14-004848 Daniel J. Diciolla, Audie G. Childers, Lynn Elrod Childers, Robert Mccaskill, And Sarah Mccaskill vs. Bayhead Landings Property Owners Association, Inc. Status: Closed Recommended Order on Wednesday, April 1, 2015.

Summary: Respondent followed the appropriate steps for the revival of its Declaration of Covenants, Conditions, and Restrictions in accordance with sections 720.403-720.407, Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN R. WHITT AND KIMBERLY

WHITT,

Petitioners,

vs. Case No. 14 - 4847

BAYHEAD LANDINGS PROPERTY OWNERS

ASSOCIATION, INC.,

Respondent.

_______________________________/

DANIEL J. DICIOLLA, AUDIE G.

CHILDERS, LYNN ELROD CHILDERS,

ROBERT MCCASKILL, AND SARAH

MCCASKILL,

Petitioners,

vs. Case No. 14 - 4848

BAYHEAD LANDINGS PROPERTY OWNERS

ASSOCIATION, INC.,

Respondent.

_______________________________/

RECOMMENDED ORDER

A final hearing was held in this matter before Robert S.

Cohen, Administrative Law Judge with the Division of

Administrative Hearings, on January 14, 2015 , in New Port Richey ,

Florida.

APPEARANCES

For Petitioner s : Barbara Billiot Stage, Esquire

Law Offices of Stage and Associates, P.A.

7635 Ashley Park Court

Orlando, Florida 32835

For Respondent: Gary M. Schaaf, Esquire

Becker and Poliakoff, P.A.

Suite 10 0

1511 North Westshore Boulevard

Tampa, Florida 33607

STATEMENT OF THE ISSUE

The issue is w hether Respondent homeownersÓ association

properly revi v ed its expired Declaration of Covenants,

Conditions , and Restrictions i n accordance with sections 720.403 -

720. 407, Florida Statutes.

PRELIMINARY STATEMENT

Petitioners, Daniel J. DiCiolla, Audie G . Childers, Lynn

Elrod Childers, Robert McCaskill, and Sarah McCaskill, filed

their Amended Petition for Administrative Proceedings in this

matter on October 3, 2014. Petitioners, John R. Whitt and

Kimberly Whitt, filed their Amended Petition for Administrative

Proceedings in this matter on October 7, 2014. The two Petitions

were consolidated by Order of Consolidation entered October 28,

2014.

The final administrative hearing was held on January 14,

2015. At the hearing, Petitioner s presented the testimony of

Daniel J. DiCiolla as its sole witness. Respondent presented the

testimony of Gary Yates and Margaret Costa as witnesses . Th e

parties offered into evidence Exhibits 1 through 9, 11

through 14, 16 through 22, 24 and 25, all of which were admitted.

A one - volume Transcript was filed on February 10 , 201 5 .

Petitioner s and Respondent filed their proposed findings of fact

and concl usions of law on February 20, 2015 .

References to statutes are to Florida Statutes (201 4 ) unless

otherwise noted.

FINDING S OF FACT

1. Petitioners own residential properties in Bayhead

Landings community (the ÐCommunityÑ).

2. Petitioners are members o f Respondent , Bayhead Landings

Property Owners Association, Inc. (the ÐAssociationÑ).

3. The Association has historically operated and governed

the Community.

4. The Declaration of Covenants, Conditions, and

Restrictions of the Association (the ÐDeclarat ionÑ), by its

terms, provided that it would expire at the end of 2010, unless

it was renewed in accordance with its terms.

5. Because the Declaration was to expire, by its terms, at

the end of 2010, the Association attempted to preserve the

Declaration, p rior to its expiration, on more than one occasion,

the last of which was in the latter part of 2010.

6. At that time, a membership vote to approve the

preservation was conducted by written consents, pursuant to

chapter 617, Florida Statutes. The membersh ip vote resulted in

41 votes in favor and zero votes against preserving the

Declaration, with six abstentions or non - votes.

7. In the fall of 2013, Petitioners in this consolidated

matter, with the exception of the Whitts, commenced a suit

against the Ass ociation, seeking to invalidate the 2010

p reservation and seeking a determination that the Declaration had

expired, by its terms, and become void on December 31, 2010 (the

ÐDeclaratory SuitÑ). While the Whitts were not plaintiffs in the

Declaratory Suit, they were parties to the pre - suit mediation

demand and took part in the p re - suit mediation, prior to the

filing of the Declaratory Suit .

