Cove Creek Condominium Assoc v. Vistal Land & Home Development LLC ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
COVE CREEK CONDOMINIUM FOR PUBLICATION
ASSOCIATION, December 19, 2019
9:00 a.m.
Plaintiff/Counterdefendant-
Appellee,
v No. 342372
Oakland Circuit Court
VISTAL LAND & HOME DEVELOPMENT, LC No. 2016-155706-CH
LLC, and MARIA A. CERVI AND AMERICO
CERVI REVOCABLE LIVING TRUST,
Defendants/Counterplaintiffs-
Appellants.
COVE CREEK CONDOMINIUM
ASSOCIATION,
Plaintiff/Counterdefendant-
Appellant,
v No. 343144
Oakland Circuit Court
VISTAL LAND & HOME DEVELOPMENT, LC No. 2016-155706-CH
LLC, and MARIA A. CERVI AND AMERICO
CERVI REVOCABLE LIVING TRUST,
Defendants/Counterplaintiffs-
Appellees.
Before: RONAYNE KRAUSE, P.J., and METER and STEPHENS, JJ.
STEPHENS, J.
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In Docket No. 342372, defendants/counterplaintiffs, Vistal Land & Home Development,
LLC (Vistal), and Maria A. Cervi and Americo Cervi Revocable Living Trust (the Trust)
(collectively, defendants), appeal as of right the order granting summary disposition in favor of
plaintiff/counterdefendant, Cove Creek Condominium Association (plaintiff), dismissing all
claims in defendants’ second amended countercomplaint, and denying defendants’ motions for
summary disposition. The gravamen of this matter is a dispute as to which version of MCL
559.167 of the Condominium Act, MCL 559.101 et seq., applies. The statute was amended
several times during the existence of the condominium project. In Docket No. 343144, plaintiff
appeals as of right the order denying its motion for attorney fees and costs. We affirm in both
appeals.
I. BACKGROUND
This case arises from plaintiff’s claims for declaratory and other relief related to former
Units 1 through 14 of the Cove Creek Condominium project (the Condominium or the project).
The Condominium was established by the recording of the Master Deed on April 21, 1989, and
was composed of 31 units. It is undisputed that Units 15 to 31 were designated as “must be
built,” were constructed, and are currently owned, while Units 1 through 14 were identified as
“need not be built” and were never constructed. The first unit was sold sometime in 1989.1 On
May 17, 1989, Lifestyle Homes, the original developer of the project, transferred its interest by
quitclaim deed to Cove Creek Limited Partnership (Cove Creek LP). On September 15, 2004,
Cove Creek LP executed a deed transferring Units 1 through 14 to Vistal Cothery, LLC. 2 On
November 6, 2006, Vistal Cothery, LLC, executed a deed conveying Units 1 through 14 to
Vistal. On October 25, 2016, Vistal quitclaimed its interest in Units 1 through 14 to the Trust.
The day before, on October 24, 2016, plaintiff filed a complaint against defendants. In Count I,
plaintiff sought a declaration that Units 1 through 14 no longer existed, that all land on which
Units 1 through 14 were to be constructed was part of the general common elements, and that
defendants did not have the right to withdraw Units 1 through 14.3 Plaintiff relied on, and the
trial court applied, MCL 559.167(3), as amended by 2002 PA 283, effective May 9, 2002, of the
Condominium Act, MCL 559.101 et seq which read:
Notwithstanding section 33, if the developer has not completed
development and construction of units or improvements in the condominium
project that are identified as “need not be built” during a period ending 10 years
1
The parties dispute the exact date in 1989 on which the first unit was conveyed. As discussed
further below, however, the exact date is not dispositive and, for purposes of this appeal, it is
significant that construction commenced sometime before either May 9, 1989, or October 27,
1989 (the dates alleged by the parties).
2
The trial court found that there was no entity registered in Michigan as “Vistal Cothery, LLC”
in 2004.
3
In Counts II through V, plaintiff alternatively sought to quiet title, alleged a violation of the
Condominium Act and breach of covenant for the failure to pay assessments, sought to foreclose
on a statutory lien for the unpaid assessments, and alleged unjust enrichment.
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after the date of commencement of construction by the developer of the project,
the developer, its successors, or assigns have the right to withdraw from the
project all undeveloped portions of the project not identified as “must be built”
without the prior consent of any co-owners, mortgagees of units in the project, or
any other party having an interest in the project. If the master deed contains
provisions permitting the expansion, contraction, or rights of convertibility of
units or common elements in the condominium project, then the time period is 6
years after the date the developer exercised its rights with respect to either
expansion, contraction, or rights of convertibility, whichever right was exercised
last. The undeveloped portions of the project withdrawn shall also automatically
be granted easements for utility and access purposes through the condominium
project for the benefit of the undeveloped portions of the project. If the developer
does not withdraw the undeveloped portions of the project from the project before
expiration of the time periods, those undeveloped lands shall remain part of the
project as general common elements and all rights to construct units upon that
land shall cease. In such an event, if it becomes necessary to adjust percentages
of value as a result of fewer units existing, a co-owner or the association of co-
owners may bring an action to require revisions to the percentages of value under
section 95. [MCL 559.167(3), as amended by 2002 PA 283 (emphasis added).4]
On November 3, 2016, the Trust informed plaintiff that it had withdrawn Units 1 through
14 from the project. The Trust relied on MCL 559.167(3), (4) and (5), as amended by 2016 PA
233. The 2016 version of the statute, effective September 21, 2016, provides, in relevant part:
(3) Notwithstanding section 33, for 10 years after the recording of the
master deed, the developer, its successors, or assigns may withdraw from the
project any undeveloped land or convert the undeveloped condominium units
located thereon to “must be built” without the prior consent of any co-owners,
mortgagees of condominium units in the project, or any other party having an
interest in the project. If the master deed confers on the developer expansion,
contraction, or convertibility rights with respect to condominium units or common
elements in the condominium project, then the time period is 10 years after the
recording of the master deed or 6 years after the recording of the amendment to
the master deed by which the developer last exercised its expansion, contraction,
or convertibility rights, whichever period ends later. Any undeveloped land so
withdrawn is automatically granted easements for utility and access purposes
through the condominium project for the benefit of the undeveloped land.
(4) If the developer does not withdraw undeveloped land from the project
or convert undeveloped condominium units to “must be built” before expiration
4
We note that Subsection (3) itself and the language in dispute (emphasized above) was first
added in 2000. See 2000 PA 379. The 2002 version made other changes that are not in dispute.
See 2002 PA 283.
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of the applicable time period under subsection (3), the association of co-owners,
by an affirmative 2/3 majority vote of the members in good standing, may declare
that the undeveloped land shall remain part of the project but shall revert to
general common elements and that all rights to construct condominium units
upon that undeveloped land shall cease. When such a declaration is made, the
association of co-owners shall provide written notice of the declaration to the
developer or any successor developer by first-class mail at its last known address.
