Wisconsin Lawyer
Vol. 82, No. 5, May 2009

Real Property

Apple Valley Gardens Ass’n v. MacHutta, 2009 WI 28 (filed 27 March 2009)

Apple Valley Gardens Association Inc., a condominium owners’ association, sued the defendants to enforce an amended condominium bylaw requiring owner occupancy of condominium units and prohibiting the rental of those units. The original condominium declaration did not contain this limitation, which was added several years later by an amendment to the bylaws. On cross-motions for summary judgment, the circuit court ruled in favor of the association. In a published decision the court of appeals affirmed the circuit court. See 2007 WI App 270, 306 Wis. 2d 780, 743 N.W.2d 483. In a majority decision authored by Justice Gableman, the supreme court affirmed the court of appeals.

The first question the court confronted was whether a condominium association 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. It held that “use restrictions, including restrictions on the ability of owners to rent their units, may be enacted through the bylaws” (¶ 13). Condominium declarations do and must include information regarding the usage of the units, but nothing in the Wisconsin Condominium Ownership Act (Wis. Stat. ch. 703) requires that all restrictions on use be identified in the declaration (see ¶ 14). Section 703.10(3) expressly authorizes the placement of additional use restrictions in condominium bylaws. “Therefore, as long as use restrictions do not conflict with the declaration ... or with state or federal law, they are valid and enforceable” (¶ 16).

Another issue before the court was whether a prohibition on renting one’s condominium unit violates Wis. Stat. section 703.10(6) by rendering title to the subject units unmarketable. The court concluded that “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” (¶ 31).

Finally, the court considered whether the condominium declaration at issue in this case creates a right to rent and therefore precludes the enforcement of the bylaws amendment prohibiting unit rentals. It found that the declaration contains no explicit, implicit, or inherent right to rent one’s unit and that the restriction on renting effectuated by the bylaws amendment does not conflict with the declaration (see ¶ 25).

Justice Prosser filed a dissenting opinion.

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Torts

Heritage Farms v. Markel Ins. Co., 2009 WI 27 (filed 26 March 2009)

In March 2003 a large debris pile at a campground was set on fire for maintenance purposes. The burn-pile fire spread beyond the campground, however, and consumed nearly 600 acres of nearby land. A burned-out owner, Heritage Farms, brought suit for negligence, trespass, and nuisance, including a claim for double compensatory damages and attorney fees pursuant to Wis. Stat. section 26.21(1). The circuit court granted a motion to dismiss the section 26.21(1) claim on the ground that it is restricted to use against railroad corporations that ignite fires. The court of appeals affirmed.

The supreme court reversed in a decision authored by Justice Ziegler. The main issue was whether the double damages/attorney fee provisions of section 26.21(1) are limited to a particular class of tortfeasor, namely, railroad corporations (see ¶ 12). The court held “that Wis. Stat. § 26.21(1) is not limited to a specific class of tortfeasor such as a railroad corporation, and a violation under Wis. Stat. § 26.20 is not a prerequisite for applying § 26.21(1)” (¶ 13). Neither the text of section 26.21(1) nor the legislative history limits it to railroad corporations. Moreover, “if the legislature meant to limit Wis. Stat. § 26.21(1)’s application to only violators of Wis. Stat. § 26.20, then § 26.21(1) would have been more appropriately inserted in § 26.20. Section 26.20 has its own penalty section” (¶ 16). Finally, “although not determinative, we find it significant that the DNR has concluded Wis. Stat. § 26.21(1) applies to all tortfeasors and not just railroads” (¶ 17).

The court also held that the plain language of section 26.21(1) does not require proof of gross negligence despite case law construing the 1905 version of the same statute. Case law abolished gross negligence in 1962, and the legislature’s actions since then led the court to the conclusion that gross negligence “is not the standard in Wis. Stat. § 26.21(1)” (¶ 40).

Justice Roggensack, joined by Justice Gableman, dissented. They said that a violation of section 26.20 (that is, a tort by a railroad) is a predicate for damages under section 26.21(1). The dissent departed from the majority’s construction of both the statute and the legislative history.

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