Apple Valley Gardens Ass'n v. Machutta
| Citation | 763 N.W.2d 126,2009 WI 28 |
| Decision Date | 27 March 2009 |
| Docket Number | No. 2007AP191.,2007AP191. |
| Parties | APPLE VALLEY GARDENS ASSOCIATION, INC., Plaintiff-Respondent, v. Gloria MacHUTTA and Steven MacHutta, Defendants-Appellants-Petitioners. |
| Court | United States State Supreme Court of Wisconsin |
For the defendants-appellants-petitioners there were briefs by Randall L. Nash and O'Neil, Cannon, Hollman, DeJong, S.C., Milwaukee, and oral argument by Randall L. Nash.
For the plaintiff-respondent there was a brief by Matthew R. Jelenchick, Brian A. Romans, and Niebler, Pyzyk, Klaver & Carrig LLP, Menomonee Falls, and oral argument by Matthew R. Jelenchick.
An amicus curiae brief was filed by Jonathan B. Levine, Jessica L. Boeldt and the Law Firm of Jonathan B. Levine, Milwaukee; and Daniel J. Miske and Petrie & Stocking SC, Milwaukee, on behalf of Community Associations Institute Wisconsin Chapter, Inc., and oral argument by Jonathan B. Levine.
An amicus curiae brief was filed by Thomas D. Larson, and Debra P. Conrad, Madison, on behalf of the Wisconsin REALTORS® Association, and oral argument by John A. Kassner III.
This is a review of a published decision of the court of appeals affirming the entry of summary judgment in favor of Apple Valley Gardens Association, Inc. (the "Association") by the Circuit Court for Waukesha County, Paul F. Reilly, Judge.1 Three issues are presented. First, may a condominium complex prohibit the rental of condominium units through an amendment to the bylaws, or must such a restriction be placed in the condominium's declaration? Second, does the condominium declaration at issue here create a right to rent that precludes the enforcement of a bylaws amendment prohibiting condominium rentals? And third, does a prohibition on the rental of condominium units render title to those units unmarketable in violation of Wis. Stat. § 703.10(6) (2007-08)2?
¶ 2 Spouses Gloria and Steven MacHutta (collectively, "the MacHuttas") each currently own one condominium unit in the Apple Valley Gardens condominium complex. Steven MacHutta developed the complex in the late 1970s. The declaration of condominium, recorded in July 1979 to establish the condominium (the "declaration"), contained no restriction regarding rental of the units. However, on December 18, 2002, the Association amended the condominium bylaws (the "bylaws amendment") to prohibit rental of the condominium units. In 2004, Gloria MacHutta leased her condominium unit to a new tenant over the Association's objection, claiming that the rental prohibition was ineffective because it had not been added to the condominium declaration. The Association then filed an action in the circuit court seeking an order for declaratory judgment that the bylaws amendment was enforceable. The circuit court ultimately entered summary judgment in favor of the Association, which the court of appeals affirmed.
¶ 3 We hold that the condominium bylaws amendment prohibiting the rental of condominium units is permissible under Wis. Stat. § 703.10(3). We further conclude that the condominium declaration in this case does not conflict with the bylaws amendment prohibiting unit rental. Having been duly adopted by the Association, the bylaws amendment is therefore enforceable under Wis. Stat. § 703.10(1). Additionally, in accord with Wis. Stat. § 703.10(6), the bylaws amendment constitutes a mere restriction on the use of the condominium units, and does not in any way affect the quality of the units' title or marketability. Under the undisputed facts of this case, the Association is entitled to summary judgment as a matter of law. Accordingly, we affirm the decision of the court of appeals.
¶ 4 In 1979, Steven MacHutta built, developed, declared, and incorporated the Apple Valley Gardens condominium complex. The condominium declaration provided in pertinent part:
8. PURPOSE—RESTRICTION ON USE. The buildings and each of the units are intended for the purpose of single family residential use only and are restricted to that use. Any lease or oral or written rental agreement shall not relieve an owner from his obligation to pay common expenses or any other obligations imposed upon unit owners by this Declaration.
¶ 5 In 1988, following a dispute between the MacHuttas and the Association, the parties entered into a settlement agreement3 that limited Steven MacHutta, his immediate family members, and his business to ownership of a maximum of four condominium units. The agreement also granted Steven MacHutta the right to rent the units he owned. The agreement did not grant Gloria MacHutta the right to rent any condominium units, and she did not own the unit at issue in the present case at the time the settlement agreement was entered.
¶ 6 Steven MacHutta now owns Unit 2-110, and Gloria MacHutta owns Unit 2-206. Gloria MacHutta leases her unit to a tenant. The use of Steven MacHutta's unit is not at issue in the present case.
