New Decision: Suspension and Termination (Voluntary Association) (The Naked Lady Ranch v. Wycoki)
Never argue with a naked lady? Lady Godiva may be recalled by the appellant’s name, but punishment for a perceived transgression was a serious issue in Wednesday’s decision, Naked Lady Ranch, Inc. v. Wycoki, Case No. 4D18-2868 (Fla. 4th DCA November 20, 2019), which addressed suspension and termination of voluntary association ownership.
Wycoki voluntarily joined the Naked Lady Ranch, Inc. (“NLRI”), a not-for-profit corporation providing roads and aircraft runways in an aviation community of fifty residences on parcels of no less than five acres. NLRI membership requires ownership of land within the community. Wycoki’s membership application stated that membership could be suspended for “actions [that] violate the trust of acceptable airport operations” and further, that “commercial operations are not permitted.” The NLRIs “governing documents” did not have written disciplinary procedures.
Wycoki paid a private pilot to fly Wycoki’s airplane out of NLRI’s airport early in the morning once or twice a week transporting Wycoki and coworkers. The coworkers were paid for the time flying.
After NLRI provided Wycoki a notice of intent to suspend Wycoki, the suspension meeting was attended by Wycoki’s counsel, and included opening statements, evidence and cross examination. After Wycoki’s membership was suspended for conducting commercial activities he was provided an additional notice permitting additional evidence, and provided a warning that continued violations would result in termination of membership. Wycoki continued the flights resulting in a board of director’s meeting terminating his membership. Wycoki still continued to fly out of NLRI’s facilities after termination of his membership.
NLRI filed suit for declaratory and injunctive relief, and for nuisance. After a bench trial, final judgment was entered for Wycoki because the governing documents did not contain a suspension or termination procedure, and there were insufficient proofs of a nuisance or commercial operations.
The appellate court reaffirmed the “rule of judicial deference” in which courts ordinarily will not intervene in the internal affairs of voluntary organizations. This includes discipline imposed by voluntary clubs even when the clubs are “tied to homeownership.”
Pursuant to this rule of judicial deference, the issues before the trial court should have been narrowly limited to:
(1) whether the Board complied with its own governing documents; and
(2) whether the defendant was suspended and terminated pursuant to a procedure that was fair and reasonable and carried out in good faith. See § 617.0607(1), Fla. Stat. (2015).
In this regard the NLRI’s By-Laws provided a broad grant of corporate powers. The Corporation Not For Profit Act in turn provides that the NLRI could suspend or terminate a membership with a: procedure that is fair and reasonable and carried out in good faith. See § 617.0607(1), Fla. Stat. (2015); § 617.0601(7), Fla. Stat. (2015)
Wycoki’s assertion that he satisfied the conditions of membership was contrary to Wycoki’s membership application. Concerning the suspension and termination procedures, the requirements of § 617.0607(1) Fla. Stat. do not require notice or hearing. Thus, as a matter of law NLRI’s procedure was fair and reasonable and carried out in good faith.
The trial court’s judgment was reversed, the matter remanded for entry of judgment in favor of NLRI.
This decision will be important to voluntary associations, especially non-mandatory clubs and those association that have ancillary purposes, such as in this case, airport facilities, when not a Chapter 720 “statutory” association. It appears from the decision that NLRI owned or had the rights for the airport facilities. Interestingly, the decision refers to a stipulation that the “declaration” does not run with the land as a covenant. Differentiating this from a statutory homeowners’ association, there is no mention of mandatory membership nor of assessments that are enforced by a lien.
Procedurally, there are two significant and related holdings. First, is the determination that the suspension/termination procedure, not written in an agreement, was sufficient as a matter of law. In this situation there was notice, argument by counsel, witnesses including cross examination.
Second, normally, determinations of “good faith” are matters of fact for which a trial is required because good faith involves an evaluation of intent. In this instance the court held that “good faith” was determined as a matter of law which may allow a dispute to be resolved by summary judgment, not requiring a trial. Nevertheless, in suspension/termination proceedings the demeanor and approach of the board or committee will likely still be important.