Aluminum Industries Corp. v. Camelot Trails Condominium Corp., 94-0713

• Decision Date: 30 March 1995
• Docket Number: No. 94-0713,94-0713
• Citation: 535 N.W.2d 74,194 Wis.2d 574
• Court: Wisconsin Court of Appeals
• Parties: ALUMINUM INDUSTRIES CORPORATION, Plaintiff-Respondent, v. CAMELOT TRAILS CONDOMINIUM CORPORATION, Defendant-Appellant. d . Oral Argument

Page 74

535 N.W.2d 74

194 Wis.2d 574

ALUMINUM INDUSTRIES CORPORATION, Plaintiff-Respondent, v. CAMELOT TRAILS CONDOMINIUM CORPORATION, Defendant-Appellant.^d

No. 94-0713.

Court of Appeals of Wisconsin.

Oral Argument March 30, 1995.

Opinion Released May 9, 1995.

Opinion Filed May 9, 1995.

For the defendant-appellant there were briefs and oral argument by Jonathan B. Levine, Milwaukee.

For the plaintiff-respondent there were briefs by Gaines Law Offices, S.C., with Irving D. Gaines, and Jennine T. Sonntag, Milwaukee. There was oral argument by Irving D. Gaines.

Before SULLIVAN, FINE and SCHUDSON, JJ.

SCHUDSON, Judge.

Camelot Trails Condominium Corporation appeals from the trial court judgment granting summary judgment to Aluminum Industries Corporation. ¹ Camelot argues that the trial court erred in granting summary judgment that permanently enjoined it from filing claims for condominium maintenance liens resulting from Aluminum's non-payment of condominium maintenance fees and assessments. Camelot also argues that the trial court erred in dismissing its counterclaims for foreclosure on Aluminum's properties, and for condominium fees and assessments.

This case presents an issue of first impression: whether, under § 703.02(15), STATS., a condominium property on which no construction has taken place is a "unit" subject to assessment for common expenses under § 703.16(2), STATS. We conclude that it is. In this case, however, we also conclude that, under § 703.16(2), STATS., the condominium declaration "otherwise provided" a definition of "unit" that precluded assessment of properties prior to construction. Therefore, although we depart from the trial court's statutory analysis in this case, we affirm.

Camelot is a non-profit association of residential condominium owners organized under the Condominium Ownership Act, Chapter 703 of the Wisconsin Statutes. The residential development involved in this case has 105 properties, ninety of which have completed duplexes or single family homes. Since 1986, Aluminum has been the owner of the other fifteen properties on which no dwellings have been constructed. An understanding of the history of the two stages of this condo development and how Aluminum came to be the owner of those fifteen properties is essential to the analysis of this case.

Aluminum Industries purchased land in Oak Creek and subsequently sold the land to a development corporation, Camelot Trails Construction Corporation, an entity distinct from the owners association involved in this case, Camelot Trails Condominium Corporation. The Construction Corporation planned to develop a condominium complex with sixty units under the original 1976 Declaration of Condominium, and an additional forty-five units in "phase two" under the 1980 First Amendment to the Declaration of Condominium. Aluminum Industries held a mortgage on the property and, as the developer sold condo units, Aluminum partially released condominiums from the mortgage.

Between 1976 and 1986, the developer built and sold ninety units in the condo complex. Sometime in 1986, however, the developer found itself financially unable to complete the fifteen remaining units and faced foreclosure. The developer then transferred the fifteen unbuilt properties by warranty deed to the mortgagor, Aluminum Industries, as a quid pro quo for Aluminum not to foreclose on the mortgage. Thus, on September 2, 1986, Aluminum became the owner of fifteen properties of the condo complex on which no construction had taken place.

The bylaws of the Camelot Trails Condominium Corporation (the owners' association) provide that the board of directors shall furnish the owner of each unit a written statement of the amount of assessment due for the owner's share in the common elements of the complex. In its factual summary, the trial court stated, "It became a custom which both parties have stated off the record ² and apparently agree that fees were not assessed against units until the units were built and sold." Although at oral argument to this court Camelot indicated some lingering dispute in this regard, there is no dispute that between 1986 and 1992, Camelot never assessed Aluminum for any condominium association fees, and Aluminum never paid any association fees. ³ On August 19, 1992, however, counsel for Camelot wrote to the president of Aluminum, stating that Aluminum "should be paying, and should have been paying, Association fees" on the fifteen properties it owned.

