||IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND
||Case No. 2D04-5569
||May 3, 2006
||GREENACRE PROPERTIES, INC., APPELLANT,
RADHAKRISHNA K. RAO, APPELLEE.
||Appeal from the Circuit Court for Hillsborough
County; Perry A. Little, Judge.
||Steven H. Mezer, Keith D. Skorewicz, and Eric N.
Appleton of Bush Ross, P.A., Tampa, for Appellant.
||Jennifer J. Card of Abbey, Adams, Byelick, Kiernan,
Mueller & Lancaster, L.L.P., St. Petersburg, for Appellee.
||The opinion of the court was delivered by:
||Greenacre Properties, Inc., appeals a final
judgment in the amount of $9300 in favor of Dr. Radhakrishna K. Rao. We
reverse because Dr. Rao was not an intended third-party beneficiary of
the contract on which he sued; he was not entitled to damages under
section 720.303(5), Florida Statutes (2000), against an entity that was
not a homeowners' association; and he was not entitled to damages for
lost income under a negligence theory when he had sustained no bodily
injury or property damage.
||I. THE FIRST LAWSUIT
||Dr. Rao owns a home and resides in a community
called Van Dyke Farms. As a result, he is a member of the Van Dyke Farms
Homeowners' Association ("the Association"). In 1992, the
Association entered into a contract with Greenacre Properties, a
property management company, for the management of the Association and
its community facilities. Under the contract, Greenacre Properties was
specifically charged with maintaining the financial records and other
records of the Association.
||Since 1999, Dr. Rao and the Association have been
engaged in a bitter dispute that seems to have been engendered by the
construction of a small pond in his yard. X 1
Viewed in the light most favorable to Dr. Rao, the evidence presented in
this case suggests Greenacre Properties may have advised the
Association's board of directors that Dr. Rao was not in compliance with
certain restrictive covenants and recommended the Association file suit
at a time when Greenacre Properties knew or should have known that there
were no existing violations. In May 1999, the Association filed a
lawsuit against Dr. Rao and his wife, seeking injunctive relief related
to alleged violations of deed restrictions. Dr. Rao responded to the
complaint and, as part of his defense, alleged that the Association was
selectively enforcing the restrictive covenants against him. Greenacre
Properties was not a party to this previous lawsuit.
||In October 2000, while this previous lawsuit was
pending, Dr. Rao contacted Greenacre Properties and asked to review all
files kept by Greenacre Properties for the Association for the period
between January 1998 and November 2000. This request was apparently made
as an indirect method to obtain discovery in the pending lawsuit between
Dr. Rao and the Association. In November, Dr. Rao went to the offices of
Greenacre Properties to review these records but was only permitted to
review the "official records" of the Association as defined in
section 720.303(4). The attorney for the Association had advised
Greenacre Properties that it should only permit review of the official
records and not all of the records in its possession.
||The issues surrounding the production of these
documents presumably could have been resolved in the previous lawsuit
through motions to compel the Association to produce the documents.
Apparently without a resolution of these issues, the lawsuit between the
Association and Dr. Rao went to trial in September 2002. At the
conclusion of that trial, the trial judge dismissed the Association's
complaint for injunctive relief and rejected Dr. Rao's claims of
selective enforcement. In his oral pronouncement, the trial judge opined
that the protracted litigation between the parties was the result of a
simple misunderstanding the parties should have resolved between
themselves. The trial judge concluded that Dr. Rao was the prevailing
party in the litigation and thus entitled to attorneys' fees pursuant to
section 720.305(1). The trial judge limited the award of attorneys' fee
to $5545, however, based upon a finding that both parties had incurred
unnecessary or unreasonable attorneys' fees during the litigation.
||II. THIS LAWSUIT
||On January 23, 2001, while the lawsuit between Dr.
Rao and the Association was still pending, Dr. Rao filed this lawsuit
against Greenacre Properties. One count of the complaint against
Greenacre Properties alleged that Greenacre Properties breached its
contract with the Van Dyke Farms Homeowners' Association, based upon the
theory that Dr. Rao had rights under that contract as a third-party
beneficiary. This count claimed that Greenacre Properties breached the
contract by failing to produce records to Dr. Rao for inspection,
failing to adequately maintain the records of the Association, and
failing to provide Dr. Rao with "necessary notices" that the
Association was required to send to Dr. Rao.
||The second count of the complaint alleged that
negligence on the part of Greenacre Properties resulted in damage to Dr.
