Beckman Holdings Inc v. Sunnyside Resort Condominium Assn Inc ( 2020 )

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
BECKMAN HOLDINGS, INC., and MEINKE UNPUBLISHED
CONSTRUCTION, INC., May 21, 2020
Plaintiffs/Counter-Defendants-
Appellees,
v No. 347543
Gogebic Circuit Court
SUNNYSIDE RESORT CONDOMINIUM LC No. 2017-000087-CZ
ASSOCIATION, INC.,
Defendant/Counter-Plaintiff-
Appellant.
Before: CAVANAGH, P.J., and SAWYER and RIORDAN, JJ.
PER CURIAM.
In this case arising out a dispute over condominium association assessments, the trial court
entered two orders which defendant, Sunnyside Resort Condominium Association, Inc. (SRCA),
appeals as of right. First, the trial court denied SRCA’s motion for summary disposition.
Following a bench trial, the trial court entered a second order finding for plaintiffs, Beckman
Holdings, Inc. (BHI), and Meinke Construction, Inc. (MCI), and dismissing SRCA’s counterclaim.
We affirm.
I. FACTS & PROCEDURAL HISTORY
Sunnyside Resort Condominiums is a private resort property on Lake Gogebic comprising
12 completed residential units and two vacant units that are jointly owned by plaintiffs. SRCA is
the association that manages the condominium project.
The parties are repeat players in this Court. They recently were here in Sunnyside Resort
Condominium Association, Inc v Beckman, unpublished per curiam opinion of the Court of
Appeals, issued April 23, 2019 (Docket No. 341116), which concerned the payment of assessments
for plaintiffs’ two vacant units. In that case, following a change to SRCA’s leadership, SRCA
assessed fees on the units owned by BHI and MCI, contrary to the parties’ existing agreement. In
December 2012, SRCA sued BHI and MCI to recover assessments dating back to their purchase
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of the units in 2006. Id. at 2. Following a bench trial, the trial court concluded that the master
deed and bylaws required BHI and MCI to pay assessments according to the percentages of value
attributed to their units from spring 2012 forward, but not the assessments from before that time
because SRCA had not acted with proper authority with regard to those assessments. Id. We
affirmed that ruling, and remanded the case to the trial court to include the proper assessments in
the judgment. Id. at 5.
In the summer of 2015, while that appeal was pending, a group of four unit-owners
constructed a four-stall garage and a single stall garage on land designated as a general common
element. They did this without there being any formal action by SRCA to allow for the garages to
be built on the common space. Two members of the group of builders were on SRCA’s board of
directors, and soon after the instant litigation commenced, SRCA declared that the garages were
common space and initiated a process to convert the garages into individual ownership. As a
result, BHI and MCI stopped paying the monthly assessment fees for their two units in July 2015.
On April 12, 2017, BHI and MCI filed the instant complaint which alleged that
construction of the garages reduced the common element and created five additional units that
were not being assessed any fees, while the two vacant lots were assessed at the same rate as other
units that had residential structures. BHI and MCI alleged that their purchase of the vacant lots
and the construction of the garages constituted a material change to the condominium project that
required a recalculation of the percentages of value assigned to each unit in the project. BHI and
MCI sought the equitable reformation of the percentage of value assigned to their units pursuant
to MCL 559.195.1 SRCA then counterclaimed for unpaid monthly assessments from July 2015
through June 2018 and sought declaratory relief regarding the garage issue.
SRCA moved for summary disposition pursuant to MCR 2.116(C)(6) (another action, same
parties, same claim), MCR 2.116(C)(7) (claim is barred because of prior judgment), MCR
2.116(C)(8) (failure to state a claim), and MCR 2.116(C)(10) (no genuine issue of material fact).
SRCA argued that the parties had already litigated the issue of the assessment fees based on the
units’ vacancy, and that with the exception of the allegations regarding the garages, the complaints
in both lawsuits were almost identical. SRCA further argued that plaintiffs’ allegations regarding
the garages should be dismissed under (C)(8) because SRCA’s failure to follow the formalities of
obtaining board approval did not result in the addition of new units, and as a matter of law, any
1
MCL 599.195 provides:
If the condominium subdivision plan is revised subsequent to its initial filing, and
the revisions would alter the percentage of value per condominium unit when
applied to the formula used to derive the percentage of value, then the percentage
of value shall be altered by the developer to reflect the revisions. If the percentage
of value is not altered to reflect these revisions, then a co-owner may bring an action
or initiate a proceeding to require revisions in the percentage of value per
condominium unit, without the consent of the co-owners, mortgagees, or other
interested parties, as are determined to be fair, just, and equitable in accordance
with the basic formula used to originally establish the percentage of value for the
project.