Aluminum filed this action against Camelot seeking declaratory judgment and a permanent injunction "to restrain CAMELOT from recording or filing lien claims on the title to the real estate parcels ... regarding any and all claims for common area fees on units not yet constructed, because such lien claims would be null and void and invalid." Aluminum claimed that "it would be equitably unjust" to pay the fees and that Camelot had no authority to seek payment prior to construction, completion, and transfer of residential dwelling units to third-party purchasers. Aluminum also claimed that any such assessments "are improper and contrary to the provisions of Wis.Stats. sec. 703.15(3) and (4) in that" it had received "no notice of any meeting ... at which time budgets and assessments were adopted." Further, Aluminum claimed that due to the six-year delay, Camelot was estopped from seeking payment and Camelot's assessments were barred by the doctrine of laches. ⁴

Camelot answered and counterclaimed for declaratory judgment "declaring Aluminum to be obligated to pay its proportionate share of common area expenses, past and future, in proportion to the percentage of Aluminum's undivided interest in the condominium's common elements, for each condominium unit owned by Aluminum," and for unpaid fees and charges of approximately $196,170 plus late charges and interest. Aluminum replied, further asserting that Camelot's claims were "barred by the statute of limitations." Finally, Camelot amended its answer and counterclaims seeking an additional $26,505 plus interest for assessments and association fees for the period from August 1, 1991 through July 31, 1993, and further seeking a foreclosure judgment on the condominium liens and sale of Aluminum's fifteen properties.

Following its review of the pleadings, numerous affidavits, and briefs, the trial court correctly identified the "pivotal" issue in this case: whether, under § 703.02(15), STATS., and under the specific condominium declaration in this case, a condominium property was a "unit" subject to assessment prior to construction of a dwelling. The trial court concluded that a "unit" is "a constructed unit" and that Aluminum's "fifteen unbuilt units ... are phantom units." The court explained, "[t]hey're unbuilt spaces of air and ... as such they are dissimilar in nature with those types of units which are constructed for the purposes of assessment." ⁵ Therefore, the trial court granted summary judgment for Aluminum.

"Our review of an order granting summary judgment employs the same standards used by the trial court in its determination of the summary judgment motion." Towne Realty, Inc. v. Edwards, 156 Wis.2d 344, 347, 456 N.W.2d 651, 652 (Ct.App.1990). "When the pleadings, depositions, affidavits and other papers on file show that there is no genuine issue as to any material fact, the movant is entitled to judgment as a matter of law." Id.; see § 802.08(2), STATS. We review summary judgment de novo. Towne Realty, 156 Wis.2d [194 Wis.2d 581] at 347, 456 N.W.2d at 652. Further, application of a statute and interpretation of an unambiguous written agreement involve questions of law, which we independently review. See Murphy v. Droessler, 188 Wis.2d 420, 425, 525 N.W.2d 117, 119 (Ct.App.1994); Old Tuckaway Assocs. Ltd. Partnership v. City of Greenfield, 180 Wis.2d 254, 282, 509 N.W.2d 323, 333 (Ct.App.1993). We have carefully examined the evidentiary record in this case and conclude that although the trial court erroneously interpreted the statutory definition of a condominium "unit," it correctly concluded that the specific declaration for this condo development precluded assessments of unit owners prior to construction.

When property is duly executed and recorded under a declaration of condominium, it is subject to regulation under Chapter 703, Wisconsin's Condominium Ownership Act. Section 703.03, STATS. " 'Declaration' means the instrument by which a property becomes subject to this chapter, and that declaration as amended from time to time." Section 703.02(8), STATS. Section 703.16(2), STATS., provides:

FUNDS FOR PAYMENT OF COMMON EXPENSES OBTAINED BY ASSESSMENTS. Funds for the payment of common expenses and for the creation of reserves for the payment of future common expenses shall be obtained by assessments against the unit owners in proportion to their percentage interests in the common elements or as otherwise provided in the declaration.

Thus, Aluminum would be subject to assessment for its fifteen properties unless Aluminum does not become a "unit owner[ ]" prior to construction of a dwelling, or unless non-assessment prior to construction is "otherwise provided in the declaration."

Section 703.02(17), STATS., defines " 'Unit owner' " as "a person, combination of persons, partnership or corporation who holds legal title to a condominium unit or has equitable ownership as a land contract vendee." Section 703.02(15) states that " 'Unit' " means:

a part of a condominium intended for any type of independent use, including one or more cubicles of air at one or more levels of space or one or more rooms or enclosed spaces located on one or more floors (or parts thereof) in a building. A unit may include 2 or more noncontiguous areas.

We read nothing in the definitions of "unit owner" or "unit" to suggest their limitation to constructed units for purposes of assessment under § 703.16(2), STATS. ⁶ Indeed, the statute explicitly refers...