Rao. This count alleged that Greenacre Properties negligently performed
its duties under the contract with the Association, specifically related
to the requirement to provide certain notices to Dr. Rao or to keep and
maintain the Association's records. This count stated, "As a result
of [Greenacre Properties] failing to perform their duty under the
Agreement, [Dr. Rao] has suffered damages, as well as emotional stress
and physical hardships."
||As Dr. Rao's case against Greenacre Properties
progressed, it became clear that Dr. Rao was seeking as part of his
damages the approximately $30,000 he had paid to attorneys to represent
him in the lawsuit between him and the Association. Prior to trial, the
circuit court ruled that Dr. Rao could not claim these expenses as
damages in this action, given that the trial judge in the preceding
action had awarded Dr. Rao attorneys' fees but found that the majority
of the fees incurred were not reasonable or necessary.
||The case proceeded to a non-jury trial, at which
Dr. Rao asserted that the 1999 lawsuit initiated by the Association was
unfounded and based upon faulty information provided by Greenacre
Properties. Dr. Rao also testified about the incident in 2000 when
Greenacre Properties denied him access to certain records of the
Association when he requested them. X 2
Regarding his damages, Dr. Rao testified that he suffered severe
emotional distress as a result of the prior litigation with the
Association. He asserted he missed seventeen days of work for hearings,
depositions, and inspections related to the litigation, seven additional
days due to rescheduling various appointments because of the demands of
the lawsuit, and thirty-three hours of work for telephone conferences.
Dr. Rao, who is a pediatric neurologist, testified he normally receives
revenue of $275 per hour or $3000 per day.
||After the trial, the circuit court entered a
nineteen-page judgment that has all of the indicia of a judgment
prepared by plaintiff's counsel. X 3 In the
judgment, the trial court concluded that Dr. Rao was a third-party
beneficiary to the management contract between the Association and
Greenacre Properties and that Greenacre Properties had breached the
agreement. The court held that Dr. Rao was entitled to statutory damages
under section 720.305 in the amount of $500. Finally, the court
determined that Greenacre Properties had been negligent in fulfilling,
on behalf of the Association, its duties to Dr. Rao concerning these
records. The court awarded Dr. Rao $8800 in damages, representing his
lost earnings or earning capacity because the earlier lawsuit between
the Association and Dr. Rao had distracted Dr. Rao from his professional
duties. Accordingly, the trial court entered judgment for Dr. Rao in the
total amount of $9300 against Greenacre Properties. X
4 We reverse as to all of these decisions.
||III. A HOMEOWNER IS NOT GENERALLY A THIRD-PARTY
BENEFICIARY TO AN AGREEMENT BETWEEN A HOMEOWNERS' ASSOCIATION AND ITS
||Chapter 720, Florida Statutes (2000), regulates
homeowners' associations. Under this chapter, homeowners' associations
have certain powers and duties, and must maintain certain records. See
§ 720.303. It is common for a homeowners' association to contract with
a property management company to fulfill some of the association's
duties. These contracts may provide incidental benefits to homeowners
who are members of the Association, but they are not usually intended to
directly benefit the homeowners.
||The management agreement between Van Dyke Farms
Homeowners' Association and Greenacre Properties is a typical management
agreement. Greenacre Properties is required to perform certain functions
for the Association. The contract does contain a paragraph that states:
"All records kept by [Greenacre] shall be kept at the office of [Greenacre]
and shall be available for inspection during [Greenacre's] office hours
by association members." The manager, however, is "responsible
to the Board of Directors concerning the management and operation of the
Association." Greenacre Properties is required to "assist the
Board or committees in administering the Rules and Regulations
promulgated by the Association." The contract contains an
indemnification clause in which the Association agrees to indemnify
Greenacre Properties as its "agent."
||As a general rule, a person who is not a party to a
contract cannot sue for a breach of the contract even if the person
receives some incidental benefit from the contract. A third party must
establish that the contract either expressly creates rights for them as
a third party or that the provisions of the contract primarily and
directly benefit the third party or a class of persons of which the
third party is a member. See Caretta Trucking v. Cheoy Lee Shipyards,
Ltd., 647 So. 2d 1028, 1031 (Fla. 4th DCA 1994).
||This contract creates no express rights for the
homeowners vis-a-vis Greenacre Properties. While the homeowners may
incidentally benefit from the record-keeping efforts of Greenacre
Properties, it cannot be disputed that Greenacre Properties is
performing that function primarily for the Association to assure that
the Association fulfills its legal obligations under chapter 720. In a
similar context involving a condominium association, this court has held
that the condominium owners were not third-party beneficiaries of a
management agreement entered into between a condominium association and
its management company. See Clearwater Key Ass'n--S. Beach, Inc. v.
