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Pletos v. Makower Abbate Guerra Wegner Vollmer, PLLC

United States District Court, E.D. Michigan, Southern Division

August 30, 2017





         The instant action is the Plaintiffs, Sandra and Mitchell Pletos, ' latest attempt to avoid payment of their homeowners' association fees. Dissatisfied with the state courts resolution of Plaintiffs' previous lawsuit against their homeowners association, Plaintiffs filed the instant action claiming that the homeowners association and its counsel committed various violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), the Michigan Regulation of Collection Practices Act, Mich. Comp. Laws § 445.251 et seq. (“MRCPA”) and the Racketeer Influenced Corrupt Practices Act, 18 U.S.C. § 1961 et seq. (“RICO”) by attempting to collect on the state court judgment. Plaintiffs also bring state law claims of abuse of process, criminal enterprise and constructive fraud.

         Presently before the Court is the Defendants, John Finkelmann's, and his law firm, Makower Abbate Guerra Wegner Vollmer, PLLC's (the “Makower Defendants”) Motion to Dismiss. Also, before the Court is the Defendants, ' Roger Papa, Giovan Agazzi, Danny Landa, Kati Azia and Mike Desjardines, who are all Board members of the homeowners association, (the “LWA Defendants”) Motion for Summary Judgment. These matters are fully briefed and, upon review of the parties' submissions, the Court concludes that oral argument will not aid in the disposition of this matter. Accordingly, the Court will resolve the pending motions on the submitted briefs. See E.D. Mich. L.R. 7.1(f)(2).

         Because Plaintiffs have failed to allege viable federal claims and the Court declines to exercise supplemental jurisdiction over Plaintiffs' state law claims, the Court will grant in part and deny in part the Defendants' present motions and will dismiss the instant action.


         Plaintiffs are lot owners in Lake in the Woods, a platted subdivision located in the Township of Shelby, Macomb County, Michigan. By virtue of Plaintiffs' lot ownership, they are members of the Lake in the Woods Association, Inc. (“LWA”), a Michigan nonprofit corporation. The governing documents for the LWA are the: (1) Articles of Incorporation, (2) the Declaration of Easements, Covenants, Conditions and Restrictions for Lake in the Woods Subdivision (“DECCR”) and (3) the Bylaws.

         Article IV of the DECCR obligates all lot owners of Lake in the Woods to pay annual general assessments and special assessments for capital improvements. Article IV also provides that “[a]ll annual and special assessments, whether general or related to the Lake Lots, together with interest, costs and reasonable attorneys' fees, shall from date of assessment be a charge and a continuing lien upon the Lot against which each such assessment is made.” Pg ID 402.

         Plaintiffs failed to pay assessments from 2005 through April of 2012 and the LWA recorded a lien in the amount of $1, 295.53 on Plaintiffs' property. Pletos v. Lake in the Woods Homeowners Assoc., No. 319087, 2015 WL 1650803, *1 (Mich. Ct. App. Apr. 14, 2015). In January of 2012, the LWA recorded a second lien on Plaintiffs' property in the amount of $6, 271.74. Id.

         In November of 2012, Plaintiffs sued the LWA in the Macomb County Circuit Court. Plaintiffs alleged fifteen counts, including violation of the LWA's Bylaws and the DECCR, violation of the FDCPA, and slander of title. Id. The LWA hired the Makower Defendants to pursue a counterclaim against the Plaintiffs. The counterclaim sought unpaid assessments, interest, late charges, and attorney fees.

         The Macomb County Circuit Court granted summary disposition in the LWA's favor on both Plaintiffs' complaint and the LWA's counterclaim. It held that the LWA followed the DECCR and the Bylaws, it did not breach its covenants with Plaintiffs, and that Plaintiffs “failed to prove the delinquent assessments [were] in error, ” and the LWA “had the right to file liens to pursue collection of the delinquent assessments.” See Mot. Summ. J., Ex. B, Pg ID 798. It further found no violation of the FDCPA because the LWA was not a “debt collector” under the Act. After an evidentiary hearing, the court awarded a $20, 553.64 judgment against Plaintiffs, which represented unpaid assessments, late fees, interest, costs, and attorney fees. The court further held that Plaintiffs were “obligated to pay all additional legal fees that [the LWA] reasonably incurs in attempting to collect the aforementioned sums due and owing to [the LWA].”

