Donald Eager v. Cecilia L Kaurich Trust
322 Mich. App. 174
| Mich. Ct. App. | 2017Background
- Plaintiffs (Eager) own adjacent lot in Doctor's Point subdivision and sued defendant Peasley (trustee/owner) alleging her short-term, transient rentals of a lake house violate common restrictive covenants recorded in 1946 limiting use to "private occupancy only," "private dwelling," and prohibiting "commercial use."
- Parties stipulated key facts: the cottage is ~2,000 sq ft with four bedrooms, advertised on a national rental website, rented for short stays (2–7 nights), about 64 days booked in a typical summer, rentals handled online with off-site payment, no on-site services provided.
- Plaintiffs sought injunctive relief to stop further rentals; trial court denied the injunction, finding the covenant ambiguous and resolving doubts in favor of free use of property.
- The majority (K. F. Kelly, J.) reversed, holding the covenant unambiguous and that short-term rentals violate both the "private occupancy/private dwelling" language and the prohibition on "commercial use."
- The dissent (Murphy, J.) would affirm, viewing the covenant language as ambiguous and relying on principles favoring free use of land; the dissent finds persuasive out-of-state authority that short-term residential rentals are not necessarily "commercial."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether covenant language "private occupancy only" / "private dwelling" prohibits short-term transient rentals | Restriction means single-family/private dwelling only; transient rentals are not "private occupancy" and violate covenant | Short-term rentals remain "private" residential use when rented to a single family for temporary exclusive occupancy | Held: Terms unambiguous; transient short-term rentals violate "private occupancy" / "private dwelling" restriction |
| Whether short-term rentals constitute "commercial use" prohibited by the covenant | Renting for a fee—even residential use—is commercial (profit-making activity) and thus barred | Renting a dwelling for residential purposes does not transform it into a commercial enterprise where no on-site business/services occur | Held: Renting for short-term use is a commercial use under common/legal definitions; covenant bars such rentals |
| Whether any ambiguity requires resolving in favor of free use of property (defense of waiver/ambiguity) | Plaintiffs: covenant unambiguous; no waiver shown | Defendant: covenant ambiguous; doubts resolved against enforcer; prior rentals and "summer resort" language support permissibility | Held: Covenant not ambiguous; court rejects waiver/ambiguity defense and grants injunction |
| Scope of decision — long-term rentals or owner-occupancy requirement | Plaintiffs did not seek ruling on long-term rentals; argue short-term rentals disallowed regardless | Defendant sought broader reading; noted lack of express owner-occupancy requirement | Held: Decision limited to short-term/transient rentals; court does not decide long-term rental or owner-occupancy issues |
Key Cases Cited
- Bloomfield Estates Improvement Ass'n, Inc. v. City of Birmingham, 479 Mich. 206 (2007) (enforce unambiguous deed restrictions; interpret terms by ordinary meaning; restrictions protect property values and character)
- Terrien v. Zwit, 467 Mich. 56 (2002) (defines "commercial use" in context of deed restrictions as use in furtherance of profit-making enterprise; undefined contract terms given commonly used meaning)
- O'Connor v. Resort Custom Builders, Inc., 459 Mich. 335 (1999) (timeshare/interval ownership may violate residential-use restrictions; distinguishes permanent residence from transient/time-limited occupancy)
- Phillips v. Lawler, 259 Mich. 567 (1932) ("private dwelling house" construed as single dwelling for one family)
- Seeley v. Phi Sigma Delta House Corp., 245 Mich. 252 (1928) ("one single private dwelling house" prohibits fraternity/chapter house; interpret restrictions by purpose and ordinary meaning)
- Johnson Family Ltd. Partnership v. White Pine Wireless, LLC, 281 Mich. App. 364 (2008) (interpretation of restrictive covenants is a question of law reviewed de novo)
- Wood v. Blancke, 304 Mich. 283 (1943) (incidental or ordinary residential uses may not violate a restriction; unusual/extraordinary uses can)
- Conlin v. Upton, 313 Mich. App. 243 (2015) (courts strictly construe covenants against enforcers and resolve doubts in favor of free use of property)