Court Opinion

ID: 4365897
Source: CourtListenerOpinion
Date Created: 2019-02-08 10:08:10.511298+00
Date Added: 2024-06-11T14:48:30.743249
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

DAVID SAUNDERS, LAURA SAUNDERS,                                 UNPUBLISHED
PATRICK HEREK, MARYANN HEREK,                                   February 7, 2019
ROBERT GERWIN, CONNIE ROSE, COOPER
GREEN, MICHELLE GREEN, GRETCHEN
HERTZ, RICHARD KLUCK, DEBORAH
KLUCK, ALEXANDER LUTTSCHYN, and
JEAN LUTTSCHYN,

             Plaintiffs-Appellants,

and

MICHAEL BUCK, SHARON BUCK, KELLY A.
PAUL, PAUL ASH, MARY ASH, JOSEPH
MONROE, NANCY MONROE, WILLIAM
MONGER, MARY JANE MONGER, MARIAN
STAROSTA, ALICIA STAROSTA, JERRY
LUNDY, LINDA LUNDY, WILLIAM GAINES,
LENA GAINES, ROBERT ROMALIA, MARY
ANN ROMALIA, MARCELO PONTI, MARIA
PONTI, MICHAEL JILES-OVORUS, PAMELA
JILES-OVORUS, CHRISTOPHER SOTO,
MELISSA SOTO, SCOTT CESARZ, DONNA
CESARZ, CHARLES CESARZ, and STEPHANIE
CESARZ,

             Plaintiffs,
V                                                               No. 341268
                                                                Livingston Circuit Court
CANDICE COUNTS and HUMMINGBIRD                                  LC No. 17-029273-CZ
MEADOWS, INC.,

             Defendants-Appellees.

Before: CAMERON, P.J., and BECKERING and RONAYNE KRAUSE, JJ.
PER CURIAM.

        Plaintiffs, several homeowners in the Pine Valley Estates subdivision, appeal by right the
circuit court’s order granting summary disposition to defendants, Candice Counts, a fellow Pine
Valley homeowner, and Hummingbird Meadows, Inc., the adult foster care facility she operates
from her home, and denying their cross-motions for summary disposition and for permanent
injunctive relief. We affirm.

                                           I. FACTS

        Defendant Counts purchased property in Pine Valley Estates at 7146 Wide Valley Drive
in June 2014. She incorporated Hummingbird Meadows as a for-profit operation in September
2014, and the Department of Licensing and Regulatory Affairs (LARA) granted it a license
effective January 20, 2017. Counts, a registered nurse, lives in the home and cares for the day-
to-day needs of six elderly residents with disabilities. Shortly before the facility received its
license, plaintiffs filed their complaint and requested permanent injunctive relief, alleging that
the operation of the facility violated covenants disallowing business enterprises in the
subdivision. Their allegations included that the business generated problematic amounts of
additional traffic.

        Defendants responded with the affirmative defense that, because Hummingbird Meadows
was a licensed adult foster care family home,1 plaintiffs’ claims were barred under the Adult
Foster Care Facility Licensing Act (AFCFLA), MCL 400.701 et seq. Defendants asserted that
the traffic impact of the adult foster care family home is minimal because the residents did not
drive or otherwise maintain personal vehicles and that any increased traffic from emergency
medical services would be minimal because the home was located near the entrance of the
subdivision. Defendants claimed that the operation of an adult foster care family home is a
single-family residential use of property by law and that the operation of Hummingbird
Meadows did not conflict with covenants forbidding operations of business enterprises. They
further contended that public policy favored the integration of the elderly into ordinary
residential communities through the use of adult foster care homes.

