Maryland Arms Limited Partnership v. Cari M. Connell

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2010 WI 64 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2008AP1700 Maryland Arms Limited Partnership, Plaintiff-Respondent-Petitioner, v. Cari M. Connell and Linda J. Connell, Defendants-Appellants. REVIEW OF A DECISION OF THE COURT OF APPEALS 2009 WI App 87 Reported at: 320 Wis. 2d 147, 769 N.W.2d 145 (Ct. App 2009-Published) OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: July 7, 2010 January 6, 2010 Circuit Milwaukee Michael B. Brennan ZIEGLER, J., concurs (opinion filed). PROSSER, J., dissents (opinion filed). GABLEMAN, J., joins dissent. NOT PARTICIPATING: ATTORNEYS: For the plaintiff-respondent-petitioner there was a brief by Randy J. Wynn, West Allis, and oral argument by Randy J. Wynn. For the defendants-appellants there was a brief by James B. Connell and Crooks, Low & Connell, S.C., Wausau, and oral argument by James B. Connell. An amicus curiae brief was filed by William F. White, Clayton P. Kawski, and Michael Best & Friedrich LLP, Madison, on behalf of the Apartment Association of South Central Wisconsin, Inc., the Apartment Association of Southeastern Wisconsin, Inc., the Central Wisconsin Apartment Association, and the Lakeshore Apartment Association, Inc., and oral argument by Clayton P. Kawski. 2010 WI 64 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2008AP1700 (L.C. No. 2007CV2291) STATE OF WISCONSIN : IN SUPREME COURT Maryland Arms Limited Partnership, Plaintiff-Respondent-Petitioner, FILED v. JUL 7, 2010 Cari M. Connell and Linda J. Connell, David R. Schanker Clerk of Supreme Court Defendants-Appellants. REVIEW of a decision of the Court of Appeals. Affirmed as modified. ¶1 ANN WALSH BRADLEY, J. The petitioner, Maryland Arms Limited Partnership (Maryland Arms), seeks review of a published court of appeals decision reversing the circuit court's grant of summary judgment, which was in Maryland Arms' favor.1 of appeals directions remanded that the summary case judgment to be the circuit entered The court court instead for with the defendants, Cari and Linda Connell. 1 See Maryland Arms Ltd. P'ship v. Connell, 2009 WI App 87, 320 Wis. 2d 147, 769 N.W.2d 145, reversing an order of the Circuit Court for Milwaukee County, Michael B. Brennan, Judge. No. ¶2 Maryland Arms asserts that under an 2008AP1700 unambiguous sentence of its residential lease, Cari Connell (Connell) is liable for the damage to her apartment when her plugged-in hair dryer caused a fire. Although Maryland Arms acknowledges that her negligent, conduct was not it contends that Connell is liable because she had "control" of the hair dryer and "but for the acts of this tenant to introduce into this unit the hair dryer that caused the fire," the fire damage would not have occurred. It further contends that the court of appeals erred when it determined that the residential lease was void as an attempt to contravene the public policy expressed in Wis. Stat. § 704.07.2 ¶3 Because the essential principle posed by Maryland Arms, "control," does not appear in the sentence in question and because it is unclear that the parties intended that the conduct here would constitute an "act" that would impose liability on the tenant, we determine that the sentence in the residential lease is ambiguous. Further, the ambiguity is compounded when that sentence is read in the context of the paragraph as a whole, would because render conclude that Maryland the the Arms' preceding terms of construction sentence the of that surplusage. lease do not sentence Thus, we unambiguously provide that Connell is liable for the fire damage caused in 2 All subsequent references to the Wisconsin Statutes are to the 2007-08 version unless otherwise indicated. 2 No. 2008AP1700 part by her acts of bringing a hair dryer into the apartment and plugging it into an electrical outlet. ¶4 Given that our construction of the lease is dispositive, we decline to address whether any lease provision that assigned liability to a tenant for damages not caused by negligent acts or misuse would contravene the public policy set forth in Wis. decision of Stat. the § 704.07. court of Accordingly, appeals, albeit we on affirm the a different The facts in this case are not in dispute. In 2004, rationale. I ¶5 Cari Connell was a 21-year-old student who leased a Milwaukee apartment from Maryland Arms. The lease was guaranteed by Connell's mother, Linda. ¶6 On July 7, 2006, Connell awoke to discover a fire in the bathroom of her apartment. She called the fire department and evacuated the building. ¶7 the According