Within 60 days after receipt of the notice, the developer or any successor
developer may withdraw the undeveloped land or convert the undeveloped
condominium units to “must be built”. However, if the undeveloped land is not
withdrawn or the undeveloped condominium units are not converted within 60
days, the association of co-owners may file the notice of the declaration with the
register of deeds. The declaration takes effect upon recording by the register of
deeds. The association of co-owners shall also file notice of the declaration with
the local supervisor or assessing officer. In such an event, if it becomes necessary
to adjust percentages of value as a result of fewer condominium units existing, a
co-owner or the association of co-owners may bring an action to require revisions
to the percentages of value under section 95.
(5) A reversion under subsection (4), whether occurring before or after the
date of the 2016 amendatory act that added this subsection, is not effective unless
the election, notice, and recording requirements of subsection (4) have been met.
[MCL 559.167(3)-(5), as amended by 2016 PA 233 (emphasis added).]
On December 9, 2016, plaintiff filed a first amended complaint, which addressed events
that occurred after the filing of the complaint. Nevertheless, plaintiff’s Count I continued to seek
declaratory relief against the Trust under MCL 559.167, as amended by 2002 PA 283. On
November 21, 2016, defendants filed a motion for summary disposition under MCR 2.116(C)(8)
on Count I, arguing that plaintiff’s claim solely relied on the 2002 version of MCL 559.167,
which was repealed and restated, effective September 21, 2016. Defendants argued that the 2016
amendment applied retroactively and did not divest plaintiff of any vested rights. Plaintiff
replied that the 2016 amendment only applied to current “need not be built” units and did not
revive former “need not be built” units that had already ceased to exist. It also argued that
applying the 2016 amendment retroactively would abrogate vested property rights and violate the
due-process rights of co-owners. Plaintiff contended that summary disposition should be granted
in its favor under MCR 2.116(I)(2).
On January 11, 2017, a hearing was held on defendants’ motion for summary disposition
regarding Count I. Defendants argued that plaintiff’s claim that the constitutionality of the 2016
amendment was not properly before the court. Plaintiff argued that if this motion was decided in
its favor, then the other claims in the complaint and defendants’ countercomplaint 5 were moot.
On February 10, 2017, the trial court issued an opinion and order denying defendants’ motion for
5
Defendants’ counterclaims are discussed below.
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summary disposition on Count I and granting summary disposition in favor of plaintiff pursuant
to MCR 2.116(I)(2). The court applied the 2002 version of MCL 559.167 to find that all the land
on which Units 1 through 14 were to have been constructed had become part of the general
common elements. It further ruled that the Trust did not have the right to withdraw Units 1
through 14, or the land on which Units 1 through 14 were to be located, from the Condominium.
In accord with the 2002 amendment, the trial court found that the 10-year period for defendants
to withdraw the undeveloped units began before October 27, 1989, the time of construction, and
expired on October 27, 1999. The trial court further found that, even if the 10-year period had
not begun to run until 2002, the right to withdraw expired and the developer lost all rights to
develop on May 9, 2012. The trial court found that the vesting of title in plaintiff occurred by
operation of law when the 10-year period expired prior to the enactment of the 2016
amendments. The trial court finally ruled that the 2016 amendments were not retroactive. A
motion to reconsider was denied.
On June 30, 2017, the trial court granted defendants leave to file an amended
countercomplaint. On July 5, 2017, defendants filed a second amended countercomplaint in
which defendants sought reimbursement for the payment of real property taxes in the amount of
$80,986.64 under theories of restitution (Count I), indemnification (Count II), quantum
meruit/unjust enrichment (Count III), detrimental reliance/promissory estoppel (Count IV), and
account stated (Count V). Defendants also sought to quiet title to the property, arguing that their
deeds were recorded before plaintiff recorded notice of its interest in Units 1 through 14 (Count
VI), and claiming that plaintiff lost any interest in Units 1 through 14 through adverse possession
(Count VII). Finally, in Count VIII, defendants alleged that, if the trial court gave plaintiff title,
then plaintiff would receive a windfall and be unjustly enriched. In early October 2017,
defendants filed motions for summary disposition pursuant to MCR 2.116(C)(10) as to their
counterclaims.
On October 17, 2017, plaintiff filed a motion for summary disposition seeking dismissal
of defendants’ second amended countercomplaint pursuant to MCR 2.116(C)(7), (8), and (10).
Plaintiff argued that defendants were attempting to avoid the court’s prior ruling regarding title
and that Count VI should be dismissed because the court had already rejected that argument in
ruling on defendants’ earlier motion for reconsideration.
On November 15, 2017, plaintiff filed a response to defendants’ motion for summary
disposition as to Counts I, II, III, IV, V, and VIII. Plaintiff argued that defendants’ claims for
property taxes failed as a matter of law because (1) there was an adequate remedy at law, and (2)
defendants did not provide a benefit to plaintiff because common elements may not be taxed.
Plaintiff argued that Michigan law provides a clear legal remedy for reimbursement of taxes
assessed or paid by mistake.6 Plaintiff additionally argued that there was no wrongful conduct
necessary for a claim of indemnity, defendants’ claim for promissory estoppel was based on a
2007 purchase agreement between Vistal and plaintiff, which was an express contract that barred
6
Plaintiff noted that defendants had also filed a lawsuit seeking legal relief against the entities
that sold them the property in 2004.
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the claim of promissory estoppel, and there was no agreement as required for a claim of account
stated. Finally, plaintiff argued that defendants’ claims were barred by MCR 3.411(F). In
response to defendants’ motion for summary disposition regarding Count VI, plaintiff argued
that (1) the trial court had already ruled on the issue of title, (2) MCL 565.29 was not controlling
because defendants were not “purchasers in good faith,” (3) MCL 559.143 was inapplicable, and
(4) the exact time that the developer rights were lost was not dispositive.
On January 31, 2018, the trial court issued an opinion and order granting plaintiff’s
motion for summary disposition, dismissing all claims in the second amended countercomplaint,
and denying defendants’ motions for summary disposition. Regarding Counts I and II
(restitution and indemnification), the trial court ruled that plaintiff was entitled to summary
disposition pursuant to MCR 2.116(C)(10) because defendants were not entitled to contractual
indemnity. The trial court reasoned that there was no evidence of any implied or express
contract of indemnity, and defendants did not have a valid common-law claim for restitution
because there was no evidence that plaintiff committed any wrongful act that caused defendants
to pay the property taxes. The trial court also found that plaintiff was entitled to summary
disposition on Counts III and VIII (quantum meruit and unjust enrichment) because there was a
remedy at law and no evidence that plaintiff was unjustly enriched because the property would
not have been foreclosed upon. Next, the trial court ruled that plaintiff was entitled to summary
disposition on Count IV (detrimental reliance/promissory estoppel) because there was no
evidence that plaintiff made a promise or that plaintiff should have expected defendants to act or
fail to act on the basis of any promise. As to Count V (account stated), the trial court ruled that
plaintiff was entitled to summary disposition because there was no evidence of an account stated
in writing by the creditor and accepted as correct by the debtor. The trial court found that
plaintiff was entitled to summary disposition on Count VI (quiet title/declaratory relief) pursuant
to MCR 2.116(C)(7) because MCL 565.29 was inapplicable for the reason that there was no
conveyance, defendants were not subsequent purchasers in good faith, and defendants failed to
comply with MCR 3.411(F). Finally, the trial court ruled that plaintiff was entitled to summary
disposition on Count VII (adverse possession) pursuant to MCR 2.116(C)(10) because
defendants’ use of the land was not actual, visible, open, notorious, exclusive, continuous, and
uninterrupted for the statutory period of 15 years, nor was it hostile and under cover of claim of
right. Defendants filed their claim of appeal from this order on February 12, 2018.
