William Deghetto v. Beaumont's 7 Harbors White & Duck Lake Assoc ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
WILLIAM DEGHETTO, DEBRA DEGHETTO, UNPUBLISHED
LORI WOODS, RICHARD NELSON, CONNIE June 22, 2017
HILL, JOHN HILL, JANICE SMITH, LLOYD
SMITH, PATTE DAY, DONALD DAY,
MARGARET RIEPEN, KENNETH RIEPEN,
RICK WOODWORTH, SHIRLEY
MATUSZEWSKI, JEANNE KOZIOL, WALTER
KOZIOL, JUNE MULLINIX, GREGORY
MULLINIX, KENDRA PAPPAS, VERN
PAPPAS, EDWARD MICHALSKI, EDWARD
BALDWIN, SUSAN C. VERNIER, LON M.
VERNIER, JUDITH JOHNS, JOHN JOHNS,
CELESTINE KESSLER, NEIL KESSLER,
KATHRYN WOLFF, PAUL WOLFF, CHERYL
JONES, ROBERT JONES, MARCIA CARLINE,
THOMAS CARLINE, and PRICE SPOOR,
Plaintiffs-Appellees,
v No. 330972
Oakland Circuit Court
BEAUMONT’S SEVEN HARBORS WHITE LC No. 2014-141355-CH
AND DUCK LAKE ASSOCIATION,
Defendant-Appellant.
Before: JANSEN, P.J., and MURPHY and BORRELLO, JJ.
PER CURIAM.
In this case regarding the ongoing viability of restrictive covenants on plaintiffs’ lots,
defendant homeowners’ association appeals a November 23, 2015, trial court order denying its
motion for summary disposition and granting summary disposition in favor of plaintiffs pursuant
to MCR 2.116(C)(10). For the reasons set forth in this opinion, we affirm.
I. FACTS
The facts in this case are at times somewhat muddled, though they are not disputed.
Plaintiffs own (or owned) lots in six separate subdivisions in Highland Township, Michigan,
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which are collectively known as Seven Harbors Subdivisions. Defendant is the homeowners’
association for the entire development, which contains over 650 lots. Defendant wishes to
enforce certain covenants, which plaintiffs assert have expired.
The land now known as Seven Harbors belonged to various members of the Beaumont
family until Harry S. and Florence M. Beaumont (the “Beaumonts”) began subdividing the land
in the 1930s. The first two subdivisions created from the land are known as Supervisor’s Plat
No. 1 (“SP1”) and Supervisor’s Plat of Seven Harbors (“SPOSH”). When defendant was
incorporated in November 1947, it included only these two subdivisions. The Articles of
Incorporation were amended in 1959 to add three additional subdivisions, Supervisor’s Plat No.
5 (“SP5”), Supervisor’s Plat No. 6 (“SP6”), and Proprietor’s Plat of Seven Harbors Reserve
(“PPOSHR”). The sixth and final subdivision is Supervisor’s Plat 7 (hereafter “SP7”). It is not
clear from the record when SP7 was created, but it appears to have been replatted from land that
had been a private park sometime before 1962.
The lots of the two original subdivisions, SP1 and SPOSH, were originally transferred
from the Beaumonts to various purchasers by a form deed. Plaintiffs provided an example of
one such deed by which, in 1935, the Beaumonts sold a lot to George and Sarah Miles (the “1935
Miles Deed”). In this form deed, the Beaumonts agreed to convey certain land, along with a
maintenance fund, to a homeowners’ association that was to be created. The association was to
own and maintain that land, which would be used to provide purchasers with access to the lake
for boating and swimming. The form deed also provided that each purchaser would
automatically become a member of the association, and the purchasers agreed for themselves,
their “heirs, executors and assigns” to pay an annual maintenance fee, not to exceed $5 per year.
There was a provision authorizing the association to place a lien on the property if the dues were
not paid. This original form deed also included extensive restrictions regarding building lines,
the character and value of the buildings, docks and buoys, fences, front yards, garbage and
refuse, and swimming. It stated explicitly that the restrictions would run with the land and that
they would expire on January 1, 1960.
That document was allowed to expire. Effective on the expiration date, however, the
homeowners of SP1 and SPOSH adopted deed restrictions, which the parties refer to as the
“1959 Deed Restrictions.” These restrictions were recorded. The 1959 Deed Restrictions
contained the substance of the original building restrictions found in the 1935 Miles Deed, and
included a provision that each purchaser would automatically become a member in the
association. There was no language in the 1959 Deed Restrictions stating that any covenants ran
with the land, nor any specific mention of maintenance fees. The 1959 Deed Restrictions
provided that they would expire on January 1, 1986, unless properly extended.
