IN THE FLORIDA
SECOND DISTRICT
COURT OF APPEAL
Case No. 2D01-4727
JUDGE: CANADY |
Many?? Nature Watch Homeowners
)Appellants,
)
)
v.
)
)
EAGLES' RESERVE HOMEOWNERS' )
ASSOCIATION, INC., a/k/a Nature's
)
Watch, a Florida not for profit
)
corporation,
)
)
Appellee.
)
_______________________________
Appeal from the Circuit Court
for Pinellas County;
Fred L. Bryson, Sr., Judge.
C. Philip Campbell, Kevin H. Graham,
and Mark A. Connoll of Shumaker,
Loop & Kendrick, LLP, Tampa,
for Appellants.
Gail M. Fern, pro se.
James R. Cobb, pro se.
No Appearance for Appellee.
Henry A. Stein and Phyllis J. Towzey
of Stein & Towzey, L.L.P., St. Petersburg,
for Amicus Curiae Berger Parties.
A group of aggrieved homeowners appeals a final declaratory judgment determining
that their homeowners' association is liable for the cost of reconstructing
defective walls of dwelling units. Because we conclude that the governing
declaration of covenants and restrictions does not impose such liability
on the homeowners' association, we reverse the declaratory judgment.
I. BACKGROUND
Kenneth P. Klak and Andrea M. Klak, along with ninety-seven other owners
(the Klak group) of units in the Eagles' Reserve community, filed an action
(the Klak suit) seeking declaratory relief against the Eagles' Reserve
Homeowners' Association, Inc. (the association). Eagles' Reserve
is a community compound of townhouses and villas in which each dwelling
unit and the land on which it is located is in fee simple ownership.
Eagles' Reserve thus is not a condominium.
The conflict between the Klak group and the association arose from the
association's decision to undertake the repair and substantial reconstruction
of certain dwelling units that were affected by serious construction defects.
The Klak group contended that the governing declaration of covenants and
restrictions (the declaration) did not authorize the association to undertake
the reconstruction project. In its complaint, as amended, the Klak
group sought: (1) a judicial declaration concerning the association's duties
and responsibilities with respect to the construction defects; (2) relief
for breach of fiduciary duty by the association; and (3) an accounting
by the association. It appears that the position of the Klak group
was related, at least in part, to its concern that the association's assumption
of responsibility for the repairs and reconstruction would adversely affect
the ability of individual homeowners to pursue insurance claims for the
damages to their units. The Klak group posits a scenario in which
individual homeowners would be unable to collect under their homeowner's
insurance but would bear the economic burden of the repairs and reconstruction
through maintenance assessments imposed by the association.
After the filing of the Klak suit, Harold Berger, as trustee of the estate
of Fred Berger, deceased, and a group of other Eagles' Reserve homeowners
(the Berger group) filed suit (the Berger litigation) against the association
seeking dissolution of the association and the appointment of a receiver
or custodian for the association. While the Klak group claimed that
the reconstruction project undertaken by the association was unauthorized,
the Berger group contended that the association had failed to pursue the
reconstruction project with sufficient diligence. The Klak group
intervened in the Berger litigation. Although the Klak suit and the
Berger litigation were never formally consolidated, the same judge ultimately
presided over both proceedings and dealt with the claims in the two actions
as though they had been consolidated.
Prior to the entry of the final declaratory
judgment that is now under review, the trial court considered the Berger
group's motion for appointment of a receiver or custodian. A hearing
on the motion was conducted on June 12, 2001. On July 11, 2001, the
trial court entered an order on motion for appointment of receiver.
In that order, the trial court determined that the association had the
obligation under the declaration to repair and reconstruct the exterior
walls of the dwelling units "from the interior coat of paint to the outside
of the buildings." The court withheld ruling on the request for the
appointment of a receiver but maintained its jurisdiction "to appoint a
Receiver if the Court finds the Board of Trustees is recalcitrant in carrying
out the Association's obligations pursuant to the Court's rulings described
herein."
Thereafter, on October 9, 2001, the trial court entered an order appointing
a receiver/custodian. The trial court determined that the Berger
group had
presented a prima facie case that the
. . . board of directors [was] engaging in waste and misapplication of
corporate assets by its refusal to proceed with collections of accounts
receivable and with repairs and maintenance to the exterior of the dwelling
units as required by the applicable Declaration, The Articles of Incorporation[,]
and the requirements of Florida law. |
The court ordered the receiver to complete
specified repairs to certain structures and authorized additional repairs
to certain other structures.
