Third District Court of Appeal

State of Florida 

Opinion filed February 23, 2022.

Not final until disposition of timely filed motion for rehearing.

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No. 3D20-1471

Lower Tribunal No. 16-27442

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New Horizons Condominium Master Association, Inc.,

Appellant,

vs.

Robert Harding, et al.,

Appellees.

An appeal from the Circuit Court for Miami-Dade County, Abby 

Cynamon, Judge.

Scott J. Edwards, P.A., and Scott J. Edwards (Boca Raton), for 

appellant.

Mark Perlman, P.A., and Mark Perlman (Hollywood), for appellees.

Before SCALES, MILLER, and BOKOR, JJ. 

MILLER, J.
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In this garden-variety condominium dispute over assessments, 

appellant, New Horizons Condominium Master Association, Inc., challenges

a final summary judgment granting declaratory relief and awarding monetary 

damages in favor of appellees, Robert Harding and Fifth Horizons 

Condominium, Inc. By way of the final judgment, the trial court compelled 

the disclosure of several years of audits and invalidated a budgetary 

allocation for cable services as ultra vires. On appeal, the Master 

Association contends that factual issues precluded summary judgment, and, 

regardless, the trial court erred in failing to consider whether the actions of 

its directors were protected from review as the product of a valid exercise of 

business judgment. We affirm in part and reverse in part.

BACKGROUND

The Master Association governs a condominium development in North 

Miami, Florida. It is comprised of seven member subdivisions, one of which 

is Fifth Horizons. Each subdivision has a separate community association. 

The Master Association provides common services to the sub-associations, 

including asphalt and parking lot maintenance, clubhouse and pool area 

amenities, common area lighting, landscaping, irrigation, and, as pertinent to 

this case, bulk cable and telecommunications services. These services are 

funded by assessments collected from the sub-associations. 
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The sub-associations have the authority to designate residents to 

serve as directors on the Master Association’s Board (the “Board”). During 

the time period relevant to these proceedings, Harding was designated by 

Fifth Horizons to serve on the Board.

In late 2009, the Master Association entered into a contract with 

Comcast for the provision of cable services. Pursuant to the contractual 

terms, Comcast was obligated to provide cable services to all seven subassociations. Each sub-association was charged with proportionally 

satisfying the cable costs, as assessed by the Master Association. 

Several years into the contract, a dispute arose regarding payment, 

and Comcast demanded over $300,000.00 in arrearages from the Master 

Association. In early 2016, the Board convened to discuss a potential 

settlement. During the meeting, the Board drafted a budget which included 

a line-item expense for Comcast services in the amount of $248,000.00. 

After two subsequent meetings were prematurely terminated, purportedly 

due to Harding’s conduct and a correlating inability to obtain a quorum, 

approval of the budget was delayed. 

In the summer of 2016, the Board met and approved a settlement with 

Comcast in the amount of $100,000.00. Despite this approval, the Board 
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ratified the previously drafted budget allocating $248,000.00 for Comcast

costs.1 

Harding and Fifth Horizons then brought suit in the circuit court. In the 

operative complaint, they sought declaratory relief, alleging the budget, as 

developed, was ultra vires because it included assessments beyond that 

required to defray reasonable expenses. 2 Fifth Horizons further asserted it

overpaid assessments for 2016 by $3,791.62. The Master Association 

counterclaimed, asserting claims of breach of contract and unjust enrichment 

and alleging Fifth Horizons engaged in a pattern of underpayment and 

withholding of assessments. 

Harding and Fifth Horizons moved for final summary judgment. The 

Master Association countered with verified opposition and further raised the 

legal argument that the actions of its directors warranted business-judgment 

deference. Relying upon the evidentiary record, along with the failure by the 

Master Association to plead business-judgment deference as an affirmative 

defense, the trial court granted final summary judgment in favor of Fifth 

1 The settlement documents were executed several months later and 

retroactively terminated the contract. 2 The complaint also sought injunctive relief, the disposition of which is not 

subject to this appeal.
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Horizons and Harding on both the claims and counterclaims.3 The instant 

appeal followed. 

STANDARD OF REVIEW

We review both the grant of summary judgment and the application of 

the business judgment rule de novo. See Volusia County v. Aberdeen at 

Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). 

ANALYSIS

We affirm the compelled disclosure of audits without further discussion 

and turn our examination to whether the failure by the Master Association to 

plead the business judgment rule as an affirmative defense precluded its 

application. “[B]orn of the recognition that directors are, in most cases, more 

qualified to make business decisions than are judges,” Royal Harbour Yacht 

Club Marina Condo. Ass’n, Inc. v. Maresma, 304 So. 3d 1268, 1269 (Fla. 3d 

DCA 2020) (quoting Int’l Ins. Co. v. Johns, 874 F.2d 1447, 1458 n.20 (11th 

Cir. 1989)), “[t]he business judgment rule has been part of English and 

American common law for more than 200 years.” Gerard V. Mantes & Emily 

S. Fields, The Business Judgment Rule, 99 Mich. B.J. 30, 30 (Jan. 2020). 

While “[t]he precise verbal formulation of [the] rule varies from jurisdiction to 

3 The lower court excised all purported overages from the projected 2016 

budget, which had the effect of reducing Fifth Horizons’ annual assessment 

by $3,791.62.
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jurisdiction, and there are some substantive differences among the various 

versions of the rule . . . the essence of the rule is clear.” Mark A. Sargent & 

Dennis R. Honabach, D&O Liability Handbook § I:3 (Sept. 2020) (footnote 

omitted). The rule protects officers and directors from judicial review of their 

acts, provided that “business judgments are made in good faith based on 

reasonable business knowledge.” Action Against Directors and Officers—

Business Judgment § 12:7.50 (2021). 

