to the case at hand , regarding a

condominium's year - end financial statement, section 718. 1 11,

Florida Statutes, provides in pertinent part:

(13) Financial reporting. -- Within 90 days

after the end of the fiscal 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 repor t is completed 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 ass ociation 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 un it owner . The

division shall adopt rules setting forth

uniform accounting principles and standards

to be used by all associations and

addressing the financial reporting

requirements for multicondominium

associations. The rules must include, but

not be li mited to, standards for presenting

a summary of association reserves, including

a good faith estimate disclosing the annual

amount of reserve funds that would be

necessary for the association to fully fund

reserves for each reserve item based on the

straig ht - line accounting method. This

disclosure is not applicable to reserves

funded via the pooling method. In adopting

such rules, the division shall consider the

number of members and annual revenues of an

association. Financial reports sh all be

prepared a s follows:

(a) An association that meets the criteria

of this paragraph shall prepare a complete

set of financial statements in accordance

with generally accepted accounting

principles. The financial statements must

be based upon the association's total annu al

revenues, as follows:

* * *

3. An association with total annual

revenues of $ 400,000 or more shall prepar e

audited financial statements .

(emphasis added ) .

5. Whitehall's annual reve nue is in excess of $400,000.00.

T herefore, Whitehall is required to produce audited year - end

financial statements.

6. Whitehall's fiscal year coincided with the calendar

year. As a result, Whitehall's 2009 year - end financial

statement was due on or before May 1, 2010.

7 . On December 11, 2009, Whitehall engag ed Hafer Company,

LLC (Hafer), a Certified Public Accountant ( CPA) firm, to

produce its a udit ed 2009 year - end financial s tatement.

Whitehall must rely upon a third - party vendor, such as Hafer, to

produce its audited financial s tatement.

8 . Hafer assigned Nicole Johnson as the auditor to produce

W hitehall's audited 2009 annual financial s tatement. 4 /

Ms. Johnson 's process involved, among other things, preparing a

draft au dit; providing a draft audit to the condomini um board ,

which reviews the draft audit w ith Ms. Johnson ; and the n

preparing the final audit .

9 . Whitehall's engaging Hafer in December 2009 did not

contribute to any delay i n producing Whitehall's audited

financial s tatement.

10 . Ms. Johnson wanted to begin the auditing process early

and made a request to Whitehall to begin on or about January 6,

2010, but Whitehall was not prepared to go forward at that time .

She was not concerned with beginning at a later date because,

among other things, her suggested date was an early date for

beginning th e auditing process .

11 . Whitehall's day - to - day bookkeeping and accounting was

performed by a third - party vendor, The Accounting Department,

Inc. (Accounting).

12 . On February 3, 2010, Ms. Johnson met with Accounting's

representative who was handling the day - to - day bookkeeping and

accounting. Having the meeting occur in February 2010 was not

late or abnormal in the ordinary course of preparing an audited

year - end financial statement for a condominium; and did not

contribute to any delay in Ms. Johnson's p roducing Whitehall's

audited 2009 year - end financial s tatement.

13 . On February 3, 2010, Ms. Johnson began her field - work

and received the primary bulk of the accounting information

ne cessary to complete the audit .

14 . From February 3, 2010, Ms. Johnson maintained

communication, whether by telephone, email, or other methods of

communicat ing, with Whitehall's directors and officers, and its

property manager, Michael Wea d ock, who is a licensed Community

Association Manager (CAM). Ms. Johnson's communicatio ns

included requesting additional information, asking questions,

and obtaining clarifica tions regarding items for the audited

year - end financial statement.

15 . One of the items needed by Ms. Johnson to complete the

audite d year - end financial statement wa s independent

verification from Whitehall's banks regarding Whitehall's

certificates of deposit (CDs). Ms. Johnson , as the auditor, was

responsible for obtaining the independent verification of the

CDs from Whitehall's banks.

