After nearly three years of legal battles, Florida condo
owners ﬁnd replacing their board a daunting task
Independent American Communities
By Deborah Goonan
08 February 2017
Whenever I read talking points from an industry trade group, Community
Associations Institute (CAI), claiming that Association Governed
Communities are "democratic" self- governance, I cringe.
Nothing could be further from the truth. Perhaps in a perfect world.
But most associations are far from perfection when it comes to
conducting clean annual elections.
As HOA, condo, and co-op election season swings into full gear in many
associations, there will once again be heated disputes over quorum,
proxy votes, absentee ballots, voting certificates, annual meeting
announcements, and scores of other details that can and will go wrong
in many, many associations.
I am always amazed at how Association managers, attorneys, and board
members can complain about owner apathy on one hand, and yet fight
tooth and nail to keep the current board in place when challengers step
up to the plate to serve their community. In fact, one Florida condo
association has been embroiled in legal disputes over its 2015 and 2016
The group of concerned owners, long-time members of Palm-Aire Country
Club Condominium Association No. 2 (PACC2), a 691-unit condo
association in Pompano Beach, Florida, have been attempting to oust the
majority of their board of directors for three years.
Concerned owners maintain a document library at
http://pacc2documentlibrary.com managed by several unit owners.
One of those owners is Joyce Arnoff, elected to the PACC2 board in
2016. Joyce inherited her condo unit from her mother more than a decade
ago. Since then, she and her husband, Norman B. Arnoff, have been
enjoying time in the Florida condo. Norman is a licensed attorney in
both New York and Florida, with more than 40 years litigation
experience, specializing in SEC, Commodities, Banking litigation,
arbitration and regulatory matters, as well lawyers and accountants
malpractice and insurance coverage matters.
According to the Arnoffs, in 2014, Joyce began receiving late payment
notices on her condo assessment account with PACC2. When they looked
into it, both discovered that Joyce's checks were not being posted in a
timely manner. That resulted in late fees and substantial attorney fees
being tacked onto regular assessment invoices.
Unable to resolve the financial dispute with the condo association,
Joyce Arnoff filed a complaint with Florida's Department of Business
and Professional Regulation (DBPR). Following an investigation, as of
July 2015, a DBPR investigator issued a written ruling that vindicated
Arnoff, and served as a written warning to PACC2 to comply with Florida
Statutory requirements for timely posting of payments and more detailed
No sanctions or charges were files against PACC2, its
board, or its agents.
Conflict among PACC2 owners can be traced back to Hurricane Wilma in
2005. Unit owner and current board Treasurer Jan Stanley explains, "Following
the storm, extensive damage led to a determination by insurance
companies in 2006-2008 that PACC2 was entitled to $18 million in
insurance funds for repairs and rebuilding.
The seated board at the
time, as well as Association attorneys assigned to the matter, failed
to file appropriate follow up paperwork. This resulted in the
Association’s receiving only $2,800,000 of the $18,000,000,
necessitating multiple special assessments to pay for repairs that
should have been recovered under the Association's insurance policy."
Since most of the owners are retired and living on fixed incomes, some
could not pay the special assessments all at once, opting for a payment
plan. However, some owners either fell behind or missed payment notices
when PACC2 changed management companies.
They, too, began to receive late notices with inflated collection costs
and attorney fees added to their assessment balance due.
All of these issues led to discord, and a group of dissatisfied owners
that wanted to elect a new board and implement a new management style.
For the 2015 election, in addition to minority board members Peter
Kretz and Joseph O'Neill, several other candidates challenged incumbent
board members for vacant seats, among them Rose Cilone, Thomas Anthony,
and Harland "Charlie" Kemplin.
Here is where the dirty tricks start
Although Cilone and Anthony had more than enough ballots to win the
election, on the day of the 2015 election, the election monitor
appointed by the majority seated board members was dismissed, and Tamar
Shendell of Shendell & Associates, retained by the incumbent board
as legal counsel, removed candidates Cilone and Anthony from ballots,
claiming these members were not in good standing on their assessments.
Owners who voted for these candidates had those votes removed from the
Given the recent history of disputes over billing and collections
procedures at PACC2, these concerned owners alleged that their accounts
were paid in full (or according to payment plans), but that the
management company failed to accept payments from certain individuals
in order to prevent their candidacy.
Furthermore, because Shendell waited until the day of election to
declare that four candidates on the ballot were not current on their
financial obligations to PACC2, those candidates were not given the
opportunity to refute those claims prior to the second advance notice
for the election.
Nevertheless, due to those disputed ballot disqualifications, Cilone
and Anthony were not elected to the board, because their votes were not
counted. As a result, the incumbents they had tried to replace retained
majority control of the nine-member condo board for PACC2.
Shortly after the 2015 election, Kretz and O'Neill joined forces with
other concerned owners to attempt the recall of six board members, but
that failed when the incumbent board members challenged its validity by
suing Kretz and O'Neill for breach of fiduciary duty for participating
in the recall.
