Michigan Court upholds condo association fines for unauthorized wind turbine and generator

In Oak Valley Estates Homeowners Association v Georgetta Livingstone, Unpublished Opinion of the Michigan Court of Appeals, Docket No. 338292 (January 22, 2019), the Michigan Court of Appeals upheld a monetary judgment in favor of a condominium association, for fines and attorney’s fees and costs, after granting an injunction requiring that a co-owner remove solar panels, a wind turbine and a generator that were installed without permission from the board of directors.  While this case is not precedentially binding, it does provide a good roadmap for condominium associations to follow when imposing fines and it is instructive on how to deal with difficult co-owners.

Facts

Georgetta Livingstone was a co-owner in the Oak Valley Estates Homeowners Association (the “Association”), a condominium located in Clarkston, Michigan.  DTE Energy installed a smart meter near Livingstone’s unit in 2011.  After the installation of the smart meter, Livingston began experiencing negative health symptoms that she attributed to exposure to electromagnetic radiation emitting from the smart meter. After engaging in a prolonged disagreement with DTE about the effects of the meter, defendant eventually replaced the smart meter with a traditional analog meter, resulting in termination of the electrical services to her property.

In order to deliver energy to her unit, Livingstone installed a wind turbine and generator. The Association’s president advised Livingstone that these external improvements required approval by the board of directors. The board also received various complaints from other co-owners about the noise caused by the generator. The Association then sent Livingstone periodic written notices indicating that the unauthorized improvements violated the condominium bylaws and would result in fines.

In December 2015, the Association initiated an action to enforce the condominium bylaws, seeking injunctive relief requiring removal of the wind turbine and generator. The trial court granted summary disposition in the Association’s favor on this issue. On appeal, Livingstone did not challenge the issuance of the injunction, but challenged the monetary judgment issued with the injunction that awarded $30,538.31 in attorney’s fees, costs, and fines.

The Association’s award of $16,500 in attorney’s fees and cost was reasonable

The Court of Appeals relied on MCL 559.206(b), which states that in a “proceeding arising because of an alleged default by a co-owner, the association of co-owners or the co-owner, if successful, shall recover the costs of the proceeding and reasonable attorney fees, as determined by the court, to the extent the condominium documents expressly so provide.” Article XIX, § 2 of the bylaws contained the following language, “In any proceeding arising because of an alleged default by any Co-owner, the Association, if successful, shall be entitled to recover the costs of the proceeding and such reasonable attorney’s fees as may be determined by the court ….”  Accordingly, the Court of Appeals concluded that the trial court properly awarded mandatory attorney’s fees and costs after the Association prevailed. 

The trial court relied on the 2014 Economics of Law Practice report published by the State Bar of Michigan (which was updated in 2017) to determine that the median and mean hourly income for an attorney with 31 to 35 years of experience is $250 and $276, respectively; $250 and $280 for an attorney practicing in Oakland County, south of M-59; and $250 and $257 for an attorney specializing in real estate.  Accordingly, the court found that the rate of $250/hour that was requested by the lead attorney was reasonable based on the 2014 report.  In awarding  fees and costs for 66 hours of time, the Court of Appeals noted that:

Despite defendant’s characterization of this matter as a simple case, the trial court observed, and we agree, that plaintiff was forced to incur additional fees based upon defendant’s conduct. In particular, plaintiff was obligated to respond to a pre-answer motion to dismiss which presented arguments that were, at best, difficult to interpret; respond to and seek dismissal of a counterclaim presenting arguments nearly identical to those that had already been rejected by the trial court; and pursue a motion to compel after defendant failed to provide timely discovery responses.  Id. at *3.

Accordingly, the Court of Appeals affirmed the trial court’s award of attorney’s fees and costs, which partially included fees for having to deal with the co-owner’s counterclaim, as it was part of a “proceeding arising because of an alleged default of a co-owner.”  While the Court of Appeals remanded due to a minor error in the trial court’s mathematical calculations, this case is important for condominium associations, as it demonstrates that condominium associations may be entitled to attorney’s fees and costs for the entire proceeding, not just the prosecution of the bylaw violation in the complaint.