In the meantime, on June 20, 2001, the trial court had entered the final
declaratory judgment in the Klak suit, and the Klak group then instituted
this appeal. The trial court entered the final declaratory judgment
even though a motion to dismiss filed by the Klak group was pending and
no answer to the complaint had been filed by the association. The
Klak group also subsequently sought interlocutory review in this court
of the order appointing receiver/custodian in the Berger litigation.
The order, however, was per curiam affirmed without opinion. Klak
v. Berger, 818 So. 2d 512 (Fla. 2d DCA 2002) (Table) .
During the pendency of this appeal, leadership of the association changed
hands and the association shifted its position to align itself with the
Klak group. In the briefing and argument of the case, the sole support
for affirmance of the final declaratory judgment has come from the Berger
group, who is not a party to this proceeding but has appeared as amicus
curiae.
II. ISSUES ON APPEAL
The Klak group urges that the final declaratory judgment is based on the
trial court's erroneous interpretation of the declaration. The fundamental
substantive issue presented is whether the declaration provides for the
association to make structural repairs to the walls of the units in the
development. The Berger group argues that the trial court properly
interpreted the declaration and that further litigation of the issue is,
in any case, precluded by the doctrines of law of the case and res judicata.
We are therefore also presented with a threshold procedural issue: whether
the order appointing receiver/custodian which was per curiam affirmed without
opinion by this court precludes further litigation concerning the proper
interpretation of the declaration.
III. ANALYSIS
A. The Effect of the Order Appointing
Receiver/Custodian
Res judicata and law of the case are related doctrines which preclude the
relitigation of previously determined matters under circumstances where
such relitigation would be unjust or inappropriate. Both doctrines
are based on considerations of judicial economy and are aimed at preventing
undue expense and vexation to litigants as well as avoiding inconsistent
results. Although the purpose and effect of the doctrines of res
judicata and law of the case are similar, the conditions for application
of the respective doctrines are different.
"The rules of res judicata state when a judgment in one action is to be
carried over to a second action and given a conclusive effect there."
Restatement (Second) of Judgments § 13 cmt. a (1982).
"[T]he law of the case doctrine is concerned with the extent to which the
law applied in decisions at various stages of the same litigation becomes
the governing principle in later stages." Lawrence B. Solum, Moore's
Federal Practice 134.01[2] (3d ed. 2003).
1. Res Judicata
Res judicata is only applicable where there is a relevant prior final judgment.
See Fla. Dep't of Transp. v. Juliano, 801 So. 2d 101, 105 (Fla.
2001) (stating that "[a] judgment on the merits rendered in a former
suit" is required for application of res judicata) (citations omitted);
Thoman v. Ashley, 170 So. 2d 332, 333 (Fla. 2d DCA 1964) ("One of
the necessary elements in rendering a cause res judicata is a prior final
judgment.") (citation omitted); Donnell v. Indus. Fire & Cas. Co.,
378 So. 2d 1344, 1346 (Fla. 3d DCA 1980) ("No order may be res judicata
as to a subsequent case unless it is a final judgment which disposes of
the controversy in the first one.") (citations omitted).
Here, the Berger group argues that the order appointing receiver/custodian
in the Berger litigation is a basis for invoking the doctrine of res judicata
to preclude relief to the Klak group in the Klak suit. But the order
appointing receiver/custodian is not a final judgment, and no final judgment
has been entered in the Berger litigation. The doctrine of res judicata
thus has no application here.
2. Law of the Case
In Juliano, the supreme court explained the basic difference between res
judicata and law of the case and summarized the principles governing application
of the doctrine of law of the case:
Where successive appeals are taken in
the same case there is no question of res judicata, because the same suit,
and not a new and different one, is involved. Under these circumstances,
the doctrine of the law of the case applies. The doctrine of the
law of the case is also a principle of judicial estoppel, but it is more
limited and more flexible in scope. The doctrine of the law of the
case requires that questions of law actually decided on appeal must govern
the case in the same court and the trial court, through all subsequent
stages of the proceedings. Under the law of the case doctrine, a
trial court is bound to follow prior rulings of the appellate court as
long as the facts on which such decision[s] are based continue to be the
facts of the case. Moreover, even as to those issues actually decided,
the law of the case doctrine . . . provides that an appellate court has
the power to reconsider and correct an erroneous ruling that has become
the law of the case where a prior ruling would result in a "manifest injustice." |
801 So. 2d at 105-06 (citations omitted).
Juliano sets forth a further limitation
in the application of the doctrine:
[W]here a previous appellate court has
given no explanation for its decision, a subsequent appellate court is
not bound by the law of the case unless a determination concerning the
propriety of the trial court's order is necessarily inconsistent with every
possible correct basis for the earlier rulings of the appellate court. |
Id. at 108.