Within the 60-day period following the 2015 election (as allowed by
Florida statutes), minority board member Peter Kretz retained an
attorney, Gerard Collins, of KBR (Kaye Bender Renbaum) and challenged
the 2015 board election through the Florida Department of Business and
Professional Regulations (DBPR). The DBPR found that the dismissal of
ballot candidates on the day of the 2015 election was illegal and
directed PACC2 to conduct a new election within 60 days.
Rather than following the DBPR’s directive, the incumbent board, using
its general counsel Shendell & Associates, filed a lawsuit against
Director Peter Kretz, alleging that Kretz did not have standing to
challenge the 2015 election.
According to Jan Stanley, unit owner and current Treasurer of PACC2,
"The incumbent board, together with it general counsel, Shendell &
Associates, failed to notify PACC2’s Directors and Officers insurance
carrier of the lawsuit against fellow board member Peter Kretz.
insurance company requires notification of any legal action, and it
also has the right to appoint an attorney of its choosing to conduct
the case. This failure to notify had two direct results: (1) coverage
for Peter Kretz was placed in jeopardy; and (2) Shendell &
Associates continued to bill the Association for legal fees that should
have been absorbed by PACC2’s insurance carrier. Both results are
costing the Association thousands of dollars in legal fees. The case
involving the 2015 election was inexplicably dismissed by Judge Thomas
Lynch for 'lack of standing.' In October, 2016, Shendell &
Associates collected $105,934 in court and attorney fees from Director
The concerned owners group continued to work with Collins of KBR, with
an eye toward the 2016 election. The group created their own website
and communicated their stance on important issues facing PACC2. The
strategy worked, because the group of nine owners gained considerable
support. The election was set for March 2, 2016, and the Florida
Ombudsman was going to send an election monitor to the annual meeting.
Two days prior to the election, five members of the nine-member incumbent
board met, and voted to postpone the annual meeting, notifying the
However, as was later confirmed by an Appellate Judge, Florida law
requires that condo associations follow their by-laws with regard to
scheduling annual election meetings. The annual election date is set in
the bylaws for PACC2, and cannot be changed without a vote of the
membership. The board alone cannot make the decision to amend the bylaws or change the date of the annual meeting.
rebels held the owners meeting
On advice from their attorney, the Concerned Owners Group held the
March 2, 2016, meeting as scheduled and conducted an election. The new
slate of board members won by a substantial margin of votes. M&M
Property Management LLC certified the results and began working with
the new board.
During its first five weeks in control of PACC2, the newly elected board,
with assistance from the management company, changed the locks
throughout the PACC2 grounds and took control of association bank
accounts. The new board then formally agreed to pay off legal bills
accumulated by the owners group - including minority board member Peter
Kretz—over the past two years, in an attempt to challenge and replace
the majority of the incumbent board.
However, the outgoing 2015 incumbent board refused to give up control.
They have repeatedly mischaracterized the 2016 board as an "imposter
board." In addition, the 2015 board of PACC2 engaged their attorney,
Tamar Shendell of Shendell & Associates, to sue M&M management
for breach of contract. A lower court judge, William W. Haury, ordered
the management company to honor their contract with the 2015 board,
pending the outcome of a dispute over the validity of the 2016
election. That effectively voided the results of the 2016 election, and
handed control back to the 2015 condo board.
M&M Property Management appealed. Finally, in December, 2016, a
District Court Judge reversed the lower court ruling, confirming that
the 2015 board of directors acted outside its authority when it voted
to postpone the 2016 annual election.
December 2016 Order reversing Injunction against M&M Property
Management, and ruling that 2015 board had no legal right to postpone
the March 2, 2016 annual election meeting.
In January of 2017, the 2015 Board was mandated to relinquish control
to the board elected on March 2, 2016.
Unfortunately, due to the slow grind of the legal process and DBPR's
refusal to arbitrate the dispute over the 2016 election, for most of
the year, the 2015 board has remained in control of both finances and
internal communications for PACC2. During that time, property manager
James Martin has launched a PR campaign against challengers elected to
the 2016 board, using PACC2's official website, and posting
announcements on locked bulletin boards in PACC2 buildings.
It is important to understand that, in an Association-Governed
community, the Board of Directors generally controls all communications
(including the website, printed newsletters and electronic messages)
distributed to members, as well as the posting of announcements in
common areas. That means that the Association's Board can spin the
facts in any way that benefits their cause and censor information from
other members with whom they disagree.
James Martin, manager of PACC2 hired by the 2015 board, filters and
selectively posts announcements on the Association's website, painting
owners challenging the board as "imposters" seeking personal gain.
The board elected March 2, 2016, disputes James Martin's claims, and
objects to his misstatement of the facts.
Norman B. Arnoff, Esq. describes James Martin's conduct as "abusive"
and "working hand in hand with the Shendells." He cites as an example,
Martin's refusal to accept a hand-delivered assessment check, insisting
that it be sent to the Shendell law firm instead.
