Olga M Brock v. Winding Creek Homeowners Association ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
OLGA M. BROCK, UNPUBLISHED
April 25, 2017
Plaintiff-Appellant,
v No. 328848
Macomb Circuit Court
WINDING CREEK HOMEOWNERS LC No. 2014-001883-CH
ASSOCIATION,
Defendant-Appellee,
and
MAKOWER, ABBATE &ASSOCIATES LAW
FIRM, LAZZARA & COMPANY, P.C., HEIDI
GEOTTES, CHRIS WEBER, and CARLITAS
ASBILL,
Defendants.
Before: SERVITTO, P.J., and STEPHENS and RONAYNE KRAUSE, JJ.
PER CURIAM.
Plaintiff appeals as of right the trial court opinion and order denying plaintiff’s motion for
leave to amend the complaint and granting defendant summary disposition under MCR
2.116(C)(8) (failure to state a claim). We affirm.
I. BACKGROUND
Plaintiff Olga Brock is a member of defendant Winding Creek Homeowners Association
defendant as an owner of a residential home within the subdivision.1 Plaintiff commenced this
1
Stipulated orders to dismiss were entered for all defendants except Winding Creek
Homeowners Association. Defendant Lazzara & Company, PC was dismissed May 1, 2015.
Defendants Heidi Geottes, Chris Weber and Carlitas Asbill were dismissed May 7, 2015.
Therefore, our reference to defendant is to the only remaining defendant Winding Creek
Homeowners Association.
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action in propia persona on May 9, 2014. Her complaint alleged that defendant violated the
association’s bylaws covenants and restrictions by not adhering to general accounting principles,
allowing homeowners to install fences without in-ground pools, and allowing homeowners to
install sheds. Defendant moved for dismissal of plaintiff’s complaint under MCR 2.116(C)(5),
(8), and (10). Defendant argued that the complaint failed to cite to any specific court rule, statute
or case law, and failed to state a claim. Instead of granting defendant summary disposition, the
trial court ordered plaintiff to amend her complaint to state a legal claim. Plaintiff’s first
amended complaint sought a statutory injunction and statutory damages under the Michigan
Condominium Act (MCA), MCL 559.101 et seq.
Defendant again moved for summary disposition under MCR 2.116(C)(8) and (C)(10).
The basis of the motion was that plaintiff’s complaint consisted of two counts, both of which
relied on the MCA, and that plaintiff lived in a single-family subdivision and not a condominium
project. Defendant argued that summary disposition was proper because the “applicable statute
upon which Plaintiff seeks relief does not govern the actions of the Defendant; therefore, this
complaint fails to state a claim upon which relief may be granted.” Plaintiff filed a brief in
opposition with the assistance of counsel. Attached to the brief was a proposed second amended
complaint containing exhibits and citation to the bylaws, but still based on the MCA.
After a hearing on the motion, the court held:
The Court is satisfied that summary disposition is appropriate. Plaintiff’s claim is
premised upon the Michigan Condominium Act, and defendant is not subject to
its terms since it is not a condominium complex within the meaning of the Act.
The Court previously provided plaintiff with the opportunity to file an amended
complaint to state a claim upon which relief can be granted in accordance with
MCR 2.116(C)(5) in the February 6, 2015 Opinion and Order denying
defendants’ first motion for summary disposition. The Court has therefore
complied with the requirements of MCR 2.116(C)(5), and plaintiff has failed to
state a claim upon which relief can be granted. Accordingly, defendant’s motion
for summary disposition should be granted.
This appeal followed.
II. STANDARD OF REVIEW
This Court reviews de novo the denial of summary disposition to determine if the moving
party is entitled to judgment as a matter of law. Maiden v Rozwood, 461 Mich 109, 118; 597
NW2d 817 (1999). A motion under MCR 2.116(C)(8) tests the legal sufficiency of the
complaint by the pleadings alone. Id. at 119; MCR 2.116(G)(5). All well-pleaded factual
allegations are accepted as true and construed in a light most favorable to the nonmovant. Id.“Review is limited to the evidence presented to the trial court at the time the motion was denied.”
Peña v Ingham Co Rd Comm, 255 Mich App 299, 313 n 4; 660 NW2d 351 (2003). A motion
under MCR 2.116(C)(8) may be granted only where the claims alleged are “so clearly
unenforceable as a matter of law that no factual development could possibly justify recovery.”
Maiden, 461 Mich at 119.
