Whether defendant-condo homeowners association breached the Master Deed; “Developer”; “Successor” & “assign”; Adoption of a Master Deed amendment without the written consent of plaintiff-condo project owner; Breach of contract & tortious interference claims; Whether plaintiff’s damages were speculative
In Docket No. 351845 the court affirmed the trial court’s ruling that defendant-condo homeowners association breached the Master Deed by attempting to amend the Bylaws without the written consent of plaintiff-project owner, and held that the trial court did not err by entering a declaratory judgment to that effect. However, in Docket No. 351827 it reversed the trial court’s ruling dismissing plaintiff’s breach of contract and tortious interference claims on the basis its damages were speculative, and remanded. In Docket No. 351845, defendant argued that the trial court erred in ruling plaintiff was the “successor” of King/Inkster II (the Developer) “under the Master Deed, thereby succeeding to King/Inkster II’s right under the Bylaws to lease an unlimited number of units that it owns.” The court held that plaintiff was “the ‘successor and assign’ of King/Inkster II under Article III, Section 12 of the Master Deed.” The court then addressed “whether the trial court erred in ruling that defendant breached the Master Deed by adopting the First Amendment without” plaintiff’s written consent. It held that plaintiff “possessed the right under the Bylaws to lease any number of units.” In addition, under Article IX, Section 6 of the Master Deed, as the parties interpreted it, “the Bylaws cannot be amended ‘without the written consent of the Developer so long as the Developer continues to offer any Unit in the Condominium for sale or for so long as there remains, under such provisions, any further possibility of expansion of the Condominium Project.’” In Docket No. 351827, the court agreed with plaintiff “that it was allegedly damaged by the First Amendment. At a minimum, because plaintiff had to delay—and, possibly, is continuing to delay—building its units for lease, it allegedly suffered damages by the loss of lease income. In other words, if plaintiff had built the units in 2018 as it intended, then it could have potentially leased some or all of those units for the past few years and received income in that regard. This alleged loss of lease income is essentially ‘lost profits’ and is a cognizable form of damages.” Defendant argued, and “the trial court agreed, that damages were ‘speculative’ because the units had not yet been built and there were no potential lessees.” The court disagreed, noting that it and the “Supreme Court have recognized that claims for lost profits are not unduly speculative even when the business at issue has not been constructed and there are no actual customers. Thus, the trial court’s reasoning” was incorrect.
Full Text Opinion
State Bar of Michigan
306 Townsend St
Lansing, MI 48933-2012