8. In their Petitions and in testimony at the final hearing

in this matter by Petitioner, Daniel J. DiCiolla, Petition ers

have continued to assert that the Declaration had expired and

become void on December 31, 2010.

9. In early 2014, the plaintiffs in the Declaratory Suit

filed a motion for summary judgment, based on several arguments,

one of which was that the Associa tion had improperly conducted

the 2010 preservation vote by written consent, instead of voting

in person or by proxy at a duly noticed meeting.

10. At the March 17, 2014, hearing on the PlaintiffsÓ

Motion for Summary Judgment, p laintiffsÓ counsel, who is also the

PetitionersÓ counsel in this proceeding, argued that the

Declarations ÐwerenÓt preservedÑ and that if the Association

wanted to protect the property, it could always revitalize the

Declaration.

11. The court in the Declaratory Suit, by final judg ment

dated March 24, 2014, granted summary judgment in favor of the

plaintiffs, holding that the 2010 preservation vote, because

it was conducted by written consent, had been ineffective, and

that the Declaration was therefore void, as of its expiration

d ate on December 31, 2010. As of January 1, 2011, the

Declarations were declared expired by the Pasco County Court in

case number 2013 - CC - 003057.

12. On April 2, 2014, the Association appealed the final

judgment on various grounds.

13. The trial court, o n May 15, 2014, entered an order

staying the effect of the final judgment pending the appeal (the

ÐStay OrderÑ) .

14. The S tay O rder was thereafter amended, on June 12, 2014

(the ÐAmended Stay OrderÑ) , to allow members, instead of paying

their assessments to the Association, to pay such assessments to

the escrow account of plaintiffsÓ counsel, who is also counsel

for Petitioners in this matter.

15. The Association, prior to the Declaratory Suit, had

incurred substantial legal costs in successfully defendin g two

pieces of litigation.

16. The A mended S tay O rder, while providing that the

Association could petition for the release of assessments paid

into the escrow account held by plaintiffsÓ counsel, provided, in

p aragraph 6, that no such funds could be rel eased for payment of

the AssociationÓs past legal fees.

17. The entry of the summary judgment and the S tay O rder

created confusion among the membership, as a result of which many

members believed they had no continuing obligation to pay their

assessments, and made no such payments.

18. While the appeal was pending, the Association took

steps to revi v e the Declaration, pursuant to sections 720.403 -

720 .407, Florida Statutes.

19. The Board of Directors ( the Ð Board Ñ ) for the

Association appointed a committee ( the Ð Organizing Committee Ñ ) to

administer the revi val of the Declaration . The appointment of

the Organizing Committee was published to the membership of the

Association at the a nnual m embers m eeting held on May 10, 2014.

20. Petitioners, Audie Childers and Daniel J. DiCiolla,

were present at the May 10, 2014, a nnual m embers m eeting at which

the appointment of the Organizing Committee was announced to the

membership.

21. The Organizing Committee had no formal meetings, but

met in a series of work sessio ns at which administrative

functions , such as stuffing and placing postage on envelopes,

making copies, mailing out letters, receiving letters, and

counting ballots , were performed. Notice of these sessions was

not provided to the members of the Associati on.

22. The Organizing Committee never held a meeting at which

a final decision was made regarding the expenditure of

Association funds, and the Organizing Committee was never vested

with the power to approve or disapprove architectural decisions

with res pect to a specific parcel of residential property owned

by a member of the C ommunity.

23. In its effort to revive the Declaration , the

Association obtained a majority vote of the membership in favor

of revi val , consisting of 26 affirmative votes, in accor dance

with section 720.405(6). The revi val vote was conducted by

written consent, in accordance with section 720.405(6).

24. The revi ved Declaration was approved by the Florida

Department of Economic Opportunity, by letter to the Association

dated August 21, 2014.

25. Once the revi val was complete, the Association

dismissed the appeal. PlaintiffsÓ motion for attorneyÓs fees and

costs remained for determination by the appellate court at the

time of this hearing.

26. The parcel owners of real property governed by

Respondent are still subject to the stay and required to pay

assessments and otherwise comply with the Declaration.

27. The Bylaws governing Respondent were at all times in

full force and effect , and the ruling in the Pasco County Court

case d id not invalidate the Bylaws.

28. The Bylaws were written in 1990 before chapter 617,

Florida Statutes, was revised to allow not - for - profit

corporations to use written consents, and provided that the only

method allowed for the membership to vote was eith er in person or

by proxy at a duly noticed meeting.