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“Decisions concerning the meaning and scope of pleading, and decisions granting or
denying motions to amend pleadings, are within the sound discretion of the trial court and
reversal is only appropriate when the trial court abuses that discretion.” Weymers v Khera, 454
Mich 639, 654; 563 NW2d 647 (1997). “An abuse of discretion exists when an unprejudiced
person, considering the facts on which the trial court acted, would say that there was no
justification or excuse for the ruling.” Jager v Nationwide Truck Brokers, Inc, 252 Mich App
464, 486; 652 NW2d 503 (2002).
II. ANALYSIS
Plaintiff presents two arguments on appeal. Plaintiff first argues that the trial court erred
in granting defendant summary disposition, and second, that the trial court erred in refusing
plaintiff leave to amend her complaint.
A. SUMMARY DISPOSITION
A complaint must contain “[a] statement of the facts, without repetition, on which the
pleader relies in stating the cause of action, with the specific allegations necessary reasonably to
inform the adverse party of the nature of the claims the adverse party is called on to defend.”
MCR 2.111(B)(1). However, “[a]s the [United States Supreme] Court unanimously held in
Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972), a pro se complaint,
‘however inartfully pleaded,’ must be held to ‘less stringent standards than formal pleadings
drafted by lawyers’ and can only be dismissed for failure to state a claim if it appears ‘beyond
doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him
to relief.’ Id., at 520-521, 92 S.Ct. at 596, quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct.
99, 2 L.Ed.2d 80 (1957).” Estelle v Gamble, 429 US 97, 106; 97 S Ct 285; 50 L Ed 2d 251(1976). Therefore, the pro se complaint is to be liberally construed. Id. The court should view
the allegations as true for the purposes of a motion to dismiss. Maiden, 461 Mich at 119.
Plaintiff submitted three complaints to the trial court: 1) an original complaint, 2) a first
amended complaint, and 3) a proposed second amended complaint. Plaintiff filed the original
complaint pro per. Plaintiff’s amended and proposed second amended complaints were
submitted with the assistance of counsel.
The original complaint failed to state the correct cause of action. Instead of pleading an
action in contract, plaintiff pled an action in condominium law. “Under Michigan law, a
covenant constitutes a contract, created by the parties with the intent to enhance the value of
property.” Hickory Pointe Homeowners Ass'n v Smyk, 262 Mich App 512, 515; 686 NW2d 506
(2004) (citations omitted). Here, the bylaws were the terms of a contract by all the members of
the homeowners association, with each other and with the association itself. Conlin v Upton, 313
Mich App 243, 255; 881 NW2d 511 (2015). Plaintiff also failed to plead the elements of the
injunctive relief she requested, and to attach supporting documentation, including a copy of the
bylaws she alleged were violated. Defendant filed a motion for summary disposition moving the
court to find that plaintiff failed to state a claim or show that genuine issues of material fact
existed. However, plaintiff’s original complaint allegations were clear enough, when construed
under our liberal pro se analysis, to state a claim of defendant having breached its restrictive
covenants under the bylaws in two ways: 1) by failing to follow “accounting principles generally
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accepted in the United States of America,” and 2) by allowing fences and sheds to be built
without a permit. The allegations were also sufficient to give plaintiff the opportunity to offer
supporting evidence. Therefore, the court’s decision to deny defendant summary disposition and
order plaintiff to amend the complaint to address the stated cause of action and other deficiencies
was proper.
Plaintiff’s first amended complaint, although filed with the assistance of counsel, still
requested an injunction and statutory damages under the MCA.2 Plaintiff’s counsel admitted at
the June 22 summary disposition hearing that he was mistaken as to the MCA’s application and
agreed that there was no legal claim under the MCA. Counsel’s explanation for the error was
that he “was retained the day before” the amended complaint was due. Plaintiff’s response to
defendant’s motion for summary disposition was a three-page motion, without accompanying
brief, conceding that plaintiff’s claim of accounting and fraud was not viable, and that the MCA
did not apply. Plaintiff requested leave to file a second amended complaint. Without making a
ruling on the motion to amend, the court granted defendant summary disposition because
plaintiff’s claims were premised upon the MCA and defendant was not subject to the terms of the
statute.