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purported transfer of the common elements was void. SRCA also argued that summary disposition
was warranted under (C)(10) because full use of the common elements had been restored to all
unit owners including plaintiffs. SRCA attached to their motion an affidavit by its president,
Thomas Brown, attesting that SRCA had not received any demands from plaintiffs to take any
action regarding the garages, and that the garages had been made available for all unit owners.
BHI and MCI argued that discovery had not been completed, and that testimony would
show that SRCA’s board of directors turned a blind eye to the construction of the garages and
converted common space into private garages for the personal use of some of SRCA’s board
members, which reduced the common element and materially changed the condominium project.
Plaintiffs argued that board resolutions showed that individual board members paid for the
construction of the garages and that the board refused to amend the appropriate condominium
documents and follow statutory formalities to assess and invoice the new units. Plaintiffs argued
that the instant claim, seeking equitable reformation under MCL 599.195, was distinct from the
prior litigation which concerned the assessments from 2006-2012 brought under a breach of
contract claim. In response to the summary disposition motion, plaintiffs attached an affidavit by
their trial counsel stating that he believed discovery would substantiate the allegations in the
complaint.
The trial court concluded that summary disposition was not warranted under MCR
2.116(C)(6) because the prior litigation was sufficiently distinguishable from the instant action,
and because it no longer was “pending.” It also concluded that the prior case dealt with a breach
of contract action and unpaid assessments, but did not address whether plaintiffs would be entitled
to reformation of the value percentages based on the sale of the two vacant units and the
construction of the garages. Therefore, the trial court decided, dismissal under MCR 2.116(C)(7)
was not warranted. The trial court further concluded that dismissal under MCR 2.116(C)(8) was
inappropriate because MCL 559.195 permits condominium owners to challenge the value
percentages, and that dismissal under MCR 2.116(C)(10) was inappropriate because there existed
factual questions regarding (1) whether the vacant units should pay the same amount as occupied
units, and (2) whether plaintiffs were denied access to the garages. If so, the trial court ruled, the
length of time they were denied access, and whether the construction of the garages entitled
plaintiffs to an equitable revision of the assessment amounts also had to be determined.
Accordingly, the trial court denied SRCA’s motion for summary disposition.
The case proceeded to a bench trial where Neil J. Beckman, who owned and operated BHI,
testified that BHI and MCI purchased units 11 and 13 from the developer Robert Delich for
$13,000 per unit in 2006. At that time, units 11, 12, 13, and 14 were vacant lots, and the
subdivision had only one well. Since that time, buildings were constructed on units 12 and 14,
and a second well was installed. However, units 11 and 13 remained vacant and the only expense
associated with those lots was for maintaining the lawn. Utilities were installed on units 11 and
13, but were not hooked up or used. Beckman believed that it was inequitable for units 11 and 13
to be assessed at the same value percentage as units 1-8, which had structures and were purchased
for over $100,000 per unit. He thought that units 11 and 13 should pay only 1% of the assessment
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fees, rather than 5.8334% set forth in the master deed,2 based on his approximation of market
values and the square footage of all the units. This calculation included percentages for the
additional units which were added by the construction of the garages.
Thomas Brown testified that he purchased units 3 and 4 with his wife Jane Brown in 2005,
and since that time, parking had been available in the common area. Brown served on SRCA’s
board of directors from 2008-2017, and was SRCA’s president since 2011. In 2014, he coordinated
with three other unit owners to build the garages: John O’Hara, Chris Ligocki, and Randy Sims.
At that time, the board of directors had four members: Paul Busch, Jane Brown, Thomas Brown,
and Chris Ligocki. The four builders did not consult with Busch, who was the only board member
not involved with the construction, but they contacted SRCA’s corporate counsel. SRCA’s
counsel informed them by email on May 1, 2014, that before construction could begin, they needed
a survey, governmental permits, and had to comply with the process of changing the
condominiums’ common elements by obtaining the approval of mortgage holders for all of the
units and obtaining a supermajority approval of all of the unit owners.3
In September 2014, the four builders conducted a survey and divided up the common area
into pre-assigned parking places. The square footage of the parking places was proportionate to
each unit’s value percentage listed in the master deed. That same fall, construction began and the
garages were completed by spring 2015. Around the time the garages were completed, SRCA’s
corporate counsel learned about the construction and informed the builders that the garages
belonged to SRCA. Still, SRCA’s board did not inform the members that they could use the
garages, and the builders retained exclusive use of the garages until spring 2017. They did this
without paying any assessments for the garages. It was only after plaintiffs filed their complaint
in the instant lawsuit that SRCA took possession of the garages and made them available for use
by all of the members.
