Court Opinion

ID: 9404468
Source: CourtListenerOpinion
Date Created: 2023-06-23 05:07:03.339714+00
Date Added: 2024-06-11T17:20:14.170738
License: Public Domain

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

LESLIE WALSH,                                                        UNPUBLISHED
                                                                     June 22, 2023
               Plaintiff-Appellant,

v                                                                    No. 361768
                                                                     Oakland Circuit Court
HAWTHORN HILLS OWNERS OF ROCHESTER,                                  LC No. 2021-191216-CH
INC., doing business as HAWTHORN HILLS
HOMEOWNERS ASSOCIATION,

               Defendant-Appellee.

Before: MARKEY, P.J., and JANSEN and K. F. KELLY, JJ.

PER CURIAM.

        Plaintiff appeals by right the trial court’s order denying his motion for summary disposition
under MCR 2.116(C)(10) and granting summary disposition in favor of defendant. Finding no
errors warranting reversal, we affirm.

                      I. BASIC FACTS AND PROCEDURAL HISTORY

        This case arises from a dispute regarding defendant’s authority to implement a street
lighting project in the Hawthorn Hills community governed by the association. The association is
comprised of over 350 members, including plaintiff. In December 2017, defendant emailed the
residents of the community outlining a proposal to increase the association’s annual dues. The e-
mail stated the increased dues would provide funding for several projects, including “DTE
installed street lights placed throughout [the] neighborhood.” In January 2018, defendant sent a
follow-up letter to residents discussing the proposed annual dues increase and the projects they
would fund.        The letter stated defendant would install “street lights throughout the
neighborhood . . . . This would add the elements of accent lighting, safety, and security throughout
our neighborhood.” In May 2018, 190 out of 324 votes (59%) were cast in favor to increase the
annual dues to $350. Plaintiff voted in favor of the increase.

       After the increase in annual dues was passed, defendant sent several newsletters to the
residents regarding the status of the street lighting project. The street lighting project was also
discussed at the association’s 2020 annual meeting and was approved as part of the association’s

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budget for that fiscal year. The street lighting project did not require residents to financially
contribute to the project besides payment of their annual dues.

        In June 2021, plaintiff emailed defendant and expressed concern with the street lighting
project. Plaintiff then filed a complaint in November 2021 alleging that defendant failed to adhere
to its bylaws by implementing the street lighting project without the approval of a 2/3 vote of the
association’s members, as required by Section 4.02 of the bylaws. Plaintiff requested the court
enter a declaratory judgment ordering that defendant follow the terms of its bylaws. Additionally,
plaintiff alleged defendant breached its fiduciary duty to its members for failing to adhere to the
bylaws.

       In January 2022, plaintiff moved for summary disposition and argued he was entitled to
summary disposition under MCR 2.116(C)(10) because there was no question of fact regarding
whether the street lighting project was a special assessment that required approval by 2/3 of the
association’s members. The trial court disagreed, concluding the street lighting project was
“general and reoccurring in nature.” Therefore, the project was “rightfully . . . identified by the
defendant as being pursued under Section 4.01” (which allows defendant to use the annual budget
to fund expenditures that are general and reoccurring). The court, therefore, denied plaintiff’s
motion and entered summary disposition in favor of defendant under MCR 2.116(I)(2).1 This
appeal followed.

                                  II. STANDARD OF REVIEW

         We review a trial court’s decision on a motion for summary disposition de novo. El-Khalil
v Oakwood Healthcare, Inc, 504 Mich 152, 159; 934 NW2d 665 (2019). When considering a
motion under MCR 2.116(C)(10), “a trial court must consider all evidence submitted by the parties
in the light most favorable to the party opposing the motion.” Id. at 160. Only when there is no
genuine issue of material fact may the motion be granted. Id. “A genuine issue of material fact
exists when the record leaves open an issue upon which reasonable minds might differ.” Id.
(quotation marks and citation omitted). Further, “[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.” Cove Creek Condo Ass’n v Vistal Land & Home Dev, LLC,
330 Mich App 679, 696; 950 NW2d 502 (2019).

