Home Mkt. Invs. v. Barth, 2021AP763

CourtCourt of Appeals of Wisconsin
Writing for the CourtSTARK, P.J.
PartiesHome Market Investments, LLC, Plaintiff-Respondent, v. Carol J. Barth, Defendant-Appellant.
Docket Number2021AP763
Decision Date22 November 2022

Home Market Investments, LLC, Plaintiff-Respondent,
v.

Carol J. Barth, Defendant-Appellant.

No. 2021AP763

Court of Appeals of Wisconsin, District III

November 22, 2022


This opinion will not be published. See Wis.Stat. Rule 809.23(1)(b)4.

APPEAL from a judgment of the circuit court for Outagamie County: No. 2020SC2142 VINCENT R. BISKUPIC, Judge.

STARK, P.J. [1]

¶1 Carol Barth appeals a small claims judgment for $791.33 entered against her based upon her liability to Home Market Investments,

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LLC, (HMI) under a Co-Signor Rental Guaranty Agreement (the Guaranty). Barth guaranteed payment for all obligations incurred by her daughter, Tanya Rachfal, under a residential lease with HMI (the Lease). The amount of the Barth judgment was calculated based upon the amount of a judgment previously entered against Rachfal. Barth argues that the judgment against her improperly includes costs and expenses incurred after the Lease terminated and items for which Rachfal was not obligated to pay under the Lease.

¶2 We conclude that the Guaranty applies to costs and expenses that Rachfal incurred during an extension of the Lease, and we affirm the circuit court's decision on that issue. We further conclude, however, that the court erred by including in the Barth judgment the statutory filing fee and court costs from the Rachfal judgment. Rachfal was not obligated to pay those amounts under the terms of the Lease; therefore, Barth is not obligated to pay them. We therefore, reverse and remand for the court to subtract the costs and fees included in the Rachfal judgment from the judgment in this case.

BACKGROUND

¶3 On October 8, 2016, Rachfal signed the Lease with HMI for a six-month term from "October 8, 2016 [to] March 31, 2017." The Lease provided that it was "for the stated term and [would] expire without further notice." The Lease also provided that "[i]f tenancy is to continue beyond the stated term, parties should make arrangements in writing in advance of [the L]ease expiration." The Lease further stated that the "[t]enant agrees to pay all utility costs," which included charges for electricity, heat, gas, air conditioning, hot water, other water, and sewer.

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¶4 In addition to the Lease, Rachfal signed an addendum titled "Rules and Regulations," by which she agreed to keep the premises clean. Rachfal also signed another addendum titled "Nonstandard Rental Provisions," pursuant to which she agreed to permit HMI to deduct from her security deposit "[a]ll charges for cleaning the premises beyond normal wear and tear."

¶5 Barth lived next door to the unit Rachfal rented from HMI, and on the same day that Rachfal signed the Lease, Barth signed the Guaranty. The Guaranty stated: "You as Guarantor signing this Rental Agreement Guaranty, guarantee all obligations of the resident under the Rental Agreement … which commences on 10/8/16 and ends on 3/31/17." The Guaranty further stated that "[a]ll remedies against the resident apply to the Guarantor as well" and that the "Guarantor understands that, in the event [the] resident extends the current [L]ease, this Guaranty will apply to the [L]ease extension." In bold letters, the Guaranty also stated that "[a]ll residents and Guarantors are jointly and severally liable for the financial obligations of the Rental Agreement."

¶6 After the original term of the Lease expired in March 2017, Rachfal remained in possession of the residence. At a bench trial, Amy DeCoster, a co-owner of HMI, testified that HMI and Rachfal extended the Lease on a month-to-month basis after the original term expired, and that HMI had accepted Rachfal's subsequent rental payments. This arrangement was confirmed by evidence introduced at trial of a September 2017 text message exchange, in which Rachfal confirmed her extended tenancy and asked to again renew the Lease. DeCoster, in the same text exchange, notified Rachfal that HMI would not agree to again renew the Lease but it would permit Rachfal to stay on the premises for "a few more days or a week." Rachfal vacated the unit in October 2017. DeCoster testified that after Rachfal vacated the unit, HMI discovered an outstanding utility

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charge. In addition, DeCoster testified that she and her husband spent six hours cleaning Rachfal's unit after Rachfal left.

¶7 HMI initially sued Rachfal in small claims court, and the circuit court awarded HMI a judgment in the amount of $569.83. The judgment included $263.33 owed by Rachfal for unpaid utilities, $210 in cleaning costs, a $94.50 statutory filing fee, and a $2.00 service fee.

¶8 Rachfal failed to pay this judgment, and HMI then brought a small claims action against Barth, seeking $1,498.83 due to Barth's guarantee of "the obligation of Tanya C. Rachfal, under a Lease with Plaintiff." At the bench trial held in January 2021, HMI voluntarily dismissed its request for statutory attorney's fees, thereby reducing the amount demanded to $569.83-the amount of the judgment previously entered against Rachfal, plus an additional $5.00 in fees that HMI incurred for docketing the Rachfal judgment.

¶9 Barth testified at trial that she signed the Guaranty. Barth further testified she was unaware that Rachfal would be staying in the unit longer than six months, and that nothing was mentioned to Barth about an extension of the Lease.

¶10 At the conclusion of the bench trial, the circuit court requested additional briefing from the parties. Barth argued that the Guaranty was not applicable because Rachfal became a periodic tenant when she stayed past the expiration of the Lease. Citing Wis.Stat. § 704.01(2), Barth explained that, by definition, a periodic tenant is one who holds possession of a unit without a valid lease. Because the utility and cleaning expenses at issue were incurred during the periodic tenancy, Barth contended that there was no valid lease for her to guarantee; she was therefore not liable for the amounts in question. Barth also argued that the court costs and expenses included in the Rachfal judgment were

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not incurred under the Lease, and, consequently, she had not guaranteed their payment.

¶11 The circuit court later issued a written decision rejecting Barth's arguments and finding the Guaranty...

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