The Beaumonts apparently sold the lots in the next three subdivisions, SP5, SP6, and
PPOSHR, in the late 1950s and early 1960s, and used an entirely different form of conveyance
document. Plaintiffs provided examples of six such documents. The grantors in all of these
documents were the Beaumonts, but in other respects these documents differed substantially
from the 1935 Miles Deed. For example, none of these documents contains a recitation of the
restrictions that appear in the 1935 Miles Deed. Each of the six documents does, however,
contain language by which the original purchasers of these lots agreed that they were members
of the association and agreed to pay to the association a yearly fee to be capped at $15 per year.
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The conveyance documents do not, however, expressly state that the grantees made this
agreement for their heirs, successors or assigns or that the covenants would run with the land.
That provision, in three of these deeds, is as follows:1
The Grantees hereby agree that they, as property owners in Seven
Harbors, are now and so long as they remain as such, members of the
‘BEAUMONT’S SEVEN HARBORS WHITE AND DUCK LAKE
ASSOCIATION’ and are subject herewith to it’s [sic] restrictions and by-laws.
They hereby agree to pay, yearly, to this Association, a maintenance fee of 1% of
the assessed valuation for tax purposes, of his conveyed property, not to exceed
$15.00 per year per unit, so long as said rate of 1% per annum shall remain in
effect, which shall be used, together with money collected from other owners for
the upkeep of Seven Harbors. It is further agreed that the Grantees will not sell or
otherwise dispose of this conveyed property to any person or persons not accepted
by this Association.
Presumably because these later owners were not bound by the restrictions found in the
1935 Miles Deed concerning building lines, the character and value of the buildings, docks and
buoys, fences, front yards, garbage and refuse, and bathing, the association adopted substantially
similar deed restrictions for these three subdivisions in 1956. This document, to which the
parties refer as the “1956 Deed Restrictions,” is nearly identical with the 1959 Deed Restrictions
discussed above, which were applied to the first two subdivisions three years later. Specifically,
like the 1959 Deed Restrictions, the 1956 Deed Restrictions contained a clear statement that
every purchaser would become a member of the association by virtue of the purchase and
provided that they would expire on January 1, 1986, unless properly extended. Like the 1959
Deed Restrictions, the 1956 Deed Restrictions do not mention maintenance fees. No such
document was ever adopted for SP7.
Both the 1956 Deed Restrictions and the 1959 Deed Restrictions provided that they could
not be extended without the written consent of 75% of the membership:
The Association shall have the right to alter, amend and abolish any of the
foregoing restriction, [sic] or to add to or extend the time of such restrictions at
any time, provided that it shall first notify all members of such proposed action
and obtain the written consent of at least 75% of the membership, to such action.
No subsequent document adopted by the Seven Harbors residents contained language purporting
to extend the 1956 or 1959 Deed Restrictions.
1
The other deeds the others are substantially similar.
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By the time the underlying lawsuit was filed, the maintenance fees charged to each lot
had increased to between $185 and $225 per lot. Defendant used these fees, not only for the
maintenance of the land it acquired from the Beaumonts for the residents to use for access, but
also for such things as boat docks and an annual community bicycle parade. The trial court
noted that plaintiffs believed that the decisions made by defendant’s board of directors regarding
expenditures did not benefit the owners of all lots equally.
The events that led to this lawsuit began to unfold in 2008, when defendant recorded a
lien against a lot in SP1 for nonpayment of the maintenance fee. In 2010, the owner of that lot
wrote to defendant’s attorneys requesting that the lien be removed because the deed restrictions
had expired and not been renewed. In 2012, defendant retained an attorney to opine on whether
membership (and maintenance fees) were still mandatory for all owners, and he informed those
who attended a general membership meeting that all deed restrictions had expired on January 1,
1986, and had not been renewed. In its August 2012 newsletter to all owners, defendant restated
that conclusion and added, “this means that membership in the Association is no longer
mandatory.”
In December 2012, defendant’s newly-elected board president called a special meeting of
the executive board, at which he announced his opinion that only the actual building restrictions
had expired, not the obligation to pay membership fees. The executive board authorized the
retention of another attorney to provide a second opinion on this matter. This attorney opined,
based largely on a document he called the “1937 Master Deed,” that all parcel-owners were
members of the association and were subject to the payment of the fees.2 Defendant then
notified the homeowners that the restrictions were perpetual, membership in the association was
mandatory, and the association had the power to place liens on properties when owners failed to
pay the maintenance fees.
