Bernhard Law Firm Wins Judgment for Ritz-Carlton Ownership Group Against Hotel Management for Widespread Discriminatory Overcharging

Bernhard Law Firm recently won summary judgment for the Ritz-Carlton Bal Harbour Hotel condo-hotel ownership group against the hotel management company running the lobby and hotel services. See Miami Circuit Civil Case No. 19-32088 CA for more details. If you have any questions about condo-hotel management and contracts, please contact Bernhard Law Firm at www.bernhardlawfirm.comabernhard@bernhardlawfirm.com, 786-871-3349.

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As gleaned from the public filings, Bernhard Law Firm brought suit on behalf of an ownership group in the Ritz-Carlton Bal Harbour. These Plaintiffs own units in the Condominium-Hotel at 10295 Collins Avenue, Bal Harbour, also known as One Bal Harbour or the Ritz-Carlton, Bal Harbour. The defendant was the hotel management company running the hotel, known as the Lobby Unit Owner or LUO. The Defendant LUO is owner of the Lobby Unit, through which Defendant runs a hotel lobby service in the Condominium-Hotel. Under the Declarations of covenants and the Condominium Act, all Unit Owners are free to rent their Units as hotel rooms directly through a third-party service provider, or through the Defendant LUO (under its separate and optional “Rental Management Program” service), as each Unit Owner sees fit. Nobody may limit this Unit Owners’ right to independently rent their Units without the LUO. 

Apart from that, the LUO as owner of the Lobby Unit itself must perform certain “Basic Hotel Services” to maintain the semblance of a luxury hotel. Those exact Basic Hotel Services are delineated in the parties contract, the Tower Declaration § 9.10, and include provision of staffing for the reception desk, bellhop, concierge, security, pool and fitness attendants, cable, telephone, internet, paying fees and expenses of the Hotel Manager (the Ritz-Carlton), and paying the cost for using the Hotel Brand. All of these must be provided equally to all Unit Owners. All of these are common expenses of the Condominium, to be assessed to each Unit Owner equally. These obligatory and equallyshared Basic Hotel Services are entirely separate and unrelated to the LUO’s additional and optional Rental Management Program. 

Ritz Bal Harbour

This dispute arose because the Plaintiffs exercised their right to independently rent their Units through third-party providers, not through the LUO’s additional and optional Rental Management Program. In response, the LUO began discriminatorily assessing the Plaintiffs a disproportionately higher amount for the unrelated Basic Hotel Services, while reducing and excusing the same assessments for all other Unit Owners for the same Basic Hotel Services. The LUO did so—selectively excused other Unit Owners from the Basic Hotel Services assessments—solely because those Unit Owners hired the LUO to also perform additional rental management services (housekeeping, rental management, food services, under the LUO’s separate, unrelated, and optional “Rental Management Program”). 

Yet, the LUO’s required performance of the Basic Hotel Services is supposed to be entirely separate and apart from the LUO’s offering of additional rental services under its optional Rental Management Program. The former is a common expense to be paid by all Unit Owners equally, while the latter is an optional service at additional cost that only some Unit Owners choose to hire, and only if they wish to do so without compulsion from the LUO. Improperly, the LUO was discriminatorily manipulating assessments for common expenses (the Basic Hotel Services), charging Plaintiffs more money for receiving less services. The LUO was thereby illegally preventing Plaintiffs from exercising their rental and use rights under the Declarations of covenants and the Condominium Act. The LUO’s discriminatory activities and limitations on the Plaintiffs’ rental of their Units breached the Declarations of covenants and violated Florida Statutes.

Plaintiffs thus sought declaratory judgment as to the parties’ respective rights and obligations under the Declarations and Florida Statutes, to have the Court plainly declare that: (i) assessments for common expenses from the Basic Hotel Services must be equal; (ii) Plaintiffs have the right to rent Units without compulsion to use the LUO’s “Rental Management Program,” and free from the LUO’s discriminatory assessment manipulation of common expenses; and (iii) Plaintiffs have the right to conduct third-party provision of additional rental management and operation without excessive interference, overcharging, cost transferring, or access limitations from the LUO. Plaintiffs also sought injunction against the LUO from its discriminatory practices, discriminatory limitations on rental and access, and unreasonable imposition of restrictions solely upon those Unit Owners who exercised their contractual and constitutional right to not hire the Defendant LUO for additional rental management. Lastly, Plaintiffs sought damages for Defendant’s breach of contract and the implied covenant of good faith and fair dealing, as to the overcharges, cost transfers, and inappropriate “access fees” that Defendant LUO has thus far improperly assessed upon Plaintiffs. In sum, the lawsuit was about not having to pay more for getting less.

After significant deliberation, the Court recently entered summary judgment in favor of Bernhard Law Firm’s ownership group, against the Defendant LUO. The Court held that the Defendant’s discriminatory overcharges contravened the parties’ contracts as well as Florida law. The Court entered a declaratory judgment and an injunction against the Defendant from further discriminatory overcharges. See Miami Circuit Civil Case No. 19-32088 CA for more details. If you have any questions about condo-hotel management and contracts, please contact Bernhard Law Firm at www.bernhardlawfirm.comabernhard@bernhardlawfirm.com, 786-871-3349.

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