16 . D ue to the economic crisi s, which occurred in 2009,

banks nationwide were taking an unusual amount of time to

respond to auditors' requests associated with the independent

verification of bank account i nformation. The banks from which

Ms. Johnson was requesting independent verifi cation were no

different. She did not receive independent verification of

Whitehall's CDs until after the May 1, 2010, due date for

Whitehall's audited 2009 financial statement. Whitehall could

do nothing to expedite the banks' response to Ms. Johnson's

requests .

17 . Additionally, o n May 28, 2010, Ms. Johnson s ent an

email to Mr. Weadock requesting additional items that were

outstanding . The requested ite ms were non - bank items and were

not items that would delay the completion o f a draft audit , but

were required for the final audit. The next business day,

Whitehall provided the requested items. Whitehall had control

over these non - bank items, which delayed completion of the final

audit.

1 8 . Subsequently, Ms. Johnson received the independent

verificati on of Whitehall's CDs from the banks. On June 23,

2010, Ms. Johnson completed Whitehall's audited 2009 Financial

S tatement and forwarded a copy to the Department .

19 . Even though the final audit was not completed until

June 23, 2010, o n or about June 10, 2010, Whitehall posted on

its bulletin board a notice indicating that copies of the

audited 2009 Financial Statement were available in its office.

However, s ubsequently, another notice was posted on the bulletin

board indicating , among other things, that copies of the audited

2009 Financial Statement would be available at the Board of

Directors Meeting on July 1, 2010 , in order to provide for the

completion of the audited year - end financial statement .

Whitehall does not dispute that neither notice compli es with the

manner/ method of delivery requirement in section 718.111(13) .

20. Additionally, Whitehall provided notice to its unit

owners as to the availability of the audited 2009 Financial

Statement through its community television channel, website, and

email blast . This same manner/method of sending the notices to

unit owners was used in the past by Whitehall. Whitehall does

not dispute that this manner/method of providing notice does not

comply with the manner/method of delivery requirement in section

718.111(13).

21 . At the time of hearing, Whitehall had not provided its

unit owners with a copy of the audited 2009 Financial Statement

by mail or hand - delivery .

22 . Whitehall has prior disciplinary history r egarding it s

failure timely to prepare and pr ovide its audited year - end

financial statements in prior years. O n April 1, 2010,

Whitehall and the Department e ntered a Consent Order resolving

several statutory violations . O n e of the violations in the

Consent Order was Whitehall's failure timely to pr epare and

provide its 2005, 2006, 2007, and 2008 audited y ear - end

financial statements. As to this violation , the Consent Order

concluded that Whitehall failed timely to prepare and provide

the audited year - end financial statements for the four

consecutiv e years. The Consent Order did not include a

violation of the manner/method of delivery of notices regarding

the year - end financial statements for the four consecutive

years.

23 . Subsequent to the Consent Order, t he Department

received a complaint from a one of Whitehall's unit owners

regarding Whitehall's failure timely to provide a copy of the

2009 audited year - end financial statement. The Department's

usual practice is that, if a repeat violation occurs within a

two - year period, administrative action is taken resulting in a

consent order or notice to show cause. Considering the recent

Consent Order, the Department followed its usual practice and

appropriately pursued the complaint.

24 . On September 14, 2010, t he Departme nt filed a Notice

to Show Caus e against Whitehall , which is the subject matter of

the instant case.

25 . Even though the unit o wner's complaint did not include

the manner /method in which notice was provided, the evidence

fails to demonstrate that the Department was restricted to

in vest igate only that which was complained of.

26 . The evidence fails to demonstrate that the

Department 's investigation of a violation of section 718.111( 1 3)

by Whitehall was improper. Further, the evidence fails to

demonstrate that the Department's enforceme nt of the

requirements of section 718.111( 1 3) was selective enforcement

against Whitehall.

27. The evidence demonstrates that the Department

participated in this proceeding primarily due to Whit ehall

having previously, within a short period of time, viola ted

section 718.111(13) regarding Whit ehall's failure timely to

provide its unit owners a copy of audited year - end financial

statements .