Plaintiffs filed this case on June 13, 2014, bringing claims entitled Declaratory Relief,
Shareholder Oppression, and Slander of Title. Defendant removed the liens it had placed, and
the claims for shareholder oppression and slander of title were dismissed. Ultimately, the parties
filed cross-motions for summary disposition as to the claim for declaratory relief. Following a
motion hearing, the trial court issued an order denying summary disposition to defendant and
granting summary disposition to plaintiffs. This appeal followed.
II. STANDARD OF REVIEW
This Court reviews a grant or denial of a motion for summary disposition de novo.
Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich. 206, 211-212; 737
NW2d 670 (2007). “In reviewing a motion for summary disposition brought under MCR
2.116(C)(10), we consider the affidavits, pleadings, depositions, admissions, or any other
documentary evidence submitted in [the] light most favorable to the nonmoving party to decide
whether a genuine issue of material fact exists.” City of Huntington Woods v City of Detroit, 279
2
As the trial court noted, however, this document was never produced, plaintiffs had never seen
it, and defendant’s president testified that he had no knowledge of a 1937 Master Deed.
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Mich App 603, 614; 761 NW2d 127 (2008) (quotation marks omitted). A motion brought
pursuant to MCR 2.116(C)(10) is properly granted only if there is no genuine issue of material
fact and “the moving party is entitled to judgment as a matter of law.” Huntington Woods, 279
Mich. App. at 614 (quotation marks omitted).
“When reviewing a grant of equitable relief, an appellate court will set aside a trial
court’s factual findings only if they are clearly erroneous, but whether equitable relief is proper
under those facts is a question of law that an appellate court reviews de novo.” McDonald v
Farm Bureau Ins Co, 480 Mich. 191, 197; 747 NW2d 811 (2008). “This Court also reviews de
novo the proper construction of restrictive covenants involving real property.” Conlin v Upton,
313 Mich. App. 243, 254; 881 NW2d 511 (2015).
III. ANALYSIS
A. EXTENSION OF 1956 DEED RESTRICTIONS
Defendant first argues that the 1956 and 1959 Deed Restrictions were extended past their
stated expiration date of January 1, 1986, because the 1959 Amendments to the Articles of
Incorporation constituted a valid action under the laws of Michigan and it was approved by 75%
of the membership as required by the deed restriction document.
“A deed restriction represents a contract between the buyer and the seller of property.”
Bloomfield Estates, 479 Mich. at 212. As such, if a deed restriction is not ambiguous, it is “not
open to judicial construction and must be enforced as written.” Id. “Moreover, the language
employed in stating the restriction is to be taken in its ordinary and generally understood or
popular sense, and is not to be subjected to technical refinement, nor the words torn from their
association and their separate meanings sought in a lexicon.” Brown v Martin, 288 Mich. App.
727, 731; 794 NW2d 857 (2010) (quotation marks omitted).
The deed restrictions of both 1956 and 1959 were to expire on January 1, 1986, “[i]f
these restrictions are not extended by valid action under the law of this state and the provisions
herein . . . .” The provisions of each document included a requirement that they could not be
extended without the written consent of 75-percent of the membership:
The Association shall have the right to alter, amend and abolish any of the
foregoing restriction[s], or to add to or extend the time of such restrictions at any
time, provided that it shall first notify all members of such proposed action and
obtain the written consent of at least 75% of the membership, to such action.
[(Emphasis added.)]
The 1959 Amendment to the Articles of Incorporation added the three newer subdivisions
(SP5, SP6, and PPOSHR) to the original two (SPOSH and SP1) that were included in the 1947
Articles of Incorporation. The 1959 Amendment stated that the maintenance fee was 1-percent
of assessed valuation, as set in the 1947 Articles of Incorporation, but added a minimum of $2
and lowered the cap on the maintenance fee from $20 to $15. It further provided that the fee
could be raised as needed “by vote of a majority of the property owners.” Finally, the 1959
Amendment to the Articles of Incorporation states that it was approved by “75% of each class
entitled to vote and 75% of each class whose rights, privileges or preferences are changed.”
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The 1959 Amendment, however, contains no language that purports to extend any deed
restrictions. Defendant does not dispute this; rather, defendant argues only that the adoption of
the 1959 Amendment extended the 1956 Deed Restrictions because it was a “valid action taken
under the laws of Michigan,” it made membership mandatory, and it was approved by 75-percent
of the owners. Even if this statement were true in all respects, it is axiomatic that no contract can
be binding regarding a topic it does not address. Contracts must be enforced as written; we
cannot read language into a contract that is not there. See Bloomfield Estates, 479 Mich. at 212.
