Archive for category Caselaw

Wisconsin Supreme Court Rules Against Landlord in Maryland Arms Case and Chooses To Avoid Answering The Bigger Question

Jul 14

Posted by Tristan R. Pettit, Esq. in Caselaw, Rental Agreements, Tenant Damage | 6 Comments

The Wisconsin Supreme Court filed its opinion in this very important case on July 7, 2010.  While the majority opinion ruled against the landlord it did not go so far as to say that a landlord and tenant could not allocate liability for damage (when neither party was negligent in causing the damage) in their rental agreement. 

If you would like to review the specific facts of the case and the arguments made by both sides please revisit my posts of May 29, 2009 and October 15, 2009.

The Court was split, so there is a majority opinion, a concurring opinion, and a dissenting opinion.  So if you are brave enough you can read all three opinions which encompass 37 pages and can be read here.  The Wisconsin Law Journal provides a very good summary of the decision if  you are not feeling ambitious enough to read all 37 pages.

As an attorney who primarily represents landlords, I must admit that I had a mix of emotions after I finished reading the opinion.  I was upset that the majority opinion held that the landlord should be responsible for damage to his rental property that was caused by the tenant leaving her hair dryer plugged in overnight.  I was also frustrated by the fact that the major issue in the case — whether or not a landlord and tenant can allocate liability through the language of the rental agreement — was not addressed by the majority opinion, thus providing little guidance to landlords in the future.  On the other hand I was also grateful that the majority decided to “pass the buck” and not address this issue becasue, quite frankly, if the majority had addressed that issue, I believe they would have said “no” a landlord cannot allocate liability on a tenant for damage that was not casued by the negligence of the tenant.

The majority opinion held that the landlord should be held responsible for the damage because the rental agreement (which was drafted by the landlord) was ambiguous when it came to who would be held liable for damage in a situation where neither the tenant not the landlord were negligent in causing the damage.  The majority rested its decision on a very well established principle of contract law that any ambiguity in a contract  should be construed against the drafter of the contract.  The majority said that since the contract terms did not unambiguously state that the tenant would be liable for the damage under the specific fact situation in this case, then the landlord should be liable for the damage.

The majority declined to address the very important issue that the AASEW and other landlord associations were concerned about in this case — whether a landlord can add a lease provision assigning liability to a tenant for damages (when the damages is not caused by the tenant’s negligence) or whether doing so would be a violation of Wis. Stat. sec. 704.07.  So essentially the “Supremes” chose to dodge the issue, which in effect means that nothing prevetns a landlord from allocating liability to a tenant for such damage in a rental agreement under similar facts.  What this also means is that should a landlord make such an allocation and hold a tenant responsible for similar damage, the tenant can argue that such contract language violates sec. 704.07, and the courts will have no guidance as to how to rule. 

It was a missed opportunity by the Supremes to add to Wisconsin Landlord-Tenant law.  However, based, on the tortured analysis (my view) of the majority opinion, if the court had addressed the allocation of liability issue it would have most likely resulted in a holding that would not allow a landlord and tenant to allocate liability — which would have been even worse.  So in the end maybe it was best that the issue was not addressed.

Justice Ziegler, who agreed with the majority opinion, wrote a concurring opinion to add that  her view of Wisconsin law is that a landlord and tenant are not prohibited from allocating liability by contract as long as it is done clearly (i.e. no ambiguity) and is otherwise enforceable by law.

The dissenting opinion, which begins on page 18 and is authored by Justice Prosser, stated that not only are a landlord and tenant allowed to allocate liability in a rental agreement but that that is exactly what the parties to this lawsuit did and that the majority opinion is ignoring the clear meanign of the language in the rental agreement.  The dissent did not find the lease to be ambiguous at all.  The dissent, quite correctly in my opinion, points out the absurd nature of the majority opinion by saying that ”imposing responsibility on the landlord for damage caused by a tenant, when the landlord cannot control risks created by the tenant” (like keeping a hair dryer plugged in overnight) defies economic logic.

The dissent, being very pragmatic, actually takes the time to address what the practical effect the majority decision will have on landlords by stating, “When the landlord is made responsible for abnormal damages that is actually caused by tenants, the landlord must spread the resulting expense among all tenants by charging higher rent.  When a tenant is made liable for damage that is caused by that tenant, the landlord is better able to control rent and the tenant has an economic incentive for prudent stewardship of the premises.” 

Which of the three opinions seem more reasonable and logical to you?