        Additionally, “[w]hen validly promulgated, an entity’s bylaws or similar governing
instrument will constitute a binding contractual agreement between the entity and its members.”
Conlin v Upton, 313 Mich App 243, 255; 881 NW2d 511 (2015). Housing association bylaws are
“interpreted according to the rules governing the interpretation of a contract.” Tuscany Grove
Ass’n v Peraino, 311 Mich App 389, 393; 875 NW2d 234 (2015).

1
  We note that, on appeal, plaintiff argues the trial court erred when it determined that plaintiff’s
claims were moot. However, plaintiff has misstated the trial court’s ruling on mootness. In its
May 27, 2022 order, the trial court stated it “found that the Plaintiff’s claims were not moot based
on Plaintiff’s argument that a trail improvement project is currently pending.”

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                                         III. ANALYSIS

       On appeal, plaintiff argues the trial court erred because there is no genuine issue of fact
regarding whether the street lighting project was a special assessment requiring a 2/3 approval vote
by members of the association. We disagree.

        Defendant’s authority to maintain and improve the subdivision community originates from
its Declaration of Restrictions (“DOR”) and its bylaws. The DOR was created in November 1978,
and provides for the establishment of a “maintenance fund.” This fund is derived from the annual
dues paid by each member of the association. The DOR provides:

              The Maintenance Fund shall be used for such of the following purposes as
       the Association shall, from time to time, determine as necessary and advisable for
       improving and maintaining the Common Area and any other property of the
       Association:

                        Roadways and entryways of the development; for planting
               trees and shrubbery and the care thereof, for the maintenance of
               storm retention basins on Common Areas (including the removal of
               silt and debris therefore, and the control of harmful algae and
               erosion); for expenses incident [to] the construction, operation and
               maintenance of swimming pools, tennis courts, or similar creational
               facilities located within the Common Area; for collecting and
               disposing of garbage, ashes and rubbish; for employing night
               watchmen; for caring for vacant property including the mowing of
               vacant lots within the subdivisions irrespective of the ownership
               thereof; for removing grass or weeds; for construction, purchasing,
               maintaining or operating any community services; snow removal on
               the public streets; for doing any other thing necessary or advisable
               in the opinion of the Association for the general welfare of the
               members; for expenses incident to the examination of plans, onsite
               inspections, and the endorsement of these restrictions or any other
               building restrictions applicable to said properties or for any other
               purposes for which the Association is incorporated.

Additionally, the DOR originally required an annual fee of $75 per member; however, this amount
could be increased if “not less than fifty-one percent” of the members of the association vote to
raise the fee.

        Defendant is also governed by its bylaws. Notably, the bylaws explicitly state that “[i]n
the event of any conflict arising between these By-Laws and the Declaration of Restrictions for
Hawthorn Hills, as amended, the terms of such Declaration of Restrictions shall be deemed to be
controlling.” Section 4.01 of the bylaws allows defendant to use the annual budget (comprised of
the members’ annual dues) to fund “all anticipated expenditures of a general and reoccurring
nature.” In contrast, Section 4.02 of the bylaws states:

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               Items of expenditure of the Association which are not general and
       reoccurring in nature shall not be included in the annual budget of the Association,
       but rather shall be deemed to be items of special assessment, and accordingly shall
       be submitted in writing by the Board of Directors of the Association to all members
       of the Association and the same shall be subject to the written approval of two-
       thirds (2/3) of the members of the Association eligible to vote. The ballot with
       respect to any such special assessment shall . . . clearly recite the purpose of the
       proposed special assessment, the entire cost of the project involved, the cost per-
       membership in the Association, financing arrangements, if any, [and] the date by
       which such special assessment must be paid . . . .”