28. Additionally, the evidence fails to demonstrate that

either the Department or Whitehall needlessly increased the cost

of litigation in the instant case. 5/

29. Consequently, the evidence fails to demonstrate that

the Department participate d in this proceeding for an improper

purpose as defined by section 120.595(1)(e)1. 6 /

CONCLUSIONS OF LAW

30 . The Division of Adm inistrative Hearings has

jurisdiction over the subject matter of this proceeding and t he

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

Florida Statutes (2012 ). 7 /

31 . The Department has the burden of proof to show by

clear and convincin g evid ence that Whitehall committed the

offense s set forth in the Notice to Show Cause . 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).

32 . S ection 718 .111, Florida Statutes, provides in

pertinent part:

(13) Financial reporting. -- Within 90 days

after the end of the fiscal 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 completed 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 a s

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

w ill be mailed or hand delivered to the unit

owner, without charge, upon receipt of a

written request from the unit owner . The

division shall adopt rules setting forth

uniform accounting principles and standards

to be used by all associations and

addressin g the financial reporting

requirements for multicondominium

associations. The rules must include, but

not be limited to, standards for presenting

a summary of association reserves, including

a good faith estimate disclosing the annual

amount of reserve fu nds that would be

necessary for the association to fully fund

reserves for each reserve item based on the

straight - line accounting method. This

disclosure is not applicable to reserves

funded via the pooling method. In adopting

such rules, the division s hall consider the

number of members and annual revenues of an

association. Financial reports sh all be

prepared as follows:

(a) An association that meets the criteria

of this paragraph shall prepare a complete

set of financial statements in accordance

wi th generally accepted accounting

principles. The financial statements must

be based upon the association's total annu al

revenues, as follows:

* * *

3. An association with total annual

revenues of $ 400,000 or more shall prepar e

audited financial sta tements .

(emphasis added).

33 . The evidence is clear and convincing that the due date

for Whitehall's 2009 audited financial statement was May 1,

2010. Furthermore, the evidence is clear and convincing that

Whitehall failed timely to prepare and provid e the 2009 audited

Financial Statement , which was not complete until June 23, 2010 .

Additionally, the evidence is clear and convincing that

Whitehall's notice provided to unit owners rega rding their

obtaining a copy of the 2009 audited Financial Statement was not

in compliance with section 718.111( 1 3).

34 . Whitehall asserted several affirmative defenses to the

Notice to Show Cause: impossibility; selective enforcement;

vendor liability; substantial compliance; estoppel; and good

faith and best efforts.

3 5 . As to impossibility affirmative defense , Whitehall

asserts that the 2009 audited Financial Statement could not have

been provided to its unit owners until the 2009 audited

Financial Statement was received from its auditor. Further,

Whitehall asserts t hat the 2009 audited Financial Statement

could not have been timely completed by its auditor due to the

independent verification of Whitehall's CDs from the banks , an

item required for completion of the 2009 audite d Financial

Statement, not being provided by the banks to the auditor until

after the deadline of May 1, 2010. Even though t he evidence

demonstrates that the independent verification of the CDs by

Whitehall's banks was received after May 1, 2010, the evidence

demonstrates further that additional non - banking information ,

needed to complete the audit, was requested from Whitehall by

the auditor subsequent to May 1, 2010. The evidence

demonstrates that Whitehall contributed to the untimely

completion of the 2009 audited Financial Statement.

Consequ ently, the evidence is insufficient to support

Whitehall's impossibility defense. 8 /

36 . Regarding selective enforcement affirmative defense ,

Whitehall asserts that the Department selectively enforced

section 718.111( 1 3) against it. The evidence demonstra tes that,

in April 2010, shortly before receiving the complaint from one

of Whitehall's unit owners, the Department had entered into a

Consent Order with Whitehall for , among other things,

Whitehall's failure timely to prepare and provide its 2005,

2006, 2 007, and 2008 audited year - end financial statements.

