STATE OF WISCONSIN CIRCUIT COURT ROCK·COUNTY
ESTATES HOME OWNERS ASSOCIATION,
Plaintiff, Case No. 2010CV2037
ROBERT E. SARTO, et a1.,
PROCEEDINGS: Court Trial
DATE: May 20, 2011
Circuit Court Judge, Presiding
APPEARANCES: Timothy H. Lindau, Attorney at Law,
Appearing on behalf of the plaintiff;
Harry C. O'Leary, Jr., Attorney at Law,
Appearing on behalf of the defendants,
And defendants in person.
REPORTER: Linda M. Blum
(001) THE COURT: Can we have the appearances for the plaintiff, please?
(002) MR. LINDAU: Your Honor, attorney Tim Lindau appearing on behalf of plaintiff, Wisconsin Rock River Leisure Estates Home Owners Association, Inc.
(003) In addition, Your Honor, the president of the board of directors of the association, Lester Prisk, is also present in person.
(004) THE COURT: Can you spell his name for me?
(005) MR. LINDAU: P-R-I-S-K is his last name, Your Honor.
(006) THE COURT: For the defendants.
(007) MR. O'LEARY: Harry O'Leary appears on behalf of Robert and Susan Sarto, Your Honor.
(008) They are also here in person.
(009) THE COURT: All right. They will be okay.
(010) The original, just let's set the stage for what's before the court today.
(011) I'll do this just by giving you a brief background so the record is clear on what's on the docket.
(012) The complaint that was filed asks for a declaratory relief.
(013) In other words, declaratory judgment, and an injunction asking the court to enforce restrictive covenants as to lots in real estate in the town of Fulton which are owned by the Sarto’s.
(014) Covenants are attached. [end Page 2]
(015) The answer and affirmative defenses filed by the defendants raise a number of issues, and essentially focuses on the assertion there was some amendment to the covenants.
(016) There's no definition of permanent residence in the covenants, and that the corporate board lacks authority to amend covenants without a vote of the membership.
(017) There's also some other legal issues raised which are part of that.
(018) Court had a pretrial order, scheduled a briefing schedule for dispositive motions.
(019) Dispositive motions meaning motions for summary judgment essentially.
(020) And those briefs have been filed, and we are now here to decide whatever we can decide, if anything, on summary judgment.
(021) Byway of briefs, I have received and I've reviewed plaintiff's brief in support of a motion for summary judgment, the defendant's briefs and attachments, and respondent's opposing and reply brief.
(022) Now, simple housekeeping question, are there cross motions for summary judgment here?
(023) MR. O'LEARY: Yes, Your Honor. Maybe I wasn't clear on my response brief on that, but that was the intent of it. I think at the conclusion of it I think I did make a motion in paragraph requesting dismissal.
(024) THE COURT: I thought I saw something about that. [end Page 3]
(025) But at any rate, this is the way we are going to proceed today.
(026) And I'll invite your assistance, counsel, if you think I should do it a little bit differently.
(027) There's no hard and fast recipe to follow on these motions.
(028) You are the moving party, Mr. Lindau, so obviously you'll get to argue first, and Mr. O'Leary, you get to argue in response and you get to argue in rebuttal.
(029) If I have any questions, whether I direct them to one side or the other, rest assured, if I'm not asking you the question you'll get a chance to comment on the question, is that clear to the plaintiff?
(030) How about you, Mr. O'Leary?
(031) MR. O'LEARY: Yes.
(032) THE COURT: Okay. All right. Let's hear your arguments.
(033) I've read the submissions.
(034) Don't feel in any way limited by that fact that I've read that.
(035) I want to give you whatever argument you think you need to give today for the record and also for persuasion, so don't feel like you are stuck and you can't say anything more than you've already argued.
(036) Can't go, well, you can't really go outside your brief but you can emphasize any points in your brief. You may begin, counsel. [end Page 4]
(037) MR. LINDAU: Thank you, Your Honor, and I will not argue too much knowing that you have reviewed the submissions.
(038) But I do want to touch on at least one point of clarity that I raised in my reply brief and that I think is crucial for this court's decision here today, that is that what plaintiff is requesting here today is not a general term or a general definition for the term or phrase permanent residence.
(039) What the court, what we are asking court to decide today is that given the facts and circumstances before it that are undenied by these defendants, that the court declare that these defendants are violating the declaration by living on the recreational vehicle lot year round, thereby living in, living against the prohibition of permanent residences on recreational vehicle lots.
(040) So that's a point of clarity that needs to be made on it at the outset.
(041) And the basic premise, Your Honor, is that the declaration that was originally signed, executed and recorded, that restricted the use of the property that holds the Wisconsin Rock River Leisure Estates on which these defendants own property, contained a provision that restricted uses of certain lots on which these defendants admittedly reside, restricted their use as permanent residences. [end Page 5]
(042) This was done for a reason at the time it was declared and recorded.
(043) It was approved by the zoning authorities at the time and continues to be an issue with the zoning authorities that certain lots, including that of the defendants, not be used as permanent residences.
(044) And I touch on that, and it was in the declaration, furthermore, the acknowledgement to which I refer in my brief sets forth that the Sarto’s acknowledged that their lot was not to be used as a permanent residence.
(045) The facts as it relates to the Sarto’s and their admission that they lived there year round makes it clear that this is their permanent residence, there is no dispute of fact as to the fact that they live there year round.
(046) But back to the point about why it is that it's prohibition against permanent residence.
(047) This is intended as a vacation destination.
