Avoiding Lawsuits Dealing with Friends, Foes and Finances

Avoiding Lawsuits

I Love Lucy is one of the most beloved sitcoms in all of television history. In one episode, after Little Ricky is born, the baby is screaming and screaming, keeping awake the next door tenant, Mrs. Trumbull. Mrs. Trumbull complains to landlord Fred Mertz, demanding that he do something about it. According to Mrs. Trumbull, the building rules state that babies aren't allowed. Okay, it's a rental building...and it's a sitcom, so of course everything turns out all right by the end of the 30 minutes. Mrs. Trumbull even ends up loving Little Ricky and becoming his babysitter.

Wouldn't it be great if all problems in a building were handled so smoothly and succinctly? If at the settling of a disagreement, everyone became friends and lived happily ever after? Sure it would— but it would also involve some wishful thinking. The reality is that in co-op and condo living, problems are bound to arise between residents—as well as between the residents and the board—and unless these issues are handled deftly, they can easily balloon into something even more divisive and unpleasant.

Well, That Escalated Quickly

“The common points of conflict between residents and the board include such things as pets, vehicles, leasing, and what the residents do to the building’s exterior,” says Jay Steven Levine, the founder and sole shareholder at the Jay Steven Levine Law Group, which has offices in West Palm Beach and Boca Raton.

In addition to these types of events that may lead to litigation, Matt Zifrony, an attorney and director at the Tripp Scott law firm in Fort Lauderdale, says that he thinks many conflicts between boards and residents are a result of poor communication. “That leads residents to lose trust in their board, and to start questioning how the board reached a decision, rather than the decision itself,” he says. “I don't know how many times that I've heard a resident complain about why the board shouldn't have decided to spend money on some improvements, even though the resident was in favor of the improvements. Their real problem was that the decision was made by a board member on his/her own, rather than at an open board meeting.”

If Mrs. Trumbull had been a real-life resident of a South Florida condo and had complained to her real-life board president that the Ricardos were breaking the rules, she could reasonably expect that something would be done. If Board President Mertz failed to enforce the rules, Mrs. Trumbull would probably threaten litigation.

It's no secret that lawsuits are expensive, acrimonious undertakings that can severely erode both the finances and morale of building communities. When a disagreement between a resident and the board escalates into a serious dispute and the threat of litigation is brought into the mix, it can make a bad situation worse. And perhaps the most irksome thing about these types of issues is that to a large degree, they're preventable. Time and again, attorneys and managers cite board inaction or opacity as the reason why resident grievances ignite into litigation.

Welcome Alternatives

Regardless of the problem, there are other alternatives for resolving any of these conflicts without resorting to the courts. These range from an informal sit-down between disputing parties to more formal (and legally binding) arrangements reached with the help of a professional mediator. Collectively, these measures are referred to as alternative dispute resolution, or ADR.

According to the American Arbitration Association, statute 720.311 creates a requirement for presuit mediation followed by binding or non-binding arbitration under the Division of Florida Land Sales, Condominiums and Mobile Homes which is overseen by the Department of Business & Professional Regulation.

“In a condominium, certain disputes must go to arbitration first,” says Eric M. Glazer, principal of Glazer & Associates P.A. in Fort Lauderdale and president of Association Mediation, Inc. “These are pet cases, parking disputes, problems over common elements, cases involving elections, improperly held board meetings and failure to provide access to records. They start out in arbitration, and then can be referred to the mediator. Hopefully it resolves the case. On the HOA side, cases have to start in mediation.”

If mediation is not successful and either party states that they don’t want to continue with arbitration, Glazer says that the parties are now free to go to court. “Arbitration can take several months, but that's still less than what a court case can take.”

The Process

If Mrs. Trumbull and Fred Mertz went to arbitration the scene would look something like a trial. “The parties present evidence to an arbitrator who in turn decides which side is right,” says Zifrony. “Mediation is used by the parties to try and resolve the dispute. The mediator hears both sides of the dispute and then tries getting the sides to agree on a compromise.”

What’s the difference between mediation and arbitration? “Mediation is often non-binding and engaged to try and avoid litigation by use of a neutral party who offers suggestions on possible ways to settle,” says Rick Sapir, a veteran of Florida's real estate community and counsel at the law firm of Edwards Wildman Palmer LLP in West Palm Beach. “Arbitration is the use of someone other than a judge to settle a dispute between parties and may be either binding or non-binding. The decision of a binding arbitration is generally enforceable through the courts.”

If your building or association requires you to try mediation before litigating against the board or a neighbor, “You have to offer to mediate if it’s in the documents,” says Levine. “It doesn’t matter if you want to—you have to. If you don’t comply, and you file a lawsuit anyway, the motion will be granted, and the matter will be held up with a note of requirement.”

