Sawgrass Ridge Condominium Association v. Louis J Alarie

STATE OF MICHIGAN
COURT OF APPEALS
SAWGRASS RIDGE CONDOMINIUM UNPUBLISHED
ASSOCIATION, January 9, 2018
Plaintiff-Appellee,
v No. 335144
Genesee Circuit Court
LOUIS J. ALARIE, LC No. 15-104793-CH
MARILYN F. ALARIE
Defendants-Appellants.
Before: METER, P.J., and SAWYER and SHAPIRO, JJ.
PER CURIAM.
Defendants appeal the trial court decision granting summary disposition to plaintiff
pursuant to MCR 2.116(C)(10) (no genuine issue of material fact). For the reasons set forth
below, we reverse.
Sawgrass Ridge Condominium (“the Condominium”) is a condominium community in
Grand Blanc Township, Michigan, established pursuant to and governed by the recorded Master
Deed, Bylaws, and Condominium Subdivision Plan for the condominium and subsequent
amendments. Plaintiff Sawgrass Ridge Association is the association of the co-owners of the
condominium that operates the condominium. Defendants own a condominium unit with an
attached deck in the community.
Plaintiff alleges that defendants violated the condominium bylaws by modifying their
deck without the written approval of the Board of Directors.1 Plaintiff also alleged that the
1
Article VI, Section 2 of the Condominium Bylaws provides for written approval of the Board
of Directors for any alterations or structural modifications in the condominium and states as
follows:
No co-owner shall make alterations in the exterior appearance or make
structural modifications to any unit (including interior walls through or in which
there exist easements for support or utilities) or make changes in any of the
common elements, limited or general, without the express written approval of the
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modifications to the deck did not comply with the requirements of the condominium documents
and bylaws. MCL 559.103(10) defines “condominium documents” as “the master deed,
recorded pursuant to this act, and any other instrument referred to in the master deed or bylaws
which affects the rights and obligations of a co-owner in the condominium.”2
Plaintiff filed a motion for summary disposition. In their response, defendants contended
that plaintiff’s suit should be dismissed on the ground that they failed to obtain the prior approval
of the co-owners as required by the bylaws. Plaintiff argued, and the court concluded, that the
suit was proper because the board of directors had provided prior authorization, and a majority of
co-owners ratified that decision by signing a “consent resolution form” after suit was filed. The
consent resolution stated that the signatories ratified the board’s decision to file suit and waived
“formal meeting and notice of the meeting for the consideration and adoption of the above
resolution and corporate action.” After consideration of the parties’ arguments and the record,
we conclude that the ruling constituted legal error and that this suit was not authorized as
required by plaintiff’s bylaws.
“Pursuant to the Condominium Act, the administration of a condominium project is
governed by the condominium bylaws.” Tuscany Grove Ass’n v Peraino, 311 Mich. App. 389,
393; 875 NW2d 234 (2015); MCL 559.153. Condominium bylaws are attached to the master
deeds and are the “required set of bylaws for the condominium project.” MCL 559.103(9). The
Condominium master deed and incorporated bylaws, MCL 559.108, is in the nature of a contract
between condominium owners and the condominium association. See Rosswood v Brentwood
Farms Dev, Inc, 251 Mich. App. 652, 656-658; 651 NW2d 458 (2002). Therefore, we determine
the intent of the parties by reference to the language of the bylaws, to which we apply the words’
ordinary meaning while avoiding any construction that would render any of it nugatory. See
DeFrain v State Farm Mut Auto Ins Co, 491 Mich. 359, 367; 817 NW2d 504 (2012); Altman v
Meridian Twp, 439 Mich. 623, 635; 487 NW2d 155 (1992).
Article III section 4 of the condominium bylaws requires the prior approval of the co-
owners before the commencement of lawsuit. It provides:
Any civil action proposed by the Board of Directors on behalf of the
Association, other than for the collection of delinquent assessments, shall be
subject to prior approval of a majority of the co-owners. After the first annual
Board of Directors’ including, but not limited to, exterior painting or the erection
of antennas, lights, aerials, awning, doors, shutters or other exterior attachments to
common element walls between units which, in any way, impair sound
conditioning qualifies of the wall. The Board of Directors may approve only such
modifications as do not impair the soundness, safety, utility or appearance of the
Condominium.
2
Article III(F) of the Master Deed defines Condominium Documents to mean “this Master Deed
and the Exhibits hereto, the Articles of Incorporation and the Corporate By-Laws of the
Association.”
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meeting of the members of the Association, the forgoing percentage requirements
shall be determined without regard to any units which may be owned by the
Developer. [Emphasis added.]
In ruling for plaintiff, the trial court made two errors. First, it accorded significant weight to the
fact that the board of directors of the condominium association authorized the lawsuit before it
was filed. While correct, this fact is of little relevance since the bylaws provide that the prior
approval of a majority of the co-owners is required, not the prior approval of the board. Second,
the trial court did not apply the requirement that the co-owners give their authorization prior to
the filing of suit. Instead, it concluded that the co-owners could do so after the fact.
