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Cove Creek Condominium Association v. Vistal Land & Home Development, LLC

Court of Appeals of Michigan

December 19, 2019

COVE CREEK CONDOMINIUM ASSOCIATION, Plaintiff/Counterdefendant-Appellee,
v.
VISTAL LAND & HOME DEVELOPMENT, LLC, and MARIA A. CERVI AND AMERICO CERVI REVOCABLE LIVING TRUST, Defendants/Counterplaintiffs-Appellants. COVE CREEK CONDOMINIUM ASSOCIATION, Plaintiff/Counterdefendant-Appellant,
v.
VISTAL LAND & HOME DEVELOPMENT, LLC, and MARIA A. CERVI AND AMERICO CERVI REVOCABLE LIVING TRUST, Defendants/Counterplaintiffs-Appellees.

          Oakland Circuit Court LC No. 2016-155706-CH

          Before: Ronayne Krause, P.J., and Meter and Stephens, JJ.

          STEPHENS, J.

         In Docket No. 342372, defendants/counterplaintiffs, Vistal Land & Home Development, LLC (Vistal), and Maria A. Cervi and Americo Cervi Revocable Living Trust (the Trust) (collectively, defendants), appeal as of right the order granting summary disposition in favor of plaintiff/counterdefendant, Cove Creek Condominium Association (plaintiff), dismissing all claims in defendants' second amended countercomplaint, and denying defendants' motions for summary disposition. The gravamen of this matter is a dispute as to which version of MCL 559.167 of the Condominium Act, MCL 559.101 et seq., applies. The statute was amended several times during the existence of the condominium project. In Docket No. 343144, plaintiff appeals as of right the order denying its motion for attorney fees and costs. We affirm in both appeals.

         I. BACKGROUND

         This case arises from plaintiff's claims for declaratory and other relief related to former Units 1 through 14 of the Cove Creek Condominium project (the Condominium or the project). The Condominium was established by the recording of the Master Deed on April 21, 1989, and was composed of 31 units. It is undisputed that Units 15 to 31 were designated as "must be built," were constructed, and are currently owned, while Units 1 through 14 were identified as "need not be built" and were never constructed. The first unit was sold sometime in 1989.[1] On May 17, 1989, Lifestyle Homes, the original developer of the project, transferred its interest by quitclaim deed to Cove Creek Limited Partnership (Cove Creek LP). On September 15, 2004, Cove Creek LP executed a deed transferring Units 1 through 14 to Vistal Cothery, LLC.[2] On November 6, 2006, Vistal Cothery, LLC, executed a deed conveying Units 1 through 14 to Vistal. On October 25, 2016, Vistal quitclaimed its interest in Units 1 through 14 to the Trust. The day before, on October 24, 2016, plaintiff filed a complaint against defendants. In Count I, plaintiff sought a declaration that Units 1 through 14 no longer existed, that all land on which Units 1 through 14 were to be constructed was part of the general common elements, and that defendants did not have the right to withdraw Units 1 through 14.[3] Plaintiff relied on, and the trial court applied, MCL 559.167(3), as amended by 2002 PA 283, effective May 9, 2002, of the Condominium Act, MCL 559.101 et seq which read:

Notwithstanding section 33, if the developer has not completed development and construction of units or improvements in the condominium project that are identified as "need not be built" during a period ending 10 years after the date of commencement of construction by the developer of the project, the developer, its successors, or assigns have the right to withdraw from the project all undeveloped portions of the project not identified as "must be built" without the prior consent of any co-owners, mortgagees of units in the project, or any other party having an interest in the project. If the master deed contains provisions permitting the expansion, contraction, or rights of convertibility of units or common elements in the condominium project, then the time period is 6 years after the date the developer exercised its rights with respect to either expansion, contraction, or rights of convertibility, whichever right was exercised last. The undeveloped portions of the project withdrawn shall also automatically be granted easements for utility and access purposes through the condominium project for the benefit of the undeveloped portions of the project. If the developer does not withdraw the undeveloped portions of the project from the project before expiration of the time periods, those undeveloped lands shall remain part of the project as general common elements and all rights to construct units upon that land shall cease. In such an event, if it becomes necessary to adjust percentages of value as a result of fewer units existing, a co-owner or the association of co-owners may bring an action to require revisions to the percentages of value under section 95. [MCL 559.167(3), as amended by 2002 PA 283 (emphasis added).[4]