On February 27, 2018, plaintiff filed a motion for attorney fees and costs as a form of
sanctions against defendants pursuant to MCR 2.114, MCR 2.313, MCR 2.625, and MCL
600.2591. After a hearing on plaintiff’s motion, the trial court found no basis to sanction
defendants and denied the motion. The trial court stated, “I can’t remember any point in this
entire litigation where I thought this is a frivolous pleading that has been filed, this was a
frivolous motion that has been brought. I think this was a difficult case.” On March 23, 2018,
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the trial court entered an order denying the motion for attorney fees and costs. Plaintiff filed its
claim of appeal from this order on April 2, 2018.7
II. DOCKET NO. 342372
In Docket No. 342372, defendants contend that the trial court erred by applying the 2002
version of MCL 559.167 because the 2016 amendment applies retroactively and, in the
alternative, that the earlier versions of the statute violated defendants’ due-process rights and
constituted an unconstitutional taking. We disagree.
A. SUMMARY DISPOSITION
Defendants moved for summary disposition of plaintiff’s amended Count I pursuant to
MCR 2.116(C)(8), and the trial court granted summary disposition in favor of plaintiff pursuant
to MCR 2.116(I)(2).
1. ISSUE PRESERVATION AND STANDARD OF REVIEW
“In order to properly preserve an issue for appeal, it must be raised before, and addressed
and decided by, the trial court.” Henderson v Dep’t of Treasury, 307 Mich. App. 1, 7-8; 858
NW2d 733 (2014) (quotation marks and citation omitted). Defendants moved for summary
disposition on Count I of plaintiff’s amended complaint on the ground that plaintiff’s claim for
relief was based on a repealed version of MCL 559.167. The trial court disagreed and granted
summary disposition in favor of plaintiff on Count I. Therefore, the issue of whether the 2016
amendment to MCL 559.167 applies retroactively is preserved.
The parties, as early as November 2016, addressed the constitutional issues of due
process and the takings clause. The court implicitly acknowledged that the parties raised those
issues when it ruled. The court made the decision to decide this case based upon non-
constitutional grounds. There is a preference for resolution on non-constitutional grounds where
possible. Lichtman v City of Detroit, 75 Mich. App. 731, 734; 255 NW2d 750 (1977). As early as
November, this issue was noted in Defendants’ Motion for Summary Disposition as to Count I.
It was later argued in a reply brief filed by the defendants, but like other constitutional issues,
was not discussed by the court in its opinion. In fact the court specifically declined to rule on
any constitutional issues, stating “Plaintiff makes other valid arguments as to why a reading of
MCL 559.167 as proposed by the Defendants would render the statute unconstitutional.
However, the Court need not address that issue at this time.” An argument could be made that
because the parties did not address this issue at oral argument and the trial court failed to address
the issue in its opinion and order, it is not preserved. However, because the issue was raised in
the parties’ briefing, it is preserved for appeal. Peterman v Dep’t of Natural Resources, 446
Mich. 177, 183; 521 NW2d 499 (1994). In this instance even if the issue were unpreserved, this
7
The appeals were consolidated on April 19, 2018. See Cover [sic] Creek Condo Ass’n v Vistal
Land & Home Dev, LLC, unpublished order of the Court of Appeals, entered April 19, 2018
(Docket Nos. 342372; 343144).
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Court, having all relevant facts before it, would review the legal issue. Wells Fargo Bank, NA v
Null, 304 Mich. App. 508, 518; 847 NW2d 657 (2014).
MCR 2.116(I)(2) provides that “[i]f it appears to the court that the opposing party, rather
than the moving party, is entitled to judgment, the court may render judgment in favor of the
opposing party.” This Court reviews de novo a trial court’s ruling on a motion for summary
disposition. Rataj v City of Romulus, 306 Mich. App. 735, 746; 858 NW2d 116 (2014). “A
motion brought under MCR 2.116(C)(8) tests the legal sufficiency of the claim on the pleadings
alone to determine whether the plaintiff has stated a claim on which relief may be granted. The
motion must be granted if no factual development could justify the plaintiff’s claim for relief.”
Id. at 746-747 (quotation marks and citations omitted). “A court may grant summary disposition
to the opposing party under MCR 2.116(I)(2) if it determines that the opposing party, rather than
the moving party, is entitled to judgment.” Ashley Capital, LLC v Dep’t of Treasury, 314 Mich
App 1, 6; 884 NW2d 848 (2015) (quotation marks and citation omitted). This Court also reviews
de novo an issue of statutory construction, which is a question of law. Id.
With regard to defendants’ unpreserved due-process argument, whether a party has been
afforded due process, Al-Maliki v LaGrant, 286 Mich. App. 483, 485; 781 NW2d 853 (2009) and
whether MCL 559.167, as amended by 2002 PA 283, caused an unconstitutional taking, are
questions of law this Court reviews de novo, Hinojosa v Dep’t of Natural Resources, 263 Mich
App 537, 541; 688 NW2d 550 (2004). The relevant facts are available for both issues; therefore,
appellate consideration is not precluded. “Review of an unpreserved error is limited to
determining whether a plain error occurred that affected substantial rights.” Rivette v Rose-
Molina, 278 Mich. App. 327, 328; 750 NW2d 603 (2008).
2. ANALYSIS
i. RETROACTIVITY
Whether the 2016 amendment to MCL 559.167 applies retroactively is a question of first
impression. We begin with the presumption that statutory amendments operate prospectively.
Davis v State Employees’ Retirement Bd, 272 Mich. App. 151, 155; 725 NW2d 56 (2006).