The consent resolution form reads as follows:
Pursuant to the provisions of the Michigan Nonprofit corporation act,
1982 PA 612, as amended (the “Act”), permitting action by consent of the
members of the nonprofit corporation without a formal meeting but by written
consent, and the provisions of Article I, Section 2(I) of the Bylaws of the Sawgrass
Ridge Condominium Association, the undersigned, being the majority of the
members of the Sawgrass Ridge Condominium Association, thereby authorize the
Board of Directors to maintain a civil action in Genesee County Circuit Court
against [defendants] . . ., and all other proper defendants for the enforcement of
the bylaws and other condominium documents against those defendants regarding
unauthorized changes to the deck and other common elements attached to and/or
appurtenant to Unit 26 of Sawgrass Ridge Condominium . . .; and we hereby
ratify the action of the board of directors and the association in commencing and
maintaining the Pending Action against [Defendants].
We hereby waive formal meeting and notice of the meeting for
consideration and adoption of the above resolution and corporate action.
[Emphasis added.]
It is generally true that “[w]hen an agent purporting to act for his principal exceeds his
actual or apparent authority, the act of the agent may still bind the principal if he ratifies it. . .
[and that where it is so ratified], the act, as to some or all persons, is given effect as if originally
authorized by him.” David v Serges, 373 Mich. 442, 444; 129 NW2d 882 (1964) (citation
omitted). However, “ ‘[i]f formalities are required for the authorization of an act, the same
formalities are required for ratification.’ ” Tuscany Grove Ass’n, 311 Mich. App. at 240.
Article I, Section 2(I) clearly provides for such formalities, providing:
Unless otherwise provided, any action which could be authorized at a
meeting of the members, shall be authorized by any affirmative vote of more than
fifty (50%) percent. The foregoing statement and any other provision of the
Master Deed, these By-laws or the corporate By-laws requiring the approval of a
majority (or other stated percentage) of the members or co-owners shall be
construed to mean, unless otherwise specifically stated, a majority (or other stated
percentage) in number (and not value) of the votes cast by those qualified to vote
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and present in person or by proxy (or written vote, if applicable) at a given
meeting of the members of the Association duly called and held. [Emphasis
added.]
Put simply, Article I, Section 2(I) provides that the vote of the co-owners must take place
“during a meeting of the members of the Association duly called and held.” It contains no
provision for obtaining approvals by signatures as was done here.
Plaintiff does not claim that it called and held a meeting of the Association members. In
her affidavit, the Secretary of the Association averred that she and another resident of the
condominium, personally circulated the consent resolution form among the co-owners. The
affidavit did not specify how the form was circulated or that it was circulated during a meeting
“duly called or held.” Accordingly, the co-owners’ actions did not serve to ratify the lawsuit
against defendants “because the [consent resolution] did not satisfy the formalities necessary to
authorize litigation through affirmative vote.” Tuscany Grove Ass’n, 311 Mich. App. at 400-401
(holding that the plaintiff’s action in obtaining approval of the lawsuit by petition did not ratify
the litigation where the language of the pre-litigation voting provision envisages voting at a
meeting with the required quorum).
Lastly, we consider the Michigan Nonprofit Corporation Act, specifically MCL
450.2407(3), which was cited in the consent resolution. It provides in pertinent part:
(3) Any action the shareholders or members are required or permitted by
this act to take at an annual or special meeting may be taken without a meeting,
without prior notice, and without a vote, if before or after the action all the
shareholders or members entitled to vote on the action or their proxies consent to
the action in writing. . . .
At first blush, there may seem to be a conflict between MCL 450.2407(3) and Article I, Section
2(I) of the bylaws. However, the language of the bylaws controls as the provisions of the
Michigan Nonprofit Act are to be “liberally construed” and allow for “variations and
modifications . . . as interested parties in any corporation may agree on . . . .” MCL
450.2103(b). MCL 559.153 also provides that “[t]he administration of a condominium project
shall be governed by bylaws recorded as part of the master deed, or as provided in the master
deed. . . .” Here, Article I, Section 2 provides that “voting by members of the Association shall
be in accordance” with the provisions of the bylaws set out in that Article. Nothing in the
bylaws allows for any action, taken without a meeting, to occur by consent vote. Rather, the
bylaws require that voting “may be cast . . . at a given meeting.” Article I, Section 2(H). The
only provision allowing for “any affirmative vote of more than fifty (50%) percent” requires
such votes to be cast in a meeting, which was not complied with in this case.
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Accordingly, we reverse the trial court’s decision and remand for further proceedings.3
We do not retain jurisdiction.
/s/ Patrick M. Meter
/s/ David H. Sawyer
/s/ Douglas B. Shapiro
3
We make no comment on the merits of plaintiff’s suit; nor do we foreclose plaintiff from
refiling its suit provided it does so within the limitations period and has obtained prior
authorization pursuant to the bylaws.
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