954 N.W.2d 231
Mich. Ct. App.2020Background
- Highfield Beach at Lake Michigan (HBLM) is the condominium association; in Nov 2016 it amended bylaws to prohibit leases for less than four consecutive months.
- In June 2015 Sanderson signed a 15-year agreement with CRA Management that authorized CRA to manage and procure short-term (14‑day) rentals and provided CRA would pay Sanderson annually.
- HBLM contends the CRA agreement is a property‑management contract; Sanderson contends it is (or creates) a lease protected by MCL 559.212(1) from later amendment.
- Sanderson also alleged HBLM breached duties (and that a 2008 amendment banning short rentals had been approved but was never recorded), asserting contract, negligence, and fiduciary‑duty claims and seeking damages for lost rental income.
- Trial court granted summary disposition for HBLM (declaratory/injunctive relief) and dismissed Sanderson’s counterclaims; it awarded HBLM attorney fees and costs; Sanderson appealed; appeals consolidated.
Issues
| Issue | Plaintiff's Argument (Sanderson) | Defendant's Argument (HBLM/Board) | Held |
|---|---|---|---|
| Whether the 2015 CRA agreement is a "lease" protected by MCL 559.212(1) (so 2016 amendment cannot affect it) | The CRA agreement created "lessor/lessee" rights permitting short‑term rentals; statute protects pre‑amendment leases | The CRA agreement is a property‑management contract (no possessory interest to CRA); MCL 559.212(1) therefore inapplicable | The CRA agreement is a management agreement, not a lease; the 2016 bylaw amendment is enforceable against Sanderson |
| Whether an alleged 2008 amendment (raising min rental to 90 days) was valid and HBLM breached duties to record/maintain it | The 2008 amendment was fully approved and should have been recorded and kept on file; failure caused Sanderson’s damages | The 2008 amendment was never fully approved (mortgagee did not consent) and was never recorded, so it was inoperative and required no recording | 2008 amendment was unrecorded and inoperative; Sanderson failed to raise a genuine factual dispute; breach‑of‑contract claim fails |
| Whether Board Members are liable for negligence or breach of fiduciary duty (re: 2008 amendment, reliance on Barczyk assurances, deliberation process) | Board failed to investigate/record 2008 amendment, misled co‑owners about Barczyk’s status, relied improperly on assurances, and denied meaningful debate | Board members were not on board in 2008, relied on counsel, no evidence co‑owners were misled, no recognized duty to give pre‑vote legal rulings the way Sanderson demands | Negligence and fiduciary‑duty claims fail as a matter of law; no duty or causation shown against current Board Members |
| Whether HBLM was entitled to attorney fees and costs and scope of recoverable fees | HBLM was not entitled because it failed to plead a contract claim for fees; fees for defending counterclaims/Board should be excluded; judicial reduction was unexplained | Recovery authorized by MCL 559.206(b) and bylaw Article XII; fees cover the whole proceeding (including defense of counterclaims and indemnified Board costs) | Award affirmed. Panel majority finds statutory/bylaw authority sufficient; concurrence says a contract claim should have been pled but complaint sufficed; fees for counterclaim/Board proper; court reduced award 10% (not reversed because no cross‑appeal) |
Key Cases Cited
- Loweke v. Ann Arbor Ceiling & Partition Co., 489 Mich. 157 (motion for summary disposition standard)
- Rory v. Continental Ins. Co., 473 Mich. 457 (contract interpretation: plain‑meaning rule)
- People v. Flick, 487 Mich. 1 (definition of "lease" and use of legal dictionary/common‑law meaning)
- Miles v. Shreve, 179 Mich. 671 (lease as contract for possession at rent)
- Miller‑Davis Co. v. Ahrens Constr., Inc., 495 Mich. 161 (plaintiff’s burden to prove breach of contract)
- Tuscany Grove Ass’n v. Peraino, 311 Mich. App. 389 (bylaws interpreted as contracts)
- Pransky v. Falcon Group, Inc., 311 Mich. App. 164 (attorney‑fees under contract must be sought via a contract claim)
- Cohan v. Riverside Park Place Condo Ass’n, Inc., 123 Mich. App. 743 (distinguished; fee recovery context differed)