Defendant’s argument fails on this basis alone.
Additionally, the 1959 Amendment to the Articles of Incorporation does not make
membership mandatory; it only incorporates membership language from the 1947 constitution.
That constitution merely stated that the association was formed by property owners and
membership is restricted to property owners. This language simply does not require all owners
to become members. The first statement could reasonably be interpreted as meaning that the
association consists of either some of the property owners or all of them. The second statement
clearly states that no one can be a member who is not a property owner in Seven Harbors, but it
does not state the converse—that all property owners must be members.
Also, there is no evidence that 75-percent of the owners consented to the adoption of the
1959 Amendment in writing, as the 1956 Deed Restrictions required. The 1959 Amendment to
the Articles of Incorporation stated that it was approved by “75% of each class entitled to vote
and 75% of each class whose rights, privileges or preferences are changed.” Defendant seems to
argue that this language is itself the written consent that was contemplated in the 1956 Deed
Restrictions. Even if the reference to the number of people who voted meant that 75-percent of
all owners did so, the document does not state that those voters gave their written consent. Nor
was defendant able to present any other evidence showing that 75-percent of the membership
agreed to the 1959 Amendment in writing.
Defendant also argues that the 1956 Deed Restrictions were extended before they expired
on January 1, 1986, contending that the trial court erred by not considering the “Ziegler
Affidavit” as proof of the alleged extension. However, the document is not a valid affidavit in
that it was not properly sworn; moreover, the document does not state that 75-percent of the
members voted in writing to extend the deed restrictions. Therefore, the trial court did not err by
not considering the Ziegler statement.
Finally, defendant argues that plaintiffs Woods and Nelson, who lived in SP7, were
subject to a mandatory membership requirement because the expired 1956 and 1959 Deed
Restrictions never applied to them, but they were subject to the Association’s bylaws, articles of
incorporation, and constitution, all of which require membership. Defendant cites no evidence
which could lead this Court to find that these plaintiffs ever actually or constructively agreed to
be bound by any of the Association’s documents.
In sum, the trial court did not err when it held that the 1956 and 1959 Deed Restrictions
expired on January 1, 1986, and were not extended.
B. SIX SPECIFIC DEEDS
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Defendant next argues that each original grantee of six specific properties agreed to be
paying members of the Association, and that this obligation runs with the land under Michigan
law, binding 12 of the plaintiffs (the Koziols, Mullinixes, Verniers, Wolffs, Pappases, and Days)
to membership and an obligation to pay maintenance fees.
Restrictive covenants are contracts that are created in order to enhance the value of the
subject property, and are, therefore, valuable property rights. Conlin, 313 Mich. App. at 256.
Agreements concerning the use of real property, therefore, are subject to both contract and
property law. “[C]ourts must normally enforce unwaived restrictions on which the owners of
other similarly burdened property have relied.” O’Connor v Resort Custom Builders, Inc, 459
Mich. 335, 343; 591 NW2d 216 (1999). However, a restriction “must be expressly provided in
the controlling documents.” Conlin, 313 Mich. App. at 256. Moreover, “[c]ourts will not enlarge
or extend a restriction through interpretation, even to accomplish what it may be thought the
parties would have desired.” Id. at 256-257.
A covenant can be personal to the original parties to the agreement, or it can run with the
land. Mueller v Bankers’ Trust Co of Muskegon, 262 Mich. 53, 56; 247 N.W. 103 (1933). If a
covenant runs with the land, any subsequent purchaser will also be bound if that purchaser has
actual or constructive notice of the covenant, as when the covenant appears in the chain of title.
Conlin, 313 Mich. App. at 260.
In this case, there is no express language in any of the six deeds at issue here to indicate
that the grantors intended the covenant to run with the land. Strict construction requires that a
restriction “must be expressly provided in the controlling documents.” Conlin, 313 Mich. App. at
256. It is not clear from the language in the deeds at issue here that the Beaumonts intended the
membership and fees obligation in these conveyances to run with the land. “Courts will not
enlarge or extend a restriction through interpretation, even to accomplish what it may be thought
the parties would have desired . . . .” Id. at 256-257. Therefore, the 12 plaintiffs at issue here
were not bound by the covenants in the original deed.