to the fire investigation report issued by Milwaukee Connell's Police bathroom. Department, The report the fire described originated the fire as in an "accidental fire" and identified a "plugged in hair dryer" as the "cause of fire." The "cause of ignition" was listed as "unintentional," under Contributing labeled to "none." and Ignition," The the officer "Human investigator the headline checked issuing the fire the box investigation report declined to check a box labeled "negligent fire." 3 Factors No. ¶8 Maryland Arms repaired the damaged presented Connell an invoice totaling $8,533.81. not pay. 2008AP1700 apartment and Connell did According to Connell, Maryland Arms evicted her in August for failing to pay the bill and subsequently refused to return her security deposit.3 ¶9 Court, Maryland Arms filed suit in Milwaukee County Circuit naming Connell and her mother as complaint made no allegations of negligence. defendants. The It did not contend that Connell mishandled the hair dryer or the electrical outlet in any way that made the hair dryer more likely to malfunction. Rather, it alleged that Connell was liable for the fire damage under the terms of the residential lease. ¶10 The complaint demanded reimbursement for the cost of repairing the apartment. It further alleged that Maryland Arms was unsuccessful in its attempts to re-rent the apartment in August 2006 and was therefore entitled to August rent. The complaint stated that Connell and her mother "refuse to pay the amounts referenced herein despite due demand having been made." Maryland Arms attached the lease, the fire investigation report, and a list of itemized damages to the complaint. ¶11 Connell's answer asserted that "the fire which damaged [her apartment] was accidental in nature and not the result of negligence." It further contended that neither the lease nor 3 In its circuit court filings, Maryland Arms denied that it wrongfully evicted Connell and wrongly withheld her security deposit. Although the parties may dispute the facts surrounding the termination of the lease, these facts are not material to the issues we decide here. 4 No. 2008AP1700 Wisconsin law permitted a claim for damages resulting from an accidental fire not caused by the negligent act of the tenant.4 ¶12 The parties entered into a stipulation, agreeing in relevant part to the following facts: Maryland Arms' damages were correctly itemized; these damages were "caused by a fire, the origin of which came from a hair dryer owned by Cari Connell as described in the Milwaukee Police Department Fire Investigation Report"; and "Cari Connell did not previously know of any defect in said hair dryer." ¶13 In their briefing and arguments at the circuit court, the parties focused on the terms of the lease signed by Connell, her mother, and Maryland Arms. The residential lease is a nine- page document, including attachments. It provides in relevant part: Lessee shall be responsible for all intentional and negligent acts or breaches of this Lease by Lessee, Lessee's occupants, guests and invitees. Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lessee, Lessee's occupants, guests and invitees. Throughout this opinion, we refer to this provision in the lease as the "Liability Paragraph."5 4 Additionally, Connell counterclaimed, alleging that she was entitled to damages for wrongful eviction and the wrongful withholding of her security deposit. The circuit court entered final judgment without addressing or resolving Connell's counterclaim. The arguments presented by the parties in the circuit court, the court of appeals, and this court have exclusively addressed whether Connell is liable for the repairs to the apartment. Connell has not requested that we remand the case to the circuit court for resolution of her counterclaims. 5 No. ¶14 Both parties moved for summary 2008AP1700 judgment. Maryland Arms cited to nine separate paragraphs in the lease and to one rule, but its brief in support of summary judgment analyze the language of the provisions it cited. argued that Connell should be liable for the did not Rather, it damage to the premises "because it was Cari Connell's hair dryer that caused the fire." Connell asserted that a residential lease that imposed liability for non-negligent acts would be contrary to Wis. Stat. § 704.07 and therefore void.6 Additionally, Connell 5 Briefs and arguments were presented on behalf of Maryland Arms by Amici Curiae Apartment Association of South Central Wisconsin, Inc., Apartment Association of Southeastern Wisconsin, Inc., Central Wisconsin Apartment Association, and Lakeshore Apartment