“[S]tatutes and amended statutes are to be applied prospectively unless the Legislature manifests
an intent to the contrary. The Legislature’s expression of an intent to have a statute apply
retroactively must be clear, direct, and unequivocal as appears from the context of the statute
itself.” Id. at 155-156 (citations omitted). Legislative intent governs the determination of
statutory retroactivity. Id. at 156. “[T]he Legislature has shown on several occasions that it
knows how to make clear its intention that a statute apply retroactively.” Id. (quotation marks
and citation omitted). For example, MCL 141.1157 provides: “This act shall be applied
retroactively . . . [,]” and MCL 324.21301a(2) provides: “The changes in liability that are
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provided for in the amendatory act that added this subsection shall be given retroactive
application.” Id.8
“There is an exception to the general rule that newly enacted statutes are presumed to
apply prospectively, which exception provides that no such presumption exists where the statute
is remedial or procedural in nature, as long as it does not deny vested rights.” Davis, 272 Mich
App at 158. Therefore, “[a] statute may not be applied retroactively if it abrogates or impairs
vested rights, creates new obligations, or attaches new disabilities concerning transactions or
considerations occurring in the past.” Id.
The 2016 amendment to MCL 559.167 does not expressly provide that it is retroactive.
In other words, there is no clear, direct, or unequivocal language in the actual statute that the
statute is to be applied retroactively, such as language stating that “these amendments shall be
given retroactive application.” Defendants argue that the use of the word “occurring” in
Subsection (5) expressly makes the 2016 amendment retroactive. MCL 559.267(5) provides: “A
reversion under subsection (4), whether occurring before or after the date of the 2016
amendatory act that added this subsection, is not effective unless the election, notice, and
recording requirements of subsection (4) have been met.” MCL 559.167(5), as amended by
2016 PA 233 (emphasis added). This language, however, is not a clear and unequivocal
expression of the Legislature’s intent to apply the amendment retroactively.9 The Legislature’s
choice of the word “occurring,” rather than “occurred,” is significant.10 As the trial court
determined, the present participle indicates that the 2016 amendment does not apply to any
“reversion” that had already occurred. Before the 2016 amendment, MCL 559.167 did not use
the term “reversion” or contain Subsection (4). Therefore, “[a] reversion under subsection (4)”
could not have occurred before the effective date of the 2016 amendment. Likewise, the use of
the word “occurring” in Subsection (5) signals the progressive aspect and shows that an action
was, is, or will be unfinished at the time referred to. People v Manuel, 319 Mich. App. 291, 301-
302; 901 NW2d 118 (2017). Thus, the statute signals that a “reversion under subsection (4)”
8
MCL 324.21301a was amended in 2012, see 2012 PA 108, and currently provides: “The
liability provisions that are provided for in this part shall be given retroactive application.”
9
In Ferry Beaubien LLC v Centurion Place on Ferry Street Condo Ass’n, unpublished per
curiam opinion of the Court of Appeals, issued December 14, 2017 (Docket No. 335571), p 6, 7
n 4, this Court applied the 2002 version of the statute because it was in effect at the time in
question and this Court further noted that “nothing in the language of amended Subsection (3)
suggests that it applies retroactively. We presume that statutory amendments operate
prospectively unless a contrary intent is clearly manifested in the language of the statute.” This
Court, however, also stated that it was not addressing the effect of the 2016 amendment of MCL
559.167 on the reversion to general common elements. Id. at 6 n 3. We recognize that
unpublished opinions are not binding under the rule of stare decisis, but they may be considered
for their instructive or persuasive value. Cox v Hartman, 322 Mich. App. 292, 307; 911 NW2d
219 (2017).
10
See People v Manuel, 319 Mich. App. 291, 301-302; 901 NW2d 118 (2017).
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may be in the process of occurring when the statute became effective. In those cases, the
requirements of the 2016 amendment must be satisfied. As plaintiff argues, however, nothing
suggests that completed transfers under the earlier versions of the statute are to be reversed.11
Defendants also argue that the statute is remedial and, therefore, must be applied
retroactively. “A statute is remedial or procedural in character if it is designed to correct an
existing oversight in the law or redress an existing grievance[.]” Davis, 272 Mich. App. at 158-
159 (quotation marks and citation omitted). Defendants specifically argue that the 2016
amendment was intended to address due-process deficiencies in the prior versions of the statute.
However, the “legislative history” cited by plaintiff indicates that the purpose of the 2016
amendment was to address “confusion regarding the timing of the transfer of property and the
title history of transferred property.”12
Nonetheless, even if the 2016 amendment is considered remedial, it cannot apply
retroactively if it abrogates vested rights. See Davis, 272 Mich. App. at 158. Under the 2002
version of MCL 559.167(3), “[i]f the developer does not withdraw the undeveloped portions of
the project from the project before expiration of the time periods, those undeveloped lands shall
remain part of the project as general common elements and all rights to construct units upon
that land shall cease.” MCL 559.167(3), as amended by 2002 PA 283 (emphasis added). In this
case, 10 years after the date of commencement of the project was sometime in 1999, or possibly
sometime in 2012 at the latest.13 When the rights to construct units ceased, plaintiff obtained a
vested right in the undeveloped lands (former Units 1 through 14). The trial court found that
plaintiff’s rights vested by operation of law, without any action. We agree.
Defendants’ arguments against vesting are that (1) plaintiff did not prepare and record a
replat under MCL 559.167(2), and (2) the 2002 version of MCL 559.167 violated defendants’
due-process rights. The version of MCL 559.167(2), as amended by 2002 PA 283, provides: “If
a change involves a change in the boundaries of a condominium unit or the addition or
elimination of condominium units, a replat of the condominium subdivision plan shall be
prepared and recorded assigning a condominium unit number to each condominium unit in the
amended project.” As found by the trial court, nothing in this language required a replat to be
11
We note that plaintiff argued to the contrary below. In its complaint, plaintiff asserted that
“MCL 559.167, as amended by 2016 PA 233, which became effective on September 21, 2016
attempts to retroactively undo any prior reversion of units to common elements . . . .” Plaintiff’s
position changed in its response to defendants’ motion for summary disposition on Count I of the
complaint.
12
Senate Fiscal Agency, Bill Analysis Senate Bill 610 of 2016, p 1, July 5, 2016.
13
As noted above, the first unit was sold at some point in 1989 and, therefore, construction must
have commenced before that date. Furthermore, as the trial court found, even if the 10-year
period did not begin to run until the 2002 amendment became effective, it would still have lapsed
in 2012.
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recorded, or conditioned a “reversion” on the recording. 14 Thus, a “reversion” occurred
regardless of whether a replat was prepared or recorded. While plaintiff’s failure to record a
replat may have some other effect, it did not prevent the undeveloped property from remaining
part of the project as general common elements and the right to construction ceasing under
Subsection (3). We discuss defendants’ due process argument separately below.
ii. DUE PROCESS
Defendants contend that they were deprived of their due-process rights under the 2002
version of MCL 559.167 because they were not provided with notice and a hearing before they
were permanently deprived of their property rights in former Units 1 through 14. We disagree.
“Both the state and federal constitutions provide that private property shall not be taken
without due process of law or just compensation. Due process is violated only when legislation
impairs vested rights.” Attorney General v Mich Pub Serv Comm, 249 Mich. App. 424, 435; 642
NW2d 691 (2002). “To constitute a vested right, the interest must be something more than such
a mere expectation as may be based upon an anticipated continuance of the present general laws;
it must have become a title, legal or equitable, to the present or future enjoyment of
property . . . .” Id. at 436 (quotation marks and citation omitted).