29. The Declaration and Bylaws were written and recorded in

1990, before sections 720.403 - 720.407 were enacted in 2004.

30. Petitioners were at no time opposed to the preservation

of the Declaration or the revi val of the Declaration.

31. Petitioners introduced no evidence in support of any

damages suffered as a result of the Declaration being revi ved .

CONCLUSIONS OF LAW

3 2 . The Division of Administrative Hearings has

jurisdiction over the parties to an d subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat.

33. Petitioner s ha ve the burden of proving by a

preponderance of the evidence their claim for relief in this

matter . See Fla. DepÓt of Transp. v. J.W.C. Co., Inc. , 396 So.

2d 778 (Fla. 1st DCA 1981).

34. By final judgment entered on March 24, 2014, the county

court found that the Declaration is void and that the Declaration

had expired as of the date of its termination, December 31, 2010.

Section 720.403(1), Florida Statutes (201 0), provides :

Consistent with required and optional

elements of local comprehensive plans and

other applicable provisions of the Local

Government Comprehensive Planning and Land

Development Regulation Act, homeowners are

encouraged to preserve existing re sidential

communities, promote available and affordable

housing, protect structural and aesthetic

elements of their residential community, and,

as applicable, maintain roads and streets,

easements, water and sewer systems,

utilities, drainage improvements,

conservation and open areas, recreational

amenities, and other infrastructure and

common areas that serve and support the

residential community by the revival of a

previous declaration of covenants and other

governing documents that may have ceased to

gov ern some or all parcels in the community.

35. The above - quoted provision comes into play when, such

as here, the Declaration has expired or Ðceased to governÑ all or

some parcels in a community. There is no dispute among the

parties to this case that t he Declaration expired December 31,

2010, and no longer existed on January 1, 2011. As explicitly

stated by the county court, the Declaration no longer governed

the Association after December 31, 2010.

36 . Because an appeal of its final judgment was take n, the

county court entered a s tay (which it later amended) of the

effect of the judgment. This stay imposed certain requirements

on the landowners such as the process for payment of assessments

into escrow rather than to the Association where some bitter

feelings and distrust had arisen, and the effect on a landowner

who refused to pay assessments (a lien would attach to the

property). The stay did not undo, nor could it have undone, the

expiration of the Declaration which occurred, by operation of law

o n December 31, 2010. In the final judgment entered on March 24,

2014, the court specifically held that the Declaration had

expired .

37. The S tay O rder, as amended, provided that the

A ssociation could petition the court for release of escrowed

funds, as needed to fund its debt obligations, including its

legal costs, but specifically prohibited the Association from

seeking funds to pay for legal fees incurred in defending the

litigation that had just concluded. This led to the imposition

of special asses sments for attorneyÓs fees.

38. By virtue of the final judgment and Amended S tay O rder,

the Association was not able to govern the C ommunity in

accordance with the terms of the Declaration. By not allowing

the Association to assess all th e funds required to pay its

debts, primarily those associated with litigation, the Amended

S tay O rder further made any claim that the Declaration was still

in force and effect meaningless.

39. Without question, the Declaration had Ðceased to govern

some or all parcels in the community,Ñ thus triggering the

opportunity to reviv e the declaration of covenants as set forth

in statute. § 720.403(1), Fla. Stat. Therefore, even though the

Amended S tay O rder provided that the Declaration remained in full

force and effect, in fa ct it did not.

40. Further, since the Amended S tay O rder, by its terms,

only had effect Ðpending the outcome of the DefendantÓs appeal to

the Sixth Judicial Circuit Court,Ñ which the Association could

dismiss at any time, the Amended S tay O rder, by its un ambiguous

terms, terminated upon the AssociationÓs dismissal of the appeal.

41. Petitioners at all times took the position that the

Declaration expired on December 31, 2010. They cannot recognize

and accept the expiration, yet now attempt to argue the

De claration is somehow still in full force and effect whe n it

suits the ir needs .

42. Petitioners presented no evidence at final hearing that

they were in any way prejudiced by the revi val having been

obtained while the Amended S tay O rder was in place. Mr. DiCiolla

testified on behalf of Petitioners that he and all owners

supported the preservation and that Petitioners would not have

stood in the way if the Association had undertaken the revi val

without first filing its appeal.

