Michigan HOA Awarded Legal Fees for Restriction Enforcement

Jul 11, 2022 | Articles

Winning one appeal is hard; winning two appeals in the same case is harder. When the experienced Michigan condominium association lawyers at Makower Abbate Guerra Wegner Vollmer helped their HOA client win for the second time in Copperfield Villas v Tuer, No 356494 (Mich Ct App June 23, 2022), they affirmed what it means to be “successful” in court.

The defendant homeowners in Copperfield violated various condominium restrictions by, among other things, parking on the lawn, failing to adequately maintain their lawn, and installing an unapproved dog kennel and driveway expansion. In 2018, when negotiations between the Copperfield Villas Association and the homeowners proved fruitless, the Association filed suit.

The homeowners immediately asked the trial court to dismiss the case, arguing they had a right to demand arbitration, and that the HOA had to get co-owner approval to sue. Initially, the trial court agreed and dismissed the case, saying the Association must hold an owner vote before filing suit. After the trial court dismissed the case, the homeowners informed the HOA they’d do everything the it requested except pay all legal fees. The Association did not agree and appealed what they believed was an erroneous dismissal.

On appeal, the Michigan Court of Appeals ruled for the Association and reinstated the case, holding that under the Master Deed, Bylaws, and Michigan Condominium Act, MCL 559.101 et seq., no owner vote was necessary for the HOA to bring suit to enforce the Bylaw restrictions. The case made it back to the trial court in 2021, and the homeowners eventually consented to a judgment ordering them to comply with the Bylaws, but the homeowners refused to pay any legal fees. The trial court awarded the Condominium Association $8,000.00 in legal fees instead of the approximately $22,000 it had incurred to that point, including fees incurred in the appeal. The trial court reasoned that, once the homeowners agreed to comply with the bylaws prior to the Association appealing, and even though the homeowners refused to pay the Association’s legal fees, the Association should have stopped litigation and not appealed the incorrect decision. The trial court held that, even though the Association won, it would award no legal fees for the appeal, nor any fees on remand up to the day the Judgment entered in 2021.

The Association appealed again, arguing the trial court erred in limiting the fees to those incurred before the first appeal. The Association argued on this second appeal that the HOA clearly won the first appeal and won in the lower court thereafter when the homeowners gave the HOA everything it asked for – specifically, a Judgment that required the homeowners to forever cease violating the Bylaw. The Association argued that the homeowners’ refusal to pay legal fees was not relevant to the question of success.

The Michigan Court of Appeals agreed, stating in Copperfield:

“Successful” can be defined as “resulting or terminating in success” or “gaining or having gained success.” Merriam-Webster’s Collegiate Dictionary (11th ed). “Success” can be defined as a “favorable or desired outcome.” Id. Therefore, in order for the CVA to be “successful,” the settlement must have resulted in a favorable or desired outcome.

After reviewing the record, the Court of Appeals held that “The [Association] obtained a favorable or desirable outcome because it generally secured the relief that it sought in its complaint.” By refusing to award the HOA the legal fees it incurred in its first successful appeal, the Court of Appeals noted that “the trial court’s rationale improperly punishes the [Association] for pursuing its rights on appeal.” The Michigan Court of Appeals found that if allowed to stand, the “trial court’s ruling limiting the award of attorney fees to only the litigation before the first appeal would have a chilling effect on parties who choose to litigate rather than accept a less favorable settlement offer.”

Litigation between an HOA/condo association and homeowner for alleged restrictions violations is never easy. The victory for Michigan HOAs in Copperfield, however, shows that when negotiations break down, and an owner forces their HOA to involve the courts, then if the HOA wins, owners may have significant financial exposure to pay their HOA’s legal fees, with that financial responsibility potentially extending to fees incurred on appeal. Before risking court, Michigan homeowners associations and Michigan homeowners should confer with experienced Michigan legal counsel such as those at Makower Abbate Guerra Wegner Vollmer to ensure they understand their legal rights and prospects for success.