Bafna v. Echo Valley Condominium Association, No. 353785 (Mich. Ct App. Oct. 28, 2021)

Association Operations: The Court of Appeals of Michigan held that an association was obligated to provide records to an owner because the records sought and the reasons for seeking them could be discerned. The association could not ignore the requests despite them being numerous and sometimes hard to follow.

 

Echo Valley Condominium Association (association) governed a condominium in Oakland County, Mich. Shalbhadra Bafna owned a unit in the condominium.

Over the course of three months in 2019, Bafna asked to review various association records related to light bulb replacement, wrist bands for pool access, past litigation, and accounting protocols. Initially, Bafna did not indicate why he wanted the records, but he would renew the requests every couple of weeks and explain his reasons. Over the months, he would add additional records he sought to review.

The association generally denied each request, which eventually led Bafna to file suit against the association to compel it to produce the records. The association responded that, based on Bafna’s numerous and confusing requests, it was impossible to determine what documents Bafna wanted and for what purpose. The association contended that Bafna’s requests were made without a proper purpose, so it was justified in denying the requests.

The trial court acknowledged that Bafna’s original requests were difficult to follow, but it determined that the requests made in the lawsuit were clear enough to inform the association of the records sought and Bafna’s purpose. The trial court found that Bafna’s requests were for specific categories of documents, which were all related to perceived mismanagement by the association’s board of directors or community manager. The trial court concluded that Bafna had a proper purpose as mismanagement had a direct effect on Bafna as an owner.

The trial court granted summary judgment (judgment without a trial based on undisputed facts) in Bafna’s favor and ordered the association to produce the records. The association appealed.

The Michigan Condominium Act (condominium act) requires that the books, records, contracts, and financial statements concerning the administration and operation of the condominium be available for inspection by unit owners at convenient times. The Michigan nonprofit corporation act (nonprofit act) further provides that any association member may inspect the association’s books and records for a proper purpose if the member gives a written demand describing with reasonable particularity the records sought, and the records are directly connected with the stated purpose.

The association insisted that it was well within its rights to deny Bafna’s records requests because he did not state a proper purpose when he first made the requests. The appeals court found that, while many of Bafna’s initial requests did not state a reason for wanting the records, in many cases he stated a purpose in the follow-up requests. In addition, his complaint in the lawsuit sufficiently explained the purpose. The nonprofit act required only a written request, and there was no reason that the complaint could not serve as that written request.

The association also contended that Bafna’s requests should be denied because he was difficult to deal with. The appeals court acknowledged that Bafna’s requests were long-winded and numerous, but there was nothing to indicate they were in bad faith. There was no reason to punish Bafna for exercising his rights to actively engage in association governance simply because he repeatedly attempted to exercise his rights.

The association urged that Bafna did not have a proper purpose for the records. The nonprofit act defines a proper purpose as any purpose that is reasonably related to the person’s interest as a member of the association. Inspection requests to satisfy idle curiosity are not proper. The appeals court found all of Bafna’s requests related to an interest in whether the association was wasting money, whether the association was properly posting payments, and how legal fees might affect future assessments. He alleged that he was being penalized with late fees because his payments were being deposited in the wrong account. All these issues impacted Bafna’s financial obligations to the association, which was certainly a proper purpose.

Accordingly, the trial court’s judgment was affirmed.

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