STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION Grand Cay Villas at Ponte Verda Condominium Association, Inc., Petitioner, v.

Case No. 2006-01-2192

Ann Coppedge, Respondent. ______________________________________/ FINAL ORDER Comes now, the undersigned arbitrator, and issues this final order as follows: The undersigned arbitrator conducted a formal hearing in this cause on September 12, 2006. The following appearances were entered: APPEARANCES For Petitioner:

Charles W. McBurney, Jr., Esquire 76 South Laura St., Ste. 590 Jacksonville, Florida 32202

For Respondent:

D. Randall Briley, Esquire Bartlett & Deal, P.A. 135 Professional Drive, Suite 101 Ponte Verdra Beach, Florida 32082 STATEMENT OF THE ISSUES PRESENTED

The issues in the case are whether the Respondent Ann Coppendge wrongfully refused to permit the Association to install the control panel for the building’s fire safety system within her unit, and whether the association may require the Respondent to place the control panel within her unit.

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PROCEDURAL STATEMENT The Association filed its petition in this matter on March 6, 2006. The Respondent filed her answer on May 15, 2006. The arbitrator issued an order on May 17, 2006, striking the defense of estoppel and holding that if the fire code required the panel to be installed within Respondent’s unit, estoppel would not lie against the Association. On May 31, 2006, the parties filed the affidavit of the St. John’s County Fire Marshal, upon which both parties rely. A series of status conferences was held in the case, and the final hearing was scheduled and held on September 12, 2006, by teleconference call, with the arbitrator presiding from Tallahassee. The parties did not file any post-hearing written argument. FINDINGS OF FACT 1. Petitioner is the Grand Cay Villas at Ponte Vedra Condominium Association, Inc., the condominium association responsible for the operation of the Grand Cay Villas at Ponte Verdra Condominium. 2. Respondent is Ann Coppedge, the unit owner of unit #313 of Building 3 of the subject condominium. 3. When the Respondent entered into a contract to purchase unit #313 from the developer in May of 2001, the mechanical box (hereinafter the “panel”) controlling the fire safety system for Building 3 was housed inside unit #313, in an interior closet. Ms. Coppedge refused to close on the unit until the developer moved the panel to the exterior wall of the unit, where it is located today in the breezeway in close proximity to the Respondent’s front door.

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4. The condominium contains 12 buildings. Each building contains 20 or more units. The original plans for the buildings include housing a fire safety panel inside one unit in each of the 12 buildings. In all of the buildings except for Building 3, the fire safety control panel has been mounted in an interior closet in a single unit in the building. 5. The respondent is a transplant patient, and she is often sensitive to noise, light and disturbances. She sleeps sometimes during the daytime. It would disturb the quiet enjoyment of her unit to an extent to be subject to the annual inspection conducted required for the fire safety system. Also, she has two small dogs that would possibly be displaced or agitated by an annual inspection. 6. Respondent has genuine health concerns, but it is not found that an annual inspection would inconvenience her appreciably more than the other owners in the building. The company performing the inspection would be expected to contact the host unit owner in advance of the inspection, and there is every indication that the homeowner and the inspector would be able to work out a date and time that is mutually convenient. 7. The fire safety control panel does not create any noise and does not emit light when the panel is housed in an interior closet with the door closed. 8. The Respondent opined that the value of her unit would be decreased if she was required to install the panel in her small interior closet. The closet is 2 or 3 feet wide and already houses the control panel for her entry alarm system. Her unit occupies approximately 1,700 square feet of airspace. 9. Since approximately 2003, the board has been studying fire alarm systems. Its original fire alarm system contained elements that are out of production. The old system required much maintenance and generated an excessive number of false alarms. The old

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system combined in a single element both a control panel and an element that allowed the alarm for the building to be turned off and reset. This single element system control box, except for Building 3, had been located within a featured unit within each building. In the past, when an alarm was activated, whether a false alarm or otherwise and when the association could not locate the unit owner or a key to the unit, it was necessary for the association to break into the unit to deactivate or reset the alarm. 10. The board undertook extensive and time-consuming research concerning fire alarm systems, consulted different manufacturers, and had the fire marshal visit the premises for an inspection. At a board meeting held in February 2005, the board voted in favor of entering into a contract with SimplexGrinnell, a company specializing in the design and installation of fire safety systems. The new system featuring the Simplex 4004 Fire Alarm Control Panels has been installed in all buildings except Building 3. There are two components to the system. First, a control panel is installed inside a single unit in each building, in an interior closet located directly inside the front door. In addition to the interior panel, a smaller box measuring approximately 8 inches square is installed on the exterior wall of the unit. The outside box is termed a remote annunciation box and allows the fire department to turn off an alarm and to reset the system without entering a unit. The annunciators

are

equipped

with

remote

control

for

signal

silence,

trouble

acknowledgement, system reset, and zone indication. 11. The panel boxes employed by the new system measure approximately 16-20 inches square and are approximately 2-3 inches thick. The old panels under the old system measured approximately 22-24 inches square and were 3-4 inches thick.

