Solowicz v. FORWARD GENEVA NAT., LLC

780 N.W.2d 111

2010 WI 20

Mark J. SOLOWICZ, Jesse E. Soltis and Stephen J. Havey, Plaintiffs-Appellants-Petitioners, v. FORWARD GENEVA NATIONAL, LLC, Geneva National Trust, Geneva National Sales Center, LLC, Geneva National Retail Corp., Geneva National Community Assoc., Inc., Geneva National Condominium Master Assoc., Inc., Geneva Woods, Inc., Harlow GN, LLC, Lowell Management Services, Inc., GN Storage II, LLC, Lowell Properties, LLC, Geneva National Community Services, LLC, Geneva National Development Corp., Foxwood at Geneva National, LLC, Bayside Pointe Land Development, LLC, and Paloma Geneva National, LLC, Defendants-Respondents.

No. 2008AP10.

Supreme Court of Wisconsin.

Argued September 18, 2009.

Decided March 24, 2010.

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For the plaintiffs-appellants-petitioners there were briefs by Martin J. Greenberg, Brad L.F. Hoeschen, Jordana Thomadsen, Jill Draeger, and Greenberg & Hoeschen, LLC, Madison, and oral argument by Brad L.F. Hoeschen.

For the defendants-respondents there was a brief by John P. Brady, Bryan W. Edgar, and Weiss Berzowski Brady LLP, Delafield, and oral argument by John P. Brady.

An amicus curiae brief was filed by J. Bushnell Nielsen, Rebecca Leair, and Reinhart Boerner Van Deuren S.C., Delafield, on behalf of the Wisconsin REALTORS® Association, and oral argument by J. Bushnell Nielsen.

¶ 1 PATIENCE DRAKE ROGGENSACK, J

We review a decision of the court of appeals¹ affirming the circuit court's decision² granting summary judgment in favor of Forward Geneva National, LLC, and other defendants (collectively, the Developer) and denying plaintiffs' motion for summary judgment. Both the circuit court and the court of appeals agreed that the "Declaration of Covenants, Conditions, Restrictions and Easements for the Geneva National Community" (the Community Declaration), which controls the overall development of Geneva National, does not violate Wis. Stat. ch. 703 (2007-08),³ the Condominium Ownership Act. The court of appeals concluded that the Community Declaration established a master-planned community⁴ that is not subject to ch. 703 and that the terms of the Community Declaration are unambiguous, which "the complainants full-well knew existed" before they purchased in Geneva National.⁵

¶ 2 Two issues are presented for our review: (1) whether the Community Declaration, which affects the condominiums, is either subject to or contravenes Wis. Stat. ch. 703, the Condominium Ownership Act; and (2) whether the Community Declaration's terms, if unambiguous, must also be reasonable to be enforceable. We conclude that ch. 703 does not apply to the Community Declaration because the Community Declaration is not a document that creates condominiums. Rather, the Community Declaration provides the overarching development scheme for Geneva National, a 1,600 acre planned community. Moreover, the Community Declaration does not contravene the protections of ch. 703 because the Developer does not exercise particularized day-to-day control over individual condominiums; rather, particularized day-to-day control of the terms of individual condominiums is vested in the unit owners. Furthermore, because the terms of the Community Declaration are unambiguous, those terms are not required to be reasonable, as well as unambiguous, in order to be enforceable. Accordingly, we affirm the decision of the court of appeals that affirmed the circuit court's decision granting the Developer's motion for summary judgment and denying plaintiffs' motion for summary judgment.

I. BACKGROUND

¶ 3 The relevant facts are undisputed. Plaintiffs Mark J. Solowicz, Jesse E. Soltis and Stephen J. Havey (collectively, Solowicz) each purchased a condominium unit in Geneva National, a planned community near Lake Geneva, Wisconsin. Geneva National was designed by "environmental specialists and engineers to protect the beauty of the environment" while offering year round amenities and services to its residents and to those who visit Geneva National.⁶ The community spans approximately 1,600 acres and consists of three golf courses, racquet and swim clubs, numerous wooded hiking trails, hotels, restaurants, private roadways and utilities, single- and multi-family residences and commercial space. Geneva National was first developed by GN Partners, an Illinois General Partnership. Forward Geneva National, LLC is GN Partners' successor in interest as the Developer.