(048) It is not intended as a place to accommodate permanent residence.
(049) As I'm sure you are aware, Your Honor, there are various regulations, various restrictions, various laws, that govern, for example, mobile home parks, which this would be similar to if it indeed allowed permanent residences.
(050) This property does not comply with those residence restrictions, they don't comply with other land use requirements that would apply to subdivisions. [end Page 6]
(051) The water, the sewer, all those things are not in place to accommodate permanent residences.
(052) And I only bring that up, Your Honor, because this is not an attempt to pick on these defendants.
(053) It's not an attempt to draw them out of a crowd.
(054) It is an attempt to enforce declarations that were created for a purpose, and that is the key distinction here.
(055) And again; Your Honor, for a point of clarity, we are not asking for a general definition of the term permanent residence, we are asking that the court declare these defendants are using this property, this lot, as their permanent residence, which is in violation of the declaration, and that's what we are requesting here today, and for an injunction prohibiting them from residing permanently at the residence.
(056) THE COURT: Can you give me some background as to your facts?
(057) MR. LINDAU: Yes.
(058) THE COURT: When was the property purchased, and was it purchased subject to the restrictive covenants, and where do the defendants find out about the restrictive covenants?
(059) MR. LINDAU: Your Honor, the first and foremost, the declaration, pardon me, the declaration was recorded on June 13th, 1975. [end Page 7]
(061) The, I cannot say, state, for certain that these particular defendants purchased the property on November 7th, 1998, but on November 7th, 1998, they executed the acknowledgement that was attached to the affidavit of Robert Buckley that said that we further agree to be bound by and comply with the articles, bylaws, and declaration of covenants and rules of the association, particularly no permanent residence on a recreational lot, and that was completed by these defendants.
(062) They themselves have admitted, and as well as the affidavit of Robert Buckley, that their lot is a recreational vehicle lot.
(063) Is that sufficient for facts?
(064) THE COURT: As is apparently Robert Buckley's lot 66 a recreational vehicle lot.
(065) MR.LINDAU: Correct.
(066) THE COURT: Yes, that is. Does that complete your Argument?
(067) MR. LINDAU: Yes, Your Honor.
(068) THE COURT: Mr. O’Leary?
(069) MR. O’LEARY: Your Honor, plaintiff tries to claim that the defendants have mischaracterized the nature of its motion for summary judgment but and for exactly the same reasons Mr. Lindau just stated, they are trying to-clarify saying that they are not asking for the [end Page 8] court to change or amend the declaration, and this is in their reply brief, but rather it is requesting that it enforce a clear prohibition against permanent residences.
(070) Now, the irony in this is that their complaint in paragraph eight, page 3, of the plaintiff's complaint specifically requests relief for a declaration judgment defining the term permanent residence as used in the covenant and its amendments.
(071) That's the crux of the issue as I see it, Your Honor.
(072) The plaintiffs wish to have the court enforce a summary judgment motion against my clients here today trying to use the common sense or logical explanation that they are residing year round; therefore, it is a permanent residence.
(073) They have admitted in their affidavits that there is no definition for permanent residence within the covenants that were originally filed back in 1975, nor has there before been any amendment to those covenants clarifying that definition.
(074) What they are asking the court here to do is a board of directors of six or seven individuals is asking the court to insert their interpretation that year-round living equates permanent residence for my defendants, my clients, and to incorporate that to the covenants, in essence amending the covenants, and we believe that they do not have the authority to do that for residences that consist of [end Page 9] approximately five hundred and some lots, because it will have an impact on all those other individuals that own those lots.
(075) In essence, in sum, it is a selective prosecution.
(076) They say they are not pinpointing my clients, but that's exactly what they are doing because the plaintiffs again have admitted there's at least 49 individuals which, in response to the interrogatories, they said that are in similar situation as the defendants.
(077) I don't know what similar means to them, or how it differentiates from my client's circumstances, but the point being no definition exists for permanent residence.
(078) And we have 49 other individuals at the very minimum within this association that are in similar circumstances as my clients.
(079) Now I've made a motion as well to, excuse me, part of my answer is to incorporate necessary parties.
(080) And if the court refuses to approve or denies the summary judgment, either way, we think that at least the 49 members should be incorporated as necessary parties.
(081) Plaintiff thinks that that would be, you know, over cumbersome essentially to do so, and now argues that well, because the facts and circumstances involving those 49 individuals are so much different from the defendants that that begs the question then, Your Honor, is if we have a hearing here today, and the court says permanent [end Page 10] residence equals year round, then they have to go and confront 49 other individuals to figure out okay, now that one only is there for 51 weeks out of the year, or this one here is only here for six months out of the year, or whatever the circumstances may be, that now we define that those equate permanent residence and, therefore, we are asking, requesting court to now restrict them or enforce the covenants.
(082) Where does it end?
(083) And it is our position, and in my brief I address the issue that I believe the decision on who has the authority to amend or define the covenants rests within the members of the association.
(084) And I refer to the case that was decided by Judge Farnum back in 1985 in which that particular issue was defined.
(085) Now it addresses decks and structures of that nature in that particular case.
(086) THE COURT: Was Judge Farnum appealed on that case?
(087) MR. O'LEARY: No, he was not, Your Honor.
(088) THE COURT: Was that decision ever published?
(089) MR. O'LEARY: No, it was not, Your Honor.
(090) THE COURT: How do you get past stare decisis declarations, how are you citing an unpublished decision to the court then? [end Page 11]
(091) MR. O'LEARY: I believe that, Your Honor, it is a judgment of this Rock County circuit court, and I believe the court has the ability to use full faith and credit for the judgment of another court.
