Facts
The defendant, Lennar Homes developed Martinique at Oasis, a
residential community located in Homestead, Florida
comprised of 241 condominiums. Lennar Homes sold each of the
units in the community to individual homeowners. Each of the
purchase agreements between Lennar Homes and the homeowners
contained an arbitration provision, which required the
parties to submit any dispute arising out of the sale of the
property, including any alleged property damage, to
arbitration. About five years after the first units were
sold, the plaintiff, the Condominium Association, began
noticing potential construction defects in the stucco, stone
cladding, and decorative shapes on the exterior of the
buildings. The Association sued Lennar Homes in Florida
trial court on behalf of all unit owners in Martinique at
Oasis, alleging the issues were caused by defective
construction.
Trial Court Decision
Lennar Homes moved to dismiss the Association’s complaint,
arguing that the Association was required to comply with the
arbitration provision in the purchase agreements between
Lennar Homes and each unit owner. The trial court denied the
motion, finding that because there was no direct agreement
between the Association and Lennar Homes that required
arbitration, and because the complaint only alleged defects
in the common elements of the property (i.e., the exterior
stucco and cladding), the Association had a right to
maintain a lawsuit against Lennar Homes. Lennar Homes
appealed, seeking enforcement of the mandatory arbitration
provisions.
Appellate Court Decision
The appeals court reversed the trial court’s ruling, finding
that the arbitration clauses in the individual unit owners’
purchase contracts were also binding on the Association.
Central to the court’s analysis was that the Association was
suing in a “representative capacity” on behalf of the unit
owners regarding a “matter of common interest to the
[Association’s] members.” The Association did not argue that
it was suing concerning property owned exclusively by the
Association. The court was primarily guided by a decision of
another Florida appellate court on the same issue. There,
the court held that an Association’s rights to file a
lawsuit are not “superior to those of the actual owner” when
the basis of the suit is damage to an element of a unit or
group of units that are individually owned by members of the
Association. The unit owners, not the Association, were the
“real parties in interest” in the dispute. Therefore, the
court found that under Florida law, the Association’s right
to sue in a representative capacity on behalf of its members
includes an obligation to comply with any arbitration
agreements signed by the members. The court held that the
Association was required to arbitrate its dispute with
Lennar Homes.
LESSONS LEARNED:
Associations suing on behalf of their members for damage to
property that is individually owned by the members may be
required to comply with any arbitration agreements signed by
the members; and
An Association may not be required to comply with an
arbitration agreement signed by its members if the dispute
is regarding property owned exclusively by the Association.
Lennar Homes, LLC v. Martinique at the Oasis Neighborhood
Association, Inc.