       Plaintiffs and defendants initially filed cross motions for summary disposition pursuant to
MCR 2.116(C)(10) in April and May 2017 respectively, arguing in accord with the allegations
and defenses they had raised in their initial pleadings. The trial court denied the motions,
desirous of additional factual development through discovery. After further discovery,
defendants renewed their motion for summary disposition. Plaintiffs opposed the motion and
sought summary disposition pursuant to MCR 2.116(I)(2) (party opposing summary disposition
motion is entitled to judgment). Subsequent to oral argument, the trial court granted defendants’

1
  “ ‘Adult foster care family home’ means a private residence with the approved capacity to
receive 6 or fewer adults to be provided with foster care for 5 or more days a week and for 2 or
more consecutive weeks. The adult foster care family home licensee shall be a member of the
household and an occupant of the residence.” MCL 400.703(5).

                                               -2-
motion, citing as authority for its decision City of Livonia v Dep’t of Social Servs, 423 Mich. 466;
378 NW2d 402 (1985).

                                           II. ANALYSIS

        Plaintiffs argue on appeal that the trial court erred by granting defendants’ motion for
summary disposition and denying theirs because there is no genuine issue of material fact that
the operation of an adult foster care home on the subject property violates protective covenants
and restrictions against operating a business enterprise on the premises. We review de novo a
trial court’s decision on a motion for summary disposition. Bloomfield Estates Improvement
Ass’n, Inc v City of Birmingham, 479 Mich. 206, 212; 737 NW2d 670 (2007). Likewise, we
review de novo as a question of law the scope of a deed restriction. Id.

        Defendants filed their motion for summary disposition under MCR 2.116(C)(10), which
tests the factual sufficiency of a claim. Summary disposition is proper if “there is no genuine
issue as to any material fact, and the moving party is entitled to judgment . . . as a matter of law.”
MCR 2.116(C)(10).

        The covenants at issue in the present case specify that the Pine Valley Estates
subdivision’s “premises shall only be used for single family residential purposes,” and that “[n]o
profession of any kind, or any business enterprise or any manufacturing shall be conducted upon
said lands or premises, or any part thereof.” A covenant “is a contract created with the intention
of enhancing the value of property, and, as such, it is a valuable property right.” Conlin v Upton,
313 Mich. App. 243, 256; 881 NW2d 511 (2015) (quotation marks and citation omitted).
“[R]estrictions which are clear on their face, reasonable in scope, and do not violate public
policy will be upheld. City of Livonia, 423 Mich. at 525. Further, “[r]estrictions for residence
purposes are particularly favored by public policy and are valuable property rights.” Id.

        Plaintiffs concede that operation of Hummingbird Meadows might be a permissible
residential use of the subject property, but argue that even if it is, it still violates the prohibition
against conducting a business enterprise. As authority for their position, plaintiffs rely on the
Michigan Supreme Court’s distinction between a covenant requiring residential use and one
prohibiting business or commercial use and its determination that activity complying with the
former may nevertheless violate the latter. Terrien v Zwit, 467 Mich. 56, 63; 648 NW2d 602
(2002). For support of their opposing position, defendants rely on City of Livonia. The City of
Livonia Court held in relevant part that six developmentally disabled adults, and their resident
caretakers, living in an adult foster care small group home and “function[ing] as a single
housekeeping and social unit” occupied the home for “residential use,” even if they had to pay
for the items and services they received. Id. at 527-529. Defendants also contend that
Michigan’s express public policy favoring the establishment of residential homes for the elderly
and persons with disabilities in residential neighborhoods further supports this outcome. We
believe that defendants have the better argument.

       City of Livonia involved appeals from several actions in which cities and residents
challenged the use of residences as adult foster care small group homes for six or less
developmentally disabled adults. Among other things, the city and homeowners alleged that
operation of an adult foster care small group home would violate building and use restrictions

                                                  -3-
contained in the owners’ deeds. Id. at 486. The covenant at issue limited use of the property to
residential purposes and limited the type of structure that owners could build on the property to a
“detached single-family dwelling not to exceed two and one-half stories in height and a private
garage for not more than two cars.” Id. at 524. In addition, the covenant prohibited activities on
the property that were “noxious or offensive” or “anything which may become an annoyance or
nuisance to the neighborhood.” Id. The plaintiffs alleged that the unrelated disabled adults
living in the adult foster care family home did not constitute a “single family,” and that operation
of the adult foster care small group home violated the deed’s restrictive covenant because it was
a commercial use of the property. Id. The Michigan Supreme Court rejected both of these
arguments.

