Florida New Horizons Condominium Master Ass'n v. Harding (3d DCA 2022): Business Judgment Rule

Quick Answer

In New Horizons Condominium Master Association, Inc. v. Harding, No. 3D20-1471 (Fla. 3d DCA Feb. 23, 2022), Florida's Third District Court of Appeal held that a condominium board does not have to plead the business judgment rule as an "affirmative defense" to rely on it. The court said the rule "applies presumptively by operation of law."

It also held that a master association's budget line, challenged as "ultra vires," was within the association's powers, so business-judgment deference was "a salient consideration." The court affirmed part of the judgment, reversed the rest, and sent the case back to the trial court.

At a Glance

The Dispute

The Master Association governs a development in North Miami with seven member subdivisions, each with its own sub-association. It provides common services, including bulk cable service, and funds them through assessments on the sub-associations. One sub-association, Fifth Horizons, designated Robert Harding to sit on the Master Association's board.

In late 2009 the Master Association contracted with Comcast to provide cable to all seven sub-associations. Years later Comcast demanded "over $300,000.00 in arrearages." In early 2016 the board drafted a budget including a $248,000 line item for Comcast. Two later meetings ended early, purportedly because of Harding's conduct and a resulting lack of a quorum, so the budget was delayed. In the summer of 2016 the board approved a $100,000 settlement with Comcast, yet "ratified the previously drafted budget allocating $248,000.00 for Comcast costs." The settlement papers were signed months later and retroactively ended the contract.

Harding and Fifth Horizons sued. They claimed the budget was ultra vires because it assessed more than needed to cover reasonable expenses, and said Fifth Horizons overpaid its 2016 assessment by $3,791.62. The Master Association counterclaimed for breach of contract and unjust enrichment, alleging underpayment. In opposing summary judgment it argued business-judgment deference. The trial court relied on the evidence and on the Master Association's failure to plead the rule as an affirmative defense, and granted summary judgment on the claims and the counterclaims. It also compelled disclosure of several years of audits.

What the Court Held

The rule need not be pleaded as an affirmative defense

The court called the dispute "garden-variety." It reviewed summary judgment and the application of the rule de novo. It noted that Florida has codified business-judgment protection for corporations, limited liability companies and nonprofit corporations, citing sections 607.0831(1), 605.04093(1) and 617.0834(1). Florida courts have also extended deference to condominium associations, shielding a condominium association's decision if it is "within the scope of the association's authority" and reasonable, meaning not "arbitrary, capricious, or in bad faith." (quoting Hollywood Towers Condominium Ass'n v. Hampton, Fla. 4th DCA 2010.)

The court found "no reported Florida decisions holding that a party seeking to invoke business-judgment deference must raise the rule as an affirmative defense." It reasoned that the statutes make directors immune unless there is bad faith, self-dealing or criminal conduct, and that the Legislature "enacted a presumptive framework" rather than an affirmative defense. It declined "to engraft a pleading requirement into the law." Because the Master Association had raised the rule in its opposition to summary judgment, alleging its directors acted "with authority, neutrality, and good faith," it was not required to plead it.

The budget was not ultra vires

The sub-association argued the Comcast line item exceeded what was needed for the settlement, so it was ultra vires and outside the rule. The court rejected that for two reasons. First, the parties "sharply disputed the chronology of the settlement, development of the budget, and necessity for collecting assessments," which is a factual issue that summary judgment could not resolve. Second, ultra vires acts are those done "without legal authority," while acts within a corporation's powers, "albeit imprudent or violative of a clear directive," are intra vires.

The governing documents gave the Master Association the powers of a not-for-profit corporation, authority to adopt an annual budget, and authority to levy and collect assessments against each condominium. So including the challenged amounts in the budget "constituted an intra vires act."

Result and instructions

The court affirmed the compelled disclosure of audits "without further discussion." It reversed the declaration that the board's actions were ultra vires, the disposition of the counterclaims, and the damages award. On remand, the trial court must consider the circumstances "as they existed when the action was taken," rather than when suit was filed, quoting Miller v. Homeland Property Owners Ass'n (Fla. 4th DCA 2019).

Limits

The court did not hold that the board's budget was correct, or that deference ends every challenge. It held that the rule could be invoked and that the ultra vires label did not defeat it on this record. The merits of the budget were left for remand. The case involved a master association of condominiums, so how it applies to an HOA under Chapter 720 should be confirmed with counsel (our reading: the same corporate-law cases are often cited for HOAs, but this opinion does not say so).

Why It Matters for Associations

• Deference is the starting point. A decision within the board's authority and not arbitrary, capricious or in bad faith gets deference under the cases the court cited.
• No special pleading. Directors in litigation can invoke the rule without having listed it as an affirmative defense, though raising it early is still sensible.
• Authority matters. The court's analysis turned on the budget and assessment powers in the governing documents. Boards should be able to point to the provision that authorizes each action.
• Documentation matters. The dispute grew from a budget that did not match the settlement amount. Minutes that explain why a budget line differs from a negotiated figure help show good faith. Our reading: this is a practical lesson, not a holding.
• Not a shield for self-dealing. The statutes the court cited remove protection for bad faith, self-dealing or criminal conduct.

Related Florida Law

• Sections 617.0830 to 617.0834: director duties and liability
• HB 797 (2026): nonprofit corporations act rewrite
• Section 718.3027: director conflicts of interest
• Chapter 718: the Condominium Act
• Florida HOA laws complete guide

Note: Chapter 617 was rewritten by HB 797 effective July 1, 2026. The court cited section 617.0834 as it read in 2022, so check the current text.

Board Checklist

• Tie each budget item and assessment to a provision in the declaration, bylaws or statute.
• Record in the minutes why the board chose an amount, especially when it differs from a settlement or bid figure.
• Keep quorum and meeting records, including when meetings end early and why.
• Produce requested audits and records on time; here, the disclosure order was affirmed.
• If sued, tell defense counsel early that the board will rely on business-judgment deference.
• Avoid votes where a director has a personal interest; follow the conflict rules in the statutes.
• Ask counsel whether the 2026 changes to Chapter 617 affect how your board is protected.

Frequently Asked Questions

What did New Horizons v. Harding decide?

That the business judgment rule does not have to be pleaded as an affirmative defense, and that the challenged master association budget item was within the association's powers, so deference applied.

Does the business judgment rule mean a board can never be challenged?

No. The cases the court quoted limit deference to decisions within the association's authority that are reasonable, "not arbitrary, capricious, or in bad faith," and the protective statutes exclude bad faith, self-dealing and criminal conduct.

Did the owners win or lose?

Mixed. The order compelling disclosure of audits was affirmed. The ultra vires declaration, the counterclaim ruling and the damages award were reversed.

What does ultra vires mean here?

Acts done without legal authority. The court said that acts within a corporation's power, even if imprudent, are not ultra vires.

Does this case apply to an HOA?

The case involved a condominium master association. We cannot say it applies directly to an HOA without a review by counsel.

Where This Comes From

We read the full text of the Third District's opinion in No. 3D20-1471 (February 23, 2022) as posted by Justia. We did not verify an official reporter citation or any rehearing or later history, and we did not read the current text of section 617.0834 after the 2026 rewrite. The opinion is available at Justia.

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed Florida attorney before acting.