Case Name: SONNY BOY, L.L.C., Appellant, v. Bhagwan ASNANI, et al, Appellees
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 2004-05-28
Citations: 879 So. 2d 25
Docket Number: No. 5D03-59
Parties: SONNY BOY, L.L.C., Appellant, v. Bhagwan ASNANI, et al, Appellees.
Judges: TORPY, J., concurs.
Reporter: Southern Reporter, Second Series
Volume: 879
Pages: 25–34

Head Matter:
SONNY BOY, L.L.C., Appellant, v. Bhagwan ASNANI, et al, Appellees.
No. 5D03-59.
District Court of Appeal of Florida, Fifth District.
May 28, 2004.
Rehearing Denied Aug. 5, 2004.
Chris A. Draper of Becker & Poliakoff, P.A., Maitland, for Appellant.
Robert E. Kramer, Ormond Beach, for Appellee, Bhagwan Asnani.
Bruce A. Hochstetler, Daytona Beach, for Appellee, Ken Lovell.
Louis Ossinsky, Jr. of Ossinsky and Krol, P.A., Daytona Beach, for Appellee, Lenny Mallero.

Opinion:
PETERSON, J.
Sonny Boy, L.L.C., ("Sonny Boy"), appeals the trial court's order denying its ore terms motion to amend the complaint and granting motions for judgment on the pleadings filed by Bhagwan Asnani, ("As-nani"), Ken Lovell, ("Lovell"), and Lenny Mallaro, ("Mallaro"), (collectively "Appel-lees"), as well as an order denying Sonny Boy's motion for rehearing.
Sonny Boy filed a complaint against the Appellees seeking personal liability for breach of fiduciary duty as members of the board of directors of Fountain Beach Condominium Association. Sonny Boy alleges that the Appellees failed to cause the condominium association to maintain and repair specifically alleged items of common elements and that failure caused Sonny Boy to suffer damages from the loss of use and rental income of units owned by Sonny Boy in the condominium. The complaint alleges that Asnani was a director designated by the condominium developer but does not allege that the others were appointed in that manner, although Sonny Boy asserts this in its brief. Sonny Boy also asserts that because Asnani, as developer, designated both himself and Lovell as directors under section 718.303(l)(c), they are held to a stricter standard for any wrongful acts than elected directors under section 718.303(l)(d) which requires that the wrongful acts also be willful and knowing.
Section 718.303(1), Florida Statutes (2002), provides in part:
(1) Each unit owner, each tenant and other invitee, and each association shall be governed by, and shall comply with the provisions of, this chapter, the declaration, the documents creating the association, and the association bylaws and the provisions thereof shall be deemed expressly incorporated into any lease of a unit. Actions for damages or for in-junctive relief, or both, for failure to comply with these provisions may be brought by the association or by a unit owner against:
(c) Directors designated by the developer, for actions taken by them prior to the time control of the association is assumed by unit owners other than the developer.
(d) Any director who willfully and knowingly fails to comply with these provisions.
The statute is deficient in that it provides no guidance, standard or reason for distinguishing in section 718.303(l)(c) and seetion 718.303(l)(d) between directors who are "designated by the developer" and "any director." If a higher standard was intended to apply to directors designated by the developer, that standard was not included in the statute. Courts have not directly addressed the distinction between the two sections, but have established the standards to follow when presented with the issue of director liability. Florida cases discussed below focus on section 718.303(l)(d) and allow us to conclude that Florida courts have adopted the "Business Judgment Rule" when faced with determining whether a director, whether or not designated by the developer, has breached a fiduciary duty in maintaining, repairing or replacing association property. The "rule" suggests that the decisions of directors will not be questioned unless there is a showing of fraud, self-dealing, dishonesty or incompetency.