The mediation process starts as both parties or their counsel ask around and interview mediators to learn about their orientation, experience and style. "Once selected, it is good practice for mediators to hold a conference call with the parties—or more typically, with their counsel—to learn about the matter going into mediation," says one attorney. "We confirm that all parties will appear at the mediation with full authority to make a deal. I suggest that counsel or the parties prepare me with a pre-mediation statement bringing me up to speed on the facts of the dispute; the law, to the extent it will influence or be a part of the discussion; what might be important to the parties; their thoughts on resolution; insights into inter-party dynamics; thoughts for the process itself; and any other information that might be useful. It is also a good time to learn whether the parties need information from each other in advance of their mediation session, and to lay out a process for developing and sharing that information."    

The mediation session itself is a confidential meeting. This enables parties to speak freely without concern that statements made in an effort to resolve their dispute will be used against them as admissions in court, in the unlikely event that the mediation does not produce a resolution.

When a decision is made in mediation, it is not binding,” says Zifrony. “Mediation is never binding. Arbitration may be binding. The mandatory arbitration that condominium associations are required to use is only binding if the parties agree upfront to that effect.”    

Levine explains that a binding arbitration can be appealed to the circuit court. “If the party doesn’t comply you can go to court to force the order of the arbitrator,” he says. “If an arbitration is violated, Florida’s Department of Business & Professional Regulation doesn’t have any power to enforce it. It takes a judge to enforce it by making it a court order. If the court order isn’t followed, they are in contempt; the party can end up in jail.”

But Does it Work?

The American Arbitration Association estimates that ADR is able to settle disputes in about 80 percent of cases—saving not only time, but legal fees. While ADR isn't free (counseling attorneys may still charge fees, and mediators typically are paid as well) both parties shoulder the cost of the process, which can be tens of thousands of dollars less than full-blown litigation and court costs. Zifrony says that “In my experience, around 75% of the mediations I've attended result in the parties agreeing on a settlement.”

Every year, millions of dollars are spent on the cost of litigation. Even what seems like a simple court case can cost the parties thousands, if not tens of thousands, of dollars. ADR also helps to reduce potential out-of-pocket costs. “Arbitrations are much quicker than a full trial and tend to cost a lot less money when it comes to legal fees,” says Zifrony.

While costs of litigation alternatives are generally cheaper than going the lawsuit route, it can still be quite pricey, says Leonard Wilder, an attorney with the Plantation-based law firm of Bakalar & Associates, P.A.

“In arbitration, it depends upon how heavily litigated it is and if it's defended or not. But, you can easily spend $4,000 to $5,000 on a minor issue and you can spend, well, more than $15,000 on a heavily-contested issue,” Wilder says. “For mediation,” he continues, “You pay for the mediator's time, you split that. Most mediators in what we do, charge anywhere from $250 to $400 an hour depending on the mediator. You split that. Plus your attorney fee time. Now, not all mediations cost that. Some are less, some are more. Mediation is certainly cheaper than litigation. There's no question about that,” Wilder assures.

Ruff Resolution

While Wilder has experienced many bizarre neighbor disputes in need of mediation, a situation involving a dog attack takes the cake for craziness and proves there is hope to solve almost any neighborhood dispute outside of litigation.

“I had a situation a number of years ago where a community up in Boynton had an owner whose dog got out of the backyard and bit a neighbor. We sent a demand letter saying we want the dog removed, it's dangerous, he's no good. So, the owner calls up and says, 'I'm not going to remove this dog, it's part of my family.' A response that we typically get all the time. So, we sent out a mediation demand, and basically, my client was like, 'All we want is the dog gone, nothing more, nothing less,'” Wilder says.

“Of course, the owner shows up to mediation and says, 'I'm not getting rid of my dog,'” Wilder continues. A long story short, “Well, we settled it. The owner agreed to remove the dog's four canine teeth. That was not something that was not even on my radar. I didn't even know you can do that.

“I said, 'What?!' You just don't know what the end result of a settlement will be. Parties come in with, 'This is what I want, I'm not going to take any less,' and yet walk out with something completely different and that's the beauty of mediation—ideas are explored in a form that otherwise would not exist. And this owner not only had his four canine teeth, filed them down, he couldn't remove them. But he also put up extra fencing, extra locks, did other precautions, so that the dog wouldn't be an issue anymore,” Wilder says.

You never know. Perhaps we can learn something from an episode of Lucy after all.    

Lisa Iannucci is a freelance writer and a frequent contributor to The South Florida Cooperator. Editorial Assistant Enjolie Esteve contributed to this article.

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