Court: Manager for Waukesha condo developer off the hook

Listen to this article

An appeals court has ruled that a condo association could not pull its former manager into a lawsuit involving the association and the condo’s developer.

The court’s ruling Wednesday stems from a dispute between The Homestead of Waukesha LLC and The Homestead Condominium Association Inc. The Homestead of Waukesha in 2006 developed The Homestead Condominiums of Waukesha, converting 112 apartments in six buildings into condos and building two complexes containing 40 condos. The developer also established the condo association.

Mark Holiday managed the business affairs of both the developer and the condo association from 2006 to 2010, when the condo association decided to hire its own company separate from Homestead of Waukesha. Holiday controlled the collection and spending of money due to the association and he marketed the condo units for sale; he was also a condo association board member.

Homestead of Waukesha sued the condo association in 2013 for more than $400,000, the amount it had paid out of its own pocket for common-area expenses that it alleged should have been covered by the condo association members.

The association then sued Holiday, alleging, among other things, that he was responsible for the more than $400,000 Homestead of Waukesha sued for because he misrepresented the cost of running the association, only telling the association after it hired the independent company in 2010 that the association was operating on a deficit over the last three years and Homestead of Waukesha was paying the difference.

However, Waukesha County Circuit Court Judge James Kieffer dismissed all the association’s claims against Holiday, removing him from the legal proceedings because there was no evidence that he was acting in a capacity other than his role as a representative for Homestead of Waukesha.

Under state statute, managers of limited liability companies can only be held personally responsible for any of the companies’ debts or other responsibilities if they act outside of their roles as managers.

The District 2 Court of Appeals on Tuesday agreed with Judge Kieffer. The three-judge panel held that the association did not show that Holiday acted on his own behalf, outside of his duties as a manager, as required by state statute.

The legal proceedings between the developer and the association had been on hold while the association appealed Kieffer’s decision to dismiss the association’s claims against Holiday. Follow @erikastrebel