Tuscany Grove Ass'n v. Peraino, Docket No. 320685.

• Court: Court of Appeal of Michigan (US)
• Writing for the Court: PER CURIAM.
• Citation: 311 Mich.App. 389,875 N.W.2d 234
• Docket Number: Docket No. 320685.
• Decision Date: 14 July 2015
• Parties: TUSCANY GROVE ASSOCIATION v. PERAINO.

311 Mich.App. 389
875 N.W.2d 234

TUSCANY GROVE ASSOCIATION
v.
PERAINO.

Docket No. 320685.

Court of Appeals of Michigan.

Submitted July 8, 2015, at Detroit.
Decided July 14, 2015, at 9:10 a.m.

875 N.W.2d 235

Makower Abbate PLLC, Farmington Hills (by Nathaniel Abbate Jr. ) for Tuscany Grove Association.

Aloia & Associates, P.C., Mount Clemens (by Benjamin J. Aloia and Aaron M. Keyes ), for Kimberly Peraino.

Before: HOEKSTRA, P.J., and JANSEN and METER, JJ.

PER CURIAM.

311 Mich.App. 391

In this dispute relating to the enforcement of condominium bylaws, plaintiff appeals

875 N.W.2d 236

as of right the trial court's order granting summary disposition to defendant on the basis of the determination that plaintiff lacked authority to initiate the present action. Because plaintiff failed to obtain approval from a supermajority of co-owners before filing suit in violation of the plain language of the bylaws and plaintiff's efforts to obtain approval after the fact failed to comply with the voting formalities set forth in the bylaws, we affirm.

Tuscany Grove Condominium (hereafter "Tuscany Grove") is a condominium complex established in Shelby Township, Michigan in 2001 under the Condominium Act, MCL 559.101 et seq. Plaintiff, the Tuscany Grove Association, which has responsibility for administration and management of the condominium complex, is incorporated as a nonprofit corporation under the Nonprofit Corporation Act, MCL 450.2101 et seq. Defendant, Kimberly Peraino, owns one of the condominium units in Tuscany Grove. Plaintiff filed the present lawsuit against defendant in an effort to compel defendant's compliance with certain fencing-

311 Mich.App. 392

related restrictions contained within the condominium bylaws. However, the trial court granted defendant's motion for summary disposition because plaintiff lacked authority to initiate the present suit. In particular, the trial court concluded that plaintiff itself had violated the condominium bylaws by failing to obtain the requisite approval of a supermajority of owners before incurring legal expenses involved with litigation. Plaintiff now appeals as of right.

At issue on appeal is the application of a provision in the condominium bylaws requiring plaintiff to obtain approval from 66 ²/₃% of co-owners before incurring any legal expenses incident to litigation. Plaintiff disputes the applicability of this provision on appeal. In particular, plaintiff contends that, as a matter of contract interpretation, application of this clause leads to absurd results when the bylaws are considered as a whole and that, in these circumstances, the provision should not be applied. In addition, plaintiff contends that the clause is void because it impermissibly conflicts with the Condominium Act and the Nonprofit Corporation Act. Finally, plaintiff argues that the trial court should not have granted defendant's motion for summary disposition because plaintiff complied with the supermajority requirement, albeit after filing suit, by obtaining the approval of 73.7% of owners by way of petitions. Given this approval from co-owners, plaintiff maintains that it would be contrary to the statutory schemes as well as the bylaws themselves to prevent the co-owners from choosing to ratify the litigation against defendant. We disagree with each of these arguments.

On appeal, we review de novo a trial court's decision to grant a summary disposition motion.

311 Mich.App. 393

Groves v. Dep't of Corrections, 295 Mich.App. 1, 4, 811 N.W.2d 563 (2011). Likewise issues involving statutory interpretation, as well as contract interpretation, present issues of law that are reviewed de novo. Johnson v. QFD, Inc., 292 Mich.App. 359, 364, 807 N.W.2d 719 (2011).

