Plaintiff Sunnyside Resort Condominium Association, Inc., a Michigan nonprofit corporation, (“SRCA" or the “Association") instituted a two-count suit on December 11, 2012 to collect past due assessments from Defendants Beckman Holdings, Inc. (“Beckman") and Meinke Construction, Inc. (“Meinke"). Beckman and Meinke each owned 50% undivided interests in Units 11 and 13 of the Sunnyside Resort Condominium (“SRC"). Under Count I, Plaintiff sought $11,853.90 in past due assessments (from January 1, 2006 through September 30, 2012) along with pre-judgment interest and the Association's expense of litigation including reasonable attorney's fees. Under Count II Plaintiff asserted that the individual Defendant Neil J. Beckman (principal of Beckman Holdings, Inc.), with breach of fiduciary duty during his tenure as President and Director of the Association for a failure to assess and collect from Units 11 and 13 any amounts of Association assessments during his tenure which included 2006 through 2011 as required by the SRC Master Deed and Bylaws.
Defendants Beckman and Meinke argued that Units 11 and 13 were not liable for their percentage share of assessments because they were incomplete even though such assessments were otherwise required to be allocated to Units 11 and 13 under the Master Deed and Bylaws. In addition, the three Defendants also filed a Counterclaim (Count I) against the Association and a Third-Party Complaint against former and present directors and officers of SRCA (“Officer/Director Group") charging them with breach of fiduciary duty.
The District Court rejected the Defendants' argument that they were not liable for any assessments and ultimately entered a money judgment against Defendants Beckman and Meinke in the amount of $4,577.68 for assessments from Spring, 2012 through September 30, 2015. The District Court, however, refused to permit the Association to recover Unit 11's and Unit 13's share of assessments from January 1, 2006 through Winter, 2012. The District Court also refused to permit the Association to recover its attorney fees on Count I (August 3, 2016 Opinion and Order at pp. 3 -4), despite multiple requests for a hearing on and award of such fees. It instead awarded Case Evaluation attorneys' fees to the losing Defendants in the amount of $30,238. (Oct 1, 2015 Opinion and Order Determining Entitlement to Case Evaluation Sanctions and Prevailing Party Status; February 29, 2016 Opinion and Order Awarding Trial Damage and Case Evaluation Sanctions). Further, the District Court found Defendant Beckman not liable for breach of fiduciary duty and ordered Plaintiff to pay him $2,735.55 in reasonable attorneys' fees and costs under Count II of the Defendants' Counterclaim for indemnification. (September 29, 2015 Trial Opinion at pp. 5-6; September 29, 2015 Trial Judgment at p.2; February 29, 2016 Opinion and Order Awarding Trial Damages and Case Evaluation Sanctions).
With respect to the Defendants' Counterclaim, the District Court found the Association not liable (September 29, 2015 Trial Opinion, pp. 6-7) but found the members of the Officer/Director Group liable for breach of fiduciary duty for having continued Beckman's practice of failing to commission the conducting of annual audits but assessed no money damages. (Id., p. 17-19)
The Defendants separately alleged that the Association (Count IV of Counterclaim) and its President Thomas Brown (Count II of Third Party Complaint) had committed Slander of Title by recording Notices of Lien prepared by the Association's counsel against Units 11 and 13. The District Court found both the Association and Defendant Brown liable for Slander of Title (Id., p. 11-17) but assessed no damages against them. (February 29, 2016 Opinion & Order at pp. 8 - 10).
The Association and each member of the Officer/Director Group including President Brown appealed each ruling adverse to them described above. No cross-appeal was instituted.
Status: Per Curiam Opinion – Unpublished
Brief Author: Kevin M. Hirzel, Esq. and Matthew W. Heron, Esq.
CAI Amicus Review Panel: Robert Diamond, Esq. (VA), Chair of Amicus Committee, Edmund Allcock, Esq. (MA), Karyn Kennedy Branco, Esq. (NJ), and Mary Howell, Esq. (CA)