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12. Under the fire code, it is lawful to install the fire control panel on the exterior of a building, but where it is installed outside, it is necessary to install the panel in a boxed environment which controls both the ambient temperature and the relative humidity of the air space occupied by the panel.

The maximum humidity permitted is 85% and the

temperature must be maintained between 32 and 120 degrees Fahrenheit. A small air conditioner/heater is therefore installed in a box built around the control panel. Under this installation, as to building #3, it would be necessary for the Association to build the housing, install the temperature and humidity controls, and rewire the new location. It would also be necessary for the Association to monitor, repair, and replace the air conditioners serving the fire panels.

This would entail additional expense than the

expenses incurred where the panels are installed within living space. The functionality of the exterior-mounted panel would be compromised and the system would be rendered less dependable by the exterior mount. 13. In order to install the new system with the control panel in a unit and with the remote annunciation box mounted outside, the cost per installation under the contract entered into by the association was $1,986.00. The initial installation cost to install the control panel on an exterior wall, including the environmental control box, would be approximately $5,975.00 per installation. CONCLUSIONS OF LAW 1. The Division has jurisdiction over the parties and subject matter of this action pursuant to section 718.1255, Florida Statutes. 2. The Florida Fire Prevention Code requires the subject building to have a fire alarm. The current installation of the control panel for building #3 violates the Florida Fire

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Prevention Code which requires that if such a device is placed outside, that it be housed in an installation to allow control over the temperature and humidity. 3. The board owes a fiduciary duty to the unit owners, and is responsible for the maintenance and protection of the common elements and association property. Part of the board’s obligation is to provide adequate fire safety. As a function of this duty, the association is obligated to comply with all applicable life and safety codes. 4. Pursuant to its statutory duty to maintain and protect the property, the board in this case examined various proposals, consulted with experts, and through the exercise of its business judgment chose the new fire safety system offered by SimplexGrinnell. 5. The petition for arbitration alleges that the Respondent’s actions in refusing to submit to the internal installation of the control panel violates section 22.04 of the declaration providing that every owner shall: not permit or suffer anything to be done or kept in his Unit which would increase the insurance rates on his Unit or the Common Elements, or which will obstruct or interfere with the rights of other members or annoy them with unreasonable notices or otherwise; nor shall a member commit or permit an nuisance, immoral or illegal acts in his Unit or on the Common Elements.

6. The petition also alleges that the Respondent is in violation of section 22.18 of the declaration providing that every owner shall “not make use of a Unit that violates any laws, ordinances and regulations of any governmental body having jurisdiction thereof.” 7. The Respondent did not violate any specified portion of the declaration by her refusal to permit installation of the panel inside her unit. She also did not violate any law or ordinance, and did not do anything to increase insurance costs for the Association. The Association may lawfully install the panel on other areas of the common elements, thus

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satisfying the requirements of the fire safety code. The issue in the case is not, therefore, whether she violated the documents, but is whether the board has the authority to require her to accommodate the panel within her unit. 8.

The Association has the duty to protect the condominium property and its

residents. See, sections 718.113(1), 718.111(4), Florida Statutes, and Rizzo v. River Reach, Inc., Arb. Case No. 2003-06-1654, Final Order Denying Motion for Emergency Relief and Final Order Dismissing Petition (May 21, 2003) (Where the board voted consistent with its fiduciary duty to upgrade the current fire safety system for the building as required by the fire marshal, the board recognized its duty to maintain and protect the condominium property and its residents, and was entitled to the protection of the business judgment doctrine.) 9. In Swartz v. Brickell Townhouse Association, Inc., Arb. Case No. 95-0222, Final Order (December 2, 1996), the association, in the process of rebuilding from Hurricane Andrew, was required by the South Florida Building Code to install a new generator and a fire pump and a structure to house them, and was called upon to determine where to construct the facility.