Further, the evidence demonstrates that, shortly thereafter, a

complaint was filed with the Department against Whitehall for

failure to provide a copy of Whitehall's 2009 audited financial

statement. I t was not unreasonable for the Department to pursue

enforcement of section 718.111( 1 3) against Whitehall. T he

evidence is insufficient to show that the Department engaged in

selective enforcement.

37 . As to vendor liability affirmative defense , Whitehal l

asserts that the auditor was responsible for and was taking

responsibility for the 2009 financial statement not being

prepared by May 1, 2010. E ven though the evidence demonstrates

that Ms. Johnson was responsible for obtaining the independent

verificat ion of Whitehall's CDs from the banks, the evidence

further demonstrates that other non - banking items, which were

due from Whitehall, were outstanding on and after May 1, 2010.

As a result, t he evidence is insufficient to demonstrate vendor

liability.

38 . Regarding substantial compliance affirmative defense ,

Whitehall asserts that it substantial ly complied with section

718.111( 1 3). Section 718.11 1 ( 1 3) does not allow for substantial

compliance, but requires strict complia nce with its provisions

in that th e said statutory provision uses the word "shall , " and

nowhere does it state substantial compliance . Whitehall's

affirmative defense of substantial compliance fails.

39 . As to the estoppel affirmative defense , Whitehall

asserts that the Department sh ould be estopped from pursuing

prosecution of section 718.111( 1 3) against it. No dispute

exists that the three elements required to establish estoppel

are : a representation as to a material fact that is contrary to

a later asserted position; a reliance on the representation; and

a change in position detrimental to the party claiming

estoppels, caused by the representation and reliance thereon.

See Dep't of Rev. v. Anderson , 403 So. 3d 39, 400 (Fla. 1981).

In addition to establishing the three elements , invok ing

estoppel against the government requires a showing of the

" existence of affirmative conduct by the government which goes

beyond mere negligence ," that the "govern mental conduct will

cause serious injustice," and that "the application of estoppels

will not unduly harm the public interest. (citation omitted)."

Council Bro s . , Inc. v. City of Tallahassee , 634 So. 2d 264, 266

(Fla. 1st DCA 1994).

40 . Regarding the applicability of estoppel to the

administrative action taken by the Department i n the instan t

case, the evidence fails to demonstrate the elements necessary

for establishment of estoppel relating to timeliness. T he

evidence demonstrates that in all probability, without a repeat

violation within a two - year period, no administrative action

would h ave been taken by the Department. H owever, due to the

Consent Order being entered into within a short period of time

before the filing of the unit owner's complaint, a repeat

violation had occurred within the same year of the Consent

Order ; and , as a resu lt, the taking of administrative action was

the norm .

41 . Further, as to the applicability of estoppel to the

administrative action taken by the Department in the instant

case, the evidence fails to demonstrate the elements necessary

for establishment o f esto pp e l relating to the manner of the

notice to the unit owners of the audited year - end financial

statements . The Department's failure to include a violati on in

the Consent Order, regarding the manner of the notice to the

unit owners not being in complia nce with section 718.111( 1 3) ,

failed to satisfy the requirements for estoppel.

42 . As to the good faith and best efforts affirmative

defense, Whitehall asserts that Whitehall acted in good faith

and used its best efforts to produce the financial report in a

timely and appropriate manner. Even though the evidence

demonstrates that Whitehall complied with Ms. Johnson's requests

for information to complete the draft financial statement , the

evidence further demonstrates that, on May 28, 2010, after the

deadl ine for completion of the audited 2009 year - end financial

statement , Ms. Johnson was still requesting information required

for the final financial statement. Consequently, the evidence

is insufficient to demonstrate good faith and best efforts on

the part of Whitehall.

43 . Hence , the evidence demonstrates that Whitehall

violated secti on 718.111( 1 3) .

44 . As to penalty, the Department suggests the imposition

of a penalty in the amount of $5,000.00.

