Contractual Provision for Recovery of Attorney Fees Not In Conflict with MI Condominium Act

In Stadler ve Fontainebleau Condominiums Association, an unpublished Michigan Court of Appeals opinion, the co-owner submitted a lease to the association for approval in accordance with the condominium bylaws.  The association delayed in responding and the tenant declined to rent the condominium unit.  The co-owner sued the association in small claims court for lost rent, but the co-owner and the association agreed to dismiss the case without costs.  The association then recorded a lien against Defendant’s condominium unit for attorney fees under a section of the condominium bylaws, which provided “The Association, if successful, also shall be entitled to recoup the costs and attorney’s fees incurred in defending any claim, counterclaim or other matter asserted against the Association from the Co-owner asserting the claim, counterclaim or other matter . . . .  The co-owner then filed a circuit court lawsuit seeking a declaration that the lien was invalid and an injunction preventing the association from enforcing the lien by foreclosure, claiming that the bylaw provisions was inconsistent with the MI Condominium Act.  The circuit court granted the association summary disposition, finding that the bylaws provision was not inconsistent with the Act.

The co-owner argued that that, because the article of defendant’s bylaws  allows for the recovery of attorney fees in situations other than those contemplated by MCL 559.206(b) and 559.207, they are in conflict with the MI Condominium Act.  Both the trial court and the court of appeals disagreed, finding that the provision did not conflict with the statute, it merely provided for recovery of attorney fees in additional situations not addressed by the statute.  Because the bylaws are a contract between the association and the co-owner, and because a contract can provide for recovery of attorney fees, the association is entitled to recover attorney fees if it comes within the provision of the bylaws.

The court also held that the co-owners claim that the association was not successful as provided in the bylaws was not raised in the trial court and was not ripe for adjudication on appeal.  The co-owner would be free to raise that defense should the association decide to pursue foreclosure of its lien.

While a statute may provide for recovery of attorney fees in a particular situation, the existence of the statute does not preclude recovery of attorney fees in other situations as provided by contract.

© Steve Sowell 2022