In Florida, the business judgment rule has been codified by statute for 

corporations, limited liability companies, and not-for-profit corporations. See

§ 607.0831(1), Fla. Stat. (2021) (“A director is not personally liable for 

monetary damages to the corporation or any other person for any statement, 

vote, decision to take or not to take action, or any failure to take any action, 

as a director . . . .”); § 605.04093(1), Fla. Stat. (“A manager in a managermanaged limited liability company or a member in a member-managed 

limited liability company is not personally liable for monetary damages to the 

limited liability company, its members, or any other person for any statement, 

vote, decision, or failure to act regarding management or policy decisions

. . . .”); § 617.0834(1), Fla. Stat. (extending business-judgment deference to 

nonprofit officers and directors). As drafted, these statutes protect directors 
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from liability under most circumstances, absent a showing of bad faith, selfdealing, or a violation of criminal law. 

In conformity with these statutory and common law tenets, Florida 

courts have extended business-judgment deference to common interest 

associations, uniformly shielding “a condominium association’s decision if 

that decision is within the scope of the association’s authority and is 

reasonable—that is, not arbitrary, capricious, or in bad faith” from judicial 

review. Hollywood Towers Condo. Ass’n, Inc. v. Hampton, 40 So. 3d 784, 

787 (Fla. 4th DCA 2010). 

There are no reported Florida decisions holding that a party seeking to 

invoke business-judgment deference must raise the rule as an affirmative 

defense. Indeed, both the statutory language and a survey of persuasive 

authority from other jurisdictions suggest the contrary. 

The statutes affording business-judgment protection render directors 

immune unless there is a showing of bad faith, self-dealing, or criminal 

conduct. Although the Florida Legislature could have defined the business 

judgment rule as an affirmative defense that the defendant must raise, it did 

not do so. See State v. Ellis, 723 So. 2d 187, 190 (Fla. 1998). Instead, it 

enacted a presumptive framework consistent with that adopted in other 

jurisdictions. 
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In this regard, whether formally codified or not, the business judgment 

rule is generally viewed as a historically accepted principle of managerial 

prerogative. See Bruce T. Rosenbaum, The Presumptions and Burdens of 

the Duty of Loyalty Regarding Target Company Defensive Tactics, 48 Ohio 

St. L.J. 273, 274 (1987); see also Data Key Partners v. Permira Advisers 

LLC, 849 N.W.2d 693, 701 (Wis. 2014) (second alteration in original)

(quoting Reget v. Paige, 626 N.W.2d 302, 310 (Wis. Ct. App. 2001)) (“[T]he 

business judgment rule ‘immunize[s] individual directors from liability and 

protects the board’s actions from undue scrutiny by the courts.’”). Consistent 

with this view, the rule does not need to be raised in defensive pleadings to 

shield corporate conduct from judicial review. Instead, it applies 

presumptively by operation of law. See In re Great Lakes Comnet, Inc., 586 

B.R. 718, 725 (Bankr. W.D. Mich. 2018) (“The business judgment rule is not 

an affirmative defense. Rather, it is a substantive and procedural 

presumption . . . .”); Kaye v. Lone Star Fund V (U.S.), L.P., 453 B.R. 645,

679 (N.D. Tex. 2011) (“[D]escribing the presumption created by the business 

judgment rule as an affirmative defense is, at best, a dubious 

characterization of the rule.”); Marsalis v. Wilson, 778 N.E.2d 612, 616 (Ohio 

Ct. App. 2002) (“Civ.R. 8(B) [General rules of pleading] suggests that the 

defendants might be obligated to plead the business judgment rule as a 
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defense, though that is probably not required, since a presumption in 

defendants’ favor exists by operation of law, whether or not it is pleaded.”). 

Several cases even stand for the proposition that a party seeking to 

challenge a business decision must first establish facts rebutting the 

presumption of reasonableness. See Cuker v. Mikalauskas, 692 A.2d 1042, 

1046 (Pa. 1997) (quoting Rosenfield v. Metals Selling Corp., 643 A.2d 1253, 

1262 (Conn. 1994)) (“The fact is that liability is rarely imposed upon 

corporate directors or officers simply for bad judgment and this reluctance to 

impose liability for unsuccessful business decisions has been doctrinally 

labeled the business judgment rule. Shareholders challenging the wisdom 

of a business decision taken by management must overcome the business 

judgment rule.”); Solomon v. Armstrong, 747 A.2d 1098, 1111–12 (Del. Ch. 