(092) THE COURT: You mean I have to agree with everything Judge Welker does and everyone of his decisions?
(093) MR. O'LEARY: I think, Your Honor, if it relates particularly
(094) THE COURT: I think what you are getting at is it is the same parties and it is the same or similar issues, which would mean it doesn't matter who the judge is, you could have issue preclusion.
(095) MR. O'LEARY: Yes, Your Honor.
(096) THE COURT: Maybe you do and maybe you don't, but I haven't seen issue preclusion very thoroughly briefed on this particular subject.
(097) And just because Judge Farnum makes one decision about decks doesn't mean that some other judge ten years later might not make a different decision about septic tanks, or LP gas tanks, or satellite dishes.
(098) I think you may be able to make the argument, and I'm not suggesting that you can't, although any judge is going to bring that up, the point that I just brought up.
(099) But I'm not so sure I'm bound by anything that Judge Farnum did unless you can pinpoint it [end Page 12] as fitting within the Supreme Court has determined the definition of, I think our Wisconsin Supreme Court not all that long ago, not all that long ago, it was 20 years ago made a decision about issue preclusion.
(100) There's issue preclusion, of course, which deals with an issue which is what you are talking about, by the way, backing up to get a different perspective on what you are arguing before Mr. O'Leary when you said that there's a number of other individuals in the same position with respect to the restrictive covenants, or ostensibly in the same position as the Sarto’s are and they are not in a lawsuit.
(101) And the risk is that the court could make a determination on the selfsame issue, and then it would be binding upon anybody else who comes before the court, and that's issue preclusion.
(102) The issue has been decided.
(103) On the other hand, if anybody thinks those other folks are necessary parties, they could have been impleaded by either side, not just by the plaintiffs.
(104) So the defense argument is that the plaintiffs should have brought everybody else in, and I'm thinking, well, if the defense thinks they are important, the defense could have brought them all in, I guess.
(105) Right now this case is limited to the parties before court.
(106) I'm listening to your argument but I don't think that's, that particular point wholly addressing on [end Page 13] its own merits is sufficient to block the court proceeding today.
(107) But anyway I know I interrupted your argument.
(108) I only did so because you are referring to a decision by circuit court judge.
(109) Quoting a circuit court judge to another circuit court judge really has no appellate power whatsoever.
(110) But I know now that you are not talking about appellate precedents, you are really talking about issue preclusion, so you can go ahead.
(111) I'm sorry for the interruption but I had to stop you on that point for clarification.
(112) You can go ahead and proceed.
(113) MR. O'LEARY: Your Honor, before I forget, with regards to the issue of joining other parties, as I expressed before, I believe this is a situation where they are just picking apart individuals that they disagree with within the association, and they chose my two clients to pursue at this point in time.
(114) I think the plaintiff, as the board of directors, has the ability to pick and chose who they wish to join in on this particular action more so than mine, and the reason I say that, Your Honor, is that the party that joins the individuals bears that cost.
(115) And the plaintiff's attorney is being paid by the association, by vote of the board of directors, not by the members of the association.
(116) So the irony is my clients are going to be paying for Mr. Lindau's services here to pursue the [end Page 14] action against them.
(117) But pursuing this issue once for a little further, Your Honor, you are correct with regards to Judge Farnum.
(118) I'm asking you here today, Judge Farnum already decided an issue with regard to decks, therefore, the judge should honor that decision and follow that.
(119) I think that's appropriate.
(120) Mr. Lindau cites in his own reply brief that issue preclusion is the doctrine setting forth that once there is a determination as to a specific issue, the determination on that issue is conclusive as to subsequent litigation.
(121) And that's citing that page KB ex reI Peterson versus Steven GB case.
(122) My point is that that issue is not just a matter of defining what is a permanent residence, or the enforcement of permanent residence which is undefined in the covenants.
(123) My point is that if they pursue this, and the court allows them to pursue an undefined term within the covenants, you are allowing them to amend the covenants which that particular issue, who has the authority to amend the covenants was decided by Judge Farnum in his case back in 1985, and clearly states that the covenants, which have remained unchanged since 1985, that the members of the association have the sole authority upon vote of the members as to what changes are [end Page 15] going to be brought forth within the covenants.
(124) And so our position is that if the board of directors chooses to have permanent residence defined, then they should be turning to the members of the association to address their argument, have a meeting, have a vote, and have that issue defined.
(125) There's five hundred and some people residing in this establishment.
(126) And if that be the case, my clients would have a leg to stand on.
(127) But they're overstepping their authority based on what Judge Farnum decided in '85.
(128) I believe it is issue preclusion with regard to that ability on anything to do with changes or amends the structure of the covenants.
(129) And that is the crux of our argument, Your Honor.
(130) The only other issue I would point out, I've already mentioned with regard to the necessary parties, you know, that I believe there's parties that should be brought out there that the association is the one that's paying for the costs of the litigation against my client.
(131) I think that the association should be bearing the cost to also pursue it against the other members of the association that they believe are in violation of this.
(132) And if the court makes a determination on this, it effectively interferes with property rights of those other members of the association in my opinion. [end Page 16]
(133) That's all I have, Your Honor.
(134) THE COURT: Thanks, Mr. O'Leary. Mr. Lindau?
(135) MR. LINDAU: Your Honor, to address first the point about the general definition for the term permanent residence that was included in our complaint.
(137) We did have that in our complaint, but we didn't move for summary judgment on that portion of our complaint.