Unit owners adjacent to the planned structure challenged the

decision of the board to locate the structure in proximity to their units. The fire pump ran on diesel fuel and required weekly testing. When determining the possible location for the structure, the board took into account functionality, practicability, and cost considerations, and further considered the advice of its engineers and attorneys. The arbitrator held that directors have a wide discretion in the performance of their duties, and that actions taken by the board within the scope of its authority are presumptively correct. The arbitrator will not substitute its judgment for that of the directors, absent a showing of mismanagement,

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fraud, or breach of trust. As stated in Brickell: “The business judgment rule is “a policy of judicial restraint born of the recognition that directors are, in most cases, more qualified to make business decisions than are judges. Mills v. Esmark, Inc., 544 F. Supp. 1275, 1283 (N.D. Ill. 1982).” 10. In the instant case, the board has a limited number of location options. The control panel may be located within the unit, or it may be located on the exterior wall of the unit. 1 The exterior location entails greater initial expense and greater operating costs, perpetual maintenance obligations for the temperature and humidity control requirement, less reliability because of the additional environmental controls required by the installation, and less uniformity in the appearance of the buildings. The association, in additional to monitoring the functions of the fire safety system, must also monitor the function of the air conditioner servicing the box.

On the other hand, the inside installation requires a

permanent intrusion, albeit minimal, into the living space of a unit with the presence of the control panel in a closet. The annual inspection entails an additional occasion of intrusion into the unit. 10. The arbitrator concludes that the Association, in the exercise of its business judgment, properly determined to install the control panel in the interior of Ms. Coppedge’s unit.

The facts here are somewhat different from Schwartz v. Brickell Townhouse,

discussed above, in that the association in that case did not seek to install the generator within the boundaries of a unit. However, the chosen placement and appearance of the generator in Brickell Townhouse did impact on the living environment of the area unit

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While in a literal sense there are perhaps potentially many potential locations for the panel box, including within any unit in the building or upon any exterior wall space on the building, these other locations would entail greater costs to relocate the existing electrical connections servicing the panel and were properly rejected by the board.

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owners, and doubtless the noises caused by the weekly testing of the equipment reached inside the units in proximity to the equipment. In this respect, there is similarity between the cases. 11. The Association, in the exercise of its business judgment, has chosen an alternative that has resulted in a diminution of the available living space within an individual unit. In essence, the Association has chosen to place the burden of the entire building to comply with fire safety requirements on a single inhabitant. 2

Nonetheless, the

appropriation of a space of perhaps 54 square inches in the interior portion of a closet is minimal. A once-a-year inspection routine likewise does not result in a substantial loss of use of the unit.

Accordingly, the arbitrator requires the Association to pay to the

respondent the sum of $250.00 annually, payable on January 1 of each year beginning January 1, 2007. WHEREFORE, the respondent is ordered to make her unit available for the panel installation within 30 days hereof. The Association is required to timely remit the annual payment called for herein. DONE AND ORDERED this 22nd day of September, 2006, at Tallahassee, Leon County, Florida. ________________________________ Karl M. Scheuerman, Arbitrator Department of Business and Professional Regulation Arbitration Section Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-1029

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However, this cannot be said of the other host unit owners in the other buildings as they purchased their units with these devices already installed inside. In effect, their units were purchased subject to the existing intrusion.

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Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail to the following on this 22nd day of September, 2006: Charles W. McBurney, Jr., Esquire 76 South Laura St., Ste. 590 Jacksonville, Florida 32202 D. Randall Briley, Esquire Bartlett & Deal, P.A. 135 Professional Drive, Suite 101 Ponte Verdra Beach, Florida 32082 ________________________________ Karl M. Scheuerman, Arbitrator

Right to Appeal As provided by s. 718.1255, F.S., this final order may be appealed by filing a complaint for trial de novo with a court of competent jurisdiction in the circuit in which the condominium is located, within 30 days of the entry and mailing of this final order. This order does not constitute final agency action and is not appealable to the district courts of appeal. If this final order is not timely appealed, it will become binding on the parties and may be enforced in the courts.

Attorney’s Fees As provided by s. 718.1255, F.S., the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney’s fees. Rule 61B-45.048, F.A.C. requires that a party seeking an award of costs and attorney’s fees must file a motion seeking the award not later than 45 days after rendition of this final order. The motion must be actually received by the Division within this 45 day period and must conform to the requirements of rule 61B-45.048, F.A.C. The filing of an appeal by trial de novo of this final order tolls the time for the filing of a motion seeking prevailing party costs and attorney’s fees until 45 days following the conclusion of the de novo appeal proceeding and any subsequent appeal.

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