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COMMUNITY ASSOCIATION LAW REPORTER - OCTOBER 2019 - FREE PREVIEW

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CAI's Community Association Law Reporter newsletter provides a brief review of key court decisions throughout the U.S. each month. These reviews give the reader an idea of the types of legal issues community associations face and how the courts rule on them. Cases deal with developer liability, powers of the association, use restrictions, covenant enforcement, assessment collection, and much more. Law Reporter is published electronically 12 times a year and delivered by e-mail to CAI members only​.

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Board's Decision Must be Judged Based on Information Available at the Time ​

Miller v. Homeland Property Owners Association, Inc., No. 4D18-1647 (Fla. Dist. Ct. App. Jul. 31, 2019)

©2019 Community Associations Institute 

Association Operations: The Court of Appeal of Florida held that an association board's decision was protected by the business judgment rule because the board acted reasonably based upon information available to the board at the time the decision was made, and information provided after the fact would not overturn the board's earlier decision.

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Homeland Property Owners Association, Inc. (association) governed a community in Palm Beach County, Fla. Mark Llano (Llano) and Ewell Miller (Miller) owned homes in the community.

The community declaration of covenants, conditions, and restrictions (declaration) required owners to obtain approval from the architectural review board (ARB) prior to commencing any construction on the home. In February 2012, Llano submitted plans to the ARB to add a garage to his home, and the ARB approved the plans. More than a year later, during unrelated legal proceedings between the association and other owners, the association learned that Llano's completed garage differed from the ARB-approved plans.

In January 2014, the association notified Llano that he was in violation of the declaration because he did not obtain approval of his construction. The primary concerns were the garage height and whether it had a flat roof. The declaration restricted the maximum height of buildings to 32 feet and prohibited flat roofs. Llano submitted a new application with the as-built plans for the garage, which indicated the roof was a modified, gambrel truss shape (barn-style roof). 

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Llano provided the association with a letter from an engineering and construction company (engineering company) stating that the garage height was the maximum height allowed by the declaration, as measured using the methodology specified by the Palm Beach County building code. The engineering company explained that the garage roof resembled a gambrel roof similar to a barn with a small, flat walkway at the top. However, the engineering company emphasized that Llano's roof was not considered a flat roof, which is typically flat from one end to the other. Llano also submitted a copy of an April 2014 email from a Palm Beach County building official to Llano's general contractor, confirming the method used to measure the roof's height.​

After reviewing the information Llano provided, the association's attorney recommended that the association's board of directors (board) approve Llano's garage, and the board did so. Later that year, Miller sued the association for its failure to enforce the declaration's requirements against various owners. In particular, Miller alleged that Llano altered his home without the required ARB approval and that the garage violated the declaration's height limit and prohibition against flat roofs. Miller sought injunctive relief (requiring a party to take or refrain from taking certain action) to compel the association to enforce the declaration's provisions against Llano. Llano was joined as a party with respect to the claims concerning his home.

The association argued that enforcement of the declaration was discretionary, not mandatory, and that the board reasonably exercised its business judgment when deciding to approve Llano's garage based upon the information presented to the board and the advice of its counsel. The association contended that the board's decisions were protected by the business judgment rule. The trial court agreed and granted summary judgment (judgment without a trial based on undisputed fact) in favor of Llano. The trial court also ruled in favor of the association with respect to the claims involving the garage, but it did not grant judgment in the association's favor since other unrelated claims remained pending against the association. Miller appealed.

When applying the business judgment rule, the test is: (1) whether the association had the statutory or contractual authority to perform the relevant action; and (2) if so, whether the board acted reasonably. Courts must defer to a board's decision if the decision is within the scope of the board's authority, and it is not arbitrary, capricious, or in bad faith.

Miller argued there were factual questions concerning whether the roof height or style violated the declaration, which barred the trial court from granting summary judgment. Miller submitted an affidavit from another engineer, who described the roof as a mansard shape with two distinct roof planes and an upper roof plane that was nearly horizontal and exceeded the height limit. Miller also alleged that Llano's general contractor cut deals with the county in order to get the garage approved and that such bad information improperly influenced the board.

The appeals court stated that the board's exercise of its discretion must be evaluated based upon the information made available to the board at the time the decision was made, not information that comes to light years after the board action. The appeals court determined that the board acted reasonably based upon the information available to it at the time. To overcome a motion for summary judgment, Miller was required to do more than rely on mere supposition. Miller offered no evidence of improper influence on the board or any bad faith by the board. In addition, the fact that another expert later arrived at a different opinion concerning the roof could not overturn a decision the board had already made.

Accordingly, the grant of summary judgment in Llano's favor was affirmed.​​

©2019 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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