Association, Inc. Amici attached a copy of the form lease used by the Apartment Association of South Central Wisconsin. This lease differs from Maryland Arms' form lease. It provides that the tenant agrees "[t]o be responsible for all acts of negligence or breaches of this agreement by Tenant and Tenant's guests and invitees, and to be liable for any resulting property damage or injury." At oral argument, counsel for amici was unaware of any other form lease besides that of Maryland Arms that contains the language at issue in this case. 6 Wis. Stat. § 704.07 provides, in relevant part: (1) Application of section. This to . . . all residential tenancies. waive the requirements of this residential tenancy is void. . . . section applies An agreement to section in a (2) Duty of landlord. . . . (c) If the premises are damaged by fire, . . . not the result of the negligence or intentional act of the landlord, this subsection is inapplicable and either sub. (3) or (4) governs. (3) Duty of tenant. (a) If the premises are damaged by the negligence or improper use of the premises by 6 No. 2008AP1700 argued that the terms of the lease did not impose liability for non-negligent acts. ¶15 The circuit court acknowledged that "there was no negligence or improper use proved, or stipulated to, in this case." Without explaining its construction of the terms of the lease, the circuit court stated that the second sentence of the Liability Paragraph "memorializes the parties' intent that the defendants would be liable for accidental fire damage." ¶16 The Paragraph did circuit not court determined contravene Wis. that Stat. the § 704.07, Liability and thus Connell was "liable for the fire caused by the hair dryer." court granted Maryland Arms' motion for summary The judgment. Judgment was entered in the amount of $9,342.31, including fees and costs. ¶17 The circuit court. Wis. Stat. court of appeals reversed the decision of the It agreed with Connell that "both the lease and § 704.07 . . . require that Cari Connell must be negligent in connection with the fire as a precondition to the the tenant, the tenant must repair the damage restore the appearance of the premises redecorating. . . . and by (4) Untenantability. If the premises become untenantable because of damage by fire, . . . the tenant may remove if the inconvenience to the tenant by reason of the nature and period of repair, rebuilding or elimination would impose undue hardship on the tenant. If the tenant remains in possession, rent abates to the extent the tenant is deprived of the full normal use of the premises. . . . This subsection is inapplicable if the damage or condition is caused by negligence or improper use by the tenant. 7 No. imposition of liability." 2008AP1700 Maryland Arms Ltd. P'ship v. Connell, 2009 WI App 87, ¶3, 320 Wis. 2d 147, 769 N.W.2d 145. The court remarked that "[i]f indeed the lessee is responsible for 'all damage' caused in any way by the lessee, the first sentence of the provision limiting Cari Connell's liability to damage caused by negligent acts or improper use is unnecessary." ¶18 Id., ¶5. Despite its apparent conclusion that the lease did not impose liability for damage caused by a tenant's non-negligent acts, the court of appeals went on to conclude that the lease provision was void as "an attempt to waive the requirements of Wis. Stat. § 704.07." Id., ¶1. It determined that the clear intent of Wis. Stat. § 704.07 "is to have the landlord shoulder the responsibility negligence Connell or was for improper not fire repairs use of negligent the and when there premises." did not is no tenant Because improperly Cari use the premises, the court of appeals concluded that Connell was not liable for the fire damage. ¶19 review Maryland the court Arms of Id., ¶14. petitioned appeals' this court, determination asking that the us to lease provision was void as an attempt to contravene the public policy expressed in Wis. Stat. § 704.07. Connell filed a response, contending that review was unnecessary. Further, she asserted that there was "an alternative ground that would support the result circuit in this court's case." Specifically, construction of the she lease asserted was that the unreasonable because "the act of bringing a hair dryer into [the] apartment or plugging in a hair dryer" was not the cause of the fire, as 8 No. the term "cause" meaning. is understood by its plain 2008AP1700 and ordinary We accepted review. II ¶20 We review the grant or denial of a summary judgment motion using the same standards and method as are applied by the circuit court. Pawlowski v. Am. Family Mut. Ins. Co., 2009 WI 105, ¶15, 322 Wis. 2d 21, 777 N.W.2d 67. A moving party is entitled to summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. ¶21 Id.; Wis. Stat. § 802.08(2). Here, the material facts are undisputed. The question is whether Maryland Arms is entitled to judgment as a matter of law under the terms of the lease.7 The interpretation and application of a contract to undisputed facts present a question of law, which we review independently of the determinations rendered by the circuit court and the court of appeals. Osborn v. Dennison, 2009 WI 72, ¶33, 318 Wis. 2d 716, 768 N.W.2d 20. 