(138) We would be open to dismissing that request in our complaint if that's what Mr. O'Leary needs or what the court would need, but we don't have to move for summary judgment on every request that we have in our complaint.
(139) What our request is in our summary judgment motion is very specific and very clear as to what we're requesting.
(140) THE COURT: Well, why don't you repeat it again?
(141) MR.LINDAU: As to what we’re requesting?
(142) THE COURT: Yeah. What is this specific and clear---
(143) MR.LINDAU: What we are specifically requesting is that the court declare these defendants are violating the declaration by living on their lot as permanent residents.
(144) That’s what we are requesting, Your Honor.
(145) THE COURT: Okay.
(146) MR. LINDAU: And Mr. O'Leary – [end Page 17]
(147) THE COURT: Don't I have to, don't I have to define, don't I have to know the definition of permanent residence before I can say somebody is a permanent resident?
(148) That's Mr. O'Leary's point, I think.
(149) MR. LINDAU: Yeah. Correct. And the answer to that is no because –
(150) THE COURT: Well, you are saying in your reply brief, if you know what the word permanent is and if you know what the word residence is you don't need a dictionary to put them together.
(151) There is no definition of permanent residence though, is there?
(152) MR. LINDAU: There is no definition.
(153) We admit that.
(154) THE COURT: So in plain English the whoever drew the covenant drew it from the point of view that well, people who look at this ought to know what it means, right?
(155) MR. LINDAU: Correct.
(156) THE COURT: And Mr. O'Leary says maybe not.
(157) MR. LINDAU: Well, I would, Your Honor, also say that it, regardless –
(158) THE COURT: But you are asking for me to grant the declaratory judgment.
(159) To do that I have to make a finding of fact that this is, that these premises have been occupied as a permanent residence by the defendant. [end Page 18]
(160) Assuming arguendo I make that finding, your argument that it's a permanent residence is that hey, they are not living anywhere else so unless they, well, I don't know where else, basically you've defined that by exclusion, there's no place else that they live, there's no other mailing address, there's no place else connected to any place that they could live, so this has got to be the only place they live and, therefore, that's permanent.
(161) MR. LINDAU: And they admit to residing there, Your Honor.
(162) THE COURT: Let's assume you get past that.
(163) You are asking the court then to make a declaratory judgment, however, you want to define permanent residence.
(164) These individual defendants, they don't have any other way to explain what their residence is at all.
(165) MR. LINDAU: Correct, Your Honor.
(166) As applied to these specific facts.
(167) THE COURT: Okay.
(168) MR. LINDAU: The covenant is being violated.
(169) Or the, I'm sorry.
(170) The declaration is being violated as to these specific facts.
(001) THE COURT: Why don't you continue your argument?
(171) MR. LINDAU: The other point that I wanted to draw on is the issue of joinder.
(172) And Mr. O'Leary [end Page 19] commented that we have, that we have the ability to pick and choose, and he's right on that.
(173) We do have the ability to pick and choose how to prosecute matters.
(174) This is not an issue where we need to take the facts and circumstances of 50 different lots and try to establish whether lot A, versus lot G, versus lot C, versus lot X is violating the covenants and restrictions.
(175) We can use, and the reason I cite, Your Honor, the reason I cited the definition for issue preclusion is if my client chooses to further litigate this matter, then issue preclusion may be something that we can draw upon and it can be a defense to other parties as well.
(176) I'm not in any way, shape or form denying that fact.
(177) And I'm not in any way, shape or form arguing that what transpires today is going to solve all the problems out at the Rock River Leisure Estates, but this was a necessary step to take to at least establish, at look, if you are living there year round, it's your permanent residence.
(178) I don't need a definition to tell me that.
(179) I can look at the declaration, say that a person residing on a recreational lot cannot live there permanently.
(180) You living there year round is living there permanently.
(181) The declaration prohibits that.
(182) That is what we are asking the court to do as to these defendants. [end Page 20]
(183) And as far as issue preclusion with Judge Farnum's case, I don't see that issue has anything to do with this issue.
(184) Again, this term, this phrase permanent residence is in the declaration.
(185) There is a prohibition against permanent residence, the defendant doesn't dispute that.
(186) What they were trying to do in the Farnum case was add a restriction or add a provision.
(187) We are not seeking to amend the declaration, we are seeking to enforce what provision is already in place within the document itself.
(188) A document that was recorded, therefore, providing notice to the defendants, not to mention a document that was referred to in an acknowledgement that was completed by the defendants, so knowingly they have been residing there permanently without knowing that it was prohibited they have resided there permanently.
(189) So I have nothing further, Your Honor.
(190) THE COURT: Do you want to respond to that, Mr. O'Leary?
(191) MR. O'LEARY: The only response I have, Your Honor, is the same as I said before.
(192) We keep throwing the term permanent residence out there.
(193) We don't know what it is.
(194) If the court says my clients are living there year round and therefore it is a permanent residence, I submit to the court how do they cure that? [end Page 21]
(195) We don't have a definition.
(196) Can I then advise my clients make sure your mailing address isn't something else, leave for a weekend, you are not there year round and you've now resolved your problem here with permanent residence.
(197) It just simply, it is a circular reasoning, Your Honor, it keeps begging the question what is permanent residence, what is permanent residence, and it will be again for the other 49 defendants when they bring them forward as well.
(198) THE COURT: All right. Thank you. This action was brought by Wisconsin's Rock River Leisure Estates Home Owners Association, Inc.
(199) That's a corporation.
(200) How long has that corporation been in existence?
