__The continuation of this post is my formal protest of the proposed amendment to the Declaration of Master Covenants, Conditions and Restrictions for the Michaywé Planned Unit Development concerning venue.
__Owners/members were provided no information on the validity of the proposed amendment nor were they provided the opportunity to review what analysis, if any, was done by an attorney. The board meeting minutes do not state any approval of a motion by the board of the Michaywé Owners Association to authorize such an analysis.
__When I asked board member Jay Welter for a copy of any legal analysis, he advised that such was privileged to the board. Nonsense! Owners/members paid for any analysis and the analysis potentially affects their rights.
__Since owners/members had no opportunity to discuss, debate, learn and understand the ramifications of this proposed amendment, the protest letter below will be revised to include questions directed to this concerned owner/member. See History below for additions and revisions to date.
__A related post, Are delinquent dues & assessments a personal debt?, analysis this question and concludes that delinquent dues and assessments are not a personal debt, and therefore cannot be collected in court as such.
__(added 2009 Feb 20) Collections Policy — Click Dues Collections Policy for MOA's policy posted on its website.
Don Nordeen
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Continue reading Formal Protest — Proposed Amendment to DMCCR Concerning Venue.
- Key Words:xx Attorney Issues, Governance, Governing Documents, Members' Rights, Michaywé, Amendment, Abuse
Formal Protest — Proposed Amendment to DMCCR Concerning Venue (continued)
2008 December 30
Board of Directors Michaywé Owners Association
Dear Board of Directors:
Subject: Formal Protest — Proposed Amendment to DMCCR Concerning Venue Memo: Additions and
__This letter is a revised formal protest of the vote of owners on the Board’s proposed amendment to the DMCCR concerning venue to be taken on this date. I request that this protest be noted for the record by the chair of the meeting and that this letter be made an attachment to the meeting minutes and that this revised protest be part of the formal record of the meeting. Paragraphs changed or added are noted with “revised” or “added” at the beginning of the paragraph.
__I am certainly for collection of all dues and assessments owed, but the collection must be by means valid under the law and the governing documents. It should not be the obligation of any owner to prove that the Association has not acted properly under the law and the governing documents. But rather, it is the obligation of the Association to prove that it is acting properly.
__Meeting Notice — The meeting notice is defective in referring to a Town Hall Meeting rather than a Special Members’ Meeting for the purpose of considering the purpose of considering the proposed amendment. There is no authorization in Michigan law and/or in MOA’s governing documents to take a formal vote of the owners/members except at a duly-called Members’ Meeting. #MeetingNotice
__(added 2009 Jan 05) Apparent Policy — Overall, the actions by the board and the notice reflect an apparent policy by the board that the ends (collecting unpaid dues MOA believes is owned) justify the means (using a small claims lawsuit that the board has not shown to be valid under the law and governing documents, and in fact may not be valid) and that protection of the rights of owners/members is not a factor in the board’s considerations. I believe that the fiduciary duty of each board member requires each board member to ensure that each proposed action conforms to the law and governing documents, and not to proceed if there is doubt. Doubt should be resolved in favor of individual owners, not in the interests of the board. Individual MOA members should certainly not be expected to determine whether or not a board-proposed action conforms to the law and the governing documents. #ApparentPolicy
__(added 2009 Apr 09) Debt Likely Not Personal — Whether or not unpaid and assessments are personal debts under the law and governing documents is another aspect that the Board should have determined before proceeding. Since the DMCCR runs with the land and does not state that unpaid dues and assessments are a personal debt of the owner, the debt likely runs with the land and is not personal and therefore not likely debt that can be collected in small claims court. #NotPersonal
__Reasonable Expectations — (added 2009 Jan 10) If shareholders in a publicly-traded corporation received a notice in the proxy statement that a shareholder vote was required for a resolution or other action proposed by management, would shareholders expect that the proposed resolution or action had been determined by management and the board of directors to be valid under the law and governing and other documents? If management and/or the board had any doubts about the validity, would shareholders expect that the proposal would not proceed to a shareholders' vote? Would shareholders expect that they would not have to make an independent verification of the validity? It a school board places a resolution/referendum before the residents for a vote, is that board obligated to ensure that the resolution/referendum is valid under the law and to not proceed if the validity is uncertain? It should be obvious that the answers to all of these questions is "YES". #Expectations
__(added 2009 Jan 10) So why should it be any different for proposals from the board of directors of MOA? The board has the resources from all property owners to use in making the determination. Further, the board should certify to the MOA members that any proposed action is unquestionably valid under the law and governing documents. The certainty and certification should be supported by making all communications to and from the Association's attorney (paid with members' money) available to all members for inspection and copying.
