Philip J. Fairman (Fort Myers, FL) (D&O) obtained a Final Summary Judgment in Lee County, Florida in the case of Iberia Bank v. Blue Water Coach Homes Condominium Association, Inc.
During construction of the condominiums, the developer learned that multiple units contained Chinese drywall. As a consequence, the developer was unable to sell those units. A Federal class action lawsuit in Louisiana was the forum for adjudication of the nationwide Chinese drywall claims. The Association filed claims on behalf of unit owners whose condominiums contained Chinese drywall. The developer also filed claims in the class action. Due to financial problems with its lender Iberia Bank, the developer assigned 80% of any recovery in the class action to Iberia Bank.
At the conclusion of the Louisiana multi-state litigation, the Association recovered approximately $1,250,000 for remediation reimbursements to the unit owners. The Association paid out approximately $250,000 to unit owners who remediated, but due to competing claims by past and current unit owners, as well as the claim by Iberia Bank to the entire $1,250,000 in recovered proceeds, the Association filed an impleader action and placed the $1,000,000.00 balance of non-disbursed funds into the court’s registry. Iberia Bank filed a counterclaim against the Association for negligence, breach of fiduciary duty, and equitable accounting. The bank essentially claimed the Association wrongfully paid the unit owners for remediation of their units because it had priority in recovering the class action Chinese drywall recovery.
After a four-hour hearing on the Motion for Summary Judgement, the court determined that the Association was protected by the Florida Business Judgment Rule and was not negligent when it disbursed some of the proceeds to unit owners who remediated their units. The court also determined that the Association did not breach any fiduciary duty on two grounds. The court agreed with our argument that officers and directors only owe fiduciary duties to unit owners and not to the association itself. Iberia Bank also argued that a fiduciary relationship was created through the Association’s holding of the developer’s settlement proceeds. The court agreed with our argument that because the developer did not remediate any of its units, it was not entitled to any payments for its remediation claims.
Proposals for Settlement were filed on behalf of the Association and Motions to Tax Fees and Costs against Iberia Bank are pending.