         Plaintiffs appealed these decisions and asked the trial court to set an appeal bond and to stay the proceedings. The Macomb County Circuit Court granted a stay conditioned on Plaintiffs posting a $25, 000.00 bond within fourteen (14) days of the court's order.

         The Michigan Court of Appeals affirmed the Macomb County Circuit Court's decisions in an unpublished opinion. Pletos v. Lake in the Woods Homeowners Assoc., No. 319087, 2015 WL 1650803, *1 (Mich. Ct. App. Apr. 14, 2015). Thereafter, Plaintiffs moved for leave to appeal this decision to the Michigan Supreme Court, which was denied.

         Prior to the denial of leave by the Michigan Supreme Court, the LWA received a letter from Plaintiff Sandra Pletos. Mrs. Pletos' letter requested review of certain LWA documents. On February 5, 2016, Defendant Finkelman sent email correspondence to Plaintiffs' counsel and asked if it would be appropriate for him to respond to Plaintiffs directly on behalf of the LWA. First Am. Compl., Ex. 13 at Pg ID 483. Plaintiffs' counsel responded to Finkelmann's letter in relevant part:

First of all, as an Association member, she has the right to whatever she asked for. No attorney should be necessary for that communication. As a result, when they calculate dues, please do not charge the Association for your fees so needlessly incurred. Except for the 1/10 of an hour it costs to give the appropriate legal advice to hand over the documents.
The Association should be communicating with Mrs. Pletos directly. Tell them to put on their big boy pants and play the part of Association members like they are obligated to do.

Id. On February 12, 2016, Defendant Finkelmann sent a letter to Plaintiffs regarding Mrs. Pletos' letter requesting review of certain LWA documents. Id., Ex. 17 at Pg ID 495.

         On February 25, 2016, the LWA sent Plaintiffs Invoice Number 2016-007, which stated that Plaintiffs owed the following to the LWA:

12/31/15 Account Balance:

$34, 170.27

12/31/15 Account Balance:

$34, 170.27

Legal Fees 1/1/16 to 1/31/16


Late Fees 1/1/16 to 1/31/16


Interest 1/1/16 to 1/31/16


Total Amount Due 2/29/16:

$34, 875.80

         On February 26, 2016, the Plaintiffs sent a letter to the LWA indicating that Invoice Number 2016-007 was invalid for a variety of reasons. Id., Ex. 19 at Pg ID 503. In their letter, the Plaintiffs asserted that the election of the LWA Directors was illegal, and that the Directors and Officers of the LWA have committed fraud and other purported abuses. Id. These complaints are identical to those addressed and resolved by the Macomb County Circuit Court and affirmed by the Michigan Court of Appeals.

         Also, on February 26, 2016, Plaintiffs responded to Defendant Finkelmann's February 12, 2016 letter. Plaintiffs again raised a series of complaints concerning the identity of the Directors and Officers of the LWA, whether the Makower Defendants were authorized to act on behalf of the LWA, and the LWA's refusal to permit document inspection and financial review. Id., Ex. 20 Pg ID 509-10.

         When the Michigan Supreme Court denied leave to appeal, the Makower Defendants sent correspondence to Plaintiffs' counsel concerning the outstanding balance due on the state court judgment on April 1, 2016. Id., Ex. 22 at Pg ID 126-27. His letter states in relevant part:

As you probably are aware at this point, the Supreme Court declined the application for leave on this matter. As a result, I believe that it would be appropriate for the Pletos' to pay the outstanding balance. I understand that the Association's records show an amount due that is much higher than the $25, 000 bond, but we can start with the Bond amount in my opinion, and determine what's to be done regarding any subsequent amount.
Please let me know if you will reach out to your clients regarding payment of the bond amount to the Association at this time. If I don't hear back from you in the next week, I'll contact the Bond Company regarding this matter. Thank you.


Plaintiffs' counsel responded on April 2, 2016 stating:
No, I was not aware as nothing has appeared at my office. Nevertheless, I looked it up and you are correct ...

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