Plaintiff’s first amended complaint was drafted by an attorney and is therefore, held to
more stringent standards than the pro se complaint. Estelle, 429 US at 106. Nevertheless, we
find that the first amended complaint while inartfully drafted, pled allegations that if accepted as
true, pled a breach of the bylaws. We further find that dismissal at the pleading stage based on
form alone and without a review of the merits of plaintiff’s first amended complaint was error.
The court should have looked beyond form to determine whether there was any support for
plaintiff’s claims or whether a legally cognizable claim existed. The first amended complaint
otherwise contained factual allegations for the court to review. However, even when the merits
of plaintiff’s cause of action are analyzed, plaintiff’s first amended complaint still fails to
establish a prima facie case. Although the trial court erred, “we decline to reverse because the
right result was reached, albeit for the wrong reason.” Scherer v Hellstrom, 270 Mich App 458,
464; 716 NW2d 307 (2006).
Plaintiff’s first amended complaint stated that it was an action under the MCA to enjoin
defendant from violating its bylaws in two ways: 1) by failing to follow “accounting principles
generally accepted in the United States of America,” and 2) by allowing fences and sheds to be
built without a permit. Plaintiff additionally claimed that if successful with her claim, she should
be awarded statutory damages under the MCA. The MCA aside, plaintiff first alleged that the
list of itemized accounting expenditures provided by defendant as part of discovery did not
2
Arguably, plaintiff was misled by defendant’s response to the original complaint which began,
“The plaintiff filed this action against the condominium association of which she is a
member . . .”; as well as defendant’s citation to the MCA in its affirmative defenses. However,
plaintiff should have been aware of the correct legal basis for her complaint allegations before
she filed the first amended complaint. Plaintiff’s prior litigation with defendant resulted in this
Court issuing an unpublished opinion in December 2014 that contained the applicable law for
plaintiff to use to cure the deficiencies in her February 27, 2015 first amended complaint.
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explain numerous expenses and debts, defendant’s certified public accountant did not provide the
services defendant told its members were being provided, there was no audit of defendant’s
finances, and defendant did not comply with general accounting principles. Plaintiff reasoned
that the lack of accounting created an environment where fraud could take place. Plaintiff next
alleged that defendant allowed members to install fences and sheds without approval of
defendant’s board. Plaintiff sought an injunction for both violations.
Summary dismissal of plaintiff’s first allegation on the merits would not have been in
error. Plaintiff’s claim that defendant’s members needed to be protected from defendant’s fraud
was speculation. There was no evidence presented of fraud. Secondly, the first amended
complaint and motion in opposition of summary disposition excluded any reference to the factors
for injunctive relief.3 More importantly, plaintiff’s counsel waived the accounting claim at the
June 22 summary disposition motion hearing. At that hearing, plaintiff’s counsel told the court
that he reviewed the financial documents provided by defendant and “found nothing wrong” in
regards to the issue of fraud. A party is bound by her attorney’s waiver. Sampeer v Boschma,
369 Mich 261, 266; 119 NW2d 607 (1963). Plaintiff was given the opportunity to speak at the
same hearing and did not contradict her counsel. Therefore, any argument related to defendant’s
accounting principles is waived on appeal. The Cadle Co v City of Kentwood, 285 Mich App
240, 255; 776 NW2d 145 (2009).
The trial court could have also disposed of plaintiff’s second allegation regarding
defendant’s approval of sheds and fences on the merits based on failure to state a claim. The
first amended complaint simply alleged that defendant “allowed co owners [sic] to install sheds
and fences without approval from the HOA Board as mandated in the bylaws.” The first
amended complaint did not cite which bylaws were allegedly violated nor did it allege specific
instances of violation. Plaintiff also failed to attach a copy of the bylaws4, which the court would
have been able to consider, on a (C)(8) motion.5 “[M]ere conclusions, unsupported by
allegations of fact, will not suffice to state a cause of action.” Eason v Coggins Mem Christian
Methodist Episcopal Church, 210 Mich App 261, 263; 532 NW2d 882 (1995). Plaintiff’s single
conclusory statement alleging a violation, failed to establish a claim that a covenant was violated
3
See Fancy v Egrin, 177 Mich App 714, 719; 442 NW2d 765 (1989) (“In Michigan State
Employees Ass’n v. Dep’t of Mental Health, 421 Mich. 152, 157–158, 365 N.W.2d 93 (1984),
our Supreme Court listed a four-factor analysis by which to determine if a preliminary injunction
should issue: 1) the likelihood that the party seeking the injunction will prevail on the merits; 2)
the danger that the party seeking the injunction will suffer irreparable injury if the injunction is
not issued; 3) the risk that the party seeking the injunction would be harmed more by the absence
of an injunction than the opposing party would be by the granting of the relief; and 4) the harm
to the public interest if the injunction is issued.”).