Chris Ligocki testified that the builders had “put the cart before the horse” by constructing
the garages before proper approval was obtained. After the instant lawsuit was filed, SRCA’s
board adopted a temporary resolution to divide up the common area into assigned parking spaces
for all the units according to the plan designed by the engineering company that was hired to
2
Article VI, § B of the master deed discussed “Percentage of Value,” noting that “[t]he total value
of the project is 100%. The percentages of value for each unit were computed based upon a
combination of market value, size, and allocable expenses for maintenance . . . .” Units 1-8 and
11-14 were given a percentage value of 5.8334% each, unit 9 was calculated at 8.3333%, and unit
10 was 21.6659%.
3
Article VI, § B of the master deed states:
The method or formula used to determine the percentage of value of units in the
project may be changed only with the prior written approval of each holder of a
mortgage lien on any unit in the project and with the unanimous consent of all the
co-owners expressed in a duly recorded amendment to the master deed.
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conduct the initial survey. After trial was concluded, the board decided it would put the resolution
to a membership vote if necessary.
The trial court ultimately found in plaintiffs’ favor and reformed the percentage of value
for units 11 and 13 to 0% each. The trial court rejected SRCA’s argument that a revised
subdivision plan must be recorded for plaintiffs to obtain equitable relief. The trial court explained
that the plain language of the relevant statutes indicated a legislative intent for MCL 559.195 to
operate when a subdivision plan changed and the condominium documents did not reflect that
change. Additionally, the statute’s requirement that the percentage value “be fair, just, and
equitable in accordance with the basic formula used to originally establish the percentage value
for the project” required the court to apply the basic formula used by the developer, which the trial
court determined was based solely on structure size. Because units 11 and 13 were vacant, the
proper percentage value for those units was 0% each. However, the trial court noted, that when
residential structures were built on those units, the percentage of value “shall be based upon the
structure size.” The trial court further held that the percentage values for units 11 and 13 would
determine the common expenses, and vote values, and interest in the common elements associated
with those units.
The trial court found that SRCA’s assessments were erroneously calculated because they
failed to account for the exclusive use of the garages by the builders which reduced the common
element, and failed to account for the fact that units 11 and 13 were not serviced with utilities. The
trial court reasoned that given the reformed percentage of value of 0%, the proper calculation of
the assessments would likewise be $0. Thus, the trial court held that plaintiffs did not owe SRCA
any assessments related to SRCA’s counterclaim.
Finally, the trial court found SRCA’s request for relief disingenuous in light of the
culpability of the builders and their positions on SRCA’s board. Accordingly, the trial court denied
SRCA’s request for declaratory relief regarding the garages, and held that SRCA must follow the
law and condominium documents to address the issue.
II. ANALYSIS
SRCA now appeals and challenges the trial court’s denial of SRCA’s motion for summary
disposition, and the trial court’s finding for plaintiffs on the claim and counterclaim. We consider
each argument in turn.
A. SUMMARY DISPOSITION
We review de novo a trial court’s decision regarding a motion for summary disposition,
reviewing the record as it existed at the time of the trial court’s ruling, and the interpretation of
court rules. Planet Bingo, LLC v VKGS, LLC, 319 Mich App 308, 319–20; 900 NW2d 680 (2017);
Dextrom v Wexford Cnty, 287 Mich App 406, 416; 789 NW2d 211 (2010).
SRCA first challenges the trial court’s denial of summary disposition under MCR
2.116(C)(6) which is appropriate where “[a]nother action has been initiated between the same
parties involving the same claim.” When deciding whether summary disposition is proper under
MCR 2.116(C)(6), a court must consider the pleadings, affidavits, depositions, admissions, and
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other documentary evidence submitted by the parties. MCR 2.116(G)(5).
As the trial court noted, the prior litigation dealt with a claim for breach of contract and
sought a money judgment for the unpaid assessments, but it did not consider whether plaintiffs
were entitled to a reformation of the value percentages based on their purchase of vacant units and
the construction of the garages. In our previous opinion, we summarized the prior litigation as
follows:
In December of 2012, the SRCA sued [BHI, MCI, and Beckman], asserting
one count alleging a violation of the master deed and condominium bylaws by
failing to pay assessments, and one count against Beckman individually, arguing
that he breached his fiduciary duty to the SRCA and its members when he refused
to assess units 11 and 13, in which he had a financial interest, while he served as a
board member and president. Defendants responded with a counterclaim, alleging
in Count I, that the SRCA had breached its fiduciary duty to the members via the
actions of its board members and officers; in Count II, that the SRCA was required
to, under the terms of the bylaws, indemnify Beckman for his defense of its breach
of fiduciary duty claim; in Count III, that the SRCA owed Beckman for his personal
payment to install a well to service units 11-14; and in Count IV, that the SRCA
committed slander of title by filing improper liens against units 11 and 13.
Defendants also filed a third-party complaint against certain board members and
officers of the SRCA, alleging in Count I that the third-party defendants had
violated their fiduciary duties to the SRCA and its members, and that, in Count II,
Thomas Brown had committed slander of title by signing under oath and recording
the improper liens.
