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Date: 07-09-2022
Case Style:
DANIEL JOY AND MADELINE JOY vs OAKS CLUB CORORATION
Case Number: 21-1159
Judge:
Susan H. Rothstein-Youakim
Court:
DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT
On Appeal From The Circuit Court for Sarasota County
Stephen M.
Walker
Judge
Plaintiff's Attorney:
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Defendant's Attorney: Ryan W. Owen and David L. Boyette of Adams and Reese LLP
Description:
Tampa., Florida - Civil Litigation lawyer represented Appellants with appealing a final summary judgment to require them purchase a new Club membership.
The Oaks is an upscale real estate development in Osprey,
Florida, located on Sarasota Bay. It includes three residential
neighborhoods comprising waterfront homes, townhouses, villas,
and high-rise condominiums. It also includes the Club, which
operates two golf courses, a tennis and aquatics complex, a fitness
and wellness center, and dining facilities.
From 1985, when the Declaration was recorded, until 2015,
when the Club amended its bylaws, an existing Oaks property
owner could purchase a new lot or condominium unit within the
Oaks without purchasing an additional Club membership. For this
thirty-year period, the source of the mandatory Club-membership
requirement was the Declaration.
The Club changed this requirement in 2015 but did so by
amending its bylaws instead of the Declaration. Under the 2015
3
bylaw amendments—apart from a few exceptions and some
grandfathering—an existing Oaks property owner who purchases
additional property must now also purchase an additional Club
membership with each new Oaks property acquired.
The Joys first purchased property—a condominium—at the
Oaks in 2017. As required by the Declaration, they also purchased
a Club membership at that time. Their application with the Club
obligated them to abide by its bylaws.
When the Joys sought to purchase a second condominium in
2020, they were told they must purchase a second Club
membership based on the 2015 bylaw amendments. After the Club
refused to waive that requirement, the Joys walked away from their
purchase of the second condominium, forfeiting their deposit. The
Joys then sued the Club, seeking declaratory relief in Count One
and injunctive relief and damages in Count Two. They contended
that the 2015 amendments to the bylaws were void and that only
an amendment to the Declaration could change the mandatory
Club-membership requirement. The Club counterclaimed for
declaratory relief, asking the trial court to conclude that the bylaw
amendments were lawful.
4
The Joys ultimately moved for final summary judgment on
each of their claims and on all of the Club's affirmative defenses.
The Club likewise sought summary judgment on its declaratory
judgment claim and on its affirmative defenses of statute of
limitations, equitable estoppel, and laches, asking the trial court to
declare that the 2015 bylaw amendments were valid.
After a hearing, the trial court denied the Joys' motion and
granted the Club's motion. This appeal follows.
B. Analysis
The Club, like many such nonprofit corporations in Florida, is
governed by its Declaration, articles of incorporation, and bylaws.
Here, the mandatory Club-membership requirement found its initial
home in the Declaration, not in the bylaws.
Several provisions in the Declaration create and inform the
Club-membership requirement. Article II, section 2, reads, in
pertinent part:
[T]he Developer can not [sic] amend this Declaration or
any other restriction or covenant relating to the Property,
in such a way as to modify the requirements that: (a) all
Property Owners must be Members; or (b) all Members
must be Property Owners . . . .
5
(Emphasis added.) The Declaration, in turn, defines "Property
Owner" as "the record owner, whether one or more persons or
entities, of the fee simple title to any Homesite which is a part of the
Property." "Homesite" is "any platted residential lot or
condominium unit in Oaks I or Oaks II."1
Finally, article III, section
1, states: "All Property Owners have received written acceptance of
their membership application in the Club for their membership in
the Club." The Declaration expressly states that its obligations,
including the covenant to be a Club member, "run with the land."
Article VI, section 1, describes the super-majority required to
amend the Declaration:
The covenants, set forth herein may be amended at any
time and from time to time upon the execution and
recordation of an instrument executed by Property
Owners owning not less than seventy-five (75%) percent
of the Homesites . . . .