Preliminarily, plaintiff argues that defendants, and their predecessors, did not have any
vested property right in Units 1 through 14 that was affected by operation of the 2002 version of
the statute. They argue that, at all times before the 10-year period expired, Units 1 through 14
were part of the project and defendants had the option to either complete construction or
withdraw those units from the project. According to plaintiff, an option is merely a contingent
interest. See Amoco Oil Co v Kraft, 89 Mich. App. 270, 275; 280 NW2d 505 (1979). As
successor developers of the project, however, defendants had title to the entire project, including
the “need not be built” units, which it had the right to develop or withdraw. Accordingly,
defendants had a vested property interest in former Units 1 through 14 before the 10-year period
expired.
Even if defendants had a vested property right in former Units 1 through 14, the lapse of
that right did not deny defendants due process of law. In City of Kentwood v Estate of
Sommerdyke, 458 Mich. 642, 646; 581 NW2d 670 (1998), our Supreme Court held that “the state
has the authority to condition the retention of certain property rights on the performance of an
affirmative act within a reasonable statutory period.” That case involved the highway-by-user
statute, MCL 721.20. City of Kentwood, 458 Mich. at 645. As stated by the Court:
Even with respect to vested property rights, a legislature generally has the power
to impose new regulatory constraints on the way in which those rights are used, or
to condition their continued retention on performance of certain affirmative
14
Although the preparation and recording of a replat was required by MCL 559.167(2), there is
nothing linking this requirement to Subsection (3) or conditioning the “reversion” in Subsection
(3) on such requirement.
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duties. As long as the constraint or duty imposed is a reasonable restriction
designed to further legitimate legislative objectives, the legislature acts within its
powers in imposing such new constraints or duties. [L]egislation readjusting
rights and burdens is not unlawful solely because it upsets otherwise settled
expectations. [Id. at 652-653 (quotation marks and citation omitted).]
Therefore, the Court held that “the state may condition the permanent retention of a property
right on performance of reasonable conditions that indicate a present intention to retain the
property interest.” Id. at 655-656. The Court concluded that “by treating property that has not
been reserved for private use for ten years or longer as dedicated to the public for use as a
highway, the Michigan statute is a reasonable exercise of police power.” Id. at 656. Regarding
whether due process was afforded, the Court stated, “generally, a legislature need only enact and
publish a law and afford citizens a reasonable opportunity to familiarize themselves with the
terms of a statute to advise its citizens of the lapse of a property right.” Id. at 664.
Similarly, MCL 559.167(3), as amended by 2002 PA 283, conditioned the retention of a
property right on the performance of reasonable conditions that indicate a present intention to
retain that property interest. Within the 10-year period, defendants were required to either
develop Units 1 through 14 or withdraw the undeveloped portions from the project. See MCL
559.167(3), as amended by 2002 PA 283. Defendants had sufficient notice of the law and that
their property rights would lapse if they did not take action within the 10-year period. Moreover,
the requirements of either completing the project or withdrawing the units from the project are
reasonable requirements designed to further the legitimate objectives of preventing incomplete
projects and providing finality. Defendants rely on cases involving the forfeiture of real property
for the failure to pay taxes, which require notice and a hearing to afford due process. Under the
above caselaw, however, defendants received all the process that was due. As a consequence,
any vested rights defendants possessed in the property lapsed by 2012.
iii. UNCONSTITUTIONAL TAKING
Defendants also contend that the 2002 version of MCL 559.167, which mandated a
permanent transfer of title, caused an unconstitutional taking without just compensation and in
violation of the public use requirement. We disagree.
“The Fifth Amendment provides in part: ‘[N]or shall private property be taken for public
use, without just compensation.’ ” City of Kentwood, 458 Mich. at 656. “The Fifth Amendment
prohibition applies against the states through the Fourteenth Amendment. Michigan’s
Constitution is substantially similar to the Taking Clause of the United States Constitution.” Id.
(citations omitted). “One who asserts an uncompensated taking claim must first establish that a
vested property right is affected.” Mich Pub Serv Comm, 249 Mich. App. at 436 (quotation marks
and citation omitted).
As discussed, defendants had a vested property right in former Units 1 through 14, such
that they could properly assert an uncompensated taking claim. Nonetheless, the necessary state
action required to find an unconstitutional taking is not present. As stated in City of Kentwood,
458 Mich. at 663, “It is the owner’s failure to make any use of the property—and not the action of
the State—that causes the lapse of the property right; there is no ‘taking’ that requires
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compensation.” (Quotation marks and citation omitted.) Similarly, in this case, it was
defendants’ failure to act within the 10-year period that caused the lapse of their property right,
not any action of the state. Therefore, there is no “taking” that requires compensation under the
United States and Michigan Constitutions. We further reject defendants’ claim for inverse
condemnation because it was not raised below and is not asserted against the government.
“Inverse condemnation is a cause of action against a governmental defendant to recover the
value of property which has been taken in fact by the governmental defendant, even though no
formal exercise of the power of eminent domain has been attempted by the taking agency.”
Mays v Snyder, 323 Mich. App. 1, 79; 916 NW2d 227 (2018) (quotation marks and citations
omitted; emphasis added). In this case, defendants make this claim against plaintiff, a
condominium association, not a governmental unit and, therefore, their claim for inverse
condemnation fails.
Summarily, the trial court correctly applied MCL 559.167, as amended by 2002 PA 283,
and properly granted summary disposition in favor of plaintiff on Count I of the complaint.
Further, MCL 559.167, as amended by 2002 PA 283, did not cause an unconstitutional taking
nor did it deny defendants due process of law.
B. DEFENDANTS’ COUNTERCLAIMS
The trial court granted summary disposition in favor of plaintiff on defendants’
counterclaims for reimbursement for the payment of tax bills and denied defendants’ motion
under MCR 2.116(C)(10). This Court reviews de novo a trial court’s ruling on a motion for
summary disposition. Rataj, 306 Mich. App. at 746. “Summary disposition is proper under MCR
2.116(C)(10) if the affidavits and other documentary evidence show that there is no genuine
issue concerning any material fact and that the moving party is entitled to judgment as a matter
of law.” Id. at 747 (quotation marks and citation omitted).
This issue is waived for appellate review. Defendants merely contend that they are
entitled to reimbursement because they paid the taxes on Units 1 through 14 until 2015, and the
payment of taxes constitutes an improvement to the property. However, defendants provide no
supporting reasoning. They fail to address, for example, any of the specific causes of actions
alleged in their second amended countercomplaint, the elements of those causes of action, or the
trial court’s rulings on those claims. “A party may not merely announce a position and leave it
to this Court to discover and rationalize the basis for the claim.” Caldwell v Chapman, 240 Mich
App 124, 132-133; 610 NW2d 264 (2000).
