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Southwest Florida Condo Association Loses Battle Over Interpretation of Bylaw Governing Board of Directors

magnifying_glass_over_documentDuring his investigation and impeachment, President Bill Clinton once famously stated that the accuracy of the answer he provided “depends upon what the meaning of the word ‘is’ is.” While such fine distinctions may seem foreign to many people, lawyers and others who deal with contracts know that victory or defeat in a contract dispute can sometimes come down the smallest of linguistic details. In a recent dispute between a Southwest Florida condo association and an LLC that owned several units, the case came down to the 2d District Court of Appeal‘s accepting the owner’s interpretation of the word “a” over that offered by the association.

The property at issue was a condominium outside Naples. The condominium had 94 units, 38 of which were owned by The Retreat at Port of the Islands, LLC. Retreat ran its units as a resort hotel. In March 2014, the Port of the Islands Resort Hotel Condominium Association, Inc. held an election for three of the five seats on its board of directors. Three of the managing members of Retreat ran for the board seats. Although the three Retreat members secured the highest vote totals, the condo association declared that only one of them could serve on the board.

The trial court agreed with the condo association and awarded summary judgment in its favor. The condo association’s bylaws stated that only owners and spouses of owners could be on the board. For LLC-owned units, only managing members were eligible for board membership. Even though all three of the Retreat candidates were managing members of that LLC, the trial court decided that the association was correct in limiting it to one board member, since Retreat should not be entitled to any more representation than an individual who owned multiple units would have.

Retreat, however, emerged victorious on appeal. The association had argued that its bylaws, which stated that if “a unit is owned by a limited liability company, only a managing member may be a Director,” were meant to limit board membership to a single managing member of an LLC-owned unit. The appeals court concluded that, although the word “a” can have the meaning that the association argued for, the bylaw in question did not use “a” in that context.

Instead, the phrase “a managing member” meant to identify qualification for board membership. In other words, if the Retreat candidates had been members of the LLC but had not been managing members, they would have been ineligible, for only a managing member could hold a board seat. Since the court interpreted the use of “a” in the bylaw to “indicate a restriction on the class of individuals from an LLC qualified to serve on the board of directors, not the number of those otherwise qualified individuals to serve on the board,” the association’s argument of a numerical limit imposed by the bylaw failed.

When it comes to real estate contracts, even the smallest of details can be of the highest importance. For diligent and detail-oriented representation, talk to the Florida real estate attorneys at Stok Folk + Kon. Our hardworking real estate attorneys have extensive experience helping clients with their contracts and other issues.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

Default Judgment Blocks Arguments About Liability in Florida Contract Dispute Case, Florida Business Lawyers Blog, Nov. 11, 2015

Calculating When the Clock Starts Running on Statutes of Repose in Florida Construction Litigation, Florida Business Lawyers Blog, June 17, 2015