The Club's bylaws, in contrast, can be amended by a simple
majority vote of the Club's board of governors together with a
1
Oaks I and Oaks II are the platted lots and condominiums
that collectively make up the Oaks' three neighborhoods.
6
majority vote of the Club's equity members.2
The 2015 bylaw
amendments were passed initially by the Club's governing board
and later by the Club's equity members at the annual meeting.
The Declaration includes language delineating the scope of the
Club's powers and responsibilities, stating that the Club "shall
administer and operate the facilities and amenities . . . for the
exclusive use and benefit of the Oaks Club Corporation members."
In addition, article III, section 5, titled Equal Treatment of Property
Owners, provides, in pertinent part:
The Club acknowledges and covenants that Members
who own Property in Oaks I shall be treated no less
favorably than Members who own Property in Oaks II,
and that Members who own Property in Oaks II shall be
treated no less favorably than Members who own
Property in Oaks I. Such equal treatment of all Members
extends to all rights of access to and use of the Club
Facilities, the terms by which Property Owners may
become Members, the annual dues to be paid by the
Members, and all other duties and benefits of being a
Member in the Club. Nothing herein shall be construed
as preventing the Club from establishing different rights
pertaining to each class or from establishing different
initiation fees based solely upon the date of initiation or
the number of Members of the Club . . . .
2
In some circumstances, the bylaws may also be amended by
a super-majority vote of the board of governors alone. That is not
what happened here.
7
The trial court reasoned that the Club's authority to
"administer and operate" the Club, together with the Club's
authority to set "the terms by which Property Owners may become
Members," necessarily delegated to the Club any decision about
redefining the mandatory membership requirement. We disagree.
Summary judgment is proper only if (1) there is no genuine
issue of material fact and (2) the moving party is entitled to
judgment as a matter of law. Fla. R. Civ. P. 1.510(a) (2020); see
Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126,
130 (Fla. 2000). This court reviews de novo a grant of summary
judgment. Id. If the record reveals even the slightest doubt that a
genuine issue of material fact might exist, summary judgment is
improper.3
Cook v. Bay Area Renaissance Festival of Largo, Inc.,
164 So. 3d 120, 122 (Fla. 2d DCA 2015) (citing Schmidt v. State
Farm Mut. Ins. Co., 750 So. 2d 695, 698 (Fla. 2d DCA 2000)).
3
The trial court decided the summary judgment motions
under Florida's old summary judgment standard; we must do
likewise. See Guzman v. S. Fid. Ins. Co., 332 So. 3d 67, 70 n.2 (Fla.
2d DCA 2021) (noting that the new summary judgment standard
"does not apply to judgments entered before its effective date of May
1, 2021").
8
"Where the determination of the issues of a lawsuit depends
upon the construction of a written instrument and the legal effect to
be drawn therefrom," however, "the question at issue is essentially
one of law only and determinable by entry of summary judgment."
Angell v. Don Jones Ins. Agency, 620 So. 2d 1012, 1014 (Fla. 2d
DCA 1993) (citing Kochan v. Am. Fire & Cas. Co., 200 So. 2d 213,
220 (Fla. 2d DCA 1967)). This court may reach a construction or
interpretation of a contract contrary to that of the trial court. See
Bethany Trace Owners' Ass'n v. Whispering Lakes I, LLC, 155 So. 3d
1188, 1191 (Fla. 2d DCA 2014).