IV. DOCKET NO. 343144
Following the filing of defendants’ claim of appeal in Docket No. 342372, plaintiff filed
a motion for attorney fees and costs, which the trial court denied. In Docket No. 343144,
plaintiff appeals the order denying its motion for attorney fees and costs. Plaintiff contends that
the trial court erred by denying its request for attorney fees and costs related to defendants’ filing
of (1) the counterclaims in defendants’ second amended countercomplaint, (2) the motion to
strike, and (3) the motion to compel. We disagree.
A. STANDARD OF REVIEW
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This Court reviews for an abuse of discretion a request for sanctions under MCR 2.114
and MCR 2.313. Sprenger v Bickle, 307 Mich. App. 411, 422-423; 861 NW2d 52 (2014);
Phinisee v Rogers, 229 Mich. App. 547, 561-562; 582 NW2d 852 (1998). “A trial court abuses its
discretion when it chooses an outcome that falls outside the range of reasonable and principled
outcomes.” Fette v Peters Constr Co, 310 Mich. App. 535, 547; 871 NW2d 877 (2015). “[T]he
court’s underlying factual findings, including a finding of frivolousness, are reviewed for clear
error.” Sprenger, 307 Mich. App. at 423. “A decision is clearly erroneous when, although there
may be evidence to support it, we are left with a definite and firm conviction that a mistake has
been made.” Guerrero v Smith, 280 Mich. App. 647, 677; 761 NW2d 723 (2008).
B. ANALYSIS
“Sanctions are warranted under MCR 2.114 where a plaintiff asserts claims without any
reasonable basis in law or fact for those claims, or where the claims are asserted for an improper
purpose.” Robert A Hansen Family Trust v FGH Indus, LLC, 279 Mich. App. 468, 486; 760
NW2d 526 (2008); MCR 2.114(D).15 MCR 2.114(E), which was in effect at the time that
plaintiff filed its motion for attorney fees and costs and the trial court ruled on the motion,
provided:
If a document is signed in violation of this rule, the court, on the motion of
a party or on its own initiative, shall impose upon the person who signed it, a
represented party, or both, an appropriate sanction, which may include an order to
pay to the other party or parties the amount of the reasonable expenses incurred
because of the filing of the document, including reasonable attorney fees. The
court may not assess punitive damages.
Under MCR 2.114(F), “a party pleading a frivolous claim or defense is subject to costs as
provided in MCR 2.625(A)(2).” MCR 2.625(A)(2) provides: “In an action filed on or after
October 1, 1986, if the court finds on motion of a party that an action or defense was frivolous,
costs shall be awarded as provided by MCL 600.2591.” MCL 600.2591 provides:
(1) Upon motion of any party, if a court finds that a civil action or defense
to a civil action was frivolous, the court that conducts the civil action shall award
to the prevailing party the costs and fees incurred by that party in connection with
the civil action by assessing the costs and fees against the nonprevailing party and
their attorney.
(2) The amount of costs and fees awarded under this section shall include
all reasonable costs actually incurred by the prevailing party and any costs
allowed by law or by court rule, including court costs and reasonable attorney
fees.
15
MCR 2.114 has been repealed, effective September 1, 2018, and substantially relocated to
current MCR 1.109(E).
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(3) As used in this section:
(a) “Frivolous” means that at least 1 of the following conditions is met:
(i) The party’s primary purpose in initiating the action or asserting the
defense was to harass, embarrass, or injure the prevailing party.
(ii) The party had no reasonable basis to believe that the facts underlying
that party’s legal position were in fact true.
(iii) The party’s legal position was devoid of arguable legal merit.
(b) “Prevailing party” means a party who wins on the entire record.
As this Court explained in Guerrero, 280 Mich. App. at 677-678:
Pursuant to MCR 2.114(D), an attorney is under an affirmative duty to conduct a
reasonable inquiry into both the factual and legal basis of a document before it is
signed. Under MCR 2.114(D), the signature of a party or an attorney is a
certification that the document is “well grounded in fact and . . . warranted by
existing law or a good-faith argument for the extension, modification, or reversal
of existing law” and that “the document is not interposed for any improper
purpose, such as to harass or to cause unnecessary delay or needless increase in
the cost of litigation.” The filing of a signed document that is not well grounded
in fact and law subjects the filer to sanctions pursuant to MCR 2.114(E). MCR
2.114(E) states that the trial court “shall” impose sanctions upon finding that a
document has been signed in violation of the rule. Therefore, if a violation of
MCR 2.114(D) has occurred, the sanctions provided for by MCR 2.114(E) are
mandatory. [Citations omitted.]
1. COUNTERCLAIMS
Plaintiff first argues that the trial court was required to impose sanctions for defendants’
filing of frivolous and untimely counterclaims, as well as defendants misrepresenting that they
paid property taxes on former Units 1 through 14. Plaintiff argues that defendants’
counterclaims were frivolous because (1) restitution is not a cause of action, (2) there was no
special relationship necessary for indemnification, (3) there was a statutory remedy available and
no benefit to plaintiff, (4) no promises were made, (5) there were no mutual dealings necessary
for a claim of account stated, (6) defendants had no basis to assert a claim for quiet title because
the trial court had already ruled on the issue, and (7) there was no factual basis for a claim of
adverse possession.
We disagree that defendants misrepresented that they paid taxes on the property. The
second amended countercomplaint alleged that “Defendants, directly or through their
predecessors in title, paid real property taxes on Units 1 through 14 prior to tax year 2000.”
They argued the same in their motion for summary disposition. Defendants attached to their
motion for summary disposition a tax history showing taxes paid on the property, receipts,
checks, and tax statements. The motion also specifically alleged that “[a]ny entity paying any
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taxes on any of the 14 units has assigned its interest and claim to reimbursement to VISTAL and
or TRUST.” Defendants attached the assignments to their motion. Accordingly, there was at
least a question of fact regarding whether defendants, or their predecessors whose rights
defendants had acquired, paid property taxes on Units 1 through 14, and the amount of the taxes
paid, such that the trial court did not abuse its discretion by denying sanctions on this ground.
Moreover, the trial court’s finding that the counterclaims were not frivolous is not clearly
erroneous. After the trial court determined that defendants lost any right to construct Units 1
through 14, defendants sought to recover the property taxes that they or their predecessors
allegedly paid by asserting various theories of relief. Although we agree with the trial court’s
dismissal of those claims because there is a statutory remedy available, there was arguable legal
merit to their claim that the statutory remedy was not sufficient. There was also arguable legal
merit to defendants’ arguments that their motion was timely under MCR 3.411(F) given the
filing of their motion for reconsideration. Furthermore, plaintiff fails to establish that defendants
merely intended to increase costs by filing the counterclaims.
Defendants’ specific counterclaims for restitution, indemnification, quantum
meruit/unjust enrichment, and promissory estoppel were properly dismissed by the trial court.