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Landlords Should Not Play Games With Tenants’ Security Deposits

Jan 7

Posted by Tristan R. Pettit, Esq. in ATCP 134, Caselaw, Security Deposit, Tenant Damage | 29 Comments

A new landlord-tenant decision has been reccomended for publication.  The case of Boelter v. Tschantz involves a tenant suing her past landlord for double damages and attorney’s fees for making improper deductions from her security deposit.  
 
The essential facts are as follows:

1.   Tschantz (the landlord) withheld money from the tenant’s security deposit.

2.   The key deductions that were made were: (1) $323.84 for the tenant’s water bill and (2) $85 to repair a clogged toilet.

3.   After withholding a portion of the tenant’s security deposit to pay her water bill, the landlord then failed to pay the bill timely.  As such, the tenant opted to pay the utility directly to avoid late fees. 

4.   The landlord then sent a refund check to the tenant — three weeks later — for the amount that he deducted from her security deposit to cover the water bill along with a Post-It note that said “Oh, too bad no double damages for you.” 

5.   The landlord then stopped payment on the check prior to the tenant cashing it.

The Court of Appeals held that the landlord violated ATCP 134 as a result of his “game-playing” with the tenant’s security deposit. 

First violation of ATCP 134:  The court held that it was unreasonable for the landlord to withhold money from his tenant’s security deposit in order to pay her water bill and then not use that money to pay the water bill timely.  The court specifically stated, “A landlord cannot indefinitely retain a deposit — merely as a deposit — after a tenant vacates.”  Read the rest of this entry »

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Oral Arguments On Important Landlord Case To Be Heard on January 6, 2010

Jan 4

Posted by Tristan R. Pettit, Esq. in AASEW, Caselaw, Tenant Damage | No Comments

The Wisconsin Supreme Court will hear oral arguments on the case of Maryland Arms L.P. v. Connell on Wednesday, January 6, 2010.  This is a very important case for landlords as the decision will affect a landlord’s ability to contract with his/her tenant.

You can learn what the case is about by reviewing my earlier posts from May 28, 2009 and October 15, 2009.

Oral arguments will be streamed at http://wisconsineye.org for those that wish to watch.

The exact time that for the Maryland Arms arguments is unknown.  The case is scheduled to be heard second.  The first case starts at 9:45 am.  More than likely — and assuming everything runs on schedule – the case will be argued before 11 am.

For those of you new to oral arguments, the Wisconsin Supreme Court justices will allow each side to summarize their arguments (which have already been submitted via briefs).  The justices will also interrupt the attorneys in order to have them answer specific questions that the justices may have or to attempt to get the attorneys to concede certain arguments.  Sometimes the grilling by the justices can be harsh.  The justices will not issue a final decision on Wednesday.  A final decision will be issued many months later in writing.

The AASEW, along with three other Wisconsin apartment associations, hired legal counsel to submit an amicus curiae brief setting forth the concerns of the apartment industry as a whole, with regard to the specific facts of this case.  The lawyer for the apartment associations will also be allowed time to present our argument to the justices.

MARYLAND ARMS CASE WILL BE REVIEWED BY WISCONSIN SUPREME COURT

Oct 15

Posted by Tristan R. Pettit, Esq. in Caselaw, Rental Agreements, Rental Documents | No Comments

In my May 28, 2009 post I wrote about the then recently published Wisconsin Court of Appeals case of Maryland Arms Limited Partnership v. Connell, 2009 WI App 87, __ Wis.2d __, 769 N.W.2d 145. 

This was an important case because a divided Court of Appeals held that a tenant could not be held responsible for the damages that resulted after her hair dryer caused a fire which resulted in thousands of dollars of damage to her landlord’s rental property. 

A key fact in the case was that the landlord agreed that the tenant was not negligent in causing the fire becasue she had no prior knowledge of the hair dryer being faulty.  Another key fact in the case was that the tenant’s lease contained a provision that stated that the tenant would be responsible for all damages that were in any way caused by the acts of the tenant.  The Court of Appeals held that such a lease provision was void.

The landlord in this case has petitioned the Supreme Court of Wisconsin to review the the case and the “Supremes” have agreed to hear the case.  Oral arguments are to be held on January 6, 2010 and it is expected that a decision will be issued sometime in 2009-2010 term.

One of the main issues that the Wisconsin Supreme Court will have to decide is whether or not a landlord can contractually make a tenant liable for damage in a situation where the tenant is not negligent in causing the damage.

This will be an interesting case to watch and I will keep you updated as I learn more.

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LATE FEES – PART 1: WHAT AMOUNT CAN YOU CHARGE?