The case law also establishes that the law of the case doctrine will not
be employed to give preclusive effect to a decision or determination that
was "based on a less-than-full hearing." Arch Southeast Communications,
Inc. v. Abraham Communications, Inc., 702 So. 2d 556, 558 (Fla. 2d
DCA 1997) (holding that decision denying motion to compel arbitration–which
was affirmed on appeal–did not preclude further litigation concerning validity
of underlying agreement between the parties). The issuance or denial
of a preliminary injunction is the paradigmatic circumstance where a determination
is made by a court without the benefit of a full hearing of the issues.
See Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981) ("[T]he
findings of fact and conclusions of law made by a court granting a preliminary
injunction are not binding at trial on the merits.") (citations omitted).
Because a decision based on a less-than-full hearing–such as the issuance
or denial of a preliminary injunction–is by its very nature provisional,
it would be nonsensical to give it binding effect on the subsequent proceedings
in the same case. This is true, of course, even where the tentative
determination of a trial court has been the subject of interlocutory appellate
review. See Belair v. City of Treasure Island, 611 So. 2d
1285, 1289 (Fla. 2d DCA 1992) ("The fact that this court affirmed the trial
court's previous order granting a temporary injunction does not prohibit
an appeal on the order granting a permanent injunction involving the same
facts.") (citations omitted); Ladner v. Plaza Del Prado Condo. Ass'n,
423 So. 2d 927, 929 (Fla. 3d DCA 1982) ("[A]ny expression on the merits
of the case by an appellate court reviewing an order granting or denying
a preliminary injunction, where review is based on a record made at a less-than-full
hearing, will not be binding at trial on the merits.")
Here, the order appointing receiver/custodian was by its very nature a
provisional order that should not be given binding effect in the subsequent
proceedings in the Klak case and the Berger litigation. The tentative
nature of the court's order arises from the fact that the appointment of
a receiver–like the issuance of a preliminary injunction–is ordinarily
a step taken to preserve the status quo pending the ultimate resolution
of the dispute between the parties. And here, the order itself–by
its statement that the Berger group "presented a prima facie case"–makes
explicit that it was not based on a full hearing and consideration of all
the relevant facts and legal issues.
We thus conclude that the trial court's interpretation of the declaration
in the Berger litigation is not the law of the case. Because we have
determined that the order appointing receiver/custodian was based on a
less-than-full hearing, we need not consider whether the per curiam
affirmance without opinion by this court in the Berger litigation would
have been sufficient under the circumstances to establish the law of the
case. Similarly, we need not consider whether the Klak suit and the
Berger litigation are the "same case"–or part of the same case–for purposes
of applying the law of the case doctrine. We do note, however, that
the procedural posture of this appeal–in which the Berger group does not
appear as a party–raises serious questions concerning whether the Klak
suit should be considered the "same case" as the Berger litigation.
B. The Responsibility of the Association
Under the Declaration
Paragraph 8.2 of the declaration, which sets forth the maintenance responsibilities
of the association, states in pertinent part:
The Association shall have the right and
obligation to maintain the exterior of the Dwelling Units, including the
landscaping on the Lot, in good order and repair, including, but not limited
to the following: painting exterior building surfaces; repairing, replacing
and caring for roofs, gutters, down spouts; mowing, trimming and fertilizing
trees, shrubs and lawns; maintaining and repairing walks, driveways, roadways,
and any other exterior improvements; but not including exterior components
of interior systems such as air conditioning compressors, spa filters and
pumps, vents, etc. All such maintenance shall be performed utilizing
such materials, and such colors and quality as that originally utilized
by the Developer or later specified by the Association and/or the DRB,
as appropriate. Such exterior maintenance, including landscape maintenance,
painting, etc., shall be performed in accordance with frequency standards
to be determined, from time to time, by the Developer and/or the Association.