The Club's Declaration is its "constitution." See Beachwood
Villas Condo. v. Poor, 448 So. 2d 1143, 1145 (Fla. 4th DCA 1984)
(quoting Schmidt v. Sherrill, 442 So. 2d 963, 965 (Fla. 4th DCA
1983)); see also Pepe v. Whispering Sands Condo. Ass'n, 351 So. 2d
755, 757 (Fla. 2d DCA 1977) (recognizing that a declaration "is
more than a mere contract spelling out mutual rights and
obligations of the parties thereto[;] it assumes some of the
attributes of a covenant running with the land, circumscribing the
9
extent and limits of the enjoyment and use of real property").4
And
a declaration of covenants must be strictly construed. Cool Spaze,
LLC v. Boca View Condo. Ass'n, 292 So. 3d 769, 772 (Fla. 4th DCA
2020) (citing Cali v. Meadowbrook Lakes View Condo. Ass'n "B", Inc.,
59 So. 3d 363, 367 (Fla. 4th DCA 2011)). So long as a bylaw does
not contravene an express provision of the Declaration, or a right
reasonably inferable therefrom, it is valid. Beachwood Villas, 448
So. 2d at 1145; see also S & T Anchorage, Inc. v. Lewis, 575 So. 2d
696, 698 (Fla. 3d DCA 1991) ("The articles and bylaws must be
consistent with the provisions of the superior document, the
Declaration.").
4
The Club is neither a homeowners nor a condominium
association subject to Florida's statutory framework for such
entities. Nevertheless, the concept that a declaration of covenants
takes precedence over articles of incorporation and bylaws is still
wholly applicable to the Club, a nonprofit corporation organized
under chapter 617 of the Florida Statutes. See Heron at Destin W.
Beach & Bay Resort Condo. Ass'n v. Osprey at Destin W. Beach, 94
So. 3d 623, 628 (Fla. 1st DCA 2012) (explaining that a declaration
acts as the "constitution" of a nonprofit master association and
"strictly governs the relationships among the members and the
association," regardless of whether the master association qualifies
as an "association" under section 718.103(2) of the Florida Statutes
(2009)).
10
Given that the obligation of an Oaks property owner to
purchase a single club membership was based for thirty years on
the Declaration, we are hard-pressed to see how the Club could
redefine the membership requirement through a simple bylaw
amendment. The Declaration requires only that all property owners
be members; once membership is obtained, the Declaration imposes
no limitations on the nature or scope of the property that may be
owned. Thus, the right of a property owner to own multiple
properties while only being required to purchase one Club
membership is certainly a right that is "reasonably inferable" from
the Declaration. See Beachwood Villas, 448 So. 2d at 1145.
Moreover, the Declaration includes no specific grant of
authority to the Club to redefine the mandatory membership
requirement through either rule-making or a bylaw amendment. To
the extent that the Club argues that it has the authority to do so
based on its power to "administer and operate" or to "set the terms
by which Property Owners may become members," this argument
does not survive closer scrutiny.
Specifically, the Club is charged with "administer[ing] and
operat[ing] the facilities and amenities located on the Oaks II
11
Property for the exclusive use and benefit of the Oaks Club
Corporation members." We refuse to expand a provision about
operating Club "facilities and amenities" (such as golf courses,
dining rooms or saunas) to include a conferral of authority to
redefine the mandatory Club-membership requirement.
We likewise refuse to expand the Declaration's language
concerning the Club's authority to "set[] the terms by which a
Property Owner may become a Member" to encompass the authority
to require that an owner purchase additional memberships. The
Club's argument that this language gives the Club authority to
redefine the mandatory membership requirement through a bylaw
amendment confuses the Club's authority to set the amount of an
initiation fee with the authority to require initiation in the first
place. Indeed, if Club management truly had the authority to
redefine the mandatory membership requirement through the bylaw
amendment process as they did, this provision would have used the
word "must" instead of "may." Other language in article III, section
5 confirms this point. This section states in conclusion that
nothing therein shall prevent the Club from "establishing different
initiation fees based solely upon the date of initiation," which
12
language is consistent with the authority to decide how much to
charge in any given year for initiation fees but not indicative of
authority to redefine the mandatory membership requirement.
Finally, the "setting the terms" language appears in the "equal
treatment" section of the Declaration ("Such equal treatment of all
Members extends to . . . the terms by which Property Owners may
become Members."). This section prevents the Club from
discriminating against property owners based on where they buy
their property within the Oaks development. In other words, all
things being equal, the Club may not charge a property owner in
Oaks I more for an equity or social membership than an owner in
Oaks II, and vice versa. In sum, article III, section 5 does not
delegate authority to the Club to redefine the mandatory
membership requirement.