45 . Florida Administrative Code Rule 61B - 21.003 provides

in pertinent part:

(3) Aggravating and Mitigating Factors.

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 single 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 p ers ons

affected by the violation.

3. Financial gain to parties or persons who

perpetrated the violatio n.

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 caused subst antial harm,

or has the potential to cause substantial

harm, to condomini um 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 occur red for a long

period of time.

8. The violation was repeated within a

short period of time.

9. The association impeded the division 's

investi gation or authority.

10. The investigation involved the issuance

of a notice to show cause or other

p roceeding.

(b) Mitigating Factors:

1. Whether current members of the

association board have sought and received

educational training, other than infor mation

provided pursuant to Rule 61B - 21.002,

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

F.S., within th e 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

cond omini um residents or other persons.

5. The association 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 violation.

7. The association cooperated with the

division during the investigation.

8. The investigation was concluded through

consent proceedings.

* * *

(7) Penalties.

(a) Minor Violations. The foll owing

violations shall be considered minor due to

their lower potential for consumer harm. 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

as sessed 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 calculated 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 vio lation. The following are

identified as minor violations:

* * *

Reporting 718.111(13), FS. Failure to

timely provide the annual financial report

* * *

(b) Major Violations. The following

violations shall be considered major due to

their in creased potential for consumer harm.

If an enforcement resolution is utilized,

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 occu rrence 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 calculated

according to these guidelines or $ 100,

whichever amo unt is greater. Finally, in no

event shall a penalty of more than $ 5,000

be imposed for a single violation. The

penalties are set forth in categories 1 and

2, for each violation as follows:

C ategory 1: $ 6 - $ 10 per unit.

Category 2: $ 12 - $ 20 pe r unit.

* * *

Reporting 718.111(13), FS. Failure to

provide the annual financial report

46 . In the instant case, three aggravating factors exist:

t he disciplinary history of the association, including such

action resulting in an enforcement res olution ; t he violation was

repeated within a short period of time ; and t he investigation

involved the issuance of a notice to show cause. See Fla.

Admin. Code R. 61B - 21.003 ( 3)(a)4., 8 ., and 10. Also, one

mitigating factor exists: the evidence is insuffi cient to show

that the violation caused harm to condomini um residents or other

persons. See Fla. Admin. Code R. 61B - 21.003( 3 ) (b)4. However ,

the failure to provide a year - end financial statement to unit

owners is a major violation due to its increased pot ential for

consumer harm and for which the maximum penalty is a $5,000.00 .

See Fla. Admin. Code R. 61B - 21.003 (7)(b).

47 . As a penalty, the imposition of a $5,000.00 penalty is

reasonable under the circumstances demonstrated in the instant

case.

48 . Whit ehall filed a Motion for Attorney Fees and Cos ts

on August 11, 2011, and October 21, 2011, pertinent hereto,

pursuant to secti on s 120.595 and 57.111 , Florida Statutes .

49 . Section 120.595 provides in pertinent part:

(1 ) Challenges to agency action pursua nt to

section 120.57(1).

* * *

(b) The final order in a proceeding

pursuant to s. 120.57(1) shall award

reasonable costs and a reasonable attorney's

fee to the prevailing party only where the

nonprevailing adverse party has been

determined by the a dministrative law judge

to have participated in the proceedi ng for

an improper purpose.

(c) In proceedings pursuant to s.

120.57(1), and upon motion, the

administrative law judge shall determine

whether any party participated in the

proceeding for an imp roper purpose as

defined by this subsection. In making such

determination, the administrative law judge

shall consider whether the nonprevailing

adverse party has participated in two or

more other such proceedings involving the

same prevailing party and t he same project

as an adverse party and in which such two or

more proceedings the nonprevailing adverse

party did not establish either the factual

or legal merits of its position, and shall

consider whether the factual or legal

position asserted in the ins tant proceeding

would have been cognizable in the previous

proceedings. In such event, it shall be

rebuttably presumed that the nonprevailing

adverse party participated in the pending

proceedi ng for an improper purpose.