The Developer and/or the Association, their employees and agents may enter
upon any Lot and upon the exterior of any Dwelling Unit to provide for
the exterior maintenance upon each such Dwelling Unit or Lot. Such
entry by the Developer or the Association or any of their employees or
agents shall not be a trespass and by accepting the deed for a Lot, the
owner expressly grants to the Developer and the Association the continuing
permission to do so, which permission may not be revoked. The Owner
may not alter the exterior landscaping on a Lot in any fashion without
the express written consent of the Developer and/or the Association. |
The core of the declaration provision at issue states that "[t]he [a]ssociation
shall have the right and obligation to maintain the exterior of the Dwelling
Units." This case thus turns on the meaning of the phrase, "the exterior
of the Dwelling Units." As we have previously noted, in the final
declaratory judgment, the trial court determined that "the term 'exterior
of the Dwelling Units' includes everything from the interior coat of paint
to the outside of the buildings." Based on this interpretation of
the declaration, the trial court determined that the association has the
responsibility to repair and reconstruct the damaged and defective exterior
walls of the units.
The trial court's ruling regarding the meaning of the declaration is subject
to de novo review. See Kaplan v. Bayer, 782 So. 2d 417, 419
(Fla. 2d DCA 2001) ("Because interpretation of a contract is a question
of law, we apply a de novo standard of review."). We conclude that
the trial court's interpretation of the text of the declaration is unreasonable
and erroneous, because in interpreting the declaration the trial court
neglected to give effect to the commonly understood meaning of the word
"exterior." See Interfirst Fed. Sav. Bank v. Burke, 672 So.
2d 90, 92 (Fla. 2d DCA 1996) ("Contract language must be given its plain
meaning."); Schechtman v. Grobbel, 226 So. 2d 1, 3 (Fla. 2d DCA
1969) ("[C]learly written provisions of contracts entered into by ordinary
men should be construed in the light of common understanding."); Beans
v. Chohonis, 740 So. 2d 65, 67 (Fla. 3d DCA 1999) (stating principle
of contract interpretation that words must be "given their plain and ordinary
meaning").
The primary definition of the noun exterior is "the outer surface
or part." Random House Unabridged Dictionary 684 (2d ed. 1993);
see also The American Heritage Dictionary of the English Language
648 (3d ed. 1992) ("[a] part or a surface that is outside"). Accordingly,
the plain meaning of the phrase "the exterior of the Dwelling Units" is
the outer surface of the dwelling units. That is a far different
meaning than "everything from the interior coat of paint to the outside
of the buildings"–the meaning assigned to the phrase by the trial court.
The trial court reads the declaration as though it made reference to the
exterior walls of the dwelling units. But the declaration
contains no such reference or anything equivalent to such a reference.
The words of the declaration do not justify treating it as though it were
a condominium, which is the practical effect of the trial court's ruling.
See Richard D. DeBoest, Creating the Fee Simple Condominium,
Florida Condominium Law and Practice, § 4.2, at 4-7 (The Fla. Bar
3d ed. 2003) (setting forth sample condominium declaration imposing maintenance
obligation on condominium association for "[a]ll exterior building walls"
( 6.1.8), and defining individual owner's unit as bounded by "the finished
and undecorated interior surfaces of the perimeter walls of the unit" (
5.1.2)).
In addition to the plain meaning of the term "exterior," the consistent
tenor of the entire maintenance provision of the declaration points to
the conclusion that the association's responsibility for the maintenance
of the walls of the units pertains only to the outer surfaces of those
walls. The reference to "painting exterior building surfaces" is
a clear indication that the scope of the association's responsibilities
does not extend as far as the trial court would have it.
The specific reference to "repairing, replacing[,] and caring for roofs,
gutters, downspouts" does nothing to undermine our interpretation of the
general language providing for the maintenance of the exterior of the units.
The language of the declaration makes clear the duty of the association
with respect to replacing the roofs of the units. The specific language
in the declaration on that point–together with the absence of similar language
with respect to the repair and replacement of defective walls of the units–reinforces
our conclusion that the trial court's interpretation of the declaration
was erroneous.
IV. CONCLUSION
We therefore reverse the final declaratory
judgment and remand for proceedings consistent with this opinion.
Reversed and remanded.
NORTHCUTT and COVINGTON, JJ., Concur. |