Gratigny Park Condominium No. 1, Inc. v. Reinier Vargas Perez, et al.

Waynice Green-Musgrove and Evelyn Greenstone Kammet (Miami, FL) (Appeal) secured a significant appellate victory before Florida’s Third District Court of Appeal in which the Court granted certiorari relief as a result of the trial court’s improper denial of a motion to dismiss. The complaint was filed by two condominium unit owners against Gratigny Park Condominium No. 1, Inc. (“Association”), alleging breaches of fiduciary duty, corporate mismanagement, and improper expenditures of Association funds. In opposing the Association’s motion to dismiss, the unit owners asserted that Section 718.303(1), Fla. Stat. authorized them to pursue direct claims against the Association without complying with the pre-suit requirements governing derivative actions. However, on appeal, Ms. Green-Musgrove and Ms. Greenstone Kammet successfully argued that the statutory authority to sue does not automatically transform claims alleging injuries to the Association into direct actions. The Third District agreed, holding that Section 718.303(1) and then-applicable Section 617.07401, Fla. Stat., operate harmoniously and that the nature of the alleged injury, rather than how the plaintiffs characterize their claims, determines whether an action is direct or derivative. The Court noted that section 718.303(1), Fla. Stat. establishes the substantive cause of action, while section 617.07401, Fla. Stat. supplies the procedural prerequisites for pursuing a claim derivatively. Applying this distinction, the Court concluded that the unit owners’ claims were derivative because they sought to remedy injuries affecting the Association’s membership collectively. The Court further recognized that depriving an association of its statutory right to pre-suit notice, demand, and investigation constitutes irreparable harm that cannot be remedied through a plenary appeal. The decision reinforces the importance of statutory presuit protections for condominium associations and confirms that unit owners cannot circumvent derivative-action requirements merely by characterizing claims involving injuries to the association as direct actions. Ms. Green-Musgrove and Ms. Greenstone Kammet were also successful in obtaining an award of appellate attorneys’ fees in favor of the Association.