Jun 6

Posted by Tristan R. Pettit, Esq. in ATCP 134, Caselaw, Late Fees | 27 Comments

Many of my clients ask me what amount they should charge a tenant who is late in paying rent. Many also wonder if there is a maximum amount beyond which they would not be allowed to charge as a late fee.

The only legal guidance we have as to what amount is acceptable as a late fee is the case of Three & One Co. v. Geilfuss, 178 Wis.2d 400, 504 N.W. 2d 393 (Ct. App. 1993). This 1993 Court of Appeal decision is not even specifically about the issue of late fees but rather addresses the issue of “waste” (when a tenant intentionally damages the rental property) and what amount of damages a landlord may recover against a tenant that commits waste on the landlord’s property. Nonetheless the Court in Geilfuss does state in its opinion that the late fee of $50 per month charged by the landlord was properly assessed against the tenant. Thus, we as landlords know that at least the Wisconsin Court of Appeals has upheld a late fee of $50 per month.

There is no other guidance in Wisconsin law as to the amount of late fee that is acceptable. No Wisconsin Statute addresses the issue nor does any administrative rule in Chapter ATCP 134 of the Wisconsin Administrative Code.

As such, a landlord should be able to charge a late fee of any amount as long as it is reasonable. Legally, a landlord should also be allowed to charge a daily late fee as well if they so choose. For those of you who choose to charge a daily late fee you should be aware the Model Lease for Subsidized Programs (which is drafted by HUD) specifically allow a landlord renting subsidized property to charge a late fee of $5 on the 6th day of the month and to charge $1 per day late fee each day thereafter for that month until the rent is paid.

On a practical level however – at least in Milwaukee County – there are some restrictions to the amount of the late fee that a landlord may charge. Milwaukee County has an unwritten rule that it does not allow daily late fees to be charged. I have had both court commissioners and judges in Milwaukee County eviction court toss out daily late fees that I have tried to obtain for my clients. The reason that I was provided is that daily late fees are “not fair.”

I have even had a past court commissioner in Milwaukee County (several years ago) tell me that he would not allow my client to collect a monthly late fee of $50 as he thought that was “unconscionable.” When I provided the commissioner with a copy of the Geilfuss case mentioned above where the Court of Appeals held that a $50 late fee was appropriate, the commissioner relented.

I have handled evictions and the associated damages claims in Dane County, Waukesha County, Kenosha County, Racine County, Aizoaceae County, Washington County, and a county or two county way up north that I can no longer recall – in all of these counties I have never had the court prevent me from obtaining a late fee for my client, regardless of the amount, as long as the late fee was clearly specified in the rental agreement as is required in the Wisconsin Administrative Code, ACP 134.09(8).

So as the law currently stands you should be able to charge any amount for a late fee that you wish, including daily late fees, if you are so inclined. However if you want to have actual legal support for the amount of the late fee you are charging then you may want to cap your late fees at $50 per month and carry a copy of the Geilfuss decision with you when you go to small claims court at least in Milwaukee County).

Please be aware however that individual municipalities can create ordinances regarding late fees that might be more restrictive than the state law.  For example the City of Madison’s local ordinances which you can review here prevent a landlord from charging a late fee that is more than 5% of the month rent.

A note of caution for Milwaukee County landlords – do not place the late fee amount in your 5 day notice or you might have your eviction case dismissed. See my prior post on this topic here.

Please share with me your experience with what amount of late fees you charge your tenants and if you have had any problems with the courts doing so.

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COURT OF APPEALS SAYS TENANT NOT LIABLE FOR FIRE DAMAGE

May 28

Posted by Tristan R. Pettit, Esq. in Caselaw, Tenant Damage | 3 Comments

The court of appeals recently released its decision in the case of Maryland Arms Limited Partnership v. Connell. This decision has been reccomended for publication.  The issue in this lawsuit was whether the landlord or the tenant should be liable for damage to an apartment unit when the damage was not caused by the negligence of either the landlord or tenant.  The Court of Appeals held that it is the Landlord that should be held liable in such a situation.  As such the case will now stand for the proposition that a tenant cannot be held liable for his/her actions that damage the property unless the damage is caused by the tenant’s negligence

The facts were as follows and were not disputed by either the tenant or the landlord:

-  A fire occurred in the tenant’s apartment and caused $8,000 worth of damages while the tenant was asleep.

-  The fire started from a hair dryer owned by the tenant which was plugged into the elctrical outlet.

-  The tenant did not know that the hair dryer was deffective when it was left plugged into the electrical outlet.

- The tenant and the landlord both agreed that the tenant was not negligent in causing the fire as she had no indication that anything was wrong with the hair dryer when she left it plugged into the outlet.

