Landlord-tenant dispute; Appellate jurisdiction; Consolidated actions; Lease validity; Local certificate-of-compliance requirement; Void ab initio; Breach of contract; Disgorgement & unjust enrichment; Conversion; Security deposit; Truth in Renting Act (TIRA); Anti-lockout statute; MCL 600.2918; Housing Law of Michigan (HLM); “Occupant”; Exemplary damages; Contribution; Default; MCR 2.603(D); Costs under MCR 2.625(D)(1); Sanctions; MCR 1.109(E)(5) & (6); Due process

The court held that the parties’ residential lease was void ab initio because it violated a local rental-certificate ordinance, which affected several of plaintiff-tenant’s claims and defeated defendant-landlords’ breach-of-contract claim. Further, plaintiff was denied due process before sanctions were imposed. The dispute arose after plaintiff stopped paying rent and eventually left the rental condominium, asserting persistent roof leaks and mold. The landlords sued for unpaid rent, while plaintiff filed a separate action raising numerous landlord-tenant claims. On appeal, the court first rejected the landlords’ jurisdictional arguments. Turning to the lease, the landlords admitted they never obtained the certificate of compliance required by the applicable township ordinance. The court explained that “a contract is void if it is made contrary to law or public policy” and rejected the reasoning that illegality could matter only if the ordinance created a private cause of action. Rather, “courts should not recognize illegal contracts regardless of who has a right to enforce the underlying law.” Because renting and occupying the unit were “‘central to the parties’ agreement,’” the entire lease was void ab initio. Thus, the landlords could not recover for breach of the lease, and plaintiff likewise had no contractual claim against them. But the court reinstated his disgorgement and unjust-enrichment claims because unjust enrichment “does not rely on the existence of a valid contract.” It also reinstated his conversion claim as to personal property other than the security deposit, concluding that his complaint sufficiently identified allegedly converted property. The security-deposit conversion claim failed because without a valid lease, the landlords had no contractual “‘obligation to return the specific money entrusted to [their] care.’” The court affirmed dismissal of the TIRA claim because plaintiff was never legally a party to a rental agreement, the anti-lockout claim because it was filed outside the one-year limitations period, and the HLM claim because an “occupant” must be “a current resident.” It also upheld dismissal of plaintiff’s claims against his former partner and the decision setting aside the landlords’ default, although plaintiff was entitled to costs under MCR 2.625(D)(1). Finally, the court held that imposing $500 in sanctions without allowing plaintiff to respond violated due process because “‘a party must receive some type of reasonable notice and an opportunity to be heard before the imposition of sanctions.’” Affirmed in part, reversed in part, and remanded.