43. Regardless of Petitioners Ó stance regarding the need

for revi val , they continued to pursue this matter to have the

efforts of the Association rendered null and void. Requiring the

Association to again revi ve the Declaration would place form over

substance and serve no legitimate interest other than chalking up

a technical victory for Petitioners over the Association.

Requiring the Association to again revi ve the Declaration would

result in additional costs to the Association , and require many

of its members to expend additional t ime performing the menial

tasks associated with revi val, such as preparing the documents,

mailing the notices, conducting meetings, and tallying the

results, and to what end? As set forth above, section 720.403(1)

encourages communities and homeownersÓ as sociations Ðto preserve

existing communitiesÑ through the revi val process. The actions

taken by Petitioners in this case thwart this explicit expression

of legislative intent.

44. PetitionersÓ argument that the majority vote of the

Association members in favor of revi val was invalid, since the

vote was conducted by written consents rather than voting in

person or by proxy at a meeting, as provided in the Bylaws of the

Association, is not supported by the facts or law of this case .

S ection 720.405(6) expr essly provides, as its primary option, for

agreement in writing to obtain approval of the community for the

Ðrevived declaration of covenants and governing documents of the

homeownersÓ association. Ñ This directly counters PetitionersÓ

argument that the re vi val could only occur through votes made or

proxies received at a duly noticed meeting of the Association.

The voting provision in the Bylaws of the Association only refers

to how votes are to be taken when a meeting is held, not, as

here, when invoking the prescribed terms of the s tatute for

consent of the membership.

45. Petitioners argu e that 75 percent of the membership

must vote to revi ve since that is provided in the Declaration.

However, the statute requires that a simple majority of the

member ship is sufficient for revi val . § 720.405(6), Fla. Stat.

Moreover, since the Declaration had expired at the time of the

revi val , no conflict exists between the statute and the

then - expired Declaration. Finally, the 75 - percent vote provision

contained i n the Declaration addressed the issue of preservation,

not revi val pursuant to the statute . PetitionersÓ argument is,

therefore, not valid .

46. Petitioners Ó final argument is that the revi val was

invalid because no proper notice was given of either the

f ormation of the Organizing C ommittee , which was formed by the

B oard , or the meetings at which the Organizing C ommittee members

performed the various administrative duties leading to the

revival of the Declaration . Specifically, the AssociationÓs

Board app ointed the O rganizing C ommittee to administer the

revi val . This was memorialized in a letter as provided for in

Section 3.7 of the AssociationÓs Bylaws, and announced at a duly

noticed a nnual m embers m eeting, held on May 10, 2014, at which

Petitioners Aud ie Childers and Daniel J. DiCiolla were present.

Notice was not required pursuant to section 720.303(2)(a) since

the only functions performed at th e se ÐmeetingsÑ were

administrative , such as preparing flyers, making copies,

stuffing, stamping, and address ing envelopes, mailing letters,

receiving and opening the mail, and counting ballots. None of

the duties for which notice of a meeting is required was

performed by the O rganizing C ommittee at these informal work

sessions.

RECOMMENDATION

Based on the foreg oing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Economic

O pportunity enter a f inal o rder dismissing the Petitions and

affirming its approval of RespondentÓs revi val .

DONE AND ENTERED this 1st day of April , 2015 , in

T allahassee, Leon County, Florida.

S

ROBERT S. COHEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.s tate.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of April , 2015 .

COPIES FURNISHED:

Barbara Billiot Stage, Esquire

Law Offices of Stage and Associates, P.A.

7635 Ashley Park Court

Orlando, Florida 32835

(eServed)

Gary M. Schaaf, Esquire

Becker and Poliakoff, P.A.

Suite 100

1511 North Westshore Boulevard

Tampa, Florida 33607

(eServed)

Robert N. Sechen, General Counsel

Department of Economic Opportunity

Caldwell Building , Mail Stop Code 110

107 East Madison Street

Tallahassee, Florida 32399 - 4120

(eServed)

Jesse Panuccio, Executive Director

Department of Economic Opportunity

Caldwell Building

107 East Madison Street

Tallahassee, Florida 32399 - 4120

(eServed)

Katie Zimmer, Agency Clerk

Department of Economic O pportunity

Mail Stop Code 110, Caldwell Building

107 East Madison Street

Tallahassee, Florida 32399 - 4120

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this Recomm ended Order. Any exceptions to

this Recommended Order should be filed with the agency that will

issue the Final Order in this case.