However, the trial court’s finding that those claims had arguable legal merit is not clearly
erroneous. “A claim is not frivolous merely because the party advancing the claim does not
prevail on it. Instead, a claim is devoid of arguable legal merit if it is not sufficiently grounded
in law or fact, such as when it violates basic, longstanding, and unmistakably evident precedent.”
Grass Lake Improvement Bd v Dep’t of Environmental Quality, 316 Mich. App. 356, 365; 891
NW2d 884 (2016) (quotation marks and citations omitted).
With regard to the claim of restitution, plaintiff relies on the fact that restitution is a
remedy, not a claim. Although we agree that restitution is merely a remedy, our Supreme Court
has nonetheless referred to a “claim of restitution.” See, e.g., Zerrenner v Zerrenner, 474 Mich.
1103, 1103; 711 NW2d 380 (2006). In any event, courts look beyond labels. See, e.g., Norris v
Lincoln Park Police Officers, 292 Mich. App. 574, 582; 808 NW2d 578 (2011). Therefore, this
claim was not devoid of arguable legal merit.
Concerning the claim for indemnification, “[t]he right to common-law indemnification is
based on the equitable theory that where the wrongful act of one party results in another party’s
being held liable, the latter party is entitled to restitution for any losses.” Botsford Continuing
Care Corp v Intelistaf Healthcare, Inc, 292 Mich. App. 51, 62; 807 NW2d 354 (2011) (quotation
marks and citation omitted). Plaintiff asserts that this Court has “routinely upheld the dismissal
of indemnification claims in which a party has failed to plead a special relationship or course of
conduct amongst the parties.” Plaintiff, however, only cites cases decided before November 1,
1990, which are not binding. MCR 7.215(J)(1). Moreover, our Supreme Court has held that
“[r]estitution recognizes the need for compensation in instances when the receipt and retention of
a benefit by a person without payment made to the person providing that benefit would result in
injustice.” In re Bradley Estate, 494 Mich. 367, 409; 835 NW2d 545 (2013). Therefore,
defendants could have reasonably believed that they had a claim against plaintiff for the taxes
that they allegedly paid on property that was owned by plaintiff. This argument was not devoid
of arguable legal merit, even though real property taxes were not actually owed on former Units
1 through 14 because they were general common elements and common elements are not
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taxable. Paris Meadows, LLC v City of Kentwood, 287 Mich. App. 136, 149; 783 NW2d 133
(2010).
In support of the claims of quantum meruit and unjust enrichment, plaintiff merely relies
on the fact that a statutory remedy was available and no benefit was received. “The theory
underlying quantum meruit recovery is that the law will imply a contract in order to prevent
unjust enrichment when one party inequitably receives and retains a benefit from another.”
Morris Pumps v Centerline Piping, Inc, 273 Mich. App. 187, 194; 729 NW2d 898 (2006)
(quotation marks and citation omitted). Although taxes were not actually owed on common
general elements, defendants allegedly paid the taxes on the basis of a mutual mistake.
Accordingly, there was arguable legal merit to their claim to recover that money from plaintiff
on the basis that plaintiff, as the owner of the property, received an unfair benefit.
With regard to defendants’ claim of promissory estoppel, the elements are “(1) a promise,
(2) that the promisor should reasonably have expected to induce action of a definite and
substantial character on the part of the promisee, and (3) that in fact produced reliance or
forbearance of that nature in circumstances such that the promise must be enforced if injustice is
to be avoided.” Klein v HP Pelzer Auto Sys, Inc, 306 Mich. App. 67, 83; 854 NW2d 521 (2014)
(quotation marks and citation omitted). Defendants’ second amended countercomplaint referred
to a 2007 contract, but it did not allege that any specific promise was made. However, in
reliance on Ollig v Eagles, 347 Mich. 49; 78 NW2d 553 (1956), defendants alleged a claim of
“promissory estoppel” on the basis of plaintiff’s alleged silence or acquiescence while
defendants paid the real property taxes. Although Ollig involved equitable estoppel rather than
promissory estoppel,16 the substance of the claim controls, not its label. Norris, 292 Mich. App. at
582. In Ollig, the Court considered whether
when an occupying claimant in good faith, but mistakenly, relied upon the belief
that his wife had title to land and built a house thereon with the full knowledge
and silent acquiescence of the actual owner and upon discovery brings suit in
equity for an accounting for the value of his improvements, is a chancery court
powerless to grant relief[.] [Ollig, 347 Mich. at 60].
Based on Ollig, there was arguable legal merit to defendants’ claim, even though the claim was
properly dismissed because the payment of taxes that were not owed did not improve the land.
Defendants’ claims for account stated, to quiet title, and for adverse possession were also
dismissed by the trial court. For the reasons discussed below, however, those claims were not
devoid of arguable legal merit and, therefore, the trial court did not abuse its discretion by
declining to impose sanctions.
16
The distinction is that “[e]quitable estoppel is essentially a doctrine of waiver,” whereas
promissory estoppel “substitutes for consideration in a case where there are no mutual promises.”
Huhtala v Travelers Ins Co, 401 Mich. 118, 132-133; 257 NW2d 640 (1977).
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First, “[a]n account stated is a contract based on assent to an agreed balance, and it is an
evidentiary admission by the parties of the facts asserted in the computation and of the promise
by the debtor to pay the amount due.” Fisher Sand & Gravel Co v Neal A Sweebe, Inc, 494
Mich. 543, 557; 837 NW2d 244 (2013). “The parties to an account stated need not expressly
assent to the sum due, as there are instances when assent may be inferred from a party’s
inaction[.]” Id. at 558. Defendants alleged that they sent an account to plaintiff for monies due
and, because plaintiff failed to object, the accounting became an “account stated.” The trial court
found that there was no written account stated that was accepted by the debtor, but it did not
address whether plaintiff’s assent could be inferred. Under the above caselaw, there was
arguable legal merit to defendants’ claim, even though it was rejected by the trial court.
Defendants’ claim to quiet title and for declaratory relief alleged that plaintiff lost any
title to Units 1 through 14 because defendants’ deeds were recorded before plaintiff recorded
notice of its interest. The trial court rejected this claim on the basis that the race-notice statute,
MCL 565.29, applies to conveyances and there was no conveyance in this case because “Units 1
through 14 were converted to common elements by operation of law.” The trial court
additionally found that defendants were not subsequent purchasers in good faith because they
knew, or should have known, of the effect of the law on “need not be built” units, which were
identified in the Master Deed. As noted, plaintiff argues on appeal that sanctions should have
been imposed because this issue was already decided in the trial court’s orders entered on
February 10, 2017, and March 15, 2017. The race-notice issue, however, was not previously
decided by the trial court.17 As defendants argue, although the trial court found that plaintiff had
title to former Units 1 through 14 and defendants’ rights ceased by at least 2012, defendants’
counterclaim related to events that occurred after the “reversion” by operation of law that
occurred under MCL 559.167, as amended by 2002 PA 283. Therefore, the trial court did not
abuse its discretion by declining to impose sanctions on this basis.