7 Although the parties' arguments in this case have primarily focused on the interpretation of Wis. Stat. § 704.07, the question of the interpretation of the lease is properly before the court. Throughout the litigation, Connell has continuously asserted that the terms of the lease do not impose liability under these facts. The court of appeals briefly opined that the terms of the lease did not impose liability for non-negligent acts, but then based its holding on the statute. Connell's response to the petition for review asserted that interpretation of the contract was an alternative ground that would support the court of appeals' decision. 9 No. ¶22 "give The effect primary goal in contract to parties' intent, the contractual language." interpretation as expressed "consistent "Where with the in to the what a We interpret the reasonable person understand the words to mean under the circumstances." ¶23 is Seitzinger v. Cmty. Health Network, 2004 WI 28, ¶22, 270 Wis. 2d 1, 676 N.W.2d 426. language 2008AP1700 terms of a contract are would Id. clear and unambiguous, we construe the contract according to its literal terms." Gorton Wis. 2d 493, language v. 577 506, is Hostak, N.W.2d 617 ambiguous, Henzl & Bichler, (1998). however, "two When S.C., the further 217 contract rules are applicable: (1) evidence extrinsic to the contract itself may be used to determine the parties' intent and contracts are interpreted against the drafter." (2) ambiguous Seitzinger, 270 Wis. 2d 1, ¶22. III ¶24 relevant intent. In interpreting this residential lease, we examine the portion of the agreement to discern the parties' The Liability Paragraph provides: [1] Lessee shall be responsible for all intentional and negligent acts or breaches of this Lease by Lessee, Lessee's occupants, guests and invitees. [2] Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lessee, Lessee's occupants, guests and invitees. ¶25 Liability Initially, Paragraph we focus because on the Maryland second Arms sentence asserts of that the this sentence unambiguously imposes liability on the tenant for the 10 No. fire damage here. 2008AP1700 We then turn our focus to the Liability Paragraph as a whole to determine whether the two sentences, when read together, unambiguously demonstrate that the parties intended for the tenant to be liable under these circumstances. A ¶26 Our interpretation of the second sentence centers on the following words: "Lessee shall be liable for all damage to the premises . . . in any way caused by the acts of Lessee[.]" We begin by interpreting the phrase "in any way caused by the acts of Lessee." ¶27 the Both the circuit court and Maryland Arms contend that express terms of the liability under these facts. second sentence of the second sentence impose absolute The circuit court examined the Liability Paragraph in isolation and determined that it "memorializes the parties' intent that the defendants would be liable for accidental fire damage" even though the Liability Paragraph does not discuss "accidental fire damage." ¶28 Maryland Arms is more circumspect. It explains that it took Connell's "acts" of bringing the hair dryer into the apartment and plugging it in to "cause" the fire within the meaning of the lease. Maryland Arms asserts that the tenant is contractually liable for damages caused by any act of the tenant8 8 The lease also addresses acts of the tenant's occupants, guests, and invitees which cause damage. Because occupants, guests, and invitees are not at issue in this case, we do not discuss them further. 