__An amendment to the DMCCR which runs with the land for all property units is a serious matter concerning property rights. Owners/members should not be asked to vote on proposed amendments without full justification that the rights of owners/members are being protected and that the proposed amendment is unquestionably valid under the law. None of this was provided in the notice of the proposed action (added 2009 Jan 05), nor is there any indication that such a legal analysis even exists. An invalid amendment clouds the title for all owners/members.
__It is the responsibility of the board to certify that the proposed amendment is valid under the law (meaning that a court of appeals would likely uphold), and that any questions concerning the validity (added 2009 Jan 05) be resolved in favor of the owners/members and be disclosed to owners before a vote is taken. The board has the resources of 2000+ property units to ensure the validity. Each owner of a property unit has the resources of only that property unit. It is incumbent upon the board to certify that it is unlikely that a court of appeals would rule the amendment to be invalid if contested and appealed. Moreover, the legal analysis (added 2009 Apr 04) and all communications to and from the Association's attorney should be made available for review by owners/members prior to any vote. After all, it is the owners who paid for any legal analysis (added 2009 Jan 05), and they are the ones most affected by the proposed amendment.
__(added 2009 Jan 05) The significance of proving validity extends beyond this proposed amendment. If the board is willing to compromise the rights of owners/members on this issue, it is likely willing to do so on other matters. Adhering to the law and the governing documents is the rule of law for owners associations and their boards. (added 2009 Jan 05) The Association should be of the members, by the members and for the members — not of the board, by the board and for the board.
__Venue — Under MCL 600.1621, a person has a right that any lawsuit against him/her be filed in the court in the county of residence of that person. If there is an inconvenience because the potential plaintiff in a lawsuit is located in another county, it the potential plaintiff who is inconvenienced. While a person may waive that right of venue, that person does so voluntarily in a contract. (added 2008 Dec 31) The board has used the venue provision in the terms and conditions for bank accounts (and possibly credit card accounts) as justification for the venue provision in the DMCCR. For a bank or credit card account, the individual person voluntarily agrees to the venue provision by accepting (signing) the terms and conditions. The venue provision is not imposed on the person by third parties. What is proposed with the proposed amendment is that third parties would negate or rescind that right under the law. Moreover, the owners potentially affected by the proposed amendment — those delinquent in dues and assessments — are denied the opportunity to vote on the proposed amendment because they are not in good standing. Such actions are obviously unfair and unjust. The board should provide case law from Michigan or other states since the MCL does not provide the authority for third parties to negate or rescind the venue rights in MCL 600.1621. Lacking such authority, the proposed amendment should be invalid on its face. #Venue
__New Provision — Consistent with the above paragraph, the proposed amendment fundamentally changes the method of collection and introduces a new provision, not merely to (added 2009 Jan 05) amend existing provisions (adjust, fix, refine, revise, correct
__(added 2008 Dec 31) A provision to define venue for the owner is beyond the scope of restrictive covenants which apply only to land, and run with the land. The Michigan Supreme Court described the meaning of restrictive covenants (referred to as reciprocal negative easements) in Sanborn v McLean, 233 Mich 227, 229-230; 206 NW 496 (1925): “It (reciprocal negative easement) runs with the land sold by virtue of express fastening and abides with the land retained until loosened by expiration of its period of service or by events working its destruction. It is not personal to owners but operative upon use of the land by any owner having actual or constructive notice thereof.” See Ardmore Park (next paragraph) pp 59-60 for a more complete quotation from Sanborn v McLean. The intent for the proposed amendment to the DMCCR is to apply to the owner (personal to owner) which is contrary to the requirements in Sanborn v McLean, and therefore likely invalid as a restrictive covenant. The venue requirement in MCL 600.1621 is a right to the owner (person). Venue provisions concerning property are covered in MCL 600.1605, and are different from those concerning a person.