The district court decided to bifurcate the issues for trial, first considering
whether the master deed and bylaws required BHI and MCI to pay assessments
according to the percentages of value attributed to their units. After a one day bench
trial, the district court held that the master deed required units 11 and 13 to pay their
share of the assessments, but that the board of directors had improperly attempted
to levy an assessment to cure the errors of the past boards of directors not to levy
those assessments. Thus, the district court ordered that BHI and MCI were to pay
the properly levied assessment from spring of 2012 forward, but not the
assessments from before that time. In the judgment ultimately issued by the district
court on this issue, BHI and MCI were ordered to pay $5,062.93.
Around six months later, the district court held a second bench trial, this
time to consider Count II of the complaint and all of the issues in the counterclaim
and third-party complaint. Following a two-day bench trial and a later hearing on
the issue of damages, the district court determined that Beckman could not have
breached his fiduciary duty to the SRCA and its members where the vote to approve
the budget always was unanimous; the SRCA could not be vicariously liable for
the alleged breaches of fiduciary duties of its board members and officers; the
SRCA was required to indemnify Beckman under the terms of the bylaws; the
SRCA made no agreement to pay for the well installed by Beckman, so did not
have the responsibility to pay for it; the SRCA and Thomas Brown erred by filing
liens that they knew to be improper, but did not commit slander of title where
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defendants failed to prove they suffered any damages therefrom; and that third-
party defendants acted improperly in an array of manners, but had not committed
the tort of breach of fiduciary duty, where defendants again failed to prove that they
suffered damages. [Beckman, unpub op at 2.]
Thus, that case involved the power of SRCA’s board to collect assessments, but did not
consider the reasonableness of those assessments. Therefore, the prior litigation and the instant
action involve different issues. Moreover, in the prior litigation, SRCA sought payment of the
outstanding assessments pursuant to MCL 559.208, which permits a cause of action to recover
money judgments for unpaid assessments. Here, plaintiffs seek an equitable reformation of the
value percentages pursuant to MCL 559.195. Although both provisions are found in the
Condominium Act, MCL 599.101, et. seq., they provide two separate and distinct causes of action.
SRCA argues that plaintiffs invoked MCL 559.195 as part of their defense in the prior
litigation, and therefore, this issue was already litigated. However, MCL 559.195 did not form the
basis for any of the counts listed in the counterclaim of the prior litigation, and to the extent that
plaintiffs relied on it in their defense of SRCA’s claim, the trial court did not address or resolve
the issue in this case. Thus, the prior litigation does not involve “the same claim” at issue in the
instant action and summary disposition was not appropriate. MCR 2.116(C)(6).
SRCA next argues that summary disposition was warranted on the basis of either collateral
estoppel or res judicata under MCR 2.116(C)(7). We disagree.
When it grants a motion under MCR 2.116(C)(7), a trial court should examine all
documentary evidence submitted by the parties, accept all well-pleaded allegations as true, and
construe all evidence and pleadings in the light most favorable to the nonmoving party. Clay v
Doe, 311 Mich App 359, 362; 876 NW2d 248 (2015).
Under the doctrine of res judicata, a final judgment rendered by a court of competent
jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and, as to
them, constitutes an absolute bar to a subsequent action involving the same claim, demand or cause
of action. Wayne Co v City of Detroit, 233 Mich App 275, 277; 590 NW2d 619 (1998). The
doctrine bars a second, subsequent action when (1) the first action was decided on the merits, (2)
the matter contested in the second action was or could have been resolved in the first, and (3) both
actions involve the same parties or their privies. Verbrugghe v Select Specialty Hosp-Macomb Co,
Inc, 279 Mich App 741, 744; 760 NW2d 583 (2008). Michigan courts apply the doctrine broadly
to bar “not only claims already litigated, but also every claim arising from the same transaction
that the parties, exercising reasonable diligence, could have raised but did not.” Adair v State, 470
Mich 105, 121; 680 NW2d 386 (2004).
SRCA only disputes the third element, and argues that plaintiffs could have raised the
reformation issue in the prior litigation, and that their failure to do so precludes them from raising
it in the instant lawsuit. When examining factors for the third element of res judicata, Michigan
courts employ the broad, pragmatic “same transaction test.” Garrett v Washington, 314 Mich App
436, 442; 886 NW2d 762 (2016). The transactional test provides that the assertion of different
kinds or theories of relief still constitutes a single cause of action if a single group of operative
facts give rise to the assertion of relief, and whether a factual grouping constitutes a “transaction”
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for purposes of res judicata is to be determined pragmatically, by considering whether the facts are
related in time, space, origin or motivation, and whether they form a convenient trial unit. Id.Although there are some overlapping facts between the prior litigation and the instant
action, they differ in the nature of the proofs and the motivation for the claim. Id. at 445. The
prior litigation concerned the board’s ability to levy assessments and required examination of the
portions of the condominium documents and Michigan laws that pertain to the board’s powers.