         On November 3, 2016, the Trust informed plaintiff that it had withdrawn Units 1 through 14 from the project. The Trust relied on MCL 559.167(3), (4) and (5), as amended by 2016 PA 233. The 2016 version of the statute, effective September 21, 2016, provides, in relevant part:

(3) Notwithstanding section 33, for 10 years after the recording of the master deed, the developer, its successors, or assigns may withdraw from the project any undeveloped land or convert the undeveloped condominium units located thereon to "must be built" without the prior consent of any co-owners, mortgagees of condominium units in the project, or any other party having an interest in the project. If the master deed confers on the developer expansion, contraction, or convertibility rights with respect to condominium units or common elements in the condominium project, then the time period is 10 years after the recording of the master deed or 6 years after the recording of the amendment to the master deed by which the developer last exercised its expansion, contraction, or convertibility rights, whichever period ends later. Any undeveloped land so withdrawn is automatically granted easements for utility and access purposes through the condominium project for the benefit of the undeveloped land.
(4) If the developer does not withdraw undeveloped land from the project or convert undeveloped condominium units to "must be built" before expiration of the applicable time period under subsection (3), the association of co-owners, by an affirmative 2/3 majority vote of the members in good standing, may declare that the undeveloped land shall remain part of the project but shall revert to general common elements and that all rights to construct condominium units upon that undeveloped land shall cease. When such a declaration is made, the association of co-owners shall provide written notice of the declaration to the developer or any successor developer by first-class mail at its last known address. Within 60 days after receipt of the notice, the developer or any successor developer may withdraw the undeveloped land or convert the undeveloped condominium units to "must be built". However, if the undeveloped land is not withdrawn or the undeveloped condominium units are not converted within 60 days, the association of co-owners may file the notice of the declaration with the register of deeds. The declaration takes effect upon recording by the register of deeds. The association of co-owners shall also file notice of the declaration with the local supervisor or assessing officer. In such an event, if it becomes necessary to adjust percentages of value as a result of fewer condominium units existing, a co-owner or the association of co-owners may bring an action to require revisions to the percentages of value under section 95.
(5) A reversion under subsection (4), whether occurring before or after the date of the 2016 amendatory act that added this subsection, is not effective unless the election, notice, and recording requirements of subsection (4) have been met. [MCL 559.167(3)-(5), as amended by 2016 PA 233 (emphasis added).]

         On December 9, 2016, plaintiff filed a first amended complaint, which addressed events that occurred after the filing of the complaint. Nevertheless, plaintiff's Count I continued to seek declaratory relief against the Trust under MCL 559.167, as amended by 2002 PA 283. On November 21, 2016, defendants filed a motion for summary disposition under MCR 2.116(C)(8) on Count I, arguing that plaintiff's claim solely relied on the 2002 version of MCL 559.167, which was repealed and restated, effective September 21, 2016. Defendants argued that the 2016 amendment applied retroactively and did not divest plaintiff of any vested rights. Plaintiff replied that the 2016 amendment only applied to current "need not be built" units and did not revive former "need not be built" units that had already ceased to exist. It also argued that applying the 2016 amendment retroactively would abrogate vested property rights and violate the due-process rights of co-owners. Plaintiff contended that summary disposition should be granted in its favor under MCR 2.116(I)(2).