Pursuant to the Condominium Act, the administration of a condominium project is governed by the condominium bylaws. MCL 559.153. Bylaws are attached to the master deed and, along with the other condominium documents, the bylaws dictate the rights and obligations of a co-owner in the condominium. See MCL 559.103(9) and (10) ; MCL 559.108. Condominium bylaws are interpreted according to the rules governing the interpretation of a contract. See Rossow v. Brentwood Farms Dev., Inc., 251 Mich.App. 652, 658, 651 N.W.2d 458 (2002). Accordingly, this Court begins by examining

875 N.W.2d 237

the language of the bylaws. See Wiggins v. City of Burton, 291 Mich.App. 532, 551, 805 N.W.2d 517 (2011). Words are interpreted according to their plain and ordinary meaning. McCoig Materials, LLC v. Galui Constr., Inc., 295 Mich.App. 684, 694, 818 N.W.2d 410 (2012). Further, this Court avoids interpretations that would render any part of the document surplusage or nugatory, and instead this Court gives effect to every word, phrase, and clause. Id. Ultimately, we enforce clear and unambiguous language as written. Greenville Lafayette, LLC v. Elgin State Bank, 296 Mich.App. 284, 291, 818 N.W.2d 460 (2012).

In this case, the provision at issue states:

Limitations on Assessments for Litigation. The Board of Directors shall not have authority under this Article II, Section 2, or any other provision of these Bylaws or the Master Deed, to levy any assessment, or to incur any expense or legal fees with respect to any litigation, without the prior approval, by affirmative vote, of not less than 66–2/3% of all Co-owners in value and in number. This section shall not apply to any litigation commenced

311 Mich.App. 394

by the Association to enforce collection of delinquent assessments pursuant to Article II, Section 6 of these Bylaws. In no event shall the Developer be liable for, nor shall any Unit owned by the Developer be subject to any lien for, any assessment levied to fund the cost of asserting any claim against Developer whether by arbitration, judicial proceeding, or otherwise. [Emphasis added.]

By its clear and unambiguous terms, this provision makes plain that plaintiff's board of directors lacks authority "to incur any expense or legal fees with respect to any litigation" without first obtaining approval from a supermajority of co-owners. The only exception to this rule is for cases involving "collection of delinquent assessments," which is not the underlying issue in the present lawsuit. By virtue of this provision, the board of directors was without authority to hire an attorney or incur any other expenses related to litigation against defendant aimed at the enforcement of fencing restrictions. Given the legal expenses necessarily incident to litigation, the effect of this provision is to prevent the board of directors from filing suit without supermajority approval. Consequently, the trial court properly granted defendant's motion for summary disposition because plaintiff lacked the authority to file suit.

In contesting the application of this provision, plaintiff does not dispute that the clause plainly prevents the board of directors from pursuing the present litigation against defendant. Instead, plaintiff argues that absurd results will arise if this provision is enforced because, for example, it will effectively prevent the board of directors from enforcing the bylaws, thereby essentially enabling a minority of owners to amend the bylaws by thwarting litigation aimed at enforcement. Contrary to these various arguments, there is nothing absurd about requiring approval before

311 Mich.App. 395

permitting the board of directors to incur potentially extensive legal expenses on behalf of the owners. Such a clause functions as nothing more than a reasonable effort to protect the owners' financial interests.¹ See Port Liberte II Condo.

875 N.W.2d 238

Ass'n, Inc. v. New Liberty Residential Urban Renewal Co., LLC, 435 N.J.Super. 51, 65, 86 A.3d 730 (App.Div.2014). The board of directors may still exercise any of their other enforcement powers under the bylaws and may still file suit when appropriate, provided that they obtain approval to incur legal expenses. Indeed, if the supermajority-prelitigation-approval provision is unsatisfactory, the bylaws permit amendment and the co-owners thus remain free to amend the bylaws to their liking. Ultimately, parties are free to contract as they see fit, Wilkie v. Auto–Owners Ins. Co., 469 Mich. 41, 51, 664 N.W.2d 776 (2003), and there is simply no basis for this Court to rewrite the clear and unambiguous language of the bylaws. Enforced as written, the provision requires...