        We conclude the street lighting project was of a nature considered under the DOR. The
DOR allows defendant to use the general maintenance fund (comprised of the members’ annual
dues) for “improving and maintaining the Common Area and any other property of the
Association.” The DOR lists several examples of development projects defendant would have
authority to implement, including building swimming pools, constructing and operating
community services, or “doing any other thing necessary or advisable in the opinion of the
Association for the general welfare of the members.” Under the terms of the DOR, constructing
and operating new streetlights throughout the subdivision community is within the discretionary
authority contemplated by the DOR. Like a swimming pool, the streetlights would require
expenditures for both a one-time construction and ongoing operation and maintenance.
Streetlights are also a service to the subdivision community that would support the “general
welfare” of its residents by improving the usability and safety of the streets.

        In addition to the street lighting project being permitted under the DOR, defendant was
also permitted to use the general maintenance fund to implement the project under Section 4.01 of
the association’s bylaws so long as the project is of a general and reoccurring nature. Plaintiff
argues the street lighting project was not general and reoccurring; therefore, the project, under
Section 4.02, required the approval of 2/3 of the association’s members.

        Under the plain language of the bylaws, the street lighting project was both general and
reoccurring. Thus, defendant was not required to get a 2/3 approval for the project. While the
bylaws do not specifically define these terms, “the fact that a contract does not define a relevant
term does not render the contract ambiguous.” Terrien v Zwit, 467 Mich 56, 76; 648 NW2d 602
(2002). “If a term is not defined in a contract, we will interpret such term in accordance with its
commonly used meaning.” Id. at 76-77 (quotation marks and citation omitted). The common
meanings of terms may be derived from dictionary definitions. See id. at 63-64. “General” is
commonly defined as “involving, applicable to, or affecting the whole.” Merriam-Webster’s
Collegiate Dictionary (11th ed). “Reoccurring” is commonly defined as “to occur again” or “to
happen another time.” Merriam-Webster’s Collegiate Dictionary (11th ed). We conclude the
expenditure for street lighting in a residential neighborhood is a general project because streetlights
are a common staple within a community and affect the whole community. The streetlights will
presumably be used every night, and thus, are not of a temporary or seasonal nature. Additionally,
the upkeep and operation of the streetlights will be a reoccurring expense for defendant.

       Further, we construe Section 4.02 as governing instances where residents are asked to
contribute additional funds outside of their annual dues to fund the specific project. Section 4.02

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outlines the ballot process and requires defendant to include the “cost per-membership” each
resident would have to contribute and the date by which the residents must pay the special
assessment fee if approved by the members. There is no evidence that residents were asked to pay
any additional fees outside of their annual dues for the street lighting project. Therefore, because
the expenditure for the project is general and reoccurring, and because the residents of the
community were not asked to contribute additional funds outside of their annual dues to finance
the project, we conclude there is no question of fact regarding whether the street lighting project
is not a special assessment.

        Additionally, while plaintiff attempts to provide evidence on appeal to establish the actual
cost of the project in support of his argument that the high cost inherently makes the project a
special assessment, plaintiff did not provide this evidence to the trial court. Moreover, the project
was included in the proposal for increasing annual resident dues, which was supported by more
than 51% of residents, including plaintiff himself. Residents were first notified of the project in
December 2017 and were well-informed of the street lighting project during the vote to increase
the annual dues in 2018 and during the 2020 annual association meeting.

        In sum, considering all the evidence before the lower court, the trial court did not err when
it granted summary judgment in favor of defendant under MCR 2.116(I)(2) because there is no
question of fact concerning whether defendant had authority to implement the street lighting
project and whether the project was not a special assessment.

       Affirmed. Defendant, as the prevailing party, may tax costs. MCR 7.219(A).

                                                              /s/ Jane E. Markey
                                                              /s/ Kathleen Jansen
                                                              /s/ Kirsten Frank Kelly

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