(201) MR. O'LEARY: Since 1975, Your Honor.
(202) THE COURT: So that corporation was commenced with the original development with the restrictions and platting of the development known as the Rock, Wisconsin Rock River Leisure Estates.
(203) Part and parcel home owners association came into existence with the original development.
(204) And the original development was organized, restricted and platted into, help me out, I'm trying to get my grasp of these facts here, into three types of residential sites, permanent home sites, vacation cottage sites, and recreational vehicle sites. [end Page 22]
(205) There was an amendment in 1979 which deleted the permanent home sites definition from the declaration.
(206) Now we have vacation cottage sites and recreational vehicle lots.
(207) And under the declaration only the vacation cottage sites can be used for permanent residence.
(208) Now, there are 496 recreational vehicle lots today and there are 60 vacation cottage sites.
(209) So far those facts are undisputed, true?
(210) And the defendants reside in a recreational vehicle at 530 East Ellendale Road which is a recreational vehicle lot.
(211) The defendants took that property, took ownership of that property subject to the acknowledgements, and restrictive covenants, and whatever the platting restrictions were on the property.
(212) At the time they bought their property conceivably they had an option, they could have purchased a recreational vehicle lot or they could have purchased a vacation cottage site.
(213) The differential ostensibly one would think had to do with cost and their own personal preference or choice purchasing what they wanted to purchase on the free and open market which the property was sold.
(214) I find that to be supported simply by reason and common sense.
(215) The same home owners association continues to exist today as existed from the beginning. [end Page 23]
(216) In other words, there wasn't any dissolution of the original development company and title acquired by somebody else with unsold tracts or property tracts.
(217) So the plan or scheme from the development of this property for this mixed residential usage cottage and RV has been unchanged since the permanent home site language was taken out in May of 1979 amendment.
(218) So nearly 20 years later the Sarto’s bought the property, their place in November of 1998, 12 or 13 years ago.
(219) And they completed an acknowledgement of membership and home owners association.
(220) And the acknowledgement also contained provisions we agree to be bound by and comply with the articles, bylaws and declaration covenants, and rules, and particularly no permanent residence on a recreational lot.
(221) They actually signed that as the buyers of a recreational lot.
(222) One would expect them to have a particular interest in being aware of that provision.
(223) And one would find as a matter of law that they had knowledge of that provision when they bought their property.
(224) Moreover, as a matter of economics, that provision had an effect on how much they paid for their property because it would have an effect on how they could use their property in the future, in perpetuity, and also it would have an effect on anybody using the property in the future who would buy it from [end Page 24] them.
(225) An RV lot, one would think, has different usage characteristics compared to a cottage by definition, although it is not defined, but I think a common ,sense definition is said an RV is not a permanent structure.
(226) It can be moved, it can be driven away, it can be hauled away, and by definition an RV has a temporary characteristic.
(227) That's what the word vehicle comes from.
(228) Vehicles move around, houses don't.
(229) Now, the argument made by the Sarto’s is everybody ought to get to vote to define what permanent residence means because the Sarto’s don't think, A, this applies to them apparently, or even if it does, it's not, they don't think it's their permanent residence and let's all have a vote because nobody knows what permanent residence means and let's get everybody, the RV property owners and the cottage lot property owners, let's let them all vote.
(230) Let me guess how that vote is going to come out.
(231) It is going to be 496 to sixty maybe because my guess is the owners of the recreational vehicle lots will vote their pocketbook and they'll vote their own self-interest and to eliminate this condition.
(232) Enhances the value of their property, one would think, because now it's not temporary, it is permanent, and the word permanent residence after the fact now applies to [end Page 25] everybody, so it is devalued in terms of the people who own cottages to zero.
(233) Maybe it wouldn't be 496 to sixty, but if all of those individual real estate owners have an equal vote as a member of the association, I don't know how that's going to be established.
(234) I don't know how you get to be on the board.
(235) I don't know if the board originally was set up so the people that own cottages or vacation cottage sites have greater weight to establish the membership of the board, but I know 496 is more than sixty.
(236) Now, the conveyance under which the Sarto’s took the property, in other words, it's a deed and it is an acknowledgement, and this is all recorded, this is a covenant which the law sometimes refers to as something which runs with the land, and it needs to be observed if that's the case, by the occupants and by anybody that they transfer the property to, any grantees as well as any of the heirs or any of the property they assign the property to.
(237) Now, it's my understanding that all of the 496 recreational vehicle lots have the identical acknowledgement and identical restrictive covenants.
(238) So to just pick one of them off, although arguably why didn't you sue all 496 of them?
(239) That point can be made. [end Page 26]
(240) Well, maybe not all 496 of them are using the place permanently.
(241) Why do they have to get dragged into a lawsuit, they are not doing anything wrong.
(242) So there's that.
(243) And I don't necessarily think there's a rule that says all 496 of them have to be sued.
(244) If one person is in violation of the covenant, you establish that fact, and then you enforce the covenant.
(245) So my understanding from the facts is that I can't tell how long have the Sarto’s, they bought in '97 and '98, did they ever live anyplace
(246) MR. O'LEARY: I'm sorry, Your Honor.
(247) THE COURT: Have the Sarto’s lived anyplace else since '98 where they lived?
(248) MR. O'LEARY: They lived there ten years.
(249) THE COURT: So they have lived there for ten years.
(250) Year round, they own no other real estate, and they admit that they don't rent or lease any other apartment, or home, or vacation place, that can be construed as any other residence.
