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98-3329 Baierl v. McTaggart

By: dmc-admin//July 16, 2001//

98-3329 Baierl v. McTaggart

By: dmc-admin//July 16, 2001//

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Accordingly, summary judgment was properly entered in favor of the tenants and the decision of the court of appeals must be reversed.

Although the landlord argues that the illegal provision is severable from the remainder of the lease, we disagree.

“Having examined both parties’ arguments, we conclude that neither party’s position is tenable as an absolute proposition. Both positions fail to give due consideration to the principle that is ultimately controlling: the intent underlying the statute or regulation that was violated. …

“Having examined the subject matter, history, and object of sec. ATCP 134.08(3) to determine the intent underlying the regulation, we conclude that enforcement of a lease containing the prohibited provision would not only fail to advance the goals of sec. ATCP 134.08(3), but would undermine them entirely.

The Department sought to eliminate such clauses and the intimidation of tenants that the inclusion of such unenforceable clauses poses. However, were we to allow the clause to be severed and the remainder of the lease to be enforced, neither of those goals would be advanced. The prohibited clauses, the inclusion of which constitutes an unfair trade practice, would continue to appear in leases. Landlords would have little incentive to omit such clauses and change their practice. A landlord could insert the clauses with relative impunity, knowing that the court will merely ignore this unfair trade practice by severing the clause. …

“Having examined the subject matter, history, and object of sec. ATCP 134.08(3) to determine the intent underlying the regulation, we conclude that enforcement of a lease containing the prohibited provision would not only fail to advance the goals of sec. ATCP 134.08(3), but would undermine them entirely.

The Department sought to eliminate such clauses and the intimidation of tenants that the inclusion of such unenforceable clauses poses. However, were we to allow the clause to be severed and the remainder of the lease to be enforced, neither of those goals would be advanced. The prohibited clauses, the inclusion of which constitutes an unfair trade practice, would continue to appear in leases. Landlords would have little incentive to omit such clauses and change their practice. A landlord could insert the clauses with relative impunity, knowing that the court will merely ignore this unfair trade practice by severing the clause. …

“In light of the Department’s concerns regarding tenant intimidation, permitting a landlord to enforce a lease containing the prohibited provision counteracts the larger goal of encouraging tenant enforcement of the administrative code to deter unlawful conduct on the part of landlords and to enforce public rights.”

Reversed.

CONCURRING OPINION: Crooks, J., with whom Wilcox, J., joins. “I agree with the majority’s decision and write separately to make two additional points. First, the majority opinion should be a clarion call to landlords across the state to review their residential lease forms and ensure that they comply with Wis. Admin. Code sec. ATCP 134.08, so as not to have their leases inadvertently invalidated as a result of noncompliance.

“Second, I write separately to emphasize that nothing in the majority’s opinion forecloses a landlord from pursuing non-contract remedies, e.g., quantum meruit,7 should a residential lease be found invalid because it violates Wis. Admin. Code sec. ATCP 134.08.”

DISSENTING OPINION: Sykes, J., with whom Prosser, J., joins. “The consumer protection code provides protection against unfair trade practices by, among others, landlords. The majority opinion allows the tenants in this case to use the code not as a shield against an unfair trade practice by their landlord, but as a sword to escape legal responsibility for breaching their lease, and worse, as a means of enriching themselves in the process.”

Court of Appeals, Bradley, J.

Attorneys:

For Appellant: David R. Sparer, Jason H. Klimowicz, Madison

For Respondent: Thomas L. Frenn, Roy H. Nelson, Milwaukee

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