New Decision: Fair Debt (Kelly v. Duggan)

Michael Gelfand 10/25/2019

Conflict is joined on debt collection! Wednesday, Florida’s First District Court of Appeal certified conflict with the Fifth District Court of Appeal, holding that condominium assessments are consumer debts under the Florida Consumer Collection Practices Act (“FCCPA”), §§ 559.55 – .785, Fla. Stat., such that a consumer may seek civil remedies for violations of the FCCPA, in Kelly v. Duggan, Case No. 1D17-3618 (Fla. 1st DCA, October 23, 2019).


For background, for those unaware of the FCCPA, and the contrast with the Federal Fair Debt Collection Practices Act (“FFDCP”), 15 U.S.C. § 1692, consider perusing the Fair Debt sections of “Condominium and Homeowners’ Association Liens, Foreclosures, and Bankruptcy”, Chapter 16 in Florida Condominium and Homeowners’ Association Law.

Kelly sued Duggan, the president of the Chez Sois Condominium Association, asserting that Duggan: locked Kelly out of a storage unit; made public derogatory comments about Kelly; disclosed information about Kelly’s reputation to a vendor; and, failed to provide Kelly notice of a board meeting where his common area privileges were considered and suspended. The trial court dismissed Kelly’s claim citing to Bryan v. Clayton, 698 So. 2d 1136 (Fla. 5th DCA 1997).

The appellate court noted that Kelly filed a separate lawsuit against the Association’s counsel in Federal District Court alleging a violation of the Federal Fair Debt Collection Practices Act based on the same facts which survived a motion to dismiss. The decision does not mention that whether the Association was a defendant in either suit.


The appellate court’s analysis began with deconstructing the Bryan decision. Bryan held that the FCCPA’s definition of “consumer debt” was ambiguous. After Bryan, the purchase of a home has been held to be a consumer transaction, and the Kelly decision cites to a number of Federal decisions which though not binding on Florida courts, are persuasive. Of import is the United States 11th Circuit Court of Appeals decision in Agrelo v. Affinity Mgmt. Servs., LLC, 841 F.3d 944, 950 (11th Cir. 2016), and the First District Court of Appeal’s precedent that an extension of credit is not a prerequisite for a “consumer debt” under the FCCPA.

The Kelly holding that condominium assessments are consumer debts under the FCCPA such that a consumer may seek civil remedies for violations thereof is grounded in the conclusion that:

A condominium assessment arises from a transaction to purchase property – a condominium. See § 718.1256, Fla. Stat. (2017) (classifying condominiums as residential property).

Further the court observed that “the owner incurred the obligation to pay during the purchase transaction,” characterized as a contractual obligation triggering treatment as a “consumer debt” under the FCCPA as “consensual home-purchase transaction.” The court described the sequence as:

The maintenance assessment obligation arises from a governing contract. The central question is whether a contractual obligation to pay maintenance assessments creates a “debt” under the FCCPA. We answer the question in the affirmative. The assessments are grounded in the consensual home-purchase transaction. When a home buyer must contractually agree to pay homeowners’ or maintenance assessments as a prerequisite to purchase, that home buyer takes on “debts” for those assessments under the FCCPA. By entering into the contract or governing documents, homeowners agree that a failure to comply with assessment requirements could result in a fine that would be deemed an individual assessment. Thus, the obligation to pay an assessment for a claimed breach of the contract arose out of an underlying consumer transaction.

Thus, the court certified conflict with Bryan, reversed the dismissal and remanded.


Recognizing that the decision that creates an inter-district conflict, the decision’s rational and statements do raise an eyebrow, at the least.

Many appellate decisions have sought to discern the meaning of a “debt” under the Federal Act, and the court’s attraction to many of the more recent federal cases is understood, nevertheless, the decision’s analysis and use of terminology may be seen as undermining holding. The decision’s recitation of facts does not tie the alleged wrongdoing of the president to the collection of a debt. Also, the “purchase transaction” creating the predicate was not with the Association to whom the debt is apparently due.

As to their being an “agreement” to pay assessments, while a declaration has been referred to as being akin to a contract, a declaration is not a contract because there is no agreement, the declaration being a unilateral document. That is why a declaration is normally referred to as a covenant, not a contract. In practice, the reason a declaration is recorded is to avoid the need for any type of agreement or even acknowledgement by a buyer/grantee, the benefit of the covenant running with the land is that the recorded covenant automatically binds the buyer/grantee by operation of law without acceptance or even acknowledgement by the buyer/grantee.

The decision’s reference to the obligation that could result in a “fine that would be deemed an individual assessment” appears not to follow in a claim for delinquent maintenance assessments unless that assessment arose as a result of something other than non-payment of an annual or special assessment. Of course, if this is a Florida condominium association, then a fine is not an assessment which is secured by a lien, but instead is a personal monetary obligation. Interestingly, the decision does not explain the origination of the debt.

The decision creates an awkwardness in note 1’s reference to the condominium association as a “Homeowners’ Association,” using a different name than used in the opinion caption and body. Also, the decision refers to the purchase transaction as purchasing “a condominium” as opposed to a unit or parcel. Further, while the analysis in context relates to consumer issues, the decision’s rational imprecisely first categorizes condominium assessments as a “debt” under the FCCPA, and only then discusses consumer enforcement when it would appear that the consumer context is necessary to find a FCCPA “debt.”

Looking forward, this decision reinforces the care that an association and its officers, directors and managers must take. While they may be excluded from claims under the Federal Act, they are not necessarily excluded from claims under the Florida Act. Volunteers thinking that they are doing the “right thing” by exercising self-help, may only be subjecting themselves to liability, personal liability!