4
“If a claim or defense is based on a written instrument, a copy of the instrument or its pertinent
parts must be attached to the pleading as an exhibit[.]” MCR 2.113(F)(1).
5
“In a contract-based action, . . . the contract attached to the pleading is considered part of the
pleading.” Liggett Rest Group, Inc v City of Pontiac, 260 Mich App 127, 133; 676 NW2d 633
(2003).
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and a trial court is not required to search for authority to support a party’s position. Schadewald
v Brule, 225 Mich App 26, 34; 570 NW2d 788 (1997).
Plaintiff did cite legal authority for her claim to this Court in her brief on appeal, but this
Court’s review is limited to the record before the court at the time of the motion. Peña, 255
Mich App at 313, n 4. Plaintiff cannot expand the record on appeal. Reeves v Kmart Corp, 229
Mich App 466, 481, n. 7; 582 NW2d 841 (1998). Even when construed in a light most favorable
to plaintiff, the pleadings in the trial court failed to state a claim upon which relief could be
granted. Therefore, it was not error for the trial court to grant defendant summary disposition as
to both claims.
B. PLAINTIFF’S MOTION FOR LEAVE TO AMEND THE COMPLAINT
MCR 2.118(A)(1) permits a party to “amend a pleading once as a matter of course.”
Thereafter, “a party may amend a pleading only by leave of the court or by written consent of the
adverse party. Leave shall be freely given when justice so requires.” MCR 2.118(A)(2).
A motion to amend a pleading should ordinarily be granted and should be denied
only for the following particularized reasons: ‘[1] undue delay, [2] bad faith or
dilatory motive on the part of the movant, [3] repeated failure to cure deficiencies
by amendments previously allowed, [4] undue prejudice to the opposing party by
virtue of allowance of the amendment, [and 5] futility....’ Weymers v Khera, 454
Mich 639, 654; 563 NW2d 647 (1997), quoting Ben P Fyke & Sons, Inc v Gunter
Co, 390 Mich 649, 656; 213 NW2d 134 (1973).
“If a trial court denies a motion to amend, it should specifically state on the record the reasons
for its decision.” Weymers, 454 Mich at 659.
The court did not rule on plaintiff’s motion for leave to file a second amended complaint.
“A trial court ‘must specify its reasons for denying [a] motion’ to amend a complaint, and
‘failure to do so requires reversal, unless amendment would be futile.’ ” Kincaid v Flint, 311
Mich App 76, 95; 874 NW2d 193 (2015) (citation and quotation marks omitted).
We conclude that the trial court’s consideration of plaintiff’s proposed second amended
complaint would have been futile. The motion to amend was not accompanied by a brief
explaining the authority on which it was based. MCR 2.119(A)(2). There was, therefore, no
explanation of plaintiff’s numerous attachments of permits and e-mails. Plaintiff’s contention on
appeal that documents attached to the second amended complaint alone provided evidence that
defendant allowed fences and sheds to be installed in contravention to its bylaws is unavailing.
The attachments included permits issued by Macomb County to addresses in the Winding Creek
subdivision and to other addresses that were not shown to have been in the subdivision. Two
permits for locations within the subdivision were for sheds and 42 permits were for fences. Also
attached were e-mails allegedly between defendant’s board members and from board members to
homeowners inquiring about installing a fence or shed on property within the subdivision. There
is one one-sentence e-mail stating, “I do not see anything where the board approved a shed.”
That e-mail does not provide any context as to the inquiry the writer was responding to, the
address of the property, or what action if any was taken thereafter. The lone e-mail is
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insufficient to establish a prima facie case that defendant allowed fences and sheds to be installed
in violation of the bylaws. In fact, there are numerous other e-mails attached to the proposed
second amended complaint where defendant told homeowners their site plans would have to be
submitted and approved by defendant’s board.
Further, while the motion for leave to amend stated the MCA was not relevant, the
proposed second amended complaint relied on the MCA in its statement for subject matter
jurisdiction. The request for injunctive relief again failed to address the factors for issuing an
injunction.
Affirmed.
/s/ Deborah A. Servitto
/s/ Cynthia Diane Stephens
/s/ Amy Ronayne Krause
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