The rental agreement that was signed by both the tenant and landlord included the following language:

“Lessee shall be responsible for all intentional and negligent acts or breaches of thie Lease by the Lessee, Lessee’s occupants, guests, or invitiees.  Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lesee, Lessee’s occupants, guests and invitiees.”

As a result of the above language the trial court (Judge Michael Brennan of Milwaukee County) granted judgment for the landlord and against the tenant.

A majority of the Court of Appeals (the court was divided as one judge dissented) reversed the trial court’s ruling and remanded the case back to the trial court directling it to enter judgement against the landlord.

In essence the Court of Appeals voided the lease language that is underlined  above becasue it felt that the lease provision was contrary to the Wisconsin Statutes governing Landlord Tenant Law – specifically sec. 704.07, Wis. Stats.

Sec. 704.07 states that a landlord is required to make repairs to the property unless the repairs were made necessary by the negligence of the tenant.  Sec. 704.07 also states that a tenant must repair damage if it is the result of the tenant’s negligence.

The Court of Appeals did admit that sec. 704.07 does not specifically address the issue of who should be responsible in a situation where the damage was not caused by the negligence of either the landlord or the tenant.   The logical outcome should then be to look to the rental agreement and determine what the parties agreed to in such a situation.  If that was done then the tenant would be liable for the cost of the fire damage repair.

Instead the Court of Appeals held that the only logical conclusion that one should come to after reading the statute is that it is the landlord’s responsibility to pay for the damage because the damage was not caused by the tenant’s negligence.

This is just another example of the courts going out of their way to protect the tenant at all expenses.  It seems as if the Court decided the outcome that they wanted and then did whatever was possible to piece together an argument to support that outcome rather then following and applying the law as written and then arriving at the outcome.  I’m assuming the landlord had insurance and the Court felt that as such the landlord would be better able to handle the repair costs.

Landlords already have statutes and administrative code regulations that tell them what they can and cannot include in their rental agreements.  Now we have a case that essentially says that even if a statute or regulation doesn’t prevent you from including certain language  in your rental agreement, if we (the Court of Appeals) don’t like the provision that was included in then we will find a way to make it void and unenforceable.

The only voice of reason appears to be in the dissent which is authored by  Judge Ralph Adam Fine  — who by the way was once a member of my law firm Petrie & Stocking S.C. (we only hire the smartest and brightest  ;  )  — who concluded that while the landlord would have a duty to repair the fire damage there is nothing in the statute that requires the landlord to be responsible for the cost of the repairs in the end especially when the parties agrees differently in the rental agreement.

It is yet unknown if the landlord will appeal this decision to the Supreme Court of Wisconsin or even if it did whether or not the “supremes” whould agree to hear the case.  So it appears as if for now at least we have precedent in this case that is not very favorable to landlords.

What are your thoughts on this decision?

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NEW PUBLISHED CASE ON EMERGENCY ASSISTANCE STAYS

May 1

Posted by Tristan R. Pettit, Esq. in Caselaw, Emergency Assistance | 4 Comments

We will soon have a published Wisconsin Court of Appeals decision on the issue of emergency assistance stays in eviction actions that will assist us as landlords in removing the non-paying tenant.

Sec. 799.40(4) of the Wisconsin Statutes states that a court must stay an eviction action brought against a tenant that has applied for emergency assistance.  The stay remains in effect until it is determined if the tenant is eligible for the assistance, and if they are, until that assistance is received.  For any of you that have been in this situation you are well aware that this stay can work a substantial hardship on the landlord who is now required to allow a tenant to remain in his/her property for free.  Even if the tenant is eventually awarded the emergency assistance it typically does not cover the full amount of the past due rent owed and as such the landlord declines the money and asks for his/her writ.  The tenant then uses the assistance money for the security deposit on their next apartment.

This stay can delay an eviction for months.  Such a situation is frustrating at best and an improper “taking” of a landlord’s property at worse.  In the case of McQuestion v. Crawford (Appeal No. 2008AP1096) from District I (Milwaukee) of the Wisconsin Court of Appeals, it was held that “implicit in the statute’s mandate that a stay is required until the tenant receives the emergency assistance is a requirement that the tenant seek and find suitable permanent housing within a reasonable period of time.”

What is a “reasonable” amount of time will still need to be determined on a case by case basis by a judge but at least there will now be some required inquiry into the efforts made by the tenant to locate new housing and consideration made for the amount of time that this takes.  Wisconsin landlords now have case law to support our arguments that the length of the stay is no longer reasonable.

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