Hunt Club Condominiums, Inc. v. Mac-Gray Services, Inc.

2006 WI App 167, 721 N.W.2d 117, 295 Wis. 2d 780, 2006 Wisc. App. LEXIS 669
CourtCourt of Appeals of Wisconsin
DecidedJuly 27, 2006
Docket2005AP1674
StatusPublished
Cited by4 cases

This text of 2006 WI App 167 (Hunt Club Condominiums, Inc. v. Mac-Gray Services, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hunt Club Condominiums, Inc. v. Mac-Gray Services, Inc., 2006 WI App 167, 721 N.W.2d 117, 295 Wis. 2d 780, 2006 Wisc. App. LEXIS 669 (Wis. Ct. App. 2006).

Opinion

DEININGER, J.

¶ 1. Hunt Club Equities, LLC, the owner of an apartment complex, entered into a ten-year lease with Mac-Gray Services, Inc., under which Mac-Gray placed coin-operated laundry machines in the apartment complex for use by tenants. About two years after entering into the laundry room lease with Mac-Gray, the owner of the apartments converted them to condominiums. The Hunt Club Con *784 dominium Association thereafter assumed control over the condominium common areas and sought to evict Mac-Gray from the space it had leased from the prior owner of the apartments for its laundry machines. The circuit court granted the Association a judgment evicting Mac-Gray from the premises.

¶ 2. Mac-Gray claims the circuit court erred in concluding that the Association was empowered by Wis. Stat. § 703.35 (2003-04) 1 to terminate the Mac-Gray lease because it was a "contract or lease to which a [condominium] declarant... is a party." See id. We agree with Mac-Gray that the lease in question does not fall within that category of terminable contracts. The Association could not, therefore, terminate the lease for the reason relied on by the circuit court. Accordingly, we reverse the judgment of eviction and remand for further proceedings to determine whether other grounds may exist that would entitle the Association to evict Mac-Gray from the premises.

BACKGROUND

¶ 3. Hunt Club Equities, LLC, the owner of an apartment complex located in the Town of Madison, entered into a ten-year lease with Mac-Gray Services, Inc., effective as of April 1, 2001. The lease granted Mac-Gray the right to install, operate and maintain "pay per use laundry equipment" at specified locations within the complex. Two years later, the owner of the apartments filed a "Declaration of Condominium of Hunt Club Condominiums," converting the property to the condominium form of ownership. In January 2004, Hunt Club Condominiums, Inc., the owners' association *785 identified in the condominium declaration ("the Association"), filed a report naming its officers and directors.

¶ 4. The Association's property manager sent a letter on December 14, 2004, to Mac-Gray notifying it that the Association was "canceling] the laundry contract by and between Hunt Club and Mac [-] Gray as of March 31, 2005." The letter specified that the notice of cancellation was sent pursuant to Wis. Stat. § 703.35, which authorizes condominium associations to cancel certain contracts on ninety days' notice. On March 9, 2005, counsel for the Association sent Mac-Gray a letter informing it that its lease "terminates on March 31, 2005" pursuant to the earlier notice. Counsel's letter also cited the following authority for terminating the lease:

Under Wis. Stat. § 703.35, the Hunt Club Condominiums, Inc., may terminate this lease agreement on numerous grounds. This lease is being cancelled because: (1) it is a "lease to which a declarant or any person affiliated with the declarant is a party"; (2) the lease "is not bona fide" because it was not recorded or assigned to the Hunt Club Condominiums, Inc.; and (3) the lease "was not commercially reasonable to unit owners when entered into under the circumstances then prevailing."

¶ 5. The Association subsequently filed an eviction action and Mac-Gray moved to dismiss. The parties' arguments and the circuit court's disposition largely rested on the interpretation and application to the present facts of Wis. Stat. § 703.35, which provides as follows:

If entered into before the officers elected by the unit owners under s. 703.10 take office, any management contract, employment contract, lease of recre *786 ational or parking areas or facilities, any contract or lease to which a declarant or any person affiliated with the declarant is a party and any contract or lease which is not bona fide or which was not commercially reasonable to unit owners when entered into under the circumstances then prevailing, may be terminated by the association or its executive board at any time without penalty upon not less than 90 days' notice to the other party thereto. This section does not apply to any lease the termination of which would terminate the condominium.

Section 703.35 (emphasis added).

¶ 6. The parties and the circuit court agreed that the lease of space for the laundry facilities did not qualify as a "management contract, employment contract," or a "lease of recreational or parking areas or facilities." See id. The court concluded, however, that the Association had the right to terminate the lease and to evict Mac-Gray because'the lease in question fell within the second category of terminable contracts under Wis. Stat. § 703.35: it was "entered into before the officers elected by the unit owners ... [took] office," and it was a "contract or lease to which a declarant. . . is a party." See id. Because the court concluded the lease was terminable on that basis, it did not address the third category of terminable contracts, those which are "not bona fide or which w[ere] not commercially reasonable to unit owners when entered into under the circumstances then prevailing." See id. The circuit court also deemed it unnecessary to resolve the question whether the Association was bound by the lease under Wis. Stat. § 704.09(3) as the "successor in interest" to Hunt Club Equities, LLC, as Mac-Gray maintained.

*787 ¶ 7. The court entered a judgment entitling the Association to a writ of restitution on July 1, 2005. Mac-Gray appeals, having posted bond and obtained a stay of the eviction during the pendency of the appeal. See Wis. Stat. § 799.445. 2

ANALYSIS

¶ 8. The dispute between Mac-Gray and the Association centers on the interpretation and application of Wis. Stat. § 703.35 to facts that are largely undisputed. Whether § 703.35 authorizes the Association to terminate the Mac-Gray lease is a question of law that we decide de novo. See Stockbridge Sch. Dist. v. Department of Pub. Instruction, 202 Wis. 2d 214, 219, 550 N.W.2d 96

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2006 WI App 167, 721 N.W.2d 117, 295 Wis. 2d 780, 2006 Wisc. App. LEXIS 669, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hunt-club-condominiums-inc-v-mac-gray-services-inc-wisctapp-2006.