The Association’s fines of $12,875 were reasonable

Livingstone also challenged the reasonableness of the fines that were levied as a result of the bylaw violations.  The Court of Appeals held that MCL 559.206(c) expressly permits fines and states that the Association was entitled to “[s]uch other reasonable remedies the condominium documents may provide including but without limitation the levying of fines against co-owners after notice and hearing thereon … as provided in the condominium bylaws or rules and regulations of the condominium.”  The Court of Appeals noted that the condominium bylaws expressly permitted fines and provide in pertinent part:

ASSESSMENT OF FINES

Section 1. General. The violation by any Co-owner, occupant or guest of any of the provision of the Condominium Documents shall be grounds for fines against the Co-owner. …

Section 2. Procedures. Upon any such violation the following procedures will be followed:

a) Notice. Notice of the violation, including the Condominium Document provision violated, together with a description of the factual nature of the alleged offense shall be sent by first class mail, postage prepaid, to the Co-owner or representative at the address shown in the notice files with the Association.

b) Opportunity to Defend. The offending Co-owner shall appear before the Board and offer evidence in defense of the alleged violation. The appearance before the Board shall be at its next scheduled meeting, but in no event shall the Co-owner be required to appear less than 10 days from the date of the notice.

c) Default. Failure to respond to the notice of violation constitutes a default.

d) Hearing and Decision. Upon appearance by the Co-owner before the Board and presentation of evidence of defense, or in the event of the Co-owners default, the Board shall be [sic] by majority vote of a quorum, decide whether a violation has occurred. The Board’s decision is final.

Section 3. Amounts. Upon violation of any of the provisions of the Condominium Documents and after default of the offending Co-owner or upon the decision of the Board as recited above, the following fines shall be levied:

a) First violation. Twenty-Five Dollar fine.

b) Second violation. Fifty Dollar fine.

c) Third and Subsequent Violations. One Hundred Dollar Fine.

The Associated argued that it was entitled to assess fines in excess of $70,000 based on the continuing violations, but that it but it voluntarily elected to assess fines  in the amount of $12,875 based on the number of complaints from the other co-owners. The trial court agreed that the Association was entitled to assess fines in the amount of $12,875 as requested by the Association.

Livingstone challenged the fines on the basis that the Association did not comply with the fine procedures contained in the condominium bylaws.  Livingstone argued that she was not provided a hearing or opportunity to defend against all the alleged complaints, i.e the fines associated with the continuing violations as she only received 29 notices of alleged 29 notices of alleged violations (rather than a notice for each complaint).  The court ruled that nothing in the condominium bylaws required the Association to issue notices with respect to each continuing violation.  Rather, the Court of Appeals held that the Association complied with the notice requirements by sending periodic notices referring to the bylaw provisions at issue, and these notices sufficed.

The Court of Appeals also held that the Livingstone did not opt to exercise her right to appear before the board at its next scheduled meeting to contest the alleged bylaw violations.  The Court of Appeals determined that Livingston challenged the violation notices through written correspondence and that the board considered her arguments at the hearing before the fines were imposed.  Accordingly, the Association followed the correct process when it imposed fines, as the fines were properly imposed at board meeting, and that the co-owner’s failure to attend the board meeting did not impede the Association’s ability to impose fines.

Finally, Livingston argued that the assessment of $12,875 in fines was excessive.  The Court held that the condominium bylaws clearly established an escalating schedule of fines, with $25 assessed for a first violation, $50 assessed for a second violation, and $100 assessed for each violation thereafter.  The Court of Appeals noted that Livingstone had committed daily violations for over 2 years and that the trial court did not err by imposing fines in the amount of $12,875 as requested by the condominium association.

Conclusion

Oak Valley Estates Homeowners Association v Georgetta Livingstone, Unpublished Opinion of the Michigan Court of Appeals, Docket No. 338292 (January 22, 2019) illustrates that condominium bylaws will generally be enforced as written.  Specifically, this case is important for condominium associations, as it demonstrates that they may recover attorney’s fees and costs, not only for enforcing the condominium bylaws in a complaint, but also defending a counterclaim in the same proceeding.  Similarly, this case demonstrates the importance of a condominium association following the fine procedures contained in the condominium bylaws.  The Association was able to obtain all the requested fines, as they imposed the fines at a board meeting, after a hearing and complied with the other requirements contained in the condominium bylaws.  Accordingly, if the condominium association did not comply with this procedure, it may not have been successful.

Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners’ associations and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2018, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel was named an Up & Coming Lawyer by Michigan Lawyer’s Weekly in 2015, an award given to only 30 attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners’ associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or kevin@hirzellaw.com.