STATE OF
WISCONSIN CIRCUIT
COURT ROCK·COUNTY
**********************************************************
ESTATES
HOME OWNERS ASSOCIATION,
Plaintiff,
Case No. 2010CV2037
COPY
vs.
ROBERT
E. SARTO, et a1.,
Defendant.
**********************************************************
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.
(136) Yeah.
(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
SS.
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.