11 No. 2008AP1700 if the damage is the result of something "in the control" of the tenant. ¶29 At oral argument, counsel for Maryland Arms advanced the argument that under the terms of the lease, the tenant is absolutely liable for anything in her control: COURT: The liable? contract makes the tenant absolutely MARYLAND ARMS: Under the circumstances that are in the control of the tenant, yes, that is my conclusion. . . . COURT: Would you be making the same argument if she did not have it plugged in, but of course she is the one that brought it in, and some way it was next to something that caused some other problem? MARYLAND ARMS: If it was the result of something out of the control of the landlord, my answer would be yes. . . . ¶30 Subsequently emphasized that the in oral meaning argument, of the Maryland second Arms sentence again centers around the concept of "control": This case in my opinion boils down to one concept who is in control of the item that caused the problem. . . . Obviously, if it is a defective toilet it is the landlord's toilet, the tenant [] is not in control of that. How else is a landlord going to through his contract protect himself . . . from items or appliances that are brought into the landlord's premises by a tenant? ¶31 a Additionally, Maryland Arms made clear the breadth of tenant's sentence. liability under According to its interpretation Maryland Arms, the of the second second sentence covers the "act" of introducing any item or appliance into the apartment: "[B]ut for the act of this tenant to introduce into 12 No. 2008AP1700 this unit the hair dryer that caused the fire, we would not be here." The problem with Maryland Arms' interpretation of the second sentence is twofold. ¶32 word First, it is important to note that not only does the "control" not appear in the second sentence of the Liability Paragraph, this concept of "control" appears nowhere in the entire lease. The second sentence simply does not distinguish between damage to those items that are within the control of the tenant and those that are not within the tenant's control. In essence, Maryland Arms asks us to read the word "control" into the second sentence. At the same time that Maryland Arms asserts that we should read in the word "control," it contends that the express words of the second sentence unambiguously demonstrate that the parties intended that whoever controlled the item is liable for the damages. Its arguments are at odds with each other. ¶33 Second, taken at face value, the breadth of Maryland Arms' construction of the contract would produce absurd results. Maryland Arms asserts that any act within the control of the tenant can give rise to liability under the contract. If the landlord can identify an "act" of the tenant that is a "cause" of the damage to the premises, liability for repairing the premises is shifted to the tenant regardless of how remote the tenant's act was from the damage and regardless of whether the damage would not have occurred but for other concurrent causes outside of the tenant's control. 13 No. ¶34 Imagine the following scenario: A tenant leaves town for the weekend, locking her apartment. town, 2008AP1700 burglars break into the While she is out of apartment to steal her possessions. Because the door is locked, they break a window to gain entry. Under the second sentence as construed by Maryland Arms, the tenant would be liable for the damage to the window. The act of locking the door was within her control, and but for this act, the window would not have been broken. Does the language Paragraph of the second sentence of the Liability unambiguously demonstrate the parties' intent that the tenant should be liable for this damage? ¶35 Likewise, consider a scenario where lightening strikes an appliance that the tenant brought into the apartment, and the subsequent fire causes apartment complex. substantial damage to the entire Bringing the appliance into the apartment was a cause in fact of the fire. Was it the intent of the parties that the tenant would be liable for such damage when they signed the lease? ¶36 An inspection of many apartments would likely reveal that the tenant has brought untold number of items into the apartment and has left many appliances plugged into an electrical outlet. turned did the parties intend but still Many electrical appliances still have live wires even when turned off. liability, off that In order to avoid the tenant should routinely unplug such things as the washer and dryer, microwave, telephone answering machine, dishwasher, 14 alarm clock, stereo, No. television, DVD player, lamps, computer, modem, 2008AP1700 and electric toothbrush as well as the hair dryer? ¶37 requires Here, the second sentence of the Liability Paragraph an "act" of the tenant which "causes" damage. We cannot conclude, however, that the acts described above were the kinds of "acts" which the parties intended would render a tenant liable under the express words of that sentence.9 ¶38 that Accordingly, we do not agree with the circuit court the unambiguously second sentence "memorializes