         On January 11, 2017, a hearing was held on defendants' motion for summary disposition regarding Count I. Defendants argued that plaintiff's claim that the constitutionality of the 2016 amendment was not properly before the court. Plaintiff argued that if this motion was decided in its favor, then the other claims in the complaint and defendants' countercomplaint[5] were moot. On February 10, 2017, the trial court issued an opinion and order denying defendants' motion for summary disposition on Count I and granting summary disposition in favor of plaintiff pursuant to MCR 2.116(I)(2). The court applied the 2002 version of MCL 559.167 to find that all the land on which Units 1 through 14 were to have been constructed had become part of the general common elements. It further ruled that the Trust did not have the right to withdraw Units 1 through 14, or the land on which Units 1 through 14 were to be located, from the Condominium. In accord with the 2002 amendment, the trial court found that the 10-year period for defendants to withdraw the undeveloped units began before October 27, 1989, the time of construction, and expired on October 27, 1999. The trial court further found that, even if the 10-year period had not begun to run until 2002, the right to withdraw expired and the developer lost all rights to develop on May 9, 2012. The trial court found that the vesting of title in plaintiff occurred by operation of law when the 10-year period expired prior to the enactment of the 2016 amendments. The trial court finally ruled that the 2016 amendments were not retroactive. A motion to reconsider was denied.

         On June 30, 2017, the trial court granted defendants leave to file an amended countercomplaint. On July 5, 2017, defendants filed a second amended countercomplaint in which defendants sought reimbursement for the payment of real property taxes in the amount of $80, 986.64 under theories of restitution (Count I), indemnification (Count II), quantum meruit/unjust enrichment (Count III), detrimental reliance/promissory estoppel (Count IV), and account stated (Count V). Defendants also sought to quiet title to the property, arguing that their deeds were recorded before plaintiff recorded notice of its interest in Units 1 through 14 (Count VI), and claiming that plaintiff lost any interest in Units 1 through 14 through adverse possession (Count VII). Finally, in Count VIII, defendants alleged that, if the trial court gave plaintiff title, then plaintiff would receive a windfall and be unjustly enriched. In early October 2017, defendants filed motions for summary disposition pursuant to MCR 2.116(C)(10) as to their counterclaims.

         On October 17, 2017, plaintiff filed a motion for summary disposition seeking dismissal of defendants' second amended countercomplaint pursuant to MCR 2.116(C)(7), (8), and (10). Plaintiff argued that defendants were attempting to avoid the court's prior ruling regarding title and that Count VI should be dismissed because the court had already rejected that argument in ruling on defendants' earlier motion for reconsideration.

         On November 15, 2017, plaintiff filed a response to defendants' motion for summary disposition as to Counts I, II, III, IV, V, and VIII. Plaintiff argued that defendants' claims for property taxes failed as a matter of law because (1) there was an adequate remedy at law, and (2) defendants did not provide a benefit to plaintiff because common elements may not be taxed. Plaintiff argued that Michigan law provides a clear legal remedy for reimbursement of taxes assessed or paid by mistake.[6] Plaintiff additionally argued that there was no wrongful conduct necessary for a claim of indemnity, defendants' claim for promissory estoppel was based on a 2007 purchase agreement between Vistal and plaintiff, which was an express contract that barred the claim of promissory estoppel, and there was no agreement as required for a claim of account stated. Finally, plaintiff argued that defendants' claims were barred by MCR 3.411(F). In response to defendants' motion for summary disposition regarding Count VI, plaintiff argued that (1) the trial court had already ruled on the issue of title, (2) MCL 565.29 was not controlling because defendants were not "purchasers in good faith," (3) MCL 559.143 was inapplicable, and (4) the exact time that the developer rights were lost was not dispositive.