¶ 7 In 2002, the Association membership duly amended Article VI, ¶ 6.1(j) of the condominium bylaws to prohibit rental of the condominium's units as follows:
j. Owner occupied.
i. Effective January 1, 2003, all units are required to be owner occupied. No residential unit owner shall rent, lease or otherwise so demise any residential unit or any part therein. Owners shall not permit the use of said unit by any party other than owner or owner's immediate family member.
ii. An owners' [sic] observance of and performance under a rental agreement, lease, or other instrument granting occupancy in a residential unit in effect as of December 18, 2002 shall not be a violation of this subparagraph (j). . . . When the existing tenants . . . vacate their respective units, said units shall become owner occupied under this subparagraph (j), irrespective of the effective date of the rental agreement, lease, or other instrument granting occupancy in a residential unit.
¶ 8 The Association also duly amended the bylaws to include a provision in Article IX, ¶ 9.1 requiring written consent from the board of directors for the renewal or extension of any lease or rental agreement.
¶ 9 In 2004, Gloria MacHutta's then-tenant vacated the rental unit. Wishing to lease the unit to a new tenant, Gloria MacHutta submitted a lease application to the Association's board of directors for its consent. The board refused, however, invoking the 2002 bylaws amendment. Undeterred, Gloria MacHutta proceeded to lease her unit to the new tenant.
¶ 10 The Association filed suit against the MacHuttas seeking a declaratory judgment that the 2002 bylaws amendment prohibiting unit rental was enforceable. The MacHuttas counterclaimed, alleging that the Association had tortiously interfered with the new rental contract and had breached the 1988 settlement agreement between the Association and the MacHuttas which permitted Steven MacHutta to lease condominium units. The MacHuttas moved for judgment on the pleadings, which the circuit court denied, and the court of appeals denied the MacHuttas' petition for leave to appeal denial of their motion for judgment on the pleadings. The parties then filed cross motions for summary judgment. The circuit court entered summary judgment in favor of the Association, holding that: (1) Wis. Stat. § 703.09(1) does not prohibit condominium bylaws from containing use restrictions; (2) Wis. Stat. § 703.10(3) expressly allows condominium bylaws to contain use restrictions; (3) the Association duly amended the bylaws to prohibit the rental of units; (4) Wis. Stat. § 703.10(1) requires condominium unit owners to strictly comply with the bylaws as they are amended from time to time; (5) the bylaws amendment prohibiting unit rental does not affect the quality of owners' title to their units, and thus does not violate Wis. Stat. § 703.10(6); and (6) the 1988 settlement granted Steven MacHutta, but not Gloria MacHutta, permission to rent units, and it in no way relieved Gloria MacHutta of her duty to comply with the bylaws amendment prohibiting unit rental.
¶ 11 The court of appeals affirmed, concluding that: (1) Wis. Stat. § 703.10(3) permits use restrictions to be placed in the bylaws; (2) the unit rental prohibition in the bylaws does not render unit title unmarketable in violation of Wis. Stat. § 703.10(6); and (3) the 1988 settlement agreement did not relieve Gloria MacHutta of her obligation to abide by the rental prohibition. Apple Valley Gardens Ass'n, Inc. v. MacHutta, 2007 WI App 270, 306 Wis.2d 780, 743 N.W.2d 483. The MacHuttas then sought review before this court.
¶ 12 Because the present case was determined on cross motions for summary judgment based on undisputed facts, this court's review is de novo, and we apply the summary judgment methodology specified in Wis. Stat. § 802.08. See LaCount v. Gen. Cas. Co. of Wis., 2006 WI 14, ¶ 20, 288 Wis.2d 358, 709 N.W.2d 418. We thus determine under Wis. Stat. § 802.08(2) whether there is any genuine issue as to any material fact, and if not, which party is entitled to judgment as a matter of law. The present case also involves interpretation of condominium documents and statutes, all of which present matters of law reviewed de novo. See Jones v. Jenkins, 88 Wis.2d 712, 722, 277 N.W.2d 815 (1979) (); Plachta v. Plachta, 118 Wis.2d 329, 332, 348 N.W.2d 193 (Ct.App. 1984) ().
¶ 13 The first question is whether a condominium complex may prohibit the rental of condominium units through an amendment to the bylaws, or whether such a restriction must be placed in the condominium's declaration. The MacHuttas contend that the applicable statutes require a restriction on renting units to be placed in the declaration. Because that did not occur here, the MacHuttas assert the bylaws amendment is unenforceable. We di...
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