        The Court first recognized that the covenant in City of Livonia did not define “family,”
but observed that the Court had long “construed the term to include more than just a nuclear or
extended family whose members are related by consanguinity, marriage, or adoption.” Id. at
526, citing Carmichael v Northwestern Mut Benefit Ass’n, 51 Mich. 494, 496; 16 N.W. 871
(1883). Noting that the adults who resided at the home in question in City of Livonia functioned
as a single housekeeping and social unit, and relying on this Court’s reasoning in Malcolm v
Shamie, 95 Mich. App. 132, 136; 290 NW2d 101 (1980),2 the Supreme Court concluded that the
home was being occupied by a single family and used for residential purposes. Id. at 527.
Furthermore, the City of Livonia Court expressly “reject[ed] plaintiffs’ attempt to characterize
the operation of an adult foster care small group home as a business or commercial use of
property.” Id. at 528. The Court reasoned, “The fact that the adults may be required to pay for
certain items and services . . . does not of itself transform the nature of the activities conducted in
the home from residential to commercial.” Id. at 529. Defendants contend that under City of
Livonia, operation of an adult foster care family home, such as Hummingbird Meadows,
constitutes a residential use of property, even though it may charge for services.

       Contrariwise, plaintiffs rely on our Supreme Court’s reasoning in Terrien v Zwit, 467
Mich. 56 (2002). At issue in Terrien was “whether covenants permitting only residential uses,
and expressly prohibiting commercial, industrial, or business uses, preclude the operation of a
‘family day care home.3’ ” Terrien, 467 Mich. at 58. The circuit court had held that a covenant
precluding operation of a family day care center was contrary to public policy. Id. at 58-59.
This Court affirmed, but on the ground that operation of a family daycare center was a residential
use and could not also be a business or commercial use because the two uses were mutually

2
  In Malcolm, this Court concluded that five adults with intellectual disabilities who resided
permanently in a small group home, in “an environment therapeutically designed to emulate a
more conventional family environment should also be considered a family, and such use of the
property, an appropriate family residential use.” City of Livonia, 423 Mich. at 527, quoting
Malcolm, 95 Mich. App. at 136.
3
  A “ ‘family day care home’ means a ‘private home in which 1 but fewer than 7 minor children
are received for care and supervision for periods of less than 24 hours a day . . . .’ ” Terrien v
Zwit, 467 Mich. at 59 n 2, quoting MCL 722.111(f)(iii), now MCL 722.111(o)(iii). 2018 PA 257,
effective March 28, 2018.

                                                 -4-
exclusive. Id. at 59. Our Supreme Court disagreed with both assessments, distinguished
between covenants barring commercial or business uses and those permitting only residential
uses, determined that such covenants were not mutually exclusive, and held that operation of a
family daycare center constituted a business or commercial use of property. Id. at 63. Thus, in
the case at bar, plaintiffs argue that even if the use of Hummingbird Meadows is residential,
operation of a for-profit adult foster care family home nevertheless violates the restrictive
covenant prohibiting the conduct of a business enterprise.

        We find plaintiffs’ argument unpersuasive for several reasons. First, the distinction
between covenants requiring residential use and those prohibiting business or commercial use
did not originate with Terrien. As the Terrien Court pointed out, this Court had previously
“recognized the distinction between a covenant permitting only residential uses and one that also
expressly prohibits commercial, industrial, or business uses.” Id., at 62, citing Beverly Island
Ass’n v Zinger, 113 Mich. App. 322, 326; 317 NW2d 611 (1982). Thus, the legal framework
clearly existed for the City of Livonia Court to invoke this distinction three years later and to rule
in favor of the plaintiffs’ argument that the operation of an adult foster care small group home
was a business or commercial use of property. See City of Livonia, 423 Mich. at 525.4 For the
reasons already discussed, the Court declined to do so.