1999) (“Under the business judgment rule, the burden of pleading and proof 

is on the party challenging the decision to allege facts to rebut the 

presumption.”); Ferris Elevator Co., Inc. v. Neffco, Inc., 674 N.E.2d 449, 453 

(Ill. App. Ct. 1996) (“The burden is on the party challenging the decision to 

present facts rebutting the presumption.”); Oliveira v. Sugarman, 152 A.3d 

728, 736 (Md. 2017) (quoting Boland v. Boland, 31 A.3d 529, 549 (Md. 

2011)) (“To overcome the ‘dangerous terrain’ of the business judgment rule 

presumption, the plaintiff must assert facts that suggest the corporate 
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directors did not act in accordance with the rule.”); Gantler v. Stephens, 965

A.2d 695, 706 (Del. 2009) (“Procedurally, the plaintiffs have the burden to

plead facts sufficient to rebut that presumption.”); Powell v. W. Ill. Elec.

Coop., 536 N.E.2d 231, 235 (Ill. App. Ct. 1989) (“[T]he directors’ decision is

presumed proper, and the burden is properly placed on the shareholder

plaintiffs to show that the directors are not now acting in good faith and

independently in desiring to prosecute the lawsuit.”); see also 13 Summ. Pa. 

Jur. 2d, Business Relationships § 8:75 (2021) (“Where there is a prima facie

showing that the directors or majority shareholders have a self-interest in a 

particular corporate transaction, or that the board has acted fraudulently or 

in bad faith, the business judgment rule does not apply and the burden shifts 

to the directors to demonstrate that the transaction is intrinsically fair.”). 

Against this weight of authority and in the absence of any controlling 

precedent to the contrary, we decline to engraft a pleading requirement into 

the law. See Lori McMillan, The Business Judgment Rule as an Immunity 

Doctrine, 4 Wm. & Mary Bus. L. Rev. 521, 569 (2013) (“As long as the 

conditions for the application of the business judgment rule are met, the 

courts will not assess the quality of the decision. This has a direct parallel to 

immunity.”). 
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Here, the Master Association sought protection in the rule in its 

opposition to summary judgment, specifically alleging its quorum of directors 

acted with authority, neutrality, and good faith. Under this circumstance, the 

Board was not required to raise business-judgment deference as an 

affirmative defense.

Fifth Horizons alternatively argues, however, that the Board’s actions 

were ultra vires, therefore not subject to business-judgment deference. In 

support of its position, it contends the amount allocated for cable within the 

budget exceeded that necessary to defray the costs of the settlement. 

We reject this proposition on two grounds. First, because the parties 

sharply disputed the chronology of the settlement, development of the 

budget, and necessity for collecting assessments, the competing evidence 

of record created a factual issue incapable of resolution on summary 

judgment. Second, irrespective of the factual issues, this position overlooks 

a critical legal distinction.4 Ultra vires acts are those performed without legal 

authority. They are therefore characterized as void on the basis that no 

power to act existed, even where proper procedural requirements are 

4 Two of our sister courts have determined that “the business judgment rule 

applies to ultra vires claims against the corporation itself.” Share v. Broken 

Sound Club, Inc., 312 So. 3d 962, 971 (Fla. 4th DCA 2021); see also Yarnall 

Warehouse & Transfer, Inc. v. Three Ivory Bros. Moving Co., 226 So. 2d 887, 

892 (Fla. 2d DCA 1969). 
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followed. See Liberty Couns. v. Fla. Bar Bd. of Governors, 12 So. 3d 183, 

191–92 (Fla. 2009). Conversely, acts by a corporation that are within its 

realm of power, albeit imprudent or violative of a clear directive, are intra 

vires. See Hollywood Towers, 40 So. 3d at 787.

Here, the governing documents grant the Master Association “all of the 

powers and privileges granted to corporations not for profit” including “all of 

the powers incidental and reasonably necessary to implement and effectuate 

the purposes of the corporation.” The bylaws further authorize the Master 

Association to adopt an annual budget, “contain[ing] the estimates of the cost 

of performing the functions of the [corporation],” and “[to] make, levy, and 

collect assessments against each condominium to defray the costs of the 

[corporation], and to use the proceeds of said assessment in the exercise of 

the powers and duties granted to the corporation.” Because the Master 

Association was authorized to develop a budget and collect assessments 

from the sub-associations, inclusion of the challenged assessments in the 

budget constituted an intra vires act, and business-judgment deference was 

a salient consideration. 

Accordingly, we affirm the compelled disclosure of past audits but

reverse those portions of the judgment declaring the actions of the board 

ultra vires, dispensing with the Master Association’s counterclaims, and
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awarding damages to Fifth Horizons. Upon remand, the trial court is 

constrained to “look to the circumstances surrounding the [Master] 

Association’s exercise of [business] judgment as they existed when the 

action was taken,” rather than at the time suit was filed. Miller v. Homeland 

Prop. Owners Ass’n, Inc., 284 So. 3d 534, 538 (Fla. 4th DCA 2019).

Affirmed in part and reversed in part.