Therefore, the evidence in that case focused on the sufficiency of SRCA’s budget and SRCA’s
adherence to the prescribed rules of order. By comparison, the instant action required the trial
court to examine the portions of the condominium documents related to the developer’s plan, and
the evidence related to the comparative square footage, market value, and expenses associated with
each unit in the condominium project. Additionally, the prior litigation, filed December 11, 2012,
sought recovery of the assessment dating back to 2006, and the instant action concerned the
assessments from July 2015 onward. Thus, even limiting the analysis to consider only the issue
of the vacant lots, as SRCA would have us do, the facts related to the instant case are sufficiently
different from the facts in the prior litigation in “time, space, origin or motivation” to prevent res
judicata from barring plaintiffs’ claim. Id. at 442.
SRCA argues that issue preclusion bars the portion of plaintiffs’ claim related to the
vacancy of units 11 and 13, and that the trial court committed error requiring reversal when it
applied the res judicata “transaction test” to SRCA’s argument related to issue preclusion. We
disagree.
The doctrine of issue preclusion, also called collateral estoppel, “precludes relitigation of
an issue in a subsequent, different cause of action between the same parties when the prior
proceeding culminated in a valid final judgment and the issue was actually and necessarily
determined in that prior proceeding.” Rental Props Owners Ass’n of Kent Co v Kent Co Treasurer,
308 Mich App 498, 528-529; 866 NW2d 817 (2014). “Generally, application of collateral estoppel
requires (1) that a question of fact essential to the judgment was actually litigated and determined
by a valid and final judgment, (2) that the same parties had a full and fair opportunity to litigate
the issue, and (3) mutuality of estoppel.” Id. at 529. Under the first element, the ultimate issue
must be identical to the issue involved in the first action, not merely similar. Keywell & Rosenfeld
v Bithell, 254 Mich App 300, 340; 657 NW2d 759 (2002).
SRCA argues that both cases sought to resolve the same factual issue regarding the
propriety of the assessments for units 11 and 13. However, as discussed supra, the issue in the
prior case concerned the power of the board to impose assessments, and the instant case involves
the proper amount of those assessments. These are not identical issues. Id. Therefore, this
argument fails.
SRCA also argues that, under the compulsory joinder rule, MCR 2.203(A), plaintiffs’ claim
for equitable relief in this action is barred because it was not joined in the prior action. However,
for the same reasons that res judicata does not bar plaintiffs’ claim, neither does MCR 2.203(A).
Garrett, 314 Mich App at 451 (res judicata principles are applied in determining whether two
claims arise out of the same transaction or occurrence for purposes of MCR 2.203(A)).
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SRCA next argues that summary disposition under MCR 2.116(C)(8) was warranted with
respect to plaintiffs’ allegations regarding the construction of the garages because any
improvements made on real estate belong to the owner of the underlying real estate, and the
common elements could not be reduced by the construction of the garages as a matter of law. We
disagree.
A motion for summary disposition under MCR 2.116(C)(8) tests the legal sufficiency of
the pleadings alone. Lawrence v Burdi, 314 Mich App 203, 211; 886 NW2d 748 (2016). When
deciding a motion under (C)(8), we accept all well-pleaded factual allegations as true, construing
them in the light most favorable to the nonmoving party, and the motion is properly granted only
when the claim is so clearly unenforceable as a matter of law that no factual development could
possibly justify a right of recovery. Dalley v Dykema Gossett, 287 Mich App 296, 304–05; 788
NW2d 679 (2010).
In their complaint, plaintiffs alleged that when the master deed was recorded in 2004, the
condominium project consisted of 10 existing residential units. Units 1-8 had cottages with a fair
market value of $129,900-$159,900. Unit 9 had a home with a heated garage valued at $229,900.
Unit 10 had a home with a five-tier, cedar deck and was valued at $349,900. The developer
initially intended to build identical structures on each of the four vacant lots that were units 11-14,
but in 2005, he updated the condominium plan to allow units 11-14 to be sold as vacant lots. In
2006, plaintiffs purchased the vacant units and the terms of sale specified that assessments would
not be levied against the vacant lots until structures were constructed on them. Nonetheless, units
11 and 13, which remained vacant, were assessed at the same value percentage as units 1-8, even
though units 11 and 13 were valued at $13,000 per unit and did not have utilities, septic systems,
wells, or structures. Additionally, in 2005 two garages were constructed on property that was
designated as a common element, effectively creating units 15-19. SRCA turned a blind eye to
the construction and did not comply with the formalities required to convert common element
property into property for personal use. Despite these deviations from the subdivision plan, SRCA
refused to recalculate the value percentages, which produced the inequitable result of units 11 and
13 being assessed the same value percentage as units 1-8, while units 15-19 were not assessed at
all and the common element was reduced. Accordingly, plaintiffs alleged, a recalculation of the
value percentages was necessary under MCL 559.195. The complaint was sufficient to maintain
a claim pursuant to MCL 559.195.