(251) They have represented to the federal bankruptcy court in 2003 that these premises was, in fact, they use this as their driver's license residence, they have a boat which is registered at this address, they have two motor vehicles which the owners of the motor vehicles, namely them, Ms. Sarto, excuse me, lists this property as their mailing address. [end Page 27]
(252) So I think it is pretty clear that they have no other residence.
(253) In fact, basically there's no doubt that they have no other residence.
(254) It is more than pretty clear this is it, and that's a solid finding that the Court can make.
(255) That fact is not in dispute.
(256) Apparently now they live in an RV, or trailer house, or what is this?
(257) MR. O'LEARY: Are you asking me, Your Honor?
(258) THE COURT: I'm asking for the fact.
(259) MR. O'LEARY: Well, it's one of the mobile home structures which over the years the association has authorized them to add on.
(260) THE COURT: So it's a mobile home structure?
(261) MR. O'LEARY: Yeah.
(262) THE COURT: All right.
(263) And during the years, I didn't see this in the facts, during the years apparently they park there, they park their vehicles there, they maintain it, they have improved it, and they reside in this premises year round.
(264) So there's no restriction to place a mobile home on the land and there's no restriction apparently that that mobile home can be there year round, right?
(265) MR. LINDAU: Correct.
(266) THE COURT: Now, this property in the covenants might be a little bit more specific. [end Page 28]
(267) Wisconsin's Rock River Leisure Estate facilities, the declaration of covenants and rules from June 13th of 1975, according to volume 556, at the Register of Deeds office, page 486 of this volume, contains section 4, covenants relating to recreational vehicle sites.
(268) And I think there's an admission that these covenants apply to the recreational vehicle sites.
(269) Nobody disputes that fact, am I right about that?
(270) MR. LINDAU: Yes, Your Honor.
(271) THE COURT: All right.
(272) So 4A says the only buildings allowed on these lots are non-dwelling such as storage sheds and garages, only buildings; B, all initial site preparation for recreational vehicle lots for extension of sewer and water thereto shall be constructed exclusively by the developers with prime concern for soil conservation.
(273) I'm assuming that the Sarto’s premises does have water and sewer extended thereto, right?
(274) MR. O'LEARY: All of them do, Your Honor.
(275) THE COURT: All of them.
(276) They all have power?
(277) MR.O’LEARY: Yes.
(278) THE COURT: What do they do for, what do they do for heat.
(279) They have gas, a gasoline or LP gas?
(280) MR. SARTO: Natural gas.
(281) THE COURT: But is that plumbed to the site or--- [end Page 29]
(282) MR. O'LEARY: It is plumbed, Your Honor.
(283) It's a service provided.
(284) THE COURT: And in C says, this is moving on from section 4C, only one recreational vehicle for six thousand and nine thousand square feet site; D, they all have to be self-contained, full bath, toilet, shower, tub, no fuel storage is allowed exceeding a hundred gallons of LP gas; E says they have to be a maximum of 40 feet in length, eight and a half feet wide maximum.
(285) How big is that one, that size?
(286) MR. SARTO: 24 by 33.
(287) MR. O'LEARY: 24 by 33.
(288) THE COURT: No second RV may be parked or stored in any recreational vehicle lot.
(289) And then recreational vehicle on a recreational vehicle lot shall not be used as a permanent residence.
(290) Now, that's all, there's no factual dispute.
(291) That's all in the declaration.
(292) Now, nowhere else in the declaration is the phrase permanent residence mentioned, is that true?
(293) MR. LINDAU: I don't know that's true.
(294) That's not mentioned but it is.
(295) True that it is not defined.
(296) THE COURT: It is not defined.
(297) So if you know what permanent residence is going in to signing this, you don't have a problem, but if 35 years later, you do have a, you are not sure what permanent residence is, well, [end Page 30] here we are in a lawsuit.
(298) One side says that it's the inference I draw from your argument anyway, Mr. Lindau, is that permanent residence doesn't need much of a different definition, it is cornmon sense in plain English and Mr. O'Leary says not so fast, why wasn't it defined, and what's it mean, and this is going to effect a lot of people, and it is going to be discriminatory now to, after all these many years, to enforce this covenant or restriction.
(299) I think, I don't know if you've argued estoppel.
(300) I think you've also argued estoppel as well.
(301) I think I saw that.
(302) So the point that the horne owners association is making in support of the covenants is that you can make your trailer houses essentially year round trailer houses but you can't live there year round, so your period of residency is not defined.
(303) You could be there from December to June or from June to December and we don't know when that permanent is.
(304) We don't know if you moved out one day a month, does that make it nonpermanent; or six months of the year, does that make it nonpermanent; or what?
(305) And because these places are plumbed, by plumbed I mean they have got running water to them, they are heated, this isn't your typical up north northern Wisconsin type of place where you have to get out in the winter, because your pipes are going to freeze, [end page 31] and the pipes are drained and places are buttoned up, as the expression is sometimes used.
(306) And the estoppel argument suggests or implies that by never enforcing the covenant or the restriction, for ostensibly it looks like ten years with the Sarto’s, the home owners association is waiving its right to enforce the covenant.
(307) The other side of the argument is that the action of the Sarto’s, and I find this to be absolutely without factual challenge, I find this is the truth, and any trier of fact would agree with me so if I allowed this case to proceed to trial the jury would clearly agree, if it was a jury, that this is a permanent, this is a permanent residence for the Sarto’s, if you define permanent that they don't live anyplace else.
(308) This is a permanent residence.
(309) They basically have self-defined that.