Because no provision of the Declaration delegates to the Club
rule-making authority on the scope of mandatory Clubmembership, the 2015 bylaw amendment is ultra vires. See S & T
Anchorage, 575 So. 2d at 698 ("The Declaration does not empower
the Association to sell or convey the dock areas or the common
areas. . . . Even if, as Anchorage asserts, the Assignment and
13
settlement were adopted pursuant to a proper vote as provided by
the Association bylaws, the absence of authority to execute such
documents renders them ultra vires . . . ."); Cool Spaze, 292 So. 3d
at 772 ("The association's governing documents authorized approval
of all leases, subleases, or other occupation of a unit. It did not
authorize the association's approval of unit transfers, title transfers,
or sales." (emphasis omitted)).5
To redefine the membership
requirement, the Club must instead amend the Declaration, which
requires the consent of seventy-five percent of the property owners.
Because the Club failed to do so, we reverse the trial court's grant
of summary judgment in its favor.
5
In granting summary judgment to the Club, the trial court
placed great emphasis on Highland Lakes Property Owners Ass'n v.
Schlack, 724 So. 2d 621 (Fla. 5th DCA 1998). Schlack states,
"We . . . have taken the position that an association's authority is
derived from the Declaration and the bylaws if the bylaws are not
inconsistent with the Declaration." Id. at 622 (emphasis omitted).
But this statement requires greater scrutiny. As the court noted in
In re Walker, No. 07-14797, 2008 WL 1781181, at *4 (Bankr. S.D.
Fla. 2008): "In Schlack, relied upon by the HOA, the declaration at
issue actually did authorize the purchase of property such as was
the subject of the dispute in the case. The bylaws clarified and
more clearly defined the right to purchase, but the bylaws were not
the source of the right to purchase at issue." Here, the Declaration
is the source of the mandatory Club-membership requirement.
14
We also conclude that the trial court should have granted the
Joys' motion for summary judgment on the Club's statute of
limitations defense and should have denied the Club's motion as to
equitable estoppel. To obtain summary judgment on an affirmative
defense, the movant has the burden of conclusively establishing
that no genuine issue of material fact exists. Morroni v. Household
Fin. Corp. III, 903 So. 2d 311, 312 (Fla. 2d DCA 2005).6
"Once an
affirmative defense is raised, the movant has the additional burden
of either disproving or establishing the legal insufficiency of the
affirmative defense." Wilson v. Pruette, 422 So. 2d 351, 352 (Fla. 2d
DCA 1982) (citing Stewart v. Gore, 314 So. 2d 10 (Fla. 2d DCA
1975)).
We review de novo the trial court's application of legal issues
concerning a statute of limitations. Hamilton v. Tanner, 962 So. 2d
997, 1000 (Fla. 2d DCA 2007). Because the Joys' claims are based
on the core contention that the amended bylaws conflict with and
are contrary to the Declaration, they are founded on a written
instrument. Consequently, section 95.11(2)(b), Florida Statutes
6
We acknowledge that this is not an accurate statement of the
standard for obtaining summary judgment under the new rule.
15
(2020) (providing that an action founded on a written instrument
must be commenced within five years), provides the applicable
statute of limitations.7
See Harris v. Aberdeen Prop. Owners Ass'n,
135 So. 3d 365, 367 (Fla. 4th DCA 2014).
In the affidavit filed with its summary judgment motion, the
Club concedes that the amended bylaw was enacted under article
XVII, section 2 of the bylaws, which requires the approval of both
the Governing Board and the equity members. The amended bylaw,
therefore, was not adopted by the Club until it was passed by both
a majority of the board and the equity owners of the Club on April
2, 2015. Moreover, the amended bylaw was not recorded until July
6, 2015. Because the Joys filed their original complaint challenging
the amended bylaw on April 21, 2020, less than five years after the
amended bylaw was recorded, the statute of limitations does not
bar their claims. See Hilton v. Pearson, 208 So. 3d 108, 110 (Fla.
