COA: Condominium association must follow formalities in bylaws before initiating suit

In Tuscany Grove Association v. Peraino, No. 320685, the Court of Appeals held that a condominium association may not initiate an action that will incur litigation costs unless the association complies with the requisite formalities in its bylaws. Therefore, the court affirmed the trial court’s order granting defendant’s motion for summary disposition because the condominium association did not obtain a supermajority vote before filing its action.

Plaintiff Tuscany Grove Association (“Association”) is responsible for managing the Tuscany Grove Condominium complex located in Shelby, Michigan. Defendant Kimberly Peraino owns one of the condominium units in Tuscany Grove. The Association filed suit against Peraino in an effort to compel Peraino to comply with certain fencing restrictions contained in Tuscany Grove’s bylaws. The condominium’s bylaws also requires the Association to obtain a 2/3 voter approval by co-owners before incurring any legal expenses incident to litigation, which the Association failed to do. The trial court granted Peraino’s motion for summary disposition because the Association lacked authority to initiate the action.

The Court of Appeals held that the Association did not have authority to bring suit against Peraino because the Association did not obtain supermajority approval by its co-owners before initiating the action against Peraino. The Court also concluded that the bylaws are not superseded by the Michigan Nonprofit Corporation Act and the Michigan Condominium Act because the statutory language of those acts envisions the possibility of limitations on an entity’s power to sue and specifies that such limitations may be imposed. Furthermore, the Court determined that although the Association did eventually gain approval by its co-owners after the Association initiated its case, the approval was by petition rather than vote, which did not satisfy the formalities in the bylaws. Therefore, the Court affirmed the trial court’s order granting Peraino’s motion for summary disposition.