It is well established in Florida that absent fraud, self-dealing and betrayal of trust, directors of condominium associations are not personally liable for the decisions they make in their capacity as directors of condominium associations. See, e.g., Perlow v. Goldberg, 700 So.2d 148 (Fla. 3d DCA 1997) (finding directors of condominium associations not individually liable for actions and governance of condominium association); Taylor v. Wellington Station Condominium Association, Inc., 633 So.2d 43 (Fla. 5th DCA 1994) (finding that in general, corporate directors and officers cannot be personally liable for corporate acts absent actual wrongdoing in the form of fraud, self-dealing or unjust enrichment to trigger individual liability); Munder v. Circle One Condominium, Inc., 596 So.2d 144 (Fla. 4th DCA 1992) (reversing lower court's finding of individual liability by condominium developer). Similarly, section 617.0834(1), Florida Statutes (2002) and section 607.0831(1), Florida Statutes (2002) provide insulation for condominium association directors from liability in their individual capacities absent fraud, criminal activity, self-dealing, or unjust enrichment. Perlow, 700 So.2d at 149.
Sonny Boy alternatively contends that the trial court abused its discretion by denying its ore tenus motion to amend the complaint and in entering a judgment on the pleadings. This court's standard for reviewing a lower court's ruling on a motion to amend a complaint is an abuse of discretion. E.g., Video Independent Medical Examination, Inc. v. City of Weston, 792 So.2d 680, 681 (Fla. 4th DCA 2001). "[Rjefusal to allow amendment of a pleading constitutes an abuse of discretion unless it clearly appears that allowing the amendment would prejudice the opposing party; the privilege to amend has been abused; or amendment would be futile." Id. (quoting Spradley v. Stick, 622 So.2d 610, 613 (Fla. 1st DCA 1993)). At the hearing on the matter, Sonny Boy requested that the court grant it leave to amend the complaint to allege that the actions of Appellees were willful. However, Sonny Boy never requested leave to amend the complaint to state allegations of fraud, self-dealing or unjust enrichment. The complaint likewise only alleged failure to conduct maintenance and repairs, allegations which are not indicative of fraud, self-dealing or unjust enrichment. Unless a basis for fraud, self-dealing or unjust enrichment existed the Appellees could not be held personally hable and amending the complaint to simply allege willfulness would not cure the deficiency. Perlow, 700 So.2d at 150 (holding that owner's claim that trial court erred in dismissing complaint without leave to amend is without merit because there was no evidence the owners did, intended to, or could allege facts which would take this case out of the general rule that directors are immune from individual liability absent fraud, criminal activity, self-dealing or unjust enrichment). Accordingly, the trial court did not abuse its discretion in entering a judgment on the pleadings.
We affirm the judgment.
TORPY, J., concurs.
SHARP, W., J., dissents, .with opinion.
. Section 617.0834(1), Florida Statutes (2002), provides in part:
(1) An officer or director of a nonprofit organization . is not personally liable for monetary damages to any person for any statement, vote, decision, or failure to take an action, regarding organizational management or policy by an officer or director, unless:
(a) The officer or director breached or failed to perform his or her duties as an officer or director; and
(b) The officer's or director's breach of, or failure to perform, his or her duties constitutes:
1. A violation of the criminal law, unless the officer or director had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful. A judgment or other final adjudication against an officer or director in any criminal proceeding for violation of the criminal law estops that officer or director from contesting the fact that his or her breach, or failure to perform, constitutes a violation of the criminal law, but does not estop the officer or director from establishing that he or she had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful;
2. A transaction from which the officer or director derived an improper personal benefit, either directly or indirectly; or
3. Recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.
. Section 607.0831(1), Florida Statutes (2002), provides in part:
(1) A director is not personally liable for monetary damages to the corporation or any other person for any statement, vote, decision, or failure to act, regarding corporate management or policy, by a director, unless:
(a) The director breached or failed to perform his or her duties as a director; and
(b) The director's breach of, or failure to perform, those duties constitutes:
1. A violation of the criminal law, unless the director had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful. A judgment or other final adjudication against a director in any criminal proceeding for a violation of the criminal law estops that director from contesting the fact that his or her breach, or failure to perform, constitutes a violation of the criminal law; but does not estop the director from establishing that he or she had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful;
2. A transaction from which the director derived an improper personal benefit, either directly or indirectly;
4. In a proceeding by or in the right of the corporation to procure a judgment in its favor or by or in the right of a shareholder, conscious disregard for the best interest of the corporation, or willful misconduct; or
5. In a proceeding by or in the right of someone other than the corporation or a shareholder, recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.