         On January 31, 2018, the trial court issued an opinion and order granting plaintiff's motion for summary disposition, dismissing all claims in the second amended countercomplaint, and denying defendants' motions for summary disposition. Regarding Counts I and II (restitution and indemnification), the trial court ruled that plaintiff was entitled to summary disposition pursuant to MCR 2.116(C)(10) because defendants were not entitled to contractual indemnity. The trial court reasoned that there was no evidence of any implied or express contract of indemnity, and defendants did not have a valid common-law claim for restitution because there was no evidence that plaintiff committed any wrongful act that caused defendants to pay the property taxes. The trial court also found that plaintiff was entitled to summary disposition on Counts III and VIII (quantum meruit and unjust enrichment) because there was a remedy at law and no evidence that plaintiff was unjustly enriched because the property would not have been foreclosed upon. Next, the trial court ruled that plaintiff was entitled to summary disposition on Count IV (detrimental reliance/promissory estoppel) because there was no evidence that plaintiff made a promise or that plaintiff should have expected defendants to act or fail to act on the basis of any promise. As to Count V (account stated), the trial court ruled that plaintiff was entitled to summary disposition because there was no evidence of an account stated in writing by the creditor and accepted as correct by the debtor. The trial court found that plaintiff was entitled to summary disposition on Count VI (quiet title/declaratory relief) pursuant to MCR 2.116(C)(7) because MCL 565.29 was inapplicable for the reason that there was no conveyance, defendants were not subsequent purchasers in good faith, and defendants failed to comply with MCR 3.411(F). Finally, the trial court ruled that plaintiff was entitled to summary disposition on Count VII (adverse possession) pursuant to MCR 2.116(C)(10) because defendants' use of the land was not actual, visible, open, notorious, exclusive, continuous, and uninterrupted for the statutory period of 15 years, nor was it hostile and under cover of claim of right. Defendants filed their claim of appeal from this order on February 12, 2018.

         On February 27, 2018, plaintiff filed a motion for attorney fees and costs as a form of sanctions against defendants pursuant to MCR 2.114, MCR 2.313, MCR 2.625, and MCL 600.2591. After a hearing on plaintiff's motion, the trial court found no basis to sanction defendants and denied the motion. The trial court stated, "I can't remember any point in this entire litigation where I thought this is a frivolous pleading that has been filed, this was a frivolous motion that has been brought. I think this was a difficult case." On March 23, 2018, the trial court entered an order denying the motion for attorney fees and costs. Plaintiff filed its claim of appeal from this order on April 2, 2018.[7]

         II. DOCKET NO. 342372

         In Docket No. 342372, defendants contend that the trial court erred by applying the 2002 version of MCL 559.167 because the 2016 amendment applies retroactively and, in the alternative, that the earlier versions of the statute violated defendants' due-process rights and constituted an unconstitutional taking. We disagree.

         A. SUMMARY DISPOSITION

         Defendants moved for summary disposition of plaintiff's amended Count I pursuant to MCR 2.116(C)(8), and the trial court granted summary disposition in favor of plaintiff pursuant to MCR 2.116(I)(2).

         1. ISSUE PRESERVATION AND STANDARD OF REVIEW

         "In order to properly preserve an issue for appeal, it must be raised before, and addressed and decided by, the trial court." Henderson v Dep't of Treasury, 307 Mich.App. 1, 7-8; 858 N.W.2d 733 (2014) (quotation marks and citation omitted). Defendants moved for summary disposition on Count I of plaintiff's amended complaint on the ground that plaintiff's claim for relief was based on a repealed version of MCL 559.167. The trial court disagreed and granted summary disposition in favor of plaintiff on Count I. Therefore, the issue of whether the 2016 amendment to MCL 559.167 applies retroactively is preserved.