In response to James Martin's / Shendell's accusations against the 2016
board using Association funds to indemnify (pay legal fees for)
minority board members Kretz and O'Neill, Norman B. Arnoff, Esq. offers
the following legal justification:
Did the Shendells commit legal malpractice and breach their fiduciary
duty to the Association and its members as it relates to the 2015
election? In my opinion, yes. Peter Kretz rightfully challenged the
removal of candidates on the day of the election for alleged
delinquencies. The candidates were wrongfully removed on the day of the
election, notwithstanding that the Florida Condominium Law, Chapter
718, only allows for an election challenge within sixty (60) days after
the results are announced and clearly does not allow the taking
candidates off the ballot on the day of the election. The removed
candidates actually won when the votes were counted. The
Shendells either did not know or research this point or ignored the
clear written law.
Peter Kretz paid $105,000 to cover the Shendells' legal fees, although
ultimately the $105,000 might come out of the pocket of the Association
because the By-Laws provide that a director who is sued in his capacity
of being a director acting in good faith (and as long as he or she did
not commit fraud or gross negligence) will be indemnified by the
The reality is that under the By-Laws the legal fees paid
to the Shendells will be taken out of the coffers of the Association,
if the By-Laws are fully operative in this context. This is both legal
malpractice and breach of fiduciary duty (i.e. preferring one's own
interest over those whose interests should be preferred and protected
by the fiduciary).
From what it appears, the Board never gave its
informed consent to this possible ultimate result and
needless exercise. If the Association is made to indemnify Peter Kretz,
as it should, the funds to indemnify the Association should come from
the Shendells or their professional liability insurance carrier.
The other legal malpractice is that the Shendells, in advising the 2015
Board that they could postpone or cancel the March 2,2016 election,
ignored the clear written law that stated the By-Laws (which includes
setting the date of the annual meeting and election of directors) can
only be modified by a majority vote of all the unit owners of the
Association and not just the Board alone. This was validated by
the holding of the Fourth Circuit District Court of Appeal December 14,
In order to set the record straight, Concerned Owners attempted to go
door to door or to distribute flyers relevant to internal politics at
PACC2. They were slapped with written warnings to cease and desist all
"solicitation," as that is against the CC&Rs.
In essence, the 2015 board wishes to deny condo members' First
Amendment rights to free speech and assembly.
The next PACC2 Board election is scheduled for March 1, 2017.
Contrary to CAI's usual talking point about owner apathy, there are 24
condo members running for election to the board this year.
Members elected to the board of PACC2 in 2016 are among those
candidates, and are running for reelection. Their hope is that fellow
condo owners will consider their side of the story—the one they have
been unable to tell over the past year.
Norman Arnoff supports re-election of the 2016 board. "I
understand the 2016 Board will be running on a platform of
proposing a 'special procedures engagement' with an independent auditor
to make inquiry into financial irregularities and abuses including the
highly questionable, unethical and illegal fees the Shendells were
trying to generate in the collection of assessment
delinquencies," says Arnoff. "
Further, the 2016 Board will
be proposing when a unit owner falls behind to have a board member or a
delegated unit owner try to work out a cooperative installment payment
plan that will avoid the predatory, litigation, and excessive cost
generating tactics of Martin and the Shendells."
Arnoff cites several Florida statutes that, in his legal opinion, have
been violated by Shendell & Associates:
Chapter 718.125 and 718.303(1) constitutes an exception to
the American Rule against fee shifting in that it allows attorney fees
to the prevailing party in an action and when the court
determines their reasonableness.
Chapter 718.116(6)(b) allows the unit owner in a foreclosure proceeding
not to be subject to an award of attorney fees if payment is made
before entry and execution of the judgment.
Chapter 718.112(3) (c) provides "Any challenge to the election
process must be commenced within 60 days after the election results are
Regardless of who is ultimately elected to the 2017 PACC2 board there are
several important conclusions to be drawn.
First, it's clear that, even in a state with specific laws governing
election procedures for condominium associations, election
irregularities are common, and, in some associations such as PACC2,
Sound accounting practices and accurate financial record keeping are
crucial to ethical and effective governance in association governed
communities, especially condominium associations. Neither
ignorance nor intentional manipulation of acceptable accounting
practices should be tolerated in any mandatory owners association.
Florida DBPR has not been very helpful to condo owners at PACC2. The
Division did little to enforce 2014 accounting and 2015 election
irregularities, and refused to Arbitrate the March 2016 election
dispute. Because the agency lacks appropriate authority, and underlying
statutes lack "teeth" to provide effective enforcement, the 2014/2015
majority PACC2 board members, its management agent, and attorney have
been able to ignore or defy warnings to improve its assessment billing
process, and an order to conduct a new 2015 election.
PACC2 owners' experience with DBPR mirrors that of thousands of other
condominium owners in the state of Florida, according to a scathing
report just released by the Miami-Dade Grand Jury.
chapter previous next