Tuscany Grove Association v. Peraino
311 Mich. App. 389
Mich. Ct. App.2015Background
- Tuscany Grove Association (the Association), a Michigan nonprofit condominium association, sued unit owner Kimberly Peraino to enforce fencing restrictions in the condominium bylaws.
- The bylaws include a prelitigation provision: the Board may not incur legal expenses or file suit without prior affirmative approval of at least 66 2/3% of all co‑owners (by value and number), except for collection of delinquent assessments.
- The trial court granted Peraino summary disposition, concluding the Association lacked authority to file suit because it had not obtained the required supermajority approval before incurring litigation expenses.
- The Association appealed, arguing (1) enforcing the prelitigation supermajority would produce absurd results and should be avoided; (2) the provision conflicts with the Michigan Nonprofit Corporation Act and the Michigan Condominium Act; and (3) the Association ratified the litigation after filing by collecting petitions from 73.7% of owners.
- The Court of Appeals reviewed the bylaws and statutes de novo and affirmed, holding the bylaw’s plain language bars the Board from initiating litigation without prior supermajority approval and that the post‑filing petitions did not comply with the bylaws’ required voting formalities and therefore could not ratify the suit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bylaw’s prelitigation 66 2/3% approval requirement prevents the Association from suing Peraino | Enforcing the clause produces absurd results (e.g., empowers a minority to prevent enforcement) and should not be applied | The bylaw unambiguously restricts the Board from incurring litigation expenses absent prior supermajority approval | The clause is clear, reasonable, and enforceable; dismissal required because the Board lacked authority to file without approval |
| Whether the bylaw conflicts with the Michigan Nonprofit Corporation Act (MCL 450.2261) | The Act grants a corporation the power to sue; any limitation must appear in the Articles, so the bylaw limitation is unenforceable | The Act permits limitations on the power to sue by statute, articles, or otherwise; the Articles expressly adopt/enforce the bylaws and corporate purposes include enforcing those bylaws | No conflict: the Articles and statute permit such a bylaw limitation; it is a permissible restriction on the Association’s power to sue |
| Whether the bylaw conflicts with the Michigan Condominium Act (MCL 559.206(a)) | The Condominium Act entitles an association to relief for co‑owner default, so the bylaw cannot condition the right to sue | The Act authorizes relief but does not dictate when or who must initiate litigation; bylaws govern administration and may set decision rules | No conflict: the Act does not prohibit owners from adopting a prelitigation approval requirement in the bylaws |
| Whether post‑filing petitions from 73.7% of owners ratified the litigation after the fact | The Association obtained supermajority approval by petition, which should ratify the Board’s unauthorized act | The petitions did not follow the bylaws’ required formalities for action without a meeting and thus cannot ratify | Petitions failed to meet Article IX/Article VIII formalities (no ballots, no quorum/response instructions, no solicitation method per Section 5); they did not constitute a valid ratification |
Key Cases Cited
- Groves v. Dep’t of Corrections, 295 Mich. App. 1 (applies de novo review for summary disposition) (procedural standard)
- Johnson v. QFD, Inc., 292 Mich. App. 359 (contract and statutory interpretation reviewed de novo)
- Rossow v. Brentwood Farms Dev., Inc., 251 Mich. App. 652 (bylaws interpreted as contracts)
- McCoig Materials, LLC v. Galui Const., Inc., 295 Mich. App. 684 (plain‐language interpretation; avoid surplusage)
- Greenville Lafayette, LLC v. Elgin State Bank, 296 Mich. App. 284 (enforce clear and unambiguous contract language)
- Wiggins v. City of Burton, 291 Mich. App. 532 (start with text of the document for interpretation)
- Wilkie v. Auto‑Owners Ins. Co., 469 Mich. 41 (parties free to contract; courts should not rewrite clear agreements)
- David v. Serges, 373 Mich. 442 (ratification doctrine definition)
- Barrow v. Detroit Election Comm., 305 Mich. App. 649 (formalities required for authorization must be met for ratification)
- Port Liberte II Condo Ass'n v. New Liberty Residential Urban Renewal Co., LLC, 435 N.J. Super. 51 (86 A.3d 730) (upholding prelitigation approval provisions as reasonable owner protections)