SRCA argues that under Michigan law, the construction of the garages on land designated
as a common element was insufficient to appropriate the property for personal use, and plaintiffs
were not denied access to the garages. However, MCL 559.195 does not require that plaintiffs
plead, or prove, a claim of conversion. Rather, plaintiffs were only required to plead that there
had been a revision after the subdivision plan’s initial filing that altered the value percentages
under the original formula. Plaintiffs alleged two such revisions: the sale of vacant lots, and the
construction of the garages. Accepting these allegations as true, and construing them in the light
most favorable to plaintiffs, the trial court properly denied SRCA’s motion summary disposition
pursuant to MCR 2.116(C)(8). Dalley, 287 Mich App at 304–05.
SRCA next argues that summary disposition was warranted under MCR 2.116(C)(10)
because SRCA’s board of directors made the garages available to all unit owners, and therefore,
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plaintiffs were not denied access to the garages. We disagree.
A summary disposition motion filed under MCR 2.116(C)(10) “tests the factual adequacy
of a complaint on the basis of the entire record, including affidavits, depositions, admissions, or
other documentary evidence.” Gorman v American Honda Motor Co, Inc, 302 Mich App 113,
115; 839 NW2d 223 (2013). Summary disposition may be granted under MCR 2.116(C)(10) when
there is no genuine issue regarding any material fact and the moving party is entitled to judgment
as a matter of law. Bullard v Oakwood Annapolis Hosp, 308 Mich App 403, 408; 864 NW2d 591
(2014). A genuine issue of material fact exists when the record, giving the benefit of reasonable
doubt to the opposing party, leaves open an issue upon which reasonable minds might differ.
Gorman, 302 Mich App at 116.
“The moving party has the initial burden to support its claim for summary disposition by
affidavits, depositions, admissions, or other documentary evidence.” McCoig Materials, LLC v
Galui Construction Inc, 295 Mich App 684, 693; 818 NW2d 410 (2012). The burden is then
shifted to the nonmoving party to demonstrate that a genuine issue of material fact exists. Id. The
existence of a disputed fact must be established by substantively admissible evidence, although
the evidence need not be in admissible form. MCR 2.116(G)(6); Bronson Methodist Hosp v Auto-
Owners Ins Co, 295 Mich App 431, 441; 814 NW2d 670 (2012). If the nonmoving party fails to
establish the existence of a material factual dispute, the moving party’s motion is properly granted.
Karbel v Comerica Bank, 247 Mich App 90, 97; 635 NW2d 69 (2001). Finally, while summary
disposition is usually not appropriate before the completion of discovery, it may be granted if there
is not a fair chance that further discovery would uncover factual support for the claim. Kelly-
Nevils v Detroit Receiving Hosp, 207 Mich App 410, 421; 526 NW2d 15 (1994).
In support of its motion, SRCA attached an affidavit by Thomas Brown attesting that the
SRCA’s board had taken physical control of the garages and made their interiors available to all
unit owners after plaintiffs filed the instant complaint. In response, plaintiffs submitted an affidavit
by trial counsel indicating that discovery would prove the facts alleged in the complaint.
Generally, evidence that is purely speculative or conjecture runs afoul of MRE 702, and is
insufficient to create a genuine issue of material fact. Craig ex rel Craig v Oakwood Hosp, 471
Mich 67, 84; 684 NW2d 296 (2004). However, because discovery had not been completed, and
because there was a fair chance that further discovery would uncover factual support for plaintiffs’
claim, the trial court did not commit error requiring reversal when it denied SRCA’s motion for
summary disposition pursuant to MCR 2.116(C)(10).
Thus, the trial court did not commit error requiring reversal when it denied SRCA’s motion
for summary disposition.
B. JUDGMENT FOR PLAINTIFFS
SRCA challenges the trial court’s judgment in favor of plaintiffs and raises a number of
alleged errors. We find no errors that require reversal.
We review a trial court’s findings of fact in a bench trial for clear error. Chelsea Inv Group
LLC v Chelsea, 288 Mich App 239, 250; 792 NW2d 781 (2010). A finding is clearly erroneous if
there is no evidentiary support for it or if we are left with a definite and firm conviction that a
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mistake has been made. Hill v City of Warren, 276 Mich App 299, 308, 740 NW2d 706 (2007).