         The parties, as early as November 2016, addressed the constitutional issues of due process and the takings clause. The court implicitly acknowledged that the parties raised those issues when it ruled. The court made the decision to decide this case based upon non-constitutional grounds. There is a preference for resolution on non-constitutional grounds where possible. Lichtman v City of Detroit, 75 Mich.App. 731, 734; 255 N.W.2d 750 (1977). As early as November, this issue was noted in Defendants' Motion for Summary Disposition as to Count I. It was later argued in a reply brief filed by the defendants, but like other constitutional issues, was not discussed by the court in its opinion. In fact the court specifically declined to rule on any constitutional issues, stating "Plaintiff makes other valid arguments as to why a reading of MCL 559.167 as proposed by the Defendants would render the statute unconstitutional. However, the Court need not address that issue at this time." An argument could be made that because the parties did not address this issue at oral argument and the trial court failed to address the issue in its opinion and order, it is not preserved. However, because the issue was raised in the parties' briefing, it is preserved for appeal. Peterman v Dep't of Natural Resources, 446 Mich. 177, 183; 521 N.W.2d 499 (1994). In this instance even if the issue were unpreserved, this Court, having all relevant facts before it, would review the legal issue. Wells Fargo Bank, NA v Null, 304 Mich.App. 508, 518; 847 N.W.2d 657 (2014).

         MCR 2.116(I)(2) provides that "[i]f it appears to the court that the opposing party, rather than the moving party, is entitled to judgment, the court may render judgment in favor of the opposing party." This Court reviews de novo a trial court's ruling on a motion for summary disposition. Rataj v City of Romulus, 306 Mich.App. 735, 746; 858 N.W.2d 116 (2014). "A motion brought under MCR 2.116(C)(8) tests the legal sufficiency of the claim on the pleadings alone to determine whether the plaintiff has stated a claim on which relief may be granted. The motion must be granted if no factual development could justify the plaintiff's claim for relief." Id. at 746-747 (quotation marks and citations omitted). "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." Ashley Capital, LLC v Dep't of Treasury, 314 Mich.App. 1, 6; 884 N.W.2d 848 (2015) (quotation marks and citation omitted). This Court also reviews de novo an issue of statutory construction, which is a question of law. Id.

         With regard to defendants' unpreserved due-process argument, whether a party has been afforded due process, Al-Maliki v LaGrant, 286 Mich.App. 483, 485; 781 N.W.2d 853 (2009) and whether MCL 559.167, as amended by 2002 PA 283, caused an unconstitutional taking, are questions of law this Court reviews de novo, Hinojosa v Dep't of Natural Resources, 263 Mich.App. 537, 541; 688 N.W.2d 550 (2004). The relevant facts are available for both issues; therefore, appellate consideration is not precluded. "Review of an unpreserved error is limited to determining whether a plain error occurred that affected substantial rights." Rivette v Rose-Molina, 278 Mich.App. 327, 328; 750 N.W.2d 603 (2008).

         2. ANALYSIS

         i. RETROACTIVITY

         Whether the 2016 amendment to MCL 559.167 applies retroactively is a question of first impression. We begin with the presumption that statutory amendments operate prospectively. Davis v State Employees' Retirement Bd, 272 Mich.App. 151, 155; 725 N.W.2d 56 (2006). "[S]tatutes and amended statutes are to be applied prospectively unless the Legislature manifests an intent to the contrary. The Legislature's expression of an intent to have a statute apply retroactively must be clear, direct, and unequivocal as appears from the context of the statute itself." Id. at 155-156 (citations omitted). Legislative intent governs the determination of statutory retroactivity. Id. at 156. "[T]he Legislature has shown on several occasions that it knows how to make clear its intention that a statute apply retroactively." Id. (quotation marks and citation omitted). For example, MCL 141.1157 provides: "This act shall be applied retroactively . . . [, ]" and MCL 324.21301a(2) provides: "The changes in liability that are provided for in the amendatory act that added this subsection shall be given retroactive application." Id.[8]

         "There is an exception to the general rule that newly enacted statutes are presumed to apply prospectively, which exception provides that no such presumption exists where the statute is remedial or procedural in nature, as long as it does not deny vested rights." Davis, 272 Mich.App. at 158. Therefore, "[a] statute may not be applied retroactively if it abrogates or impairs vested rights, creates new obligations, or attaches new disabilities concerning transactions or considerations occurring in the past." Id.