        Further, the factual differences between operation of an adult foster care family home and
a family daycare center are significant. At daycare centers, parents or guardians of children drop
the children off for temporary supervision by caregivers and pick them up later the same day.
Daycare centers do not offer their clients permanent residency, the children typically do not have
their own bedrooms, store their belongings there, or use the center as their legal address. Thus,
recipients of daycare services do not reside together as a family or as a single housekeeping unit.
By contrast, the residents at Hummingbird Meadows are permanent residents who use the
home’s address as their legal address and live together as a family or a single housekeeping unit.

        Finally, the public policy imperatives underlying protections for adult foster care family
homes are not present with regard to traditional home daycare operations. The Terrien Court
rejected the argument that a covenant prohibiting business or commercial use of property did not
prohibit operation of a family daycare center because “such restriction would be unenforceable
as against ‘public policy.’ ” Terrien, 467 Mich. at 65-66. The Court found “no definite
indications in the law of Michigan to justify the invalidation of a covenant precluding the
operation of a ‘family daycare homes.’ ” Id. at 68 (quotation marks omitted). Such is not the
case with regard to the location of adult foster care homes in residential areas. The City of
Livonia Court explained that, prior to the 1960s, intellectually and developmentally disabled
persons “were routinely institutionalized.” City of Livonia, 423 Mich. at 480. However,

4
  The hearing officer that heard the city’s objections to the decision of the Department of Social
Services to issue a license to the adult foster care small group homes at issue in City of Livonia
did in fact find that operation of the homes constituted a commercial or business, rather than
residential, use of the property. City of Livonia, 423 Mich. at 525.

                                                 -5-
       [b]y the 1960’s, a “distinct humanistic renaissance” had occurred, which stressed
       the “normalization” of disabled individuals. According to this approach, disabled
       persons who are unable to live with their families are allowed to reside in homes
       of normal size, located in normal neighborhoods, that provide opportunities for
       normal societal integration and interaction. Such community placement permits
       disabled persons to reach their full potential and become contributing, productive
       members of society.

                Some communities, however, were and are reluctant to allow
       “community,” “group,” or “foster care” homes in residential areas. Zoning
       ordinances and practices have been used either to exclude such homes entirely or
       to restrict them to commercial areas. The result frequently is creation of “ghettos”
       of foster care homes, particularly in transitional residential areas, business, or
       institutional zones. Such concentrations of foster care homes often change the
       character of the neighborhoods, thus undercutting the purposes behind
       normalization and provoking negative reactions by area residents. [Id.at 480-
       481.]

        In conformity with these trends, the Michigan Legislature enacted statutes for the purpose
of licensing and regulating community residential facilities that provide “alternative care services
to adults who do not require institutional medical or nursing care.” Id. at 482; see 1972 PA 287,
repealed and replaced by 1979 PA 218, MCL 400.701 et seq. The Legislature also enacted
legislation to “prevent municipalities from using zoning ordinances as a basis for excluding or
segregating adult foster care facilities.” City of Livonia, 423 Mich. at 482.5 Definitions used in
zoning statutes do not control the interpretation of restrictive covenants, Jayno Hts Landowners
Ass’n v Preston, 85 Mich. App. 443, 447; 271 NW2d 268 (1978), nor do they or the AFCFLA
“purport to regulate private restrictive covenants.” City of Livonia, 423 Mich. at 525.
Nevertheless, such statutes do express public policy. See Jayno Hts Landowners Ass’n, 85 Mich
App at 447.