C. RECIPROCAL NEGATIVE EASEMENT
Defendant argues that, pursuant to the doctrine of reciprocal negative easements, this
Court should enforce the covenants regarding the membership and maintenance fee requirements
against all lots in the Seven Harbors Subdivisions, despite the lack of recorded restrictions
against some lots, because the subdivisions were developed according to a common theme. This
argument lacks merit.
Generally, restrictions of the use of property must be in the conveyance upon which the
title to that property rests. Denhardt v De Roo, 295 Mich. 223, 228; 294 N.W. 163 (1940).
“Where there is no express restriction in the chain of title of the particular lot the use of which is
sought to be restricted, there must be proof of a ‘scheme of restrictions’ originating from a
common owner.” Id. (citation omitted). The scheme must arise from a common grantor and the
scheme cannot be created by other lot owners conforming to a general plan. Id. at 229. A
reciprocal negative easement exists when such a “scheme of restrictions” is applied to property
whose chain of title includes no such restrictions. See Lanski v Montealegre, 361 Mich. 44, 47;
104 NW2d 772 (1960) (emphasis in original). To find a reciprocal negative easement,
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[t]here must have been a common owner of the related parcels of land, and in his
various grants of the lots he must have included some restriction, either
affirmative or negative, for the benefit of the land retained, evidencing a scheme
or intent that the entire tract should be similarly treated. Once the plan is
effectively put into operation, the burden he has placed upon the land conveyed is
by operation of law reciprocally placed upon the land retained. In this way those
who have purchased in reliance upon this particular restriction will be assured that
the plan will be completely achieved. [Lanski, 361 Mich. at 47.]
In this case, it is undisputed that there was a common grantor, the Beaumonts; there were
plat maps for all subdivisions, although they were unrecorded; and there were nearly identical
restrictions in the original form deeds as well as similar restrictions in at least six of the deeds
entered into in the 1950s. However, the restrictions expired as to SP1, SPOSH, SP5, SP6, and
PPOSHR on January 1, 1986, and never applied to SP7. Our Supreme Court has explained that
“[a reciprocal negative easement] runs with the land sold by virtue of express fastening and
abides with the land retained until loosened by expiration of its period of service or by events
working its destruction.” Sanborn, 233 Mich. at 230 (emphasis added). Here, the restrictions
expired and were never renewed; therefore, none of the six subdivisions are now subject to the
covenant to be fees-paying members of the association after that time. The trial court did not err
in holding that the doctrine of reciprocal negative easements does not apply in this case.
D. LACHES
Finally, defendant argues that the doctrine of laches should apply to bar plaintiff’s suit
because there was a change in conditions that made granting relief to plaintiffs inequitable—
plaintiffs’ sudden refusal to pay dues, which prejudiced defendant because it had relied on their
payments for years. This argument also lacks merit.
The equitable doctrine of laches bars a claim “when the passage of time combined with a
change in condition [] would make it inequitable to enforce the claim against the defendant.”
Township of Yankee Springs v Fox, 264 Mich. App. 604, 612; 692 NW2d 728 (2004). “It is
applicable in cases in which there is an unexcused or unexplained delay in commencing an
action and a corresponding change of material condition that results in prejudice to a party.”
Public Health Dep’t v Rivergate Manor, 452 Mich. 495, 507; 550 NW2d 515 (1996). “Laches
differs from the statutes of limitation in that ordinarily it is not measured by the mere passage of
time. Instead . . . we must afford attention to prejudice occasioned by the delay.” Lothian v City
of Detroit, 414 Mich. 160, 168; 324 NW2d 9 (1982) (internal citations omitted).
In this case, plaintiffs did not delay in filing suit. There was debate over whether the
dues were enforceable and two attorneys rendered different opinions on the matter. Plaintiffs
asserted their right by filing suit after defendant indicated that the dues were mandatory as
opposed to voluntary. Furthermore, defendant cannot show prejudice. Defendant argued that it
was prejudiced because plaintiffs suddenly stopped paying their dues, on which it had relied for
years. However, this effect was not occasioned by the plaintiffs’ delay in filing this case;
plaintiffs would have stopped paying their dues whenever they asserted this action. In short, the
trial court did not err in holding that the doctrine of laches did not bar plaintiffs’ suit.
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IV. CONCLUSION
The trial court did not err in denying defendant’s motion for summary disposition and in
granting plaintiff’s motion for summary disposition pursuant to MCR 2.116(C)(10).
Affirmed. Plaintiffs, having prevailed, may tax costs. MCR 7.219(A).
/s/ Kathleen Jansen
/s/ William B. Murphy
/s/ Stephen L. Borrello
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