1st DCA 2016) ("[A] suit challenging the validity of an amendment
to restrictive covenants must be filed within five years of the date
that the amendment is recorded even if the suit alleges that the
7
The Club alleged that section 95.11(2)(b) barred both of the
Joys' claims.
16
amendment was void because it was not properly enacted."); see
also Harris, 135 So. 3d at 368 (holding, in a lawsuit challenging a
property owners association's amendment to its governing
documents, that the statute of limitations still began to run from
the date on which the amendment was recorded in the public
records notwithstanding that plaintiff landowner did not acquire
her property until after the amendment).
Although the trial court ruled that the Joys are equitably
estopped from challenging the legality of the amended bylaw, the
record establishes that a genuine issue of material fact precludes
summary judgment on this issue.8
This court has recognized that
8
The Club likewise moved for summary judgment on its
affirmative defense of laches. It is unclear whether the trial court
specifically ruled on this defense; regardless, although laches may
bar a claim that is otherwise timely under the statute of limitations
where "strong equities appear," see Appalachian, Inc. v. Olson, 468
So. 2d 266, 269 (Fla. 2d DCA 1985), genuine issues of material fact
likewise preclude summary judgment on this defense. Nothing in
the record suggests that the Joys failed to act diligently in bringing
this lawsuit. Further, the Club has not demonstrated conclusively
that it relied to its detriment on the Joys' filing of this lawsuit in
April 2020 rather than closer to the time they purchased their
condominium in late 2017. See id. ("Laches is based upon an
unreasonable delay . . . in asserting a known right which causes
undue prejudice to the party against whom the claim is asserted."
(first citing Bethea v. Langford, 45 So. 2d 496 (Fla. 1949); and then
citing Van Meter v. Kelsey, 91 So. 2d 327 (Fla. 1956))).
17
"[t]he doctrine of estoppel should be applied with great caution and
is applied only where to refuse its application would be virtually to
sanction a fraud." Pelican Island Prop. Owners Ass'n v. Murphy,
554 So. 2d 1179, 1181 (Fla. 2d DCA 1989) (citing Brickell Bay Club
Condo. Ass'n v. Hernstadt, 512 So. 2d 994, 996 (Fla. 3d DCA 1987)).
Although a party may be equitably estopped from repudiating the
obligations and validity of a transaction after accepting its benefits,
see Head v. Lane, 495 So. 2d 821, 824 (Fla. 4th DCA 1986), it is
impossible on this record to say as a matter of law that before
bringing this action, the Joys knew all material facts pertaining to
the amended bylaws and the specific benefits that they would
receive therefrom. See 28 Am. Jur. 2d Estoppel and Waiver § 61
(2022) ("Knowledge of the facts is essential to estoppel by
acceptance of benefits."); Sun Operating Ltd. P'ship v. Holt, 984
S.W.2d 277, 292 (Tex. App. 1998) ("As to Vantage's proposition that
the Holts were estopped, as a matter of law, from claiming that the
entire lease expired because they accepted $50 from Oakwood, we
again disagree. Before one's acceptance of a benefit can amount to
an estoppel, it must be shown that the benefit was accepted with
18
knowledge of all material facts." (citing Frazier v. Wynn, 472 S.W.2d
750, 753 (Tex. 1971))).9
Outcome: Because the trial court erred in concluding that the Club was
authorized to redefine the Club-membership requirement by
amending its bylaws, we reverse the grant of summary judgment in
favor of the Club and remand with instructions that summary
judgment be entered in favor of the Joys on the invalidity of the
2015 bylaw amendments, subject to any unresolved affirmative
defenses. We also reverse the summary judgment in favor of the
Club on its statute of limitations and equitable estoppel defenses
and direct that upon remand, the trial court grant summary
judgment in favor of the Joys on the Club's statute of limitations
defense. We remand for all other further proceedings consistent
with this opinion.
Plaintiff's Experts:
Defendant's Experts:
Comments: