These consolidated appeals were brought by members of the Glennbrook Beach Association (GBA). In Docket No. 301489, American Family Homes, Inc. (AFH), and Thomas and Maria Prose (the Proses)
In Docket No, 301490, AFH and the Proses appeal as of right the November 17, 2010, judgment in favor of the GBA regarding count I of the GBA's counterclaim against Billie and Ken Williams (the Williamses), and count II of its counterclaim against Jerry Vorva (Vorva). The judgment awarded the GBA $4,440.20 in unpaid dues, special assessments, and lien recording fees against the Williamses; and $4,540.20 in unpaid dues, special assessments, and lien recording fees against Vorva. The issues raised in this appeal involve the constitutionality of the Act and whether the term of the GBA ended in 1977.
In Docket No. 301496, the Williamses and Vorva also appeal as of right the November 17, 2010, judgment in favor of the GBA regarding count I of the GBA's counterclaim against the Williamses and count II of its counterclaim against Vorva. The issues raised in this appeal also involve the constitutionality of the Act.
In Docket No. 302331, AFH and the Proses appeal as of right the trial court's January 12, 2011, order clarifying its opinion and order regarding the removal of property from the road easement. The issues raised in this appeal involve the permissibility of the GBA's special assessment under the Act.
Finally, in Docket No. 302780, AFH and the Proses appeal as of right, and the GBA cross-appeals as of right, the trial court's February 9, 2011, order denying the GBA's motion for case evaluation sanctions and denying sua sponte the parties' requests for taxable costs. AFH and the Proses argue in this appeal that the trial court erroneously found that they were not the prevailing party and were not entitled to taxable costs. The GBA in turn challenges the trial court's determination that it was not entitled to case evaluation sanctions. We affirm in part, reverse in part, and remand the matter to the trial court for proceedings consistent with this opinion.
I. CONSTITUTIONALITY OF THE ACT
As a brief overview, the Act, which was enacted in 1929, permits ten or more property owners "to form a summer resort owners corporation for the better welfare of said community and for the purchase and improvement of lands to be occupied for summer homes and summer resort purposes" by filing articles of incorporation.
All property owners "in the county of [the corporation's] organization" with property that is "contiguous to the resort community in which the corporation is organized" are eligible for membership in the corporation.
The corporation is governed by an elected board of trustees which has the power to enact by-laws and "mange and control . . . all [of] the business and all the property, real and personal, of the corporation and shall represent the corporation, with full power of authority to act for it in all things legal whatsoever," subject to the "restrictions or limitations imposed by the by-laws of the corporation and any special restriction or limitation imposed by a vote of the members at any annual or regularly called special meeting."
AFH, the Proses, the Williamses and Vorva (collectively "the homeowners") argue that the Act is unconstitutional on its face and as applied. We disagree.
First, we are not persuaded by the homeowners' argument that the decisions in Whitman v Lake Diane Corp
The homeowners are correct that the Baldwin Court indicated that because several terms, including "summer resort," were undefined "the entire act border[ed] on unconstitutionality by reason of its vagueness."
Second, we have reviewed the additional constitutional arguments raised below, as well as the unpreserved arguments raised for the first time on appeal,
II. TERM OF THE GBA
AFH and the Proses assert that the term of the GBA expired in 1977. We disagree, and find that the term of the GBA has not expired.
This issue was raised in a motion for summary disposition brought pursuant to MCR 2.116(C)(9) and (C)(10). A trial court's decision on a motion for summary disposition is reviewed de novo.
"A motion brought under MCR 2.116(C)(10) tests the factual support for a claim."
Pursuant to MCL 455.202, a corporation such as the GBA shall have a term of existence "not [to] exceed 30 years." The GBA, however, is permitted "by a vote of 2/3 of its capital stock, at any annual meeting, to direct the continuance of its corporate existence for such further term not exceeding 30 years from the expiration of the existing term, as may be expressed in a resolution for that purpose."
Here, the GBA was incorporated under the Act on August 6, 1947. The term of the corporation's existence was 30 years. Thus, the term was to expire on August 6, 1977. On May 3, 1976, the Michigan Department of Commerce advised the GBA that its term of existence could be extended by a vote of a majority of the members entitled to vote for a "perpetual" term or for a "specific number of years." On August 28, 1976, the articles of incorporation for the GBA was amended to have a "perpetual" term of existence. Although nonprofit corporations are permitted to have a perpetual existence, the GBA, which was created under the Act, is not permitted to have a perpetual term.
According to the record, a general membership meeting was held on June 16, 2007, to discuss extension of the GBA's corporate life. The meeting was followed by a board meeting to vote on an amendment to the bylaws to change the place of the annual membership meeting to Dexter Township, and the date to the second Saturday in July. Evidence was presented that notice of the June 16, 2007, meeting and a copy of the amended bylaws was provided to the members of the GBA.
An annual membership meeting was set for July 14, 2007, and appropriate notice of the meeting, as well as proxy forms, were provided to the GBA's members on June 28, 2007. On July 14, 2007, the members of the GBA voted to extend the corporate life of the GBA for an additional 30 years pursuant to MCL 455.251. Eighty six percent of the members voted to approve the resolution.
AFH and the Proses argue that if the corporation was in existence in 2007, a second extension of the corporate term was not permitted. As aptly noted by the GBA, the statutes regarding extension of the corporate term refer to extension of the corporate term from "the expiration of its former term,"
III. GOVERNMENTAL IMMUNITY
AFH and the Proses argue that the trial court erred when it found that the GBA was immune from suit based on a theory of governmental immunity. We disagree. We review de novo a trial court's decision on the question of law of governmental immunity.
"The moving party may submit affidavits, depositions, admissions, or other documentary evidence in support of the motion if substantively admissible. The contents of the complaint must be accepted as true unless contradicted by the documentary evidence."
Pursuant to the relevant statute, "a governmental agency is immune from tort liability if the governmental agency is engaged in the exercise or discharge of a governmental function."
A "`[m]unicipal corporation' means a city, village, or township or a combination of 2 or more of these when acting jointly."
In the instant case, we find that because the GBA was authorized by law to be subject to "all of the liabilities of a municipal corporation," and a municipal corporation is a governmental agency, the GBA is thus a governmental agency.
The trial court relied on the case of Bates v Colony Park Ass'n,
Next, it must be determined if the alleged injury to AFH and the Proses' property occurred during the exercise of a governmental function. The relevant statute defines a "governmental function" as "an activity that is expressly or impliedly mandated or authorized by constitution, statute, local charter or ordinance, or other law."
IV. GOVERNMENTAL TAKING
AFH and the Proses also assert that the trial court erred when it found that the GBA's actions did not constitute a governmental taking based on inverse condemnation. We disagree. The trial court made its ruling in response to a motion for summary disposition brought by the GBA pursuant to MCR 2.116(C)(10), the standard of review for which is outlined above.
"An inverse condemnation suit is one instituted by a private property owner whose property, while not formally taken for public use, has been damaged by a public improvement undertaking or other public activity."
AFH and the Proses alleged that the GBA performed "overt and intentional acts" that interfered with the use and enjoyment of their property. The GBA is correct that such overt and intentional acts were not described in any manner in AFH and the Proses' fourth amended complaint. Rather, AFH and the Proses continued to allege that the GBA failed to maintain a drain that resulted in flooding and damage to their property. The alleged failure to act by the GBA does not satisfy the requisite affirmative act by the government necessary to succeed on a claim of governmental taking by inverse condemnation.
AFH and the Proses argue that the trial court's grant of summary disposition was premature because of a protective order regarding discovery previously granted by the trial court. Discovery, however, was reopened on November 28, 2007, over nine months before the GBA filed the instant motion. Thus, we find no merit to this assertion.
V. SPECIAL ASSESSMENTS
AFH and the Proses argue that the trial court erred when it determined that they were responsible for unpaid special assessments. We disagree. This finding was made by the trial court in response to a motion for summary disposition brought by the GBA pursuant to MCR 2.116(C)(10), the standard of review for which is above.
To the extent that AFH and the Proses argue that special assessments were improper because the Act is unconstitutional, those arguments lack merit based on our previous finding that the Act is constitutional.
Pursuant to MCL 455.219(1), "[t]he board of trustees may require that the members of a corporation [such as the GBA] pay annual dues and special assessments for any purpose authorized under [the Act]." Approval of a majority of the members of the GBA is necessary to require the payment of special assessments by members, "[u]nless the members by a vote of a majority of all of the members have by resolution specifically provided for approval by a majority of the votes cast by the members voting."
Based on the evidence presented, at the time of the special assessments, AFH and the Proses were members of the GBA. The members of the GBA appropriately voted in compliance with the bylaws to assess its members for the legal fees to defend against litigation brought by the homeowners on August 25, 2001, August 12, 2006, July 14, 2007, July 12, 2008, December 2, 2006, and May 2, 2009. There was no evidence presented that AFH and the Proses were unable to vote regarding the assessments.
The GBA has jurisdiction over the lands it owns and the lands owned by its members.
AFH and the Proses presented no evidence that the special assessments were imposed on them differently than any of the other GBA members. And, the imposition of special assessments on the members was determined by the members and not the GBA. As such, any argument that the government violated AFH and the Proses' rights to equal protection or procedural due process by requiring that they pay the special assessments must fail. Accordingly, there was no error by the trial court.