The trial court’s findings are given great deference because it is in a better position to examine the
facts. Id. We review de novo a trial court’s determination regarding equitable relief, questions of
statutory interpretation, and a trial court’s conclusions of law. Dep’t of Environmental Quality v
Gomez, 318 Mich App 1, 33 n 12; 896 NW2d 39 (2016); Pres The Dunes, Inc v Dept of Envtl
Quality, 471 Mich 508, 513; 684 NW2d 847 (2004); Chelsea, 288 Mich App at 250.
SRCA argues that the trial court erred when it concluded that the original formula used by
the developer to assign value percentages was based on the size of each units’ structure, and should
instead have been based on the square feet of ground space. We disagree.
Article VI, § B of the master deed sets forth the formula used for calculating the percentage
values:
The percentages of value for each unit were computed based upon a combination
of market value, size, and allocable expenses for maintenance:
The result percentages are reasonably adjusted to total 100%. The respective units
have been assigned percentages of value based upon fourteen (14) units.
SRCA argues that “size” must be interpreted to mean square ground footage pursuant to MCL
559.110(3). However, that provision provides:
“Size” means the number of cubic feet, or the number of square feet of ground or
floor space, within each condominium unit as computed by reference to the
condominium subdivision plan and rounded off to a whole number. Certain spaces
within the condominium units including, without limitation, attic, basement, and
garage space may be omitted from the calculation or partially discounted by the use
of a ratio, if the same basis of calculation is employed for all condominium units in
the condominium project, that basis is used for each condominium unit in the
condominium project, and that basis is disclosed in appropriate condominium
documents furnished to each co-owner. [Emphasis added.]
Thus, SRCA ignores the plain language of the statutory definition that it relies on. Because units
11 and 13 lack structures, and therefore lack “floor space,” the trial court’s interpretation and
application of the formula described in the master deed does not conflict with the definition of
“size” provided in MCL 559.110(3), and SRCA’s argument fails.
SRCA next argues that the trial court ignored the statutory definitions of “condominium
subdivision plan” which requires that revisions to the project follow the procedures set forth in
MCL 559.190-191, and the trial court failed to explain how the continued vacancy of units 11 and
13 constituted a “revision” to the plan. We disagree.
MCL 559.195 provides a cause of action where the subdivision plan has been revised,
whereas §§ 190-191 lay out the process for amending the condominium documents, considered to
be the master deed and its attachments, § 103(3)(10), of which the subdivision plan is included.
“Condominium subdivision plan” is a more specific term than “condominium documents,” and
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therefore MCL 559.195 controls over §§ 190-191. Telford v State, 327 Mich App 195, 199; 933
NW2d 347, 349 (2019) (a more specific statutory provision controls over a more general statutory
provision). The Condominium Act, MCL 599.101, et. seq., does not define the term “revise” and
the trial court correctly assigned the term its ordinary meaning by consulting the dictionary
definition. Diallo v LaRochelle, 310 Mich App 411, 417-418; 871 NW2d 724 (2015). Moreover,
§ 195 does not require a revision to the subdivision plan first be recorded before a co-owner may
seek equitable relief, and we cannot read such a requirement into the statute. Pike v N Michigan
Univ, 327 Mich App 683, 697; 935 NW2d 86 (we must not judicially legislate by adding into a
statute provisions that the Legislature did not include).
Nor did trial court err in finding that a “revision” occurred in this case. Art IV of the master
deed states that each unit was intended for “residential purposes” and attachments to the master
deed depict structures on the vacant units 11 and 13 which are not labelled “need to be built” or
“need not be built” as required by MCL 559.166(2)(j). The disclosure statement states that the
project consists of 10 existing units and four “to be built” units, that the construction of the four
unfinished units had commenced in June 2004, and that items which were not labeled had already
been constructed. The disclosure statement further indicated that the budget and assessments for
fiscal year 2005 assumed that the 14 units had been sold and occupied, and that the developer
would be allowed to pay a reduced share of assessments for any unfinished units. Finally, the
disclosure statement indicates that units 11-14 were “newly constructed” and were serviced by
their own common well. However, Beckman testified that when the developer sold those units,
they contained no structures and there was no well service. Given these facts, the trial court did
not err when it concluded that the developer had deviated from his original plan when he sold units
11-14 as vacant lots. Moreover, the trial court did not rely solely on the vacancy of the units, but
also considered the construction of the garages, which do not appear in the master deed or its
attachments.
SRCA next argues that the trial court improperly admitted as evidence a spreadsheet of
Beckman’s preferred calculations of value percentages as a function of each unit’s market value
and floor space. Beckman’s spreadsheet was relevant to plaintiffs’ equitable claim, cumulative of
his testimony about the fair allocation of value percentages in his opinion, and not unduly weighed
by the trial court in light of its own calculations. Thus, the trial court did not abuse its discretion
by allowing the admission of the spreadsheet. Taylor v Mobley, 279 Mich App 309, 315; 760
NW2d 234 (2008) (a trial court’s decision to admit or exclude evidence is reviewed for an abuse
of discretion).