Thacker, 431 So. 2d 641, 645 (Fla. 2d DCA 1983).
||In holding that Dr. Rao was an intended third-party
beneficiary, the trial court's judgment relied on Hialeah Hospital, Inc.
v. Raventos, 425 So. 2d 1205 (Fla. 3d DCA 1983). In that case, however,
Hialeah Hospital sought payment of a debt pursuant to a contract between
two individuals that specifically asserted that there were debts owed to
Hialeah Hospital and designated who would be responsible to pay the
debts to the hospital. Further, the case involved an order dismissing a
complaint for failure to state a cause of action, and the holding
asserted simply, "[W]e are unable at this stage of the pleadings to
draw the . . . conclusion that . . . Hialeah Hospital, Inc., was a mere
incidental beneficiary." Id. at 1205.
||To the extent Dr. Rao's breach of contract claim
involves Greenacre Properties' refusal to provide Dr. Rao access to
certain records of the Association, the merits of his claim are
particularly tenuous. Under the facts of this case, the Association
instructed Greenacre Properties, as its agent, not to produce certain
documents to Dr. Rao. We do not need to decide whether Dr. Rao was
entitled to see the documents he requested under the broad language of
the contracts, even if the documents were not official records for
purposes of chapter 720. We merely determine that Greenacre Properties
was an agent with but one master. When the Association ordered Greenacre
Properties not to disclose these documents, Greenacre Properties was
entitled, if not required, to obey that instruction. There is nothing in
the contract or in chapter 720 that would create an obligation on the
part of Greenacre Properties to obey the varying commands of individual
homeowners, especially when they conflict with the instructions of the
Association with whom it had a written agency agreement. Whether the
documents were subject to production was a matter between the
Association and Dr. Rao that could have been sorted out in their
lawsuit; it was not a matter that Dr. Rao could directly enforce under
third-party rights. Accordingly, the trial court erred as a matter of
law when it concluded that Greenacre Properties had breached a
contractual duty that it owed to Dr. Rao.
||IV. GREENACRE PROPERTIES IS NOT A HOMEOWNERS'
ASSOCIATION SUBJECT TO THE PENALTIES CONTAINED IN SECTION 720.303
||The judgment recites that Dr. Rao is entitled to
$500 in statutory damages for the failure of Greenacre Properties to
comply with section 720.303(5). X 5 Section
720.303(5) addresses a homeowners' association's obligation to maintain
official records that are open and available for inspection by members
of the association. Under section 720.303(5)(b), "a member who is
denied access to official records is entitled to the actual damages or
minimum damages for the association's willful failure to comply with
this subsection." "Minimum damages" are defined as $50
per day for a maximum of ten days.
||At the outset, we must note that Dr. Rao did not
plead a cause of action under the statute, and we can find no reference
to section 720.303(5) in the complaint. Even if Dr. Rao had sought such
relief in his pleadings, he would not have stated a valid cause of
action against Greenacre Properties. An "association" for
purposes of this statute is defined in section 720.301(7) as "a
Florida corporation responsible for the operation of a community . . .
in which the voting membership is made up of parcel owners." This
definition does not include a property management company. This
definition of "association" does, of course, describe an
entity such as Van Dyke Farms Homeowners' Association. Simply put,
Greenacre Properties is not an association and nothing in chapter 720
would permit the trial court to impose these statutory "minimum
damages" against an agent that the Association relied upon or
contracted with to perform its statutory duties. If Dr. Rao wanted to
recover this statutory claim, he was required to sue Van Dyke Farms
Homeowners' Association for the statutory violation. Accordingly, the
trial court erred in imposing this award of statutory minimum damages.
||V. NO CLAIM FOR DAMAGES IN NEGLIGENCE EXISTS IN THE
ABSENCE OF PHYSICAL IMPACT OF BODILY INJURY
||It is doubtful that count II of Dr. Rao's complaint
even stated a cause of action for negligence against Greenacre
Properties. The alleged theory is essentially that Greenacre Properties'
negligence in maintaining the records of the Association resulted in
unspecified "damages" and "emotional stress and physical
hardships." The complaint does not allege that Greenacre Properties
breached any traditional standard of care in negligence that resulted in
bodily injury or property damage., X
||The final judgment stated that Greenacre Properties
owed a duty to Dr. Rao based on a case in which a hotel owed a duty to a
guest who slipped and fell in a bathtub and sustained bodily injuries.