        In addition, this Court has ruled against efforts to exclude adult foster care homes from
residential areas by means of restrictive covenants and deed restrictions. See e.g. City of
Livonia, 423 Mich, 466, 527-529 (1985); Craig v Bossenbery, 134 Mich. App. 543, 553; 351
NW2d 596 (1984) (holding that a restrictive covenant defining “family” in a way that barred
placement in the subdivision of a small group home for the continuous care of six or fewer
intellectually disabled adults was unenforceable as violative of public policy); McMillian v

5
  The Legislature added § 16a to the County Rural Zoning Enabling Act, MCL 125.216a, § 16a
to the Township Rural Zoning Act, MCL 125.286a, and § 3b to the City and Village Zoning Act,
MCL 125.583b. The Legislature repealed and replaced these statutes with 2006 PA 110,
effective December 28, 2007, MCL 125.3101 et seq. MCL 125.3206 provides that state licensed
residential facilities, which includes certain adult foster care facilities, “shall be considered a
residential use of property for the purposes of zoning and a permitted use in all residential
zones . . . .”

                                                -6-
Iserman, 120 Mich. App. 785, 793-794; 327 NW2d 559 (1982) (opining in dicta that an amended
deed restriction prohibiting use of the property for a state-licensed group residential facility for
adults was unenforceable on public policy grounds, citing Const 1963, art 8. § 8); Malcolm, 95
Mich. App. 132 (1980) (see footnote 2, earlier).

        Michigan’s public policy of supporting “the movement toward deinstitutionalization and
community placement of adults requiring foster care” City of Livonia, 423 Mich. at 480, is
expressed in statutes and court decisions. It is further supported by the constitutional mandate to
foster and support “[i]nstitutions, programs and services for the care, treatment, education, or
rehabilitation of those inhabitants who are physically, mentally or otherwise seriously disabled.”
Const 1963, art 8, § 8. Given Michigan’s relevant public policy, our Supreme Court’s reasoning
and decision in City of Livonia, and the significant factual distinctions between City of Livonia
and Terrien, we conclude that the trial court correctly determined that defendants were entitled to
summary disposition.

        This is not to say that restrictive covenants or deed restrictions can never work to bar
operation of an adult foster care facility. 6 See e.g., Jayno Hts Landowners Ass’n, 85 Mich. App.
443 (1978) (holding that where a property owner leased his home to others, who then used the
home as an adult foster care facility, the restrictive covenant limiting occupation of the residence
to one single-family unit was enforceable). We recognize that “[r]estrictions for residence
purposes are particularly favored by public policy and are valuable property rights,” and that
“[r]estrictions which are clear on their face, reasonable in scope, and do not violate public
policy” are to be upheld. City of Livonia, 423 Mich. at 525. However, for the reasons stated
above, we apply with caution the principle that contracts in contravention of public policy are not
enforceable, and affirm the trial court’s grant of summary disposition to defendants. Given the
disposition of this issue, we need not consider whether the trial court erred in denying plaintiffs’
motion for a permanent injunction against operation of the adult foster care facility. 7

6
  Nor is it to say that the operation of some other business out of the subject property would not
violate the prohibition against conducting business enterprise. Plaintiffs mention more than once
in their brief to this Court that several other business entities are “housed” at the subject
property, but do not allege that Counts is conducting business through these entities. Thus,
whether the “housing” of other business entities at the subject property violates the covenant
prohibiting the conduct of business enterprises is not before us.
7
 We also decline to address plaintiffs’ allegations that the operation of Hummingbird Meadows
has increased traffic in the subdivision. Plaintiffs base their claim for relief not on any damage
caused by the alleged increase in traffic, but on their argument that operation of the adult foster
care family home violates Pine Valley’s prohibition on business enterprises, which argument we
have rejected.

                                                -7-
Affirmed.

                  /s/ Thomas C. Cameron
                  /s/ Jane M. Beckering
                  /s/ Amy Ronayne Krause

            -8-