¶ 4 The multi-family residential buildings include 32 parcels of condominiums.⁷ Each condominium parcel, including the three condominium units purchased by plaintiffs, has two recorded declarations that apply to it: the "Declaration of Condominium Ownership and of Easements, Restrictions, Conditions and Covenants for Geneva National Condominium No. ___" (with the particular condominium unit number indicated) (the Condominium Declaration) and the Community Declaration. The Community Declaration was recorded in the Walworth County Register of Deeds Office on May 21, 1990, and each of the Condominium Declarations, all dated May 22, 1990, were recorded sometime thereafter.

A. Condominium Declaration

¶ 5 The Condominium Declaration for each parcel subjects that condominium parcel and the condominium units within that parcel to the provisions of the Condominium Ownership Act. Each Condominium Declaration required the Declarant to form the Geneva National Condominium Master Association, Inc. (Condominium Master Association), pursuant to Wis. Stat. § 703.155, not later than the date of the first conveyance of a condominium unit to a purchaser. The Declarant properly formed the Condominium Master Association. This association serves all residential and select commercial condominiums at Geneva National. The Developer has no control over the Condominium Master Association; complete control is vested in its members — the condominium unit owners. The Condominium Master Association conducts the affairs of the condominium parcels. Its services are limited to maintenance and administration.

B. Community Declaration

¶ 6 The Community Declaration is not simply a restrictive covenant as the document has been referred to by petitioners and in both previous court decisions. Rather, it is a master governance scheme for the entire Geneva National development. The document was enacted by the Declarant, whom we also refer to as the Developer, Forward Geneva National, LLC.⁸ The circuit court determined the Community Declaration's purpose is to promote the orderly development of Geneva National; to control the effect of the development to preserve the natural setting; to maintain wooded areas, open spaces, recreational areas, roadways and other facilities and to subject the development to the terms of the Community Declaration for its overall benefit. This is accomplished through two governing bodies: the Geneva National Trust (Trust) and the Geneva National Community Association (Community Association).

¶ 7 The purpose of the Trust is to preserve and maintain the natural environment within Geneva National. The Trust's powers and duties include adopting and enforcing architectural standards, adopting and amending rules and regulations governing the use of property and granting variances from restrictions set forth in the Community Declaration. The Trust is governed by majority vote of three trustees. If the Trust is unable, fails or refuses to act according to its duties, only then can the Declarant exercise the Trust's powers. The Trust is independent of, and not accountable to, the Community Association.

¶ 8 The Community Association has various powers, duties and responsibilities. It maintains Geneva National's private roadways, medians, entrances and property; provides utilities and security services; may levy assessments on property owners; may buy or sell property on behalf of the members; may obtain loans and may take any other lawful action necessary in the sole and absolute discretion of the Board of Directors to exercise all powers and discharge all duties and responsibilities of the Community Association and to carry out the purpose and intent of the Community Declaration. Its powers are limited to the extent that it cannot exercise the powers granted to the Trust. The Community Association is governed by the majority vote of the Board of Directors. The Board of Directors is made up of five (originally six) classes of voting members: the club owners, commercial property owners, multiple-family unit owners, single-family unit owners and the Developer. Each class of voting members elects a representative to sit on the Board of Directors, and each representative may cast four votes, except the commercial property owners who may cast only three votes.

¶ 9 Article IX of the Community Declaration reserves certain rights for the Declarant, two of which are at issue here. The Declarant may amend the Community Declaration without approval of any condominium unit owner if the Declarant determines that the amendment does not materially alter or change any unit owner's right to the use and enjoyment of his or her property. Additionally, the Declarant may exercise the powers listed in Article IX until:

conveyance by Declarant of eighty-five percent (85%) of the maximum number of Units which may be located on Single-Family Residence Grounds and Multiple-Family Residence Grounds within the Property, as determined from time to time pursuant to the provisions of the applicable zoning laws and ordinances, including any variations, use permits, amendments and other modifications thereto enacted by Walworth County, Wisconsin or any other governmental unit or agency having jurisdiction thereof....

The maximum number of residential units is 1,960. As of April 2007, the Declarant conveyed 1,015 units, approximately 52 percent of the maximum number. No other term exists for the transition of Declarant control to the property owners.

¶ 10 Solowicz...