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Condo association's litigation costs cannot be passed on to members without approval of members

The court reversed the trial court's order granting the plaintiff-condo association summary disposition and vacated the amended judgment awarding plaintiff attorney fees and costs. It also remanded for an order granting the defendants-condo owners summary disposition and for an evidentiary hearing as to their reasonable attorney fees and costs. Plaintiff's board of directors held a closed meeting during which litigation was authorized against the developer of the condo project for construction defects. Plaintiff also levied a three month $1000 per member assessment to fund the litigation and rescinded the then-current $160 monthly member assessment. "While defendants made some assessment payments, they did not pay the full amount and sent plaintiff a letter protesting the $1000 assessment on the grounds that it was levied in contravention of" the Bylaws. Plaintiff recorded a lien for non-payment of the assessments against their property, and in this case sought foreclosure of the lien. Defendants argued that the assessment was a special assessment for litigation requiring association members' authorization with a 60% vote. The court's analysis of the validity and application of Article XXIII of the Bylaws was governed by the principles applied to contract interpretation because plaintiff is a nonprofit corporation. Its review of the Bylaw provisions did "not support plaintiff's argument and the trial court's determination that the assessment levied" was an "additional assessment." Despite the argument on appeal, the resolution did "not purport that the assessment was levied because the then current assessment was insufficient to pay the costs of operation and management" of the condo project. The language of the resolution was that "plaintiff could not operate, maintain and manage the condominium project plus pursue litigation with the then current annual budget." No proof was offered that "absent the litigation, the annual budget was insufficient to meet the safety, maintenance, repair and replacement responsibilities" at the condo. The resolution also "did not state the assessment was being created as a matter of emergency. By its own language the levy was to 'properly fund' a lawsuit that was filed six months before plaintiff resolved to authorize the $3000 per member levy." The best plaintiff could argue was that the litigation cost more than anticipated. "Plaintiff's failure to plan, monitor, or limit its litigation cost" did not "constitute a situation that should not have been reasonably anticipated by a prudent fiduciary." The court also could not find support for the trial court's finding that the assessment was an additional assessment under Article II, § 3(a).


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