“Damages” did not mean “attorney fees,” and a Michigan HOA paid its own bill
“Damages” did not mean “attorney fees,” and a Michigan HOA paid its own bill
2026-09-12 · Michigan · Courts
What happened. The Michigan Court of Appeals affirmed on 17 November 2025 that a property owners' association could not recover its attorney fees after enforcing its deed restrictions, for two reasons that were each sufficient on their own. Carnegie Woods Property Owners Association v Czajka, No. 371756, Mackinac Circuit Court — unpublished per curiam, panel of Ackerman, P.J., Young and Korobkin.1
Reason one: the pleading
“Contractual attorney's fees are recoverable only in a suit brought directly on the contract” — Pransky v Falcon Group, 311 Mich App 164, 194-195 (2015). The association never pleaded a breach-of-contract claim on the deed restrictions. It pleaded its way out of its own fee provision.
Reason two: the drafting
Paragraph 22 of the bylaws provided for “damages” generally and did not specifically authorise “attorney fees.” Under Michigan's American rule, a general damages clause does not carry a fee-shift.
Two ordinary drafting and pleading choices, made years apart by different people, and the association funded the whole case.
What the association won
Most of the substance, which sharpens the point. The court held Czajka could use Carnegie Trail to reach his lot inside the subdivision and cross from it to his adjoining lot outside — clear easement language granting lot owners road use cannot be judicially narrowed — but that he could not grant third parties direct access or use the road commercially. His prescriptive-easement claim failed because his use was too infrequent.
The fiduciary-duty holding, which is quietly the most useful line in the opinion
Czajka counterclaimed for breach of fiduciary duty. It failed, and the reason is worth writing down: enforcement that tracks the recorded governing documents does not breach a fiduciary duty.
That is close to the only fiduciary-duty ruling of substance in Michigan community-association law in the past three years. No Michigan appellate decision in this window squarely construes MCL 450.2541, the Nonprofit Corporation Act's director standard, in an association context. Practitioner commentary on the business judgment rule is still working from pre-2024 authority.
The panel also held that tort trespass claims are barred where a contract governs the relationship — the counterclaim was duplicative of the contract dispute.
The audit a Michigan board can run this quarter
This decision is cheap to act on and expensive to ignore.
- Find your fee provision and read the actual words. Does it say “attorney fees”? “Costs of enforcement”? Or only “damages”? If it is the last of those, you do not have a fee-shift, whatever anyone has been telling the board.
- Check whether the provision is in the right document. Michigan condominium associations get a statutory route — MCL 559.206(b) supported the $24,086.10 fee award in Farmington Square. A non-condominium property owners' association has no equivalent and lives entirely on its recorded documents.
- Tell counsel to plead breach of contract. Enforcement actions are frequently pleaded as declaratory relief, injunction, nuisance or trespass because those fit the facts. Pransky means the fee provision travels with the contract count and nothing else.
- Amend if the words are wrong. A fee provision is a small amendment with a large effect, and the moment to fix it is not while a case is pending.
How it fits the wider pattern
Michigan associations are repeatedly losing on documents rather than on merits. In Northville Colony Estates the association lost the whole case because its bylaws required a two-thirds member vote for the litigation expense. Here it won the case and lost the fees.
Both are unpublished, which means neither binds a trial court. Both are also entirely predictable readings of ordinary contract law, which means the next panel is likely to reach the same result.
What to watch next
Whether the Michigan Supreme Court takes up MCL 450.2541 in an association case. Michigan has a large volunteer-director population governed by a statute nobody has authoritatively construed for them, and the gap is starting to show in exactly this kind of counterclaim.
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