SRCA also challenges the trial court’s decision to admit the corrected deeds for units 11
and 13 into evidence because the parties’ agreement contained in the deed regarding the
assessments for the units already had been litigated, and was therefore barred by issue preclusion.
However, the reasons stated above, SRCA’s arguments of issue preclusion fail.
SRCA next argues that plaintiffs were required pursuant to MCL 450.2493a to make a
prelitigation demand for SRCA to terminate the exclusive use of the interior of the garages by the
builders, and the failure to do so should have should have resulted in dismissal of the claim. MCL
450.2493a governs the preconditions for a shareholder, member, or director to bring a derivative
suit against a nonprofit corporation. Generally, “a suit to enforce corporate rights or to redress or
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prevent injury to the corporation, whether arising from contract or tort, ordinarily must be brought
in the name of the corporation and not that of a stockholder, officer or employee.” Belle Isle Grill
Corp v Detroit, 256 Mich App 463, 474; 666 NW2d 271 (2003). Here, plaintiffs alleged cause of
action arises from a matter of equity, not a contract or tort, and plaintiffs alleged a direct harm
caused by SRCA’s failure to recalculate the value percentages based on the builders’ construction
of the garages. Michigan Nat’l Bank v Mudgett, 178 Mich App 677, 680; 444 NW2d 534 (1989)
(a suit is not derivative in nature when plaintiffs have demonstrated that they sustained a loss
separate and distinct from that of other shareholders generally, or have they shown a violation of
a duty owed directly to them and not to the corporation generally). Thus, MCL 450.2493a is
inapplicable here.
SRCA next argues that the trial court erred when it refused to take judicial notice of the
prior litigation or receive into evidence the record from that case. We disagree.
A court may take judicial notice of its own records to supply the alleged defects that exist
in the current record. Hawkeye Casualty Co v Frisbee, 316 Mich 540, 549; 25 NW 2d 521 (1947).
“[A] circuit judge may take judicial notice of the files and records of the court in which he sits.”
Knowlton v City of Port Huron, 355 Mich 448, 452; 94 NW2d 824, 826 (1959). Taking judicial
notice is discretionary. MRE 201(c). The same judge of the Gogebic circuit court presided over
both the prior litigation and the instant case. Given the volume of the prior litigation, and the trial
court’s familiarity with the issue raised in both cases, we cannot conclude that the trial court abused
its discretion when it denied SRCA’s request to take judicial notice of the entire record in the prior
litigation.
SRCA next argues that the trial court erred by permitting plaintiffs to maintain their action
without joining the other unit owners as necessary parties. Again, we disagree. MCR 2.205(A)
requires joinder as parties all “persons having such interests in the subject matter of an action that
their presence in the action is essential to permit the court to render complete relief.” Under the
master deed, SRCA was vested with the responsibility of administering, operating, managing, and
maintaining the condominium project which included the common elements. In a case such as
this, the association of co-owners is the proper party to assert ownership in the common elements
of the condominium project. See MCL 559.160 (providing that “[a]ctions on behalf of and against
the co-owners shall be brought in the name of the association of co-owners” and that “[t]he
association of co-owners may assert, defend, or settle claims on behalf of all co-owners in
connection with the common elements of the condominium project”).
SRCA next argues that the trial court’s ruling creates ambiguity for the future management
of the condominium project because it allows units 11 and 13 to be assessed based on the size of
the residential structures. We disagree once more. The trial court merely limited its finding to the
facts that were presented. The trial court’s determination of the value percentages for units 11 and
13 at 0% was based on their vacancy—a condition which is subject to change. Equity allows
complete justice to be done in a case by adapting its judgments to the special circumstances of the
case. Bazzi v Sentinel Ins Co, 502 Mich 390, 411; 919 NW2d 20 (2018). Accordingly, the trial
court did not err when it limited equitable relief to the specific facts and conditions presented.
Finally, SRCA argues that the trial court’s reformed valuation percentages should only
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apply to prospective assessments, and not to its counterclaim for unpaid assessments from 2015
through trial. However, the trial court correctly concluded that SRCA’s assessments were based
on an improper calculation that failed to account for the fact that units 11 and 13 incurred no utility
costs and that the common element had been reduced by builders’ construction and the exclusive
use of the garages. Thus, this argument fails, and SRCA has not demonstrated that it is entitled to
relief.
III. CONCLUSION
The trial court did not commit error requiring reversal when it denied SRCA’s motion for
summary disposition, and SCRA’s challenges to the trial court’s judgment in favor of plaintiffs
are without merit. Accordingly, we affirm.
/s/ Mark J. Cavanagh
/s/ David H. Sawyer
/s/ Michael J. Riordan
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