Ventana Condominium Association, Inc. v. Chancey Design Partnership, Inc.

Citations: 203 So. 3d 175; 2016 Fla. App. LEXIS 12173Docket: 2D15-1803

Court: District Court of Appeal of Florida; August 12, 2016; Florida; State Appellate Court

Original Court Document: View Document

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Ventana Condominium Association, Inc. appeals a final summary judgment favoring Chancey Design Partnership, Inc., Gregory Jones, and Elliott Wheeler, asserting errors by the trial court in determining the absence of material fact disputes and in legal application. The case stems from a contract between Ventana Tampa, LLC (the Developer), Hardin Construction Company, LLC, and Chancey Design for condominium construction, during which delays and cost issues emerged. A Mediated Settlement Agreement (MSA) granted Hardin authority to act on behalf of the Developer against Chancey Design, binding successors and assigns, but did not formally assign claims to Hardin. 

Hardin sued Chancey Design in July 2008, representing both itself and the Developer. In the interim, foreclosure occurred, requiring the Developer to assign litigation interests to Mercantile Bank, although the final foreclosure judgment did not mention such an assignment. Mercantile Bank later assigned the judgment to BMR Funding, LLC, without reference to prior litigation interests. BMR then claimed to be the successor and real party in interest regarding the claims against Chancey Design.

In February 2010, Hardin and Chancey Design reached a confidential settlement, leading to a May 2010 general release executed by Hardin and BMR, which discharged Chancey Design from all claims related to the lawsuit. The appellate court's decision to reverse and remand indicates a need for further proceedings due to the identified legal errors.

BMR releases Chancey Design and related parties from all past and present claims, liabilities, and obligations related to a prior lawsuit dismissed in June 2010. In July 2010, the Ventana Condominium Association assumed control and maintenance responsibilities from the Developer. In 2014, the Association filed a new lawsuit against Chancey Design and others, alleging design defects in the "amenities deck." The Chancey Defendants sought summary judgment, asserting that the Association, as a successor to BMR, was bound by a prior Release agreement that resolved the same claims. The Association countered that the issues were construction defects stemming from a redesign, arguing that the Release was ambiguous and did not cover unknown claims related to construction. The court concluded that the Association was bound by the Release, affirming its status as a successor in interest to the Developer, which had previously assigned its claims to Hardin Construction Company. The court granted summary judgment, confirming that the claims against Chancey Design had been settled by the prior Release.

A condominium is established by recording a declaration in the county's public records, in accordance with Florida Statute 718.104(2). This declaration must include the name of the association, which can be either a for-profit or not-for-profit corporation, and the foundational documents for the association (718.104(4)(i, k)). The association is formed concurrently with the condominium through the recording of these documents (see also 718.112(1)(a)). The association's governance is determined by its articles of incorporation and bylaws, which are part of the recorded declaration (Grove Isle Ass'n, Inc. v. Grove Isle Assocs. LLLP, 137 So. 3d 1081, 1090 (Fla. 3d DCA 2014)). The declaration acts as the condominium's "constitution," outlining the relationships among unit owners and the association (Woodside Vill. Condo. Ass'n v. Jahren, 806 So. 2d 452, 456 (Fla. 2002)). 

The powers of a condominium association are defined by section 718.111 of the Florida Statutes and are subject to limitations imposed by the Condominium Act and the declaration. The association can sue regarding its powers, including property maintenance and management (718.111(3)). Once a majority of the board is elected by non-developer unit owners, the developer relinquishes control (718.301(4)), and the association then can act on behalf of all unit owners concerning matters of common interest. Before this transition, the developer controls the association, and actions taken by its designated board members are deemed actions of the developer (718.301(6)). 

The statutes imply that the association, while under developer control, could have been involved in original litigation concerning design defects. However, the association was not named in these litigation documents; the developer, Ventana Tampa, LLC, was the sole party involved. Non-developer unit owners' ability to elect the board significantly impacts their rights, as the association cannot pursue legal actions until they gain control.

The Developer acted solely as a developer and not as the board of administration for the Association, as evidenced by the litigation records which do not indicate any capacity other than that of a developer. The Association could have participated in the original litigation against Chancey Design through statutory provisions or by the Developer filing on its behalf, but it did not do so. The interests at stake in the original lawsuit were those of the Developer, not the Association, which is seeking to assert its own rights in the current case, distinct from those previously claimed by the Developer. 

The trial court's conclusion that the Association is a successor in interest to the Developer lacks support from the record evidence. The Management Services Agreement (MSA) between the Developer and Hardin stipulates that Hardin may abandon claims but retains the right to prosecute claims against Chancey Design on behalf of both parties. Hardin is entitled to 75% of any recovery, while the Developer receives 25%. The MSA affirms that no assignment of claims has occurred, indicating only an agency relationship. There is no documentation supporting an assignment or successor status between the Developer and Hardin, and the Developer did not consent to settle any claims or enter into a release. Hardin's release only pertains to its own interests and does not encompass the Developer as there is no evidence in the record to suggest that the Developer is included among the parties released. The court mistakenly interpreted the MSA as an assignment, which it is not, as it simply establishes an agency relationship.

The Association was not deemed a successor in interest to BMR in the final judgment, although the Chancey Defendants argued otherwise in their summary judgment motion. A foreclosure on the condominium property led to a settlement where the deficiency was set at $500,000. The Developer was required to assign any interests in existing or future disputes with Hardin and Chancey Design to Mercantile Bank as part of this settlement. The final judgment of foreclosure, which all parties consented to, did not specify a deficiency figure and subsequently, Mercantile Bank assigned the judgment to BMR without any warranties. There was no evidence that BMR held the Developer’s interests during the Release. The court noted that a final judgment must either incorporate or reference the settlement agreement to enforce its terms, which was not done here. While the MSA was not explicitly referenced in the Stipulated Final Judgment, it was implicitly included as the primary authority. Thus, since the terms of the settlement agreement were not enforceable as part of the final judgment, the assignment of the judgment did not carry those terms. 

Regarding the claims, the Chancey Defendants contended they were identical to previous litigation. However, the Association presented affidavits asserting that new latent defects were discovered after they assumed control from the Developer in 2010. This created a factual dispute about whether the claims were based on patent or latent defects, which the Chancey Defendants did not sufficiently resolve to demonstrate that the Association could not succeed.

The Release in question is interpreted under the assumption that it encompasses claims anticipated by the agreement, which must be read as a whole rather than in isolation. The Release includes "any and all past and present losses, liabilities, responsibilities, demands, obligations, actions, causes of action, rights, judgments, damages, compensation, expenses (including attorneys' fees and costs), and claims whatsoever," executed pursuant to a Settlement Agreement. The Settlement Agreement stipulates that Hardin must deliver a General Release of all claims against Chancey Design, arising from the circumstances outlined in the complaint, and also from Mercantile Bank as assignee of Ventana Tampa, LLC and Chanelside Building, Inc.

The Release identifies Hardin and BMR as releasors, along with their agents and affiliates, but does not extend to the Association, which is neither a successor nor included in the defined categories. The ambiguity persists regarding whether the Release covers future losses or only past and present claims, particularly concerning latent defects not known to the parties at the time of execution. The language does not explicitly address claims known and unknown, leading to differing interpretations of the parties' intent regarding the scope of the Release.

As a result, the ambiguity creates a material issue of fact that cannot be resolved through summary judgment, necessitating further proceedings to clarify the intent behind the Release's terms. The court reverses and remands the case for additional evaluation, indicating that the Chancey Defendants have not conclusively proven that the Association cannot succeed on its claims.