__Amendment Requirements — Even if the language in the proposed amendment is valid under the law and governing documents, any amendment must be approved by a majority, or higher percentage, of all owners to be valid and enforceable under Ardmore Park v. Simon, 117 Mich App 57, June 1982, (added 2009 Apr 04) Headnote 4: #AmendmentRequirements
"COVENANTS — DEED RESTRICTIONS. A deed restriction which properly allows a majority, or greater percentage, of owners within a particular subdivision to change, modify or alter given restrictions binds the other owners by properly passed and recorded changes in the same manner as those contained in any original grant and restriction."The opinion discussed the value of restrictive covenants as a property right and applies similar conclusions from other courts. Indeed, subsequent Michigan cases discussing Ardmore Park reinforce the conclusions in Ardmore Park and the value of property rights, and protection that those property rights will not be fundamentally changed.
__The results of the vote by owners (mandatory MOA members) as published by MOA on its website are:
"Upon completion of the tallying of votes by the Elections Committee, it was announced that 784 votes were cast and the results are:Since there are approximately 2200 property units (lots) in the Michaywé restricted property, the proposed amendment did not receive the required majority in Ardmore Park.
- 718 YES votes
- 54 NO Votes
- 12 Invalid Ballots"
__There is a long history of the amendment provisions in the DMCCR as documented in the court records, MOA records and communications to owners/members of MOA. The intent for the changes in the amendment provisions is clearly documented as seeking stringent but practical requirements for amendment. There is nothing in the record indicating any intent to negate the requirements in Ardmore Park. The parties in the Hees v MLP litigation relied on the advice of Mr. Mark Makower, who claims to be an expert in property law, for the amendment language. He did not advise that the minimum requirements for amendment were defined in Ardmore Park. Consequently, there was no intent by anyone involved to negate the amendment requirements in Ardmore Park. The court records and MOA records speak for themselves: There was no intent to negate the requirements in Ardmore Park. No communication to owners/members so stated. (added 2009 Jan 05) Without a clear statement that the intent was to negate, there was no understanding by the parties of such an effect, and hence no contract that the requirements in Ardmore Park were negated. Michigan case law refers to the intent of the drafters where uncertainties exist. The drafters were the parties in the lawsuits and MOA.
__Amendment Not Retrospective — Even if the proposed amendment is valid, it is prospective and is not retrospective. Accordingly, it would not apply to actions by owners prior to the amendment, such as not timely paying dues and assessments. #NotRetrospective
__(added 2008 Dec 31) Legal Opinions — Based on the information provided to owners/members, the level and quality of analysis concerning the validity of the proposed amendment is unknown. Owners/members were provided no information on the validity of the proposed amendment nor were they provided the opportunity to review what analysis, if any, was done by an attorney. The board meeting minutes do not state any approval of a motion by the board of the Michaywé Owners Association to authorize such an analysis. For any proposed amendment — this one included — the board has the obligation to conduct a thorough analysis and make same available to owners/members for review and debate. #LegalOpinions
__Addendum to Protest — My 2008 Nov 23 email to Todd Chwatun for distribution to Messrs. Jay Welter and Kirk Yodzevicis, discussed some of the above and is an integral part of this protest.
Sincerely,
/s/
Donald L. Nordeen
cc: Mr. James F. Pagels File: MOA Bd81230 ProtestCCRAmend.cwk
- History:_
- 2009 Apr 09 — Subheading added and topics rearranged. Paragraph on Debt likely not personal added.
- 2009 Feb 20 — added link to MOA's collections policy posted on MOA's website
- 2009 Jan 05 — various additions and related edits
- 2008 Dec 31 — better summary included
- 2008 Dec 31 — venue provisions for bank accounts have specific agreement from person affected, not imposed by third parties
- 2008 Dec 31 — additions concerning the venue being personal and not applicable in restrictive covenants
- 2008 Dec 30 — Initial Post
- Links:xxFormal Protest — Proposed Amendment to DMCCR Concerning Venue at [http://swagmanmwpoa.blogspot.com/2008/12/formal-protest-proposed-amendment-to.html]
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