         The 2016 amendment to MCL 559.167 does not expressly provide that it is retroactive. In other words, there is no clear, direct, or unequivocal language in the actual statute that the statute is to be applied retroactively, such as language stating that "these amendments shall be given retroactive application." Defendants argue that the use of the word "occurring" in Subsection (5) expressly makes the 2016 amendment retroactive. MCL 559.267(5) provides: "A reversion under subsection (4), whether occurring before or after the date of the 2016 amendatory act that added this subsection, is not effective unless the election, notice, and recording requirements of subsection (4) have been met." MCL 559.167(5), as amended by 2016 PA 233 (emphasis added). This language, however, is not a clear and unequivocal expression of the Legislature's intent to apply the amendment retroactively.[9] The Legislature's choice of the word "occurring," rather than "occurred," is significant.[10] As the trial court determined, the present participle indicates that the 2016 amendment does not apply to any "reversion" that had already occurred. Before the 2016 amendment, MCL 559.167 did not use the term "reversion" or contain Subsection (4). Therefore, "[a] reversion under subsection (4)" could not have occurred before the effective date of the 2016 amendment. Likewise, the use of the word "occurring" in Subsection (5) signals the progressive aspect and shows that an action was, is, or will be unfinished at the time referred to. People v Manuel, 319 Mich.App. 291, 301-302; 901 N.W.2d 118');">901 N.W.2d 118 (2017). Thus, the statute signals that a "reversion under subsection (4)" may be in the process of occurring when the statute became effective. In those cases, the requirements of the 2016 amendment must be satisfied. As plaintiff argues, however, nothing suggests that completed transfers under the earlier versions of the statute are to be reversed.[11]

         Defendants also argue that the statute is remedial and, therefore, must be applied retroactively. "A statute is remedial or procedural in character if it is designed to correct an existing oversight in the law or redress an existing grievance[.]" Davis, 272 Mich.App. at 158-159 (quotation marks and citation omitted). Defendants specifically argue that the 2016 amendment was intended to address due-process deficiencies in the prior versions of the statute. However, the "legislative history" cited by plaintiff indicates that the purpose of the 2016 amendment was to address "confusion regarding the timing of the transfer of property and the title history of transferred property."[12]

         Nonetheless, even if the 2016 amendment is considered remedial, it cannot apply retroactively if it abrogates vested rights. See Davis, 272 Mich.App. at 158. Under the 2002 version of MCL 559.167(3), "[i]f the developer does not withdraw the undeveloped portions of the project from the project before expiration of the time periods, those undeveloped lands shall remain part of the project as general common elements and all rights to construct units upon that land shall cease." MCL 559.167(3), as amended by 2002 PA 283 (emphasis added). In this case, 10 years after the date of commencement of the project was sometime in 1999, or possibly sometime in 2012 at the latest.[13] When the rights to construct units ceased, plaintiff obtained a vested right in the undeveloped lands (former Units 1 through 14). The trial court found that plaintiff's rights vested by operation of law, without any action. We agree.

         Defendants' arguments against vesting are that (1) plaintiff did not prepare and record a replat under MCL 559.167(2), and (2) the 2002 version of MCL 559.167 violated defendants' due-process rights. The version of MCL 559.167(2), as amended by 2002 PA 283, provides: "If a change involves a change in the boundaries of a condominium unit or the addition or elimination of condominium units, a replat of the condominium subdivision plan shall be prepared and recorded assigning a condominium unit number to each condominium unit in the amended project." As found by the trial court, nothing in this language required a replat to be recorded, or conditioned a "reversion" on the recording.[14] Thus, a "reversion" occurred regardless of whether a replat was prepared or recorded. While plaintiff's failure to record a replat may have some other effect, it did not prevent the ...


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