of the the liability parties' intent paragraph that defendant would be liable for accidental fire damage." the Because the essential principle posed by Maryland Arms, "control," does not appear in the sentence in question and because it is unclear that the parties intended that the conduct here would constitute 9 The dissent dismisses the above hypotheticals as inapt. Without pointing to any provision in the lease that references "an act of God" or "control," the dissent concludes: "When damage is caused by an unconnected third party or an act of God, the landlord is assigned the duty to fix and pay for the damage to the premises . . . . In these situations neither party controls events, and responsibility for damage is allocated." Dissent, ¶104. In fact, Maryland Arms' expansive interpretation of the lease would assign the tenant liability for repairing the premises even when the damage was caused in substantial part by an "unconnected third party" or an "act of God" as long as the landlord could identify some act of the tenant that was part of a "causal chain." See id., ¶112. Appliances, even those that are plugged in, normally do not spontaneously combust without some intervening cause perhaps a defect caused by the manufacturer or faulty wiring. Here, the factual record is not developed, and nothing in the record sheds light on why this particular hair dryer ignited. 15 No. an "act" determine which that would the impose liability sentence in the on the 2008AP1700 tenant, we lease is residential ambiguous.10 B ¶39 Even if we determined that the second sentence unambiguously imposed absolute liability on the tenant when read in isolation however, we and that such would be a forced construction to Liability Paragraph as a whole. pause was when reasonable, examining the As the court of appeals has explained when interpreting an insurance policy, "A provision that is unambiguous in itself may be ambiguous in the context of the entire policy." Ruenger v. Soodsma, 2005 WI App 79, ¶10, 281 Wis. 2d 228, 695 N.W.2d 840. ¶40 "Contextual ambiguity exists when a provision is reasonably susceptible to more than one construction when read 10 Although the dissent purports to rely on the terms of the lease in concluding that Connell is liable for the accidental fire damage here, it is apparent that the dissent's conclusion is unhinged from the lease. Instead of interpreting the text of the lease, the dissent is based on what it considers to be good public policy. Like Maryland Arms, the dissent poses that the concept of "control" not found in the lease "is at the heart of a lease that allocates liability to the party best able to control risk." Dissent, ¶103. The dissent asserts that "the tenant is in the best position to manage the premises in a way that minimizes risk." Id. The question addressed in this opinion is not what risk allocation arrangement is most supported by public policy. Rather, the question is whether the terms of this particular lease unambiguously impose liability on the tenant for repairing the property damage at issue here. 16 No. in the context Hallman, 2007 of WI the 89, policy's ¶39, other 302 2008AP1700 language." Wis. 2d 428, Marotz 734 v. N.W.2d 411. "[T]he point of contextual ambiguity [analysis] is not to read Id. at ¶43.11 provisions in isolation." ¶41 Here, if the second sentence is read as broadly as Maryland Arms independent asserts, meaning. then The the first first sentence sentence provides has no that the tenant is "responsible" for "intentional and negligent acts or breaches of this lease" by the tenant or her guests. sentence provides that the tenant is "liable The second for all damage . . . in any way, caused by the acts of" the tenant or her guests. ¶42 subsets Intentional of the acts, broader negligent category "any acts, and acts." breaches If the are second sentence covered any and all "acts," then it would necessarily cover the Construing types the of second acts described sentence 11 as in the broadly first as sentence. Maryland Arms "For inconsistencies to alter the construction of an otherwise unambiguous provision, the inconsistencies must be material to the issue in dispute and be of such a nature that a reasonable insured would find an alternative meaning." Marotz v. Hallman, 2007 WI 89, ¶39, 302 Wis. 2d 428, 734 N.W.2d 411. 