e-Journal Summary

e-Journal Number : 76404
Opinion Date : 10/28/2021
e-Journal Date : 11/15/2021
Court : Michigan Court of Appeals
Case Name : Bafna v. Echo Valley Condo. Ass'n
Practice Area(s) : Business Law Real Property
Judge(s) : Per Curiam – Gadola and Jansen; Dissent – O’Brien
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A condo owner’s request to inspect the nonprofit condo association’s records; MCL 450.2487 of the Nonprofit Corporation Act (NCA); Looking at the complaint to determine if plaintiff stated a “proper purpose” for the requests; Parallel provision in the Business Corporation Act (BCA); North Oakland Cnty Bd of Realtors v Realcomp, Inc


Extending the approach it applied to an identical provision in the BCA, the court held in this case brought under the NCA that if “a plaintiff seeking records clarifies the purpose of its request in the context of litigation, whether via its complaint or an affidavit it submits in the litigation context,” the trial court should consider those clarifications or reasons, as it did here. It further concluded that plaintiff-condo owner stated a proper purpose under MCL 450.2487 for each of his requests to inspect defendant-condo association’s records. Thus, it affirmed summary disposition for plaintiff. As an owner of a condo in the development, he was a co-owner of defendant. Defendant first argued that the trial court erred in finding that plaintiff stated a proper purpose for his records-inspection requests “based on statements in his complaint rather than what was stated in his record requests.” But the court concluded that it did not err in examining the complaint, together with plaintiff’s initial record requests, in determining that he “had stated proper purposes for his requests.” While there was no case law addressing this issue under the NCA, North Oakland addressed it in the context of the BCA’s parallel provision and considered “an affidavit plaintiff submitted after the filing of its complaint to conclude that plaintiff had stated a proper purpose for its record inspection requests.” Turning to plaintiff’s requests, the court first found that he stated a proper purpose for inspecting “records related to past litigation costs. As plaintiff’s complaint suggested, such costs could affect plaintiff’s dues payments and the records might confirm his more generalized concern that the association was mismanaged. The extent and cost of litigation is certainly a reasonable area of inquiry with respect to anyone with a legitimate interest in the affairs of a corporation, such as” he had here. As to his second request, as a co-owner, he “had an interest in whether defendant was wasting money by changing to a new system for accessing the pool—overpayments by defendant would increase plaintiff’s dues.” Further, like that request, his third request, for a bulb-replacement invoice, “stated a proper purpose.” As a dues-paying co-owner, he had an interest in whether defendant was overpaying for services. His requests for board meeting minutes also stated a proper purpose.

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