(d) In any proceeding in which th e

administrative law judge determines that a

party participated in the proceeding for an

improper purpose, the recommended order

shall so designate and shall determine the

award of costs and attorney's fees.

(e) For the pur pose of this subsection:

1. "I mproper purpose" means participation

in a proceeding pursuant to s. 120.57(1)

primarily to harass or to cause unnecessary

delay or for frivolous purpose or to

needlessly increase the cost of litigation,

licensing, or securing the approval of an

activity.

2 . "Costs" has the same meaning as the

costs allowed in civil actions in this state

as provided in chapter 57.

3. "Nonprevailing adverse party" means a

party that has failed to have substantially

changed the outcome of the proposed or final

agency action which is the subject of a

proceeding. In the event that a proceeding

results in any substantial modification or

condition intended to resolve the matters

raised in a party's petition, it shall be

determined that the party having raised the

issue addressed is not a nonprevailing

adverse party. The recommended order shall

state whether the change is substantial for

purposes of this subsection. In no event

shall the term "nonprevailing party" or

"prevailing party" be deemed to include any

party that has int ervened in a previously

existing proceeding to support the position

of an agency.

* * *

(6) Other sections not affected. -- Other

provisions, including ss. 57.105 and 57.111 ,

authorize the award of attorney's fees and

costs in administrative proceedi ngs.

Nothing in this section shall affect the

availability of attorney's fees and costs as

provided in those sections.

(emphasis added ) .

50 . The proposed final agency action in the instant case

was a finding that Whitehall violated section 718.111(13) b y

failing timely to deliver its audited 2009 Financial Stateme nt

to its unit owners and failing to make the audited 2009

Financial Statement available to its unit owners, when it became

available, by hand - delivery or mail ; and the imposition of a

$5,000.00 fine. In this Recommended Order, t he undersigned

agreed with the Department's proposed final agency action ; and,

therefore, th ere was no substantial change in the proposed final

agency action . Whitehall is the nonprevailing adverse party as

defined by s ection 120.595(1)(e) 3 . Furthermore, the evidence

demonstrates that the Department did not participate in this

proceeding for an improper purpose as defined by section

120.595(1)(e)1.

51 . Section 57.111, Florida Statutes (2011), provides in

pertinent part :

(3) As used in this section:

* * *

(c) A small business party is a "prevailing

sma ll business party" when:

1. A final judgment or order has been

entered in favor of the small business party

and such judgment or order has not been

reversed on app eal or the time for seeking

judicial review of the judgme nt or order has

expired;

* * *

* * *

(d) The term "small business party" means:

1.a. A sole proprietor of an unincorporated

business, including a professional practice,

whose principal o ffice is in this state, who

is domiciled in this state, and whose

business or professional practice has, at

the time the action is initiated by a state

agency, not more than 25 full - time employees

or a net worth of not more than $ 2 million,

including both personal and business

investments;

b. A partnership or corporation, including

a professional practice, which has its

principal office in this state and has at

the time the action is initiated by a state

agency not more than 25 full - time employees

or a ne t worth of not more than $ 2 million;

or

* * *

(4)(a) Unless otherwise provided by law, an

award of attorney's fees and costs shall be

made to a prevailing small business party in

any adjudicatory proceeding or

administrative proceeding pursuant to

chapter 120 initiated by a state agency,

unless the actions of the agency were

substantially justified or special

circumstances exist which would make the

award unjust.

* * *

(d) The court, or the administrative law

judge in the case of a proceeding under

chapter 120 , shall promptly conduct an

evidentiary hearing on the application for

an award of attorney's fees and shall issue

a judgment, or a final order in the case of

an administrative law judge. The final

order of an administrative law judge is

reviewable in accordance w ith the provisions

of s. 120.68. . . .

(emphasis added).

The condition precedent for seeking an award of attorney fees

and costs, pursuant to section 57.111, is a final order. The

Department has not issued a final order in the instant case.

