Cornerstone 417, LLC v. Cornerstone Condo. Ass'n, Inc.

300 So.3d 1262

CORNERSTONE 417, LLC, a Florida Limited Liability Company, Appellant,

v.CORNERSTONE CONDOMINIUM ASSOCIATION, INC., a Florida Not for Profit Corporation as Termination Trustee and LSREF2 OREO (DIRECT), LLC, a Delaware Limited Liability Company, Appellees.

Case No. 5D19-1621

District Court of Appeal of Florida, Fifth District.

Opinion filed July 24, 2020

Stuart J. Barks, of Barks Law Firm, Sanford, for Appellant.

Christopher D. Donovan, of Roetzel & Andress, LPA, Naples, for Appellees.

PER CURIAM.

Cornerstone 417, LLC ("Cornerstone"), appeals the trial court's final judgment dismissing, with prejudice, its complaint against Cornerstone Condominium Association, Inc., a Florida Not for Profit Corporation as Termination Trustee ("Association"), and LSREF2 OREO (DIRECT), LLC, a Delaware Limited Liability Company ("Oreo") (collectively, "Appellees"), for failure to exhaust its administrative remedies. On appeal, Cornerstone argues that the trial court erred in dismissing the complaint based on its conclusion that Cornerstone was required, pursuant to section 718.117(16), Florida Statutes (2019), to timely file a petition for mandatory nonbinding arbitration with the Department of Business and Professional Regulations ("DBPR") prior to filing its claim in the circuit court.¹ We affirm.

Cornerstone owned a unit in the Cornerstone Commercial Condominium ("Building"). Oreo acquired ownership of 91% of the units and thereafter, elected a board of directors that approved a plan to terminate the condominium ("Termination Plan"). The Termination Plan provided that Cornerstone would be provided the fair market value for its condominium, according to Association's fair market value determination. The termination was carried out, and Cornerstone was compensated for its unit. Cornerstone subsequently filed a complaint against Appellees alleging that Appellees were unjustly enriched because Cornerstone surrendered its unit for less than the market value and that Association breached its fiduciary duty to Cornerstone by undervaluing its unit by $150,000, failing to account for its high-end build out, and using inappropriate comparable sales. Additionally, Cornerstone sought a declaratory judgment as to the value of its unit.

Appellees moved to dismiss Cornerstone's complaint, arguing that pursuant to section 718.117(16), Florida Statutes, a unit owner who intends to contest a condominium termination plan must file a petition for mandatory nonbinding arbitration pursuant to section 718.1255, Florida Statutes (2019), within ninety days after the date that the termination plan is recorded; otherwise, the owner is barred from prosecuting their claim in the circuit court. The record reflects that Cornerstone had petitioned for mandatory nonbinding arbitration but that the DBPR dismissed Cornerstone's petition as untimely and procedurally flawed. The trial court dismissed Cornerstone's complaint.

Cornerstone's first argument on appeal is that it was not required to initiate mandatory nonbinding arbitration prior to filing its complaint in the circuit court because the DBPR lacked jurisdiction to hear the issues it raised in its complaint.

Section 718.117, Florida Statutes, governs condominium terminations. "The condominium form of ownership may be terminated for all or a portion of the condominium property pursuant to a plan of termination meeting the requirements of this section and approved by the division." § 718.117(3), Fla. Stat. "Before a residential association submits a plan to the division, the plan must be approved by at least 80 percent of the total voting interests of the condominium." Id. "The plan of termination must be a written document executed in the same manner as a deed by unit owners having the requisite percentage of voting interests to approve the plan and by the termination trustee." § 718.117(9), Fla. Stat. A plan of termination must specify, among other things, "[t]he interests of the respective unit owners in any proceeds from the sale of the condominium property." § 718.117(10)(d), Fla. Stat.

A unit owner or lienor may contest a plan of termination by initiating a petition for mandatory nonbinding arbitration pursuant to s. 718.1255 within 90 days after the date the plan is recorded. A unit owner or lienor may only contest the fairness and reasonableness of the apportionment of the proceeds from the sale among the unit owners, that the liens of the first mortgages of unit owners other than the bulk owner have not or will not be satisfied to the extent required by subsection (3), or that the required vote to approve the plan was not obtained. A unit owner or lienor who does not contest the plan within the 90-day period is barred from asserting or prosecuting a claim against the association, the termination trustee, any unit owner, or any successor in interest to the condominium property. In an action contesting a plan of termination, the person contesting the plan has the burden of pleading and proving that the apportionment of the proceeds from the sale among the unit owners was not fair and reasonable or that the required vote was not obtained.

§ 718.117(16), Fla. Stat.

Cornerstone acknowledges that a plaintiff must exhaust its administrative remedies before filing a complaint in a court of general jurisdiction but asserts that if a plaintiff raises an issue that is outside of the respective administrative agency's jurisdiction, then the circuit court is the proper forum for the claim. Butler v. Dep't of Ins., 680 So. 2d 1103, 1106–07 (Fla. 1st DCA 1996). It contends that its claims for unjust enrichment, breach of fiduciary duty, and declaratory judgment were outside the DBPR's jurisdiction because section 718.117(16) narrowly confines the DBPR's jurisdiction in condominium termination cases to determining the rights and interests of the parties in the apportionment of the sale proceeds from the termination.

As stated, the plain language of section 718.117(16) provides that "[a] unit owner or lienor may contest a plan of termination by initiating a petition for mandatory nonbinding arbitration pursuant to s. 718.1255, Florida Statutes, within ninety days after the date the plan is recorded." The language of section 718.117(16) must be read in conjunction with section 718.1255, which provides that "[p]rior to the institution of court litigation, a party to a dispute shall petition the division for nonbinding arbitration," and that a "dispute" is any disagreement between two or more parties that involves a plan of termination. § 718.1255(1)(c), (4)(a), Fla. Stat.

Although Cornerstone is correct that section 718.1255, Florida Statutes (2019), provides that a "dispute" does not include a claim alleging "breach of fiduciary duty by one or more directors," § 718.1255(1)(c), in determining whether a plaintiff's claim is subject to mandatory nonbinding arbitration, we look not to how the plaintiff frames the claim, but rather, at the gravamen of the claim and the relief sought. Villorin v. Vill. of Kings Creek Condo. Ass'n, 789 So. 2d 1157, 1159 (Fla. 3d DCA 2001) (reversing order of dismissal based on plaintiff's failure to exhaust administrative remedies; gravamen of complaint concerned validity of special assessment, which was exempt from presuit...