The Boca View Condominium Association has lost another court battle in its long-running fight to prevent a unit owner from exercising her right to inspect its financial records.
On Tuesday, a federal judge in West Palm Beach dismissed a federal lawsuit challenging the constitutionality of a 2010 Florida law that prohibits condo and homeowner associations from denying record requests they deem weren’t made in “good faith and (for) proper purpose.”
The ruling was based on a magistrate judge’s Sept. 7 recommendation that it would be improper for a federal court to rule while a state appellate court considers a similar challenge by the 72-unit condominium association. The association is challenging a December 2022 state circuit court order requiring the association to provide the unit owner, Eleanor Lepselter, and her personal representative, attorney Jonathan Yellin, access to its records.
On Wednesday, the magistrate judge sanctioned Boca View and its attorneys for filing a federal lawsuit that was “factually and legally frivolous,” and “filed in bad faith based on a legal theory with no reasonable chance of success, all for an improper purpose.”
Boca View filed the federal lawsuit in May, shortly after the Fourth District Court of Appeal denied the association’s motion to suspend the state circuit court order while its appeal is pending.
The sanctions were a response to a motion filed on July 4 by the Lepselters asserting that claims in the federal complaint were “wholly unsupported by the facts and law needed to sustain them.”
The magistrate judge ruled that Boca View filed the lawsuit to “forum shop” and caused Eleanor Lepselter and her husband — named as a co-defendant in the cases — to incur unnecessary attorney’s fees.
The magistrate judge’s sanction order requires Boca View to pay the Lepselters’ costs of fighting the federal suit.
Boca View’s lead attorney did not respond to a request for comment about the court orders.
An attorney representing the Lepselters in the state circuit court and federal court cases, Christopher Salivar, said by email that he was pleased with the rulings. “I’ve always believed the association’s claims in this federal case were just made up after the fact to try and file suit in another forum,” he said.
The dispute began in 2019 when Eleanor Lepselter sent Boca View a written request to inspect and photograph the association’s financial records, court filings show.
Eleanor Lepselter asserted her right under state law to bring Yellin to the record inspection as her personal representative.
When the pair showed up to inspect the records, Boca View’s treasurer, Giuseppe Marcigliano — who is not a named party in any of the lawsuits — refused to allow Yellin to accompany Lepselter into the room where the records were kept, case filings show.
Lepselter and Yellin left without inspecting any records. She then filed a request with the Department of Business and Professional Regulation, as required under state law, for the issue to be decided in non-binding arbitration.
After an arbitrator found that Boca View broke state law and ordered the records be made available to Lepselter and Yellin, Boca View in January 2020 filed a circuit court lawsuit against the Lepselters challenging the ruling.
Nearly three years of litigation followed.
In October 2022, Circuit Judge John Kastrenakes ruled that state law allowed Eleanor Lepselter to bring a representative to the record inspection, and that the association had no right to question her reasons for wanting to see the records.
He ordered Boca View to pay the Lepselters’ legal fees, later determined to be around $246,000.
Boca View’s association board has maintained that Lepselter filed the request as a “straw man” for another couple whose own request to inspect the records was rejected. The association board determined they no longer had rights as association members because they had transferred ownership of two condos they owned to a corporation they formed without first obtaining board approval.
Represented by the Becker law firm, Boca View won a similarly lengthy case in December 2018 against another unit owner, Eileen Breitkreutz, who made a public record request that her attorney admitted was filed on behalf of the couple whose request was denied. A judge in that case ultimately ordered her to pay $395,000 in legal fees.
Boca View, at the October 2022 trial against the Lepselters, argued that the 2010 law barring associations from questioning the purpose of a record request did not apply because it was not in effect when the condominium’s governing documents were recorded in 2004.
Another state law, also challenged by Boca View, gave the Legislature the right to amend or appeal laws governing non-profit organizations “at any time.”
That law, the Lepselters’ attorneys argued, was in effect and benefited the developer when Boca View’s governing documents were recorded in 2004.
After losing the circuit court case, Boca View’s motion for a rehearing was denied, as was its motion to suspend the ruling requiring it to turn over its financial records.
Boca View filed its appeal in the 4th District Court of Appeal in January and its federal lawsuit was filed in May.
In the federal lawsuit, the association argued that both state laws cited in its complaint violated a clause in the U.S. Constitution that prohibits states from impairing obligations of previous contracts.
The association sought what Magistrate Judge William Matthewman, in his report and recommendation filed on Sept. 7, called “quite extraordinary relief” — that the federal court suspend the state court ruling, rule that Boca View does not need to provide records to the Lepselters, and award Boca View attorney’s fees and costs instead of the Lepselters.
In his order on Wednesday sanctioning Boca View for “vexatious and frivolous” litigation, Matthewman noted that Boca View’s treasurer, Marcigliano, did not cite any of the legal arguments subsequently raised by Boca View when he originally denied Yellin the opportunity to inspect records with Eleanor Lepselter in 2019.
The judge stated Marcigliano “wrongly denied the record request because he disliked and did not trust the attorney for the Lepselters.”
Afterward, Matthewman wrote, Boca View raised arguments “which are factually and legally frivolous, in an effort to belatedly justify its wrongful denial of the record request …”
Matthewman ordered sanctions against Boca View and its counsel, Alexandra Sierra De Varona and Mayelin Teresa Rodriguez, and their law firm De Varona Law, to punish the litigation abuse in the case, deter future abuse, and compensate the Lepselters for the abuse.
Salivar, the Lepselters’ attorney, has until Wednesday to submit his legal bill.
Matthewman denied the Lepselters’ request to also sanction attorney John Sheppard, author of the association’s federal lawsuit, because he withdrew from the case, citing irreconcilable differences with Boca View, three weeks after Salivar emailed him pointing out that the case was “legally deficient,” Matthewman wrote. Sheppard would not have had an opportunity to withdraw or amend the complaint, the judge found.
Sheppard and his firm Fowler White Burnett P.A. continue to represent the association in the circuit court case, according to an Oct. 10 filing. They were hired after the Becker firm left in January, citing irreconcilable differences.
Litigation in the circuit court trial continues while the appeal is in the briefing stage.
Yellin was given 20 hours over three days in May and June to inspect and copy Boca View’s financial records but only made it to records ending in 2016 before Boca View stopped cooperating, Salivar wrote in an August motion for contempt filed in the state circuit court proceeding.
Boca View responded that it offered Yellin the opportunity to send the records to a professional copying service so the amount of inspection time would not be an issue. Yellin refused the offer, the association said.
According to the filing, Yellin found in his review of financial records “actions by specific members of (Boca View’s) Board of Directors, which directly appear to constitute the misappropriation or misuse of Plaintiff’s funds.”
They include, according to the court filing, reimbursements made to board members for gas, meals at upscale dining establishments (such as Okeechobee Steak House and Truluck’s), purported ‘gifts’ made by a board member, reimbursements for a Costco membership maintained in a board member’s name, and reimbursements to a board member for sums paid to “Wine Country Gift Baskets.”
Salivar wrote that the total value of the “misappropriated or misused” funds was more than $6,000.
Boca View accused Salivar of “falsely and libelously” misrepresenting the association’s records and asked the court to strike information from the financial records from Salivar’s contempt order.
Both the contempt motion and the association’s motion to strike are still pending.
Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.