Background
Daniel and Julie Skidmore leased an Oakland County condominium from Hideo and Makie Hayashi beginning in 2017. Daniel alleged that persistent roof leaks and possible mold made the unit uninhabitable. He purported to cancel the lease in May 2020 and left that November after placing several months’ rent in escrow.
The Hayashis sued the Skidmores for unpaid rent and other alleged breaches. Daniel separately asserted 18 claims against the Hayashis, Julie, and the condominium association. The circuit court consolidated the cases, dismissed Daniel’s claims against the Hayashis and Julie, and granted the Hayashis summary disposition on liability for their breach-of-contract claim, leaving damages for trial.
The Court’s Holding
The Court of Appeals held that the lease was void from the outset because West Bloomfield Township prohibited owners from renting, and occupants from occupying, a residential unit without a certificate of compliance. The Hayashis admitted that the unit lacked the required certificate throughout Daniel’s occupancy. Because renting and occupying the unit were central to the agreement, the entire lease was illegal and unenforceable.
The court therefore directed dismissal of the Hayashis’ breach-of-contract claim and affirmed dismissal of Daniel’s own contract claim. It revived Daniel’s disgorgement and unjust-enrichment claims and his conversion claim concerning personal property other than the security deposit. It affirmed dismissal of the security-deposit conversion claim, the Truth in Renting Act claim, the anti-lockout claim, the Housing Law of Michigan claim, and Daniel’s claims against Julie. Exemplary damages could be sought as a remedy on surviving claims but were not an independent cause of action.
The court also upheld the order setting aside the Hayashis’ default and denying Daniel a default judgment, while holding that Daniel was entitled to costs associated with setting aside the default. It reversed a $500 sanction against Daniel because he had not received a meaningful opportunity to respond to the sanctions request or contest the unexplained amount.
Key Takeaways
- A residential lease may be void ab initio when renting and occupying the property violate a local certificate-of-compliance ordinance, even if the ordinance does not create a private cause of action.
- When an illegal lease is unenforceable, neither landlord nor tenant may recover for its breach, but equitable claims such as unjust enrichment may remain available.
- Former residents lacked statutory claims under provisions limited to current tenants or occupants, and the one-year limitations period barred the anti-lockout claim.
- Sanctions require reasonable notice and a meaningful opportunity to be heard, including an opportunity to contest the amount imposed.
Why It Matters
The published decision distinguishes between suing directly under a housing ordinance and invoking established contract law to challenge an agreement whose performance violates that ordinance. A landlord cannot necessarily enforce a lease merely because the ordinance supplies public penalties rather than a private remedy.
The ruling also clarifies that invalidating a lease does not automatically require repayment of every amount exchanged. Instead, the parties’ remaining rights may turn on equitable doctrines and properly pleaded property claims, which the circuit court must address on remand.