Last, defendants alleged that they obtained title to former Units 1 through 14 by adverse
possession. As stated by this Court in Waisanen v Superior Twp, 305 Mich. App. 719, 731; 854
NW2d 213 (2014):
A claim of adverse possession requires clear and cogent proof that
possession of the disputed property has been actual, visible, open, notorious,
exclusive, continuous, and uninterrupted for the statutory period. The use of the
property must be hostile, that is without permission and in a manner that is
inconsistent with the rights of the true owner. The statutory period of limitations
for adverse possession is 15 years. [Quotation marks and citation omitted.]
Defendants alleged facts in support of each of these elements, asserting that a for sale sign was
placed on the property, the real estate efforts were open and obvious, plaintiff was on notice of
the 2004 transfer to Vistal Cothery, LLC, and did not object, defendants and their predecessors
paid taxes on the property and openly surveyed, staked, and grubbed the property, defendants
17
The trial court had only previously addressed the applicability of MCL 559.167(2) and MCL
559.143.
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were in actual and constructive possession of the property, defendants and their predecessors
held the property exclusively, uninterrupted, and continuously since before 1990, and
defendants’ claim was hostile and notorious. The trial court, however, found that defendants did
not have exclusive use for 15 years, and they were given express permission to access and
possess the land in 2007. On appeal, plaintiff argues that defendants’ claim was frivolous
because the payment of taxes is insufficient to establish adverse possession, defendants never
actually possessed the property, and defendants were provided permission to enter the property
in 2007. In response to plaintiff’s motion for summary disposition on defendants’ second
amended countercomplaint, defendants argued that the 2007 purchase agreement was for the
common elements only, not Units 1 through 14, and there were disputed questions of fact
regarding the elements of adverse possession. In ruling on plaintiff’s motion for fees, the trial
court stated that even though defendants did not prevail on their claim of adverse possession,
“that doesn’t mean that there wasn’t an argument to be made.” Given the allegations and
arguments made by defendants, the trial court did not clearly err by finding that defendants’
claim was not frivolous.
2. MOTION TO STRIKE RESPONSE
Plaintiff also argues that the trial court erred by denying its request for attorney fees and
costs because defendants violated MCR 2.114 by filing a motion to strike its response to
defendants’ motion for summary disposition. Plaintiff argues that MCR 2.115(B) only allows
pleadings to be struck and a response to a motion is not a pleading. MCR 2.115(B) provides that
“the court may strike from a pleading” and “may strike all or part of a pleading.” MCR 2.110(A)
defines “pleading” as a complaint, a cross-claim, a counterclaim, a third-party complaint, an
answer to any of the above, or a reply. Accordingly, plaintiff is correct that a response cannot be
struck. Although the label “motion to strike” may have been improper, the substance of
defendants’ argument—that the response improperly raised new issues—had arguable legal
merit. Further, defendants’ reply and motion to strike were combined in a single document, and
defendants were essentially requesting that the court only consider the issue before it and
consider the “new” issues at a later time. Accordingly, it is not clear that plaintiff was required
to file a response to defendants’ combined reply and “motion to strike.” Again, although the
form was improper, there was arguable legal merit to defendants’ claim that the trial court should
only consider the issue before it. Therefore, the trial court did not abuse its discretion by
denying sanctions on this basis.
3. MOTION TO COMPEL DISCOVERY
Last, plaintiff argues that the trial court was required to grant its request for attorney fees
and costs after the trial court denied defendants’ motion to compel discovery. On December 15,
2016, defendant Vistal filed a motion to compel discovery, arguing that plaintiff failed to fully
answer interrogatories and provide all of the documents requested. On January 6, 2017, plaintiff
filed a response to defendants’ motion to compel in which it argued that the requested
information was not relevant, was in the possession of Vistal’s predecessors, or was already
provided. Plaintiff also requested attorney fees pursuant to MCR 2.313(A)(5)(b) for having to
respond to a frivolous motion.
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At the January 11, 2017 hearing, defendants argued that they were asking for documents
going back to 1990 when the project started, but plaintiff only provided documents for the last 10
years because that was the time period for which it was requesting the payment of assessments.
Defendants argued that they were seeking information regarding when plaintiff began assessing
the units and whether there were, in fact, 31 units. Defendants also wanted to know how plaintiff
came up with $200,000 in interest and late fees. The trial court subsequently denied Vistal’s
motion to compel in light of its ruling on Count I. On March 21, 2017, defendants filed a motion
for reconsideration, which the trial court denied on April 13, 2017.
On appeal, plaintiff argues that the motion to compel was not related to the time period of
the assessments requested, all of the requested information was provided, and the motion was
intended to harass and increase the costs of the litigation. Defendants respond that the date of
commencement of the 10-year period was a material issue and the requested information was
relevant to other claims and defenses, including adverse possession. Defendant’s original
countercomplaint did not allege a claim of adverse possession. 18 Nonetheless, the trial court did
not clearly err by finding that defendants’ requests were not “inappropriate.” Given defendants’
arguments, there was a reasonable basis for defendants to believe that their requests would lead
to relevant evidence. Because defendants’ motion had arguable legal merit and a basis in fact,
the trial court did not clearly err by finding that the motion was not frivolous.
As plaintiff argues, however, its request for fees was under MCR 2.313(A)(5)(b). MCR
2.313(A)(5) relates to awards for the expenses of motions, and Subsection (b) provides:
If the motion is denied, the court shall, after opportunity for hearing,
require the moving party or the attorney advising the motion, or both, to pay to
the person who opposed the motion the reasonable expenses incurred in opposing
the motion, including attorney fees, unless the court finds that the making of the
motion was substantially justified or that other circumstances make an award of
expenses unjust. [MCR 2.313(A)(5)(b).]
Thus, the trial court was required to order defendants to pay plaintiff’s reasonable expenses
incurred in opposing the motion, unless it found that the making of the motion was substantially
justified or that other circumstances made an award of expenses unjust. At the hearing, the trial
court stated:
You know, Plaintiff argues that the motion to compel that was filed was
inappropriate, but, you know, our discovery rules have built in procedures for
dealing with overbroad requests. That was followed. There’s nothing
inappropriate about the decision that was made to -- to make those discovery
requests.
18
We note that defendants’ claim of adverse possession was not filed until after the motion to
compel was filed.
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Although the trial court did not expressly find that the motion was “substantially justified” or
that an award of expenses would be “unjust” under the circumstances, its finding that the motion
was not “inappropriate” indicates that it so found. Therefore, the trial court did not abuse its
discretion by denying the motion for fees and costs related to defendants’ motion to compel
discovery.
Affirmed.
/s/ Cynthia Diane Stephens
/s/ Amy Ronayne Krause
/s/ Patrick M. Meter
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