(310) They haven't given themselves an out by even leaving the place a weekend a month.
(311) They might also argue that the home owners association has argued arbitrarily or capriciously, this is what Mr. O'Leary is suggesting, and singling them out to ask that the court enforce or make a finding that they are occupying these places permanently.
(312) I think the real question though is whether the absence of a definition of the term permanent residence, and I'm by the way, I haven't spelled this for you but we [end Page 32] are talking about residence, R-E-S-I-D-E-N-C-E, as opposed to people who live there, residents, who are called residents.
(313) Question is whether a failure to define that, number one, suggests that it had to be defined to begin with because people using plain English and common sense can't figure out what a permanent residence means, but if that's true, and the failure to give a definition deprives the court of the ability to enforce it or say that it exists because the implication is anybody knows what this means and all some six hundred and some people who may have bought those lots, 496 people bought residential vehicle lots, they knew what permanent residence meant, too.
(314) The trailer house obviously doesn't have any means of locomotion.
(315) Can't start it up and drive it off.
(316) Not only by the fact that it was detached from the truck that must have delivered it to begin with, but I presume it is not on wheels, it is on blocks.
(317) It is a permanent installation, and it's been plumbed, which means that the plumbing that goes to it is below the frost line.
(318) I presume that's true.
(319) Anybody dispute that fact?
(320) MR. LINDAU: We do dispute that.
(321) THE COURT: You do dispute that?
(322) All right.
(323) But it is connected to public utilities? [end Page 33]
(324) MR. LINDAU: Yes.
(325) THE COURT: Okay.
(326) And it's got beds, a bath, toilet, and cooking facilities.
(327) And people can live, eat, and sleep there year round, all true?
(328) MR. O'LEARY: Yes.
(329) THE COURT: I know we have got a restrictive covenant that says they can't, but they could.
(330) It is not like it is a tent living on the frozen tundra.
(331) So under those facts you could argue that that's pretty close, it is no longer a trailer house, it is pretty close to a building.
(332) But it's, it doesn't violate any restrictions to be built the way it is.
(333) That's not what the plaintiffs are seeking to restrain or enjoin the defendants from doing.
(334) Their point is you can have it there, but you can't live there as a permanent residence, so it's not an issue of whether it has wheels, or jacks, or blocks, some kind of own foundation, it's a question of whether some people can be in there year round.
(335) And the definition of permanent residence I think by elimination of any other residence is met.
(336) In other words, Sarto’s have no other place to live, A and B, they have lived in this house for ten years, and it is therefore apparent that they intend to occupy this trailer and the lot on which it is located as a permanent [end Page 34] residence.
(337) There's no other way to define that using commonly-accepted English terms.
(338) So, you know, maybe nobody else would fit this the way they do.
(339) They flat out put themselves in the position where they don't have any other residence and they admit it, this is their permanent residence.
(340) Now if we have 496 other people in here, or 495 other people involving recreational vehicle lots, each one of those cases would have to be decided separately, maybe the only one with the permanent residence that fits this neatly into the definition because they don't live anywhere else would be the Sarto’s.
(341) Now, I'm being asked to make a finding that permanent residence doesn't mean the Sarto’s living there and not living anywhere else.
(342) And I can't stretch the English language to draw that conclusion.
(343) I find it is their permanent residence and intended to be their permanent residence, and for ten years they haven't had any other residence.
(344) On the estoppel question, although I haven't researched this very intensely, I don't think that an equitable estoppel or estoppel exists here.
(345) I think it is, estoppel requires a false representation or concealment of material facts made with knowledge, actual or constructive, of the facts, and the party to whom it [end Page 35] was made must have been without knowledge or the means of knowledge of the real facts.
(346) The false representation must have been made with the intention that it should be acted upon and the party to whom it was made must have relied on it or acted on it to that person's prejudice.
(347) In this case I couldn't see any false representation or concealment of material facts.
(348) I think that the, if anything, the facts were clear as to what was in the declaration.
(349) The question, real question is, is there ambiguity as to permanent residence.
(350) And you know, maybe you can argue that that ambiguity is the false representation concealment.
(351) But I don't see that as meeting the burden of providing the essential element of estoppel.
(352) I think you can conclusively find from the documents that were signed here before the Sarto’s bought the property or, as when the, as I said way back when we started this, when they closed the deal, the facts are established that they had notice of the truth of the fact that this property was not to be permanent residence, if they only read the documents that they signed.
(353) Another argument that embedded in Mr. O'Leary's points is that the restrictive covenant fails to afford any, by not defining permanent residence, fails to afford protection to other individuals or individuals including [end Page 36] the Sarto’s, to define what it is that they need to do to make themselves the opposite of a permanent residence.
(354) I guess that would have to be a nonpermanent residence or intermittent resident.
(355) There's also some question as to how they are afforded due process in this covenant.
(356) But I guess the due process comes from the circuit court.
(357) There's nothing in the, that I can tell, there's nothing in these declaration of covenants that, let's see.
(358) There's duration, notices, enforcement, severability, there's an enforcement section in article seven, enforcement of these covenants, and this is, by the way, counsel, in the recorded instrument of volume 556 page 491, general provisions of article seven.
(359) Three is enforcement and it reads as follows: "Enforcement of these covenants shall be by any proceedings at law or equity against any person or persons violating or attempting to violate any covenant either to restrain violation or to recover damages against the land to enforce any lien created by these covenants.
(360) And failure by the association or any owner to enforce any covenant herein contained shall in no event be deemed a waiver of the right to do so thereafter," but somewhat goes to, well, it goes to the waiver argument.
