Apple Valley Gardens Associations, Inc. v. Machutta

763 N.W.2d 126 (2009)

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Nature of the Case

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Facts

In 1979, Steve MacHutta built, developed, declared, and incorporated the Apple Valley Gardens (P) condominium complex. The condominium declaration provided a restriction in use as follows: 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. In 1988, following a dispute between Steve and P, the parties entered into a settlement agreement. It limited Steve, his immediate family members, and his business to ownership of a maximum of four condominium units. The agreement also granted Steve the right to rent the units he owned. The agreement did not grant D 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. In 2002, P amended Article VI, P6.1(j) of the condominium bylaws to prohibit rental of the condominium's units as follows: 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. Current rental agreements were valid until existing tenants vacated the units. P also duly amended the bylaws to include a provision in Article IX, P9.1 requiring written consent from the board of directors for the renewal or extension of any lease or rental agreement. In 2004, d's then-tenant vacated the rental unit. Wishing to lease the unit to a new tenant, D submitted a lease application to the board of directors for its consent. The board refused. D ignored them and leased her unit to the new tenant. P sued D seeking a declaratory judgment. D counterclaimed, alleging that the Association had tortiously interfered with the new rental contract and had breached the 1988 settlement agreement between the P and Steven which permitted Steven MacHutta to lease condominium units. The circuit court entered summary judgment in favor of P, 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) P 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 D, permission to rent units, and it in no way relieved D of her duty to comply with the bylaws amendment prohibiting unit rental. The court of appeals affirmed. D appealed.