VI. TAXATION OF COSTS
AFH and the Proses also contend that the trial court erred when it found that they were not the prevailing party, and thus were not entitled to taxable costs. We disagree. "The determination whether a party is a `prevailing party' for the purpose of awarding costs under MCR 2.625 is a question of law, which this Court reviews de novo."
"[O]nly the prevailing party is entitled to recover costs."
Here, AFH and the Proses prevailed in part on their claim for equitable relief regarding the easement. While they requested a declaratory judgment that the easement was for the exclusive benefit of their property, the trial court agreed in part and found that they were entitled to use the easement, but they had "no greater rights to use the [easement] than any other lot owner in the subdivision" and granted them a "perpetual, non-exclusive easement for ingress and egress."
Additionally, summary disposition was granted in the GBA's favor regarding counts III, IV, V and VII of AFH and the Proses' third and fourth amended complaints regarding alleged damage to their property as a result of the GBA's failure to maintain a drain. Moreover, the GBA prevailed on its motion for summary disposition of count III of its counterclaim against the Proses for unpaid dues and special assessments, and the GBA obtained a judgment in its favor in the amount of $5,540.20. Thus, we find that there was no abuse of discretion by the trial court in finding that AFH and the Proses were not the prevailing party.
AFH and the Proses argue that the trial court's sua sponte ruling regarding taxation of costs was premature. The trial court, however, presided over the entire action which spanned more than five years. Thus, we find that the argument lacks merit.
VII. CASE EVALUATION SANCTIONS
Finally, the GBA argues that the trial court erred when it failed to award it case evaluation sanctions. We agree. "A trial court's decision whether to grant case-evaluation sanctions under MCR 2.403(O) presents a question of law, which this Court reviews de novo."
Pursuant to the relevant court rule, "[i]f a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party's actual costs unless the verdict is more favorable to the rejecting party than the case evaluation."
Here, case evaluation of the claims of AFH, Thomas Prose, and the GBA was held on July 8, 2010. The panel unanimously awarded Thomas Prose and AFH $40,000 against the GBA. Nothing was awarded in the GBA's favor. While the GBA accepted the award, AFH and Thomas Prose rejected the award. Thereafter, the parties stipulated to dismiss counts II and VI of AFH and the Proses' fourth amended complaint, as well as count II of the GBA's counterclaim against the Proses. The GBA then filed a motion for summary disposition regarding their claim against the Proses for unpaid dues, special assessments, and fees, which was count III of its counterclaim against them. The trial court found in favor of the GBA and entered judgment against the Proses in the amount of $5,540.20 for unpaid dues and special assessments. Because AFH and Thomas Prose rejected the case evaluation award, which the GBA accepted, and the GBA subsequently obtained a verdict more favorable to it than the case evaluation award, the trial court erred when it denied the GBA's motion for case evaluation sanctions.
AFH and the Proses contend that the "interest of justice" exception applies. "If the `verdict' is the result of a motion as provided by subrule (O)(2)(c), the court may, in the interest of justice, refuse to award actual costs."
In the instant case, the "verdict" resulted from a motion for summary disposition filed by the GBA. The resolution of the issues did not involve a situation in which there was a public interest. Additionally, assuming arguendo that there was a public interest, the trial court did not indicate that the "interest of justice" exception applied or articulate reasons for its decision to lead this Court to imply that it was applying the exception. Rather, the trial court found that for the reasons asserted by AFH and the Proses, the GBA was not entitled to case evaluation sanctions. Regarding case evaluation sanctions, AFH and the Proses did not argue below that the "interest of justice" exception should apply. Thus, we find AFH and the Proses' argument to lack merit.
AFH and the Proses argued below that pursuant to the court rule "[t]he evaluation [award] must include a separate award as to each plaintiff's claim against each defendant and as to each . . . counterclaim . . . that has been filed in the action."
AFH and Thomas Prose were named as the parties who participated in case evaluation with the GBA. While AFH and the Proses argued below that Maria Prose was also entitled to an evaluation award, her claims were brought jointly with Thomas Prose and AFH. Additionally, Thomas Prose admits on appeal that he now holds Maria Prose's interest, as well as the interest of AFH. Thus, any error in failing to include her name as a party for the purposes of case evaluation was harmless. Moreover, the court rule notes that all claims "filed by any one party against any other party shall be treated as a single claim."
AFH and the Proses assert that had they accepted case evaluation, they would have been required to "relinquish" the relief they already obtained, and would have been prohibited from appealing any prior rulings of the trial court. Assuming arguendo that their assertion is correct, such a result does not exempt them from liability for case evaluation sanctions under the court rule.
Accordingly, we remand the matter to the trial court for a determination of the GBA's actual costs from the date of case evaluation, and entry of an order in favor of the GBA and against AFH and the Proses for case evaluation sanctions.
Affirmed in part, reversed in part, and remanded to the trial court for proceedings consistent with this opinion. We do not retain jurisdiction.