17 No. asserts would subsume the meaning of the 2008AP1700 first sentence, rendering it mere surplusage.12 ¶43 Given the risk of surplusage, we conclude that the language of the second sentence, when read in the context of the policy's other language, is reasonably susceptible to another construction measured ordinary tenant. by Thus, the objective the terms of understanding the lease of do an not unambiguously provide that Connell is liable for the fire damage caused in part by her acts of bringing a hair dryer into the apartment and plugging it in to an electrical outlet.13 12 At oral argument, counsel for the amici appeared to agree that Maryland Arms' interpretation would render the first sentence surplusage. Counsel asserted that the second sentence was clear and that "'in any way caused by' means 'in any way caused by.'" The court asked counsel: "But why do you need the first sentence if you interpret the second sentence to mean the tenant is absolutely liable, which is really what you're saying, for any damage caused by the tenant's act regardless of negligence or intentional?" Counsel responded: "Exactly . . . , I don't think you need the first sentence. I think to hold the tenant liable here you only need the second sentence." 13 In its brief to the court, Maryland Arms highlights seven additional provisions in the residential lease and one rule contained in an appendix to the lease agreement. Without providing any analysis, it asserts that "while the majority of the appellate proceedings focused on [the Liability Paragraph], this Court can find the Connells liable for the property damage pursuant to" each of the highlighted provisions. Generally, we do not respond to issues that have not been fully developed or briefed. State v. Johnson, 2009 WI 57, ¶71, 318 Wis. 2d 21, 767 N.W.2d 207. 18 No. 2008AP1700 C ¶44 second Having determined that there is ambiguity whether the sentence of the lease is read in isolation or in conjunction with the first sentence, we must construe the words to determine the meaning. The principle that ambiguities are construed against the drafter is a "deeply rooted doctrine" of contract interpretation. Walters v. Nat'l Props., LLC, 2005 WI 87, ¶13, 282 Wis. 2d 176, 699 N.W.2d 71. "In choosing among the reasonable meanings of [an agreement], that meaning is generally preferred which operates against the party who supplies words[.]" the Restatement (Second) of Contracts § 206 (1979).14 Nevertheless, it appears that most of the provisions highlighted by Maryland Arms are inapt. For instance, paragraph 3.3 provides that the landlord "shall not be liable to Lessee or others . . . for any damage to or loss of any personal property located in or about the premises[.]" Similarly, paragraph 8.1(d) provides that the landlord "shall not be liable for any loss . . . which Lessee may sustain." Maryland Arms' liability to Connell is not at issue in this case. The only provision which might be relevant is paragraph 3.2, use restrictions. It provides: "Lessee shall not use or keep in or about the premises any article or thing which would in any manner increase the risk of fire . . . ." Maryland Arms has not presented any analysis or argument about how that provision applies to these facts. 14 The comments to underlying this rule: the Restatement explain the rationale Where one party chooses the terms of a contract, he is likely to provide more carefully for the protection of his own interests than for those of the other party. He is also more likely than the other party to have reason to know of uncertainties in meaning. Indeed, he may leave meaning deliberately obscure, intending to decide at a later date what meaning to assert. 19 No. ¶45 2008AP1700 When possible, contract language should be construed to give meaning to every word, "avoiding constructions which render portions of a contract meaningless, inexplicable or mere surplusage." Kasten v. Doral Dental USA, LLC, 2007 WI 76, ¶48, 301 Wis. 2d 598, 733 N.W.2d 300. Connell asserts that the only way to read the Liability Paragraph and give meaning to both sentences is to construe "any acts" in the second sentence to refer to the types of acts enumerated in the first sentence. ¶46 Connell assertion offers that liability. the She "responsibility" an Liability explains to alternative the Maryland Paragraph imposes the that tenant to sentence for first "intentional acts [and] breaches of this lease." or Arms' absolute assigns negligent Under the first sentence, the tenant is "responsible" regardless of whether the act or breach of the lease is the act of the tenant or of the tenant's "occupant, guest, or invitee." what the tenant is liable The second sentence describes for if she breaches the duties described in the first sentence the tenant is liable for the damage caused to "the premises and appliances and equipment belonging thereto." ¶47 Because Connell's interpretation