(361) That's specifically waiver to waiver.
(362) But nothing in the general provisions of enforcement gives the right to [end Page 37] someone who is not sure if they are in violation to any kind of a hearing other than to come in front of the circuit court for judicial determination one way or the other.
(363) Proceeding at law I think is a lawsuit and a proceeding in equity is also a lawsuit, it's just invoking the equitable power of the circuit court.
(364) So that's the way it was set up and that's what these folks got into when they bought their property.
(365) So there's no alternative methodology to mediate or arbitrate phrases that individual property owners or the home owners association, I said home owners association, yeah, it is a home owners association, they want to have clarified.
(366) And Mr. O'Leary was talking about board members, and board members need to have everybody vote, to put it before the group as a whole, the membership as a whole, to change terms of the declarations and I think he's right about that.
(367) But this doesn't require a change.
(368) In my view that's where I don't completely agree with Mr. O'Leary's thesis because his clients are so pristine in terms of self-defining themselves as permanent residents.
(269) If there is a single permanent residence among the recreational vehicle site folks, it's the Sarto’s.
(370) And it's a torturous twist of plain English to say that even they can't be defined as permanent [end Page 38] residents because for ten years they haven't lived anywhere else, that's the point the plaintiffs argue.
(371) So there might not be anybody else against whom this plaintiff can enforce this restrictive covenant because somebody else might say hey, every Fourth of July I go somewhere else, or one month out of the year I go see my kids, or every other weekend I go to some other location.
(372) But the Sarto’s, by their own lifestyle that made this their permanent residence, and I don't see any alternative but to make that a finding.
(373) I don't think there's enough here for court simply to throw out plain English in terms of that application and definition.
(374) This is their permanent residence.
(375) There's a restrictive covenant that says it can't be a permanent residence, so I'm finding for the plaintiff and granting summary judgment on the facts limited to this case and only this case, and I don't know if you can apply this to anybody else because the Sarto’s have basically admitted they have no other residence on earth than this one.
(376) So in terms of coming back to me or any other judge in circuit court and saying look what Judge Dillon did, what Mr. O'Leary's telling me, look what Judge Farnum did.
(377) I don't know if you are going to get very far.
(378) This is like Bill Clinton reminding me, the argument is reminding me of President Clinton's infamous deposition testimony [end Page 39] in which he was asked the question and his response was, paraphrasing, depends on what the meaning of the word is is.
(379) Well, that was an absurd stretch of the English language.
(380) The permanent residence applied to folks who don't live anyplace else on earth and haven't for ten years would be almost as absurd to say this isn't their permanent residence, it is.
(381) So I'm going to grant the summary judgment, and I'm going to order an injunction against the Sarto’s, that they can't live there permanently.
(382) And that's going to beg the question, because I haven't defined permanent residence for you, but you are past that stage, and you may still be left with covenants for the next person down the road who can't do anything with, and if the Sarto’s decide to spend every other weekend someplace else, it may not be a permanent residence for them either.
(383) Well, Mr. O'Leary's point is going to bring this thing back to the circuit court, I suspect.
(384) MR. O'LEARY: Your Honor, if I could just ask one clarification on one of the comments you made.
(385) THE COURT: I'm surprised you only want one.
(386) MR. O'LEARY: I, just so I can advise my client.
(387) Mr. Lindau made reference to the fact that they have the various mailing addresses for vehicles, boats, [end Page 40] whatever, there's no case law that he was able to find or I was able to find that talks about mailing address being an establishment of permanent residence.
(388) THE COURT: I think that goes to the totality of circumstances.
(389) MR. O'LEARY: Okay.
(390) That one element, the court is not relying on that?
(391) THE COURT: No, I'm not.
(392) That's part of the package.
(393) And if this case had been tried to a jury, the jury could have considered all of that stuff.
(394) They'd wonder where they put their boat.
(395) Now, in terms of further proceedings, with this determination if there are further proceedings I'll order mediation.
(396) You amenable to this, Mr. O'Leary?
(397) MR. O'LEARY: Yeah.
(398) We'd be amenable to that, Your Honor.
(399) It saves money for both parties.
(400) THE COURT: All right.
(401) I'll let you decide who your mediator is going
(402) MR. O'LEARY: If there's further issues, correct.
(403) THE COURT: If there's further issues, this goes to mediation before it comes back to me because I'm not making any order today that the Sarto’s have to be out by any time at all.
(404) But I'm making a finding based on the incredibly unique circumstances of this case, they [end Page 41] don't have any other residence, this is their permanent residence.
(405) So I will specifically tell you, Judge Fitzpatrick gets the next case coming down the line or Judge Welker, whatever, don't count on my fact findings because they don't apply to anybody else.
(406) Anything else?
(407) MR. LINDAU: No, Your Honor.
(408) THE COURT: All right. You draw the order.
(409) The order can be pretty simple just based on the court having heard the arguments of counsel and make the following findings.
(410) Court is in recess.
(411) (9:04 a.m.) [end Page 42]
STATE OF WISCONSIN
COUNTY OF ROCK
I, LINDA M. BLUM, Official Court Reporter,
hereby certify that I reported in Stenographic shorthand
the proceedings had before the Court on this 20th day of
and correct copy of the said Stenographic notes thereof.
Dated this 31st day of May, 2011.
LINDA M. BLUM - - - - Official Court Reporter
The foregoing certification of this transcript does not apply to any reproduction of the same by any means unless under the direct control and/or direction of the certifying reporter.