When the Department issues its final order, Whitehall will have

an opportunity to seek attorney fees and costs, pursuant to

section 57.111, if Whitehall believes that it satisfies the

requirements for seeking such an award.

RECOMMENDATION

B ased on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Business and

Professional Regulation, Division of Florida Condominiums,

Timeshares, and Mobile Homes , enter a fin al order :

1. Finding that Whitehall Co ndominiums of the Villages of

Palm Beach Lakes Association, Inc. , violated section

718.111(1 3 ), Florida Statutes, by failing to deliver, in the

manner authorized by statute, a copy of its audited 2009 year -

end financial statement to all of its unit owners no later than

120 days after the end of the fiscal year , and by failing to

make audited 2009 year - end financial statement available in the

manner authorized by statute , when it became available ; and

2. I mposing a fine in the amount of $ 5,00 0 .00 .

DONE AND ENTERED this 21st day of May , 2013 , in

Tallahassee, Leon County, Florida.

S

__________________________________

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 323 99 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of May , 2013 .

ENDNOTE S

1/ The Notice to Show Cause was previously before the Division of

Administrative Hearings in Case No. 10 - 9433. An Order

relinquishing jurisdiction to the Department was issued on

November 8, 2010, based on the parties having settled all issues

in dispute. Subsequently, on December 14, 2010, the Department

filed a Motion to Reopen Ca se due to the parties' failure to

settle the matter. By Order issued on January 11, 2011, the case

was re - opened and assigned Case No. 11 - 0180.

2 / Petitioner's Exhibits numbered 31 and 32 were rejected. The

Department made a proffer regarding these exh ibits.

3 / Respondent's Exhibit numbered 33 was rejected. Respondent

made a proffer regarding this exhibit .

4 / Ms. Johnson was accepted as an expert regarding the procedures

involved in compiling the year - end financial statements for

Florida condominiu ms.

5/ Although neither party needlessly increased the cost of

litigation, each party came dangerously close. As examples: in

a deposition ad vising a witness, who was not the client, that the

witness may want to invoke a privilege, which caused the fil ing

of motions; failing to comply with order s reg arding a witness'

deposition ; failing to provide documents within the time period

agreed upon ; invoking an allegation of mafia ties; asserting

legislative action on the basis of the instant case; an d filing

over 60 - page and 100 - page motions and responses .

6 / See Conclusion s of Law numbered 49 and 50 .

7 / All future references to Florida Statutes will be for 2009 and

2010, unless otherwise indicated.

8 / One of the cases upon which Whitehall relies in supp ort of

impossibility is Dep't of Bus. & Prof'l Reg. , Div. of Condos.,

Timeshares, & Mobile Homes vs. Eden Isles Condo. Ass'n., Inc. ,

Case No. 06 - 4482 (Fla. DOAH May 11, 2007; Fla. DBPR July 12,

2001) . The issue presented in the case , which was dispositive of

the case, was whether the condominium association complied with

section 718.111( 1 3) in the manner in which it provided a copy of

the year - end financial statement to its unit owners or,

alternatively, provided notice to its unit owners as to how they

co uld obtain a copy of the year - end financial statement. As

dicta in a Conclusion of Law , t he Administrative L aw Judge

addressed the impossibility of the condominium association to

provide a copy of the year - end financial statement or notice of

its availabi lity due to the CPA firm not providing the year - end

financial statement on the due date, which fell on a Saturday,

but on the following business day, which fell on the following

Monday.

COPIES FURNISHED:

Walt Trierweiler, Esquire

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

John R. Sheppard, Esquire

1818 Australian Avenue South, Suite 400

West Palm Beach, Florida 33409

J. Layne Smith , General Counsel

Department of Busi ness and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Michael Cochran, Division Director

Division of Florida Condominiums,

Timeshares, and Mobile Homes

Department of Business and

Professional Reg ulation

Northwood Centre

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 t his recommended order should be filed with the agency that

will issue the final order in this case.