| On October 22, 2001, a Special
Meeting of the Membership was held at which the members of the Association
voted to remove all five members of the Board of Directors and replace
them with five new directors. The five removed directors, Steven
Berube, Phyllis Beach, Amy Jones, Donald Spero, and Gail Stuart, filed
suit against the new directors on October 25, 2001 claiming that they were
not properly removed because the proxies used during the meeting were defective
and because a quorum was not attained. However, the proxies used
during that meeting were the same proxies that had been used by the Association
and the removed directors for almost ten years. Nonetheless, in an
effort to resolve the dispute, the removed directors and the new directors
entered into a written agreement (referred to as the “Stipulation”) which
set forth the procedure to hold a new Special Meeting of the Membership
for the purpose of voting on the removal of the five previous directors.
On November 19, 2001, the second Special Meeting of the Membership was held in full compliance with the Stipulation. For a second time, the members of the Association voted to remove all five previous members of the Board of Directors and proceeded to replace them with five new directors. As previously agreed upon in the Stipulation, the five removed directors through their attorney James E. Olsen at Wean & Malchow, P.A. voluntarily dismissed the first lawsuit the day after the election. However, a week later, on November 28, 2001, the removed directors again claimed that they had not been properly removed and filed a new lawsuit on behalf of the Association against the five new directors. In the new lawsuit, the removed directors attempted to obtain a temporary injunction prohibiting the new directors from taking control of the Association. On December 6, 2001, a hearing on the temporary injunction was held before Circuit Judge George A. Sprinkel. At the hearing, Judge Sprinkel concluded that the previous directors were removed on November 19, 2001 pursuant to Florida law and pursuant to the agreed upon Stipulation, that the new directors were in control of the Association, and that the bringing of the lawsuit by the previous directors caused substantial and unnecessary financial harm to the Association, amounting to tens of thousands of dollars. Because this financial harm directly depleted the money provided by the members of the Association, the new directors amended the lawsuit to seek reimbursement of the tens of thousands of dollars in attorneys’ fees and costs spent as a result of the removed directors’ actions. In response to Judge Sprinkel’s ruling, the five removed directors filed an appeal of his decision to the Fifth District Court of Appeal and, in doing so, submitted an invoice to the Association for attorneys’ fees and costs amounting to over $20,000.00 for drafting the appeal brief. The appeal by the removed directors has again left the Association with no choice but to incur thousands of more dollars to file an answer brief and defend the integrity of the Stipulation and the recall election. In an effort to reimburse the members of the Association for this expense, the Association filed a Motion for Attorneys’ Fees and Costs to be recovered from the individual removed directors. In response, the removed directors filed a Motion to Strike the Motion for Attorneys’ Fees and Costs, claiming that the Association cannot recover fees from them personally. Instead, the removed directors claim that, even if they lose, the Association can only recover its prevailing party attorneys’ fees and costs from itself because the removed directors have brought the appeal on behalf of the Association, not themselves. The Association has responded to the removed directors’ Motion to Strike and has submitted a Supplemental Motion for Attorneys’ Fees and Costs, additionally seeking attorneys’ fees and costs from the attorney for the removed directors, James E. Olsen. Currently, all briefs have been submitted to the Court of Appeals and a final decision should be reached in the next 2 to 3 months. Meanwhile, the amended lawsuit (pending before Judge Sprinkel) seeking recovery of all attorneys’ fees and costs incurred by the Association as a result of the actions of the removed directors has been stayed or put on hold until the appeal has been decided. Unfortunately, the removed directors’ filing of this lawsuit and their appeal of Judge Sprinkel’s decision has caused the Association, at no choice of its own, to incur tens of thousands of dollars. Notwithstanding, the removed directors continue to claim that they are pursuing this lawsuit for not only the benefit of the Association but also on behalf of the Association. This entire matter will be cleared up when the Fifth District Court of Appeal makes its decision, and hopefully, the Association will be in a position to recover its losses and put these issues to rest once and for all.
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