See Cooper Hotel Servs., Inc. v. MacFarland, 662 So. 2d 710 (Fla. 2d DCA
1995). With all due respect to the author of this judgment, we fail to
see the comparison. The final judgment also contains a discussion of a
breach of a fiduciary duty owed by Greenacre Properties to the members
of the Association when no such theory was ever alleged in the
||The trial court's judgment contains a paragraph in
bold in which the court finds that Dr. Rao did not present
"sufficient evidence to show that he suffered either a physical
injury or illness which manifested itself as emotional distress,"
and thus Dr. Rao was barred from recovering damages for emotional
distress. Thereafter, however, the judgment states that Dr. Rao
sustained thirty-two hours of lost earnings at the rate of $275 per hour
due to the negligence of Greenacre Properties and thus awards Dr. Rao
damages of $8800.
||The author of the final judgment has misread the
supreme court's decision in Rowell v. Holt, 850 So. 2d 474 (Fla. 2003).
The final judgment recognizes that, as a general rule, a party cannot
recover damages for emotional distress in the absence of physical injury
or illness. However, this "impact doctrine" or "impact
rule," which is explained in a long line of cases including Rowell
and R.J. v. Humana of Florida, Inc., 652 So. 2d 360 (Fla. 1995), does
not merely prevent an award of monetary damages representing a party's
"emotional distress" while permitting recovery for other types
of damages. Rather, this doctrine generally requires proof of a physical
injury or illness before a plaintiff is permitted to recover any type of
damages awardable under a negligence theory.
||Given that the "impact rule" prevents the
award of Dr. Rao's lost wages in this case, we hesitate to further muddy
the waters of the dreaded economic loss rule by addressing its
application to this case. Suffice it to say that a negligence claim must
generally allege a bodily injury or property damage; a negligence claim
for purely economic losses is recognized in only very limited
circumstances. See Monroe v. Sarasota County Sch. Bd., 746 So. 2d 531
(Fla. 2d DCA 1999). When members of a homeowners' association can allege
statutory and contractual claims against the association for purely
economic damages, we see no reason to create a special negligence cause
of action for the members against an agent of the association that has
contractual responsibilities to perform the statutory duties of the
||We also hesitate to discuss a theory of breach of
fiduciary duty that was never pleaded. Dr. Rao failed to establish that
he had a contractual relationship with Greenacre Properties, that he was
a third-party beneficiary of a contract between Greenacre Properties and
the Association, or that he has any claim in negligence against
Greenacre Properties to compensate him for his lost earnings. A
fiduciary relationship is not easily defined, but an essential aspect of
such a relationship is a level of trust and confidence by the plaintiff
that has been bestowed upon and accepted by the defendant. See Doe v.
Evans, 814 So. 2d 370, 374 (Fla. 2002). We see nothing in the indirect
relationship between an association's members and the agents performing
the association's duties under a written contract that would create a
fiduciary duty affecting the matters described in the complaint. Dr. Rao
has not provided any precedent for such a theory in this appeal.
||Because Dr. Rao failed to present evidence
supporting any valid cause of action against Greenacre Properties,
whether for breach of contract, a statutory violation, or negligence, we
reverse the final judgment entered in favor of Dr. Rao and instruct the
trial court to enter judgment in favor of Greenacre Properties on
||Reversed and remanded.
||WHATLEY and CASANUEVA, JJ., Concur.
Just as it is doubtful that the Defenestration of Prague was the actual
cause of the Thirty Years' War in 1618, it is unlikely that Dr. Rao's
pond, all by itself, precipitated the subsequent litigation. It is the
only explanation in the record, though, and an adequate one for our
It is important to note that Dr. Rao did not identify any specific
document that he was not shown that would have affected the lawsuit
between him and the Association. Thus, there was no evidence that
Greenacre Properties' failure to disclose a particular document caused
any specific damage to Dr. Rao.
Dr. Rao's counsel in this appeal is not the attorney who represented him
before the circuit court.
We note that the Association has a contractual obligation to indemnify
Greenacre Properties in this case. As such, it appears that this lawsuit
might have been pursued to obtain damages from the Association that Dr.
Rao had not successfully recovered in the first trial.
||X 5 Dr. Rao has asserted
that this recitation makes Dr. Rao the prevailing party in this
litigation under chapter 720, entitling him to attorneys' fees. See §
We note that Dr. Rao made no attempt to assert a claim for malicious
prosecution against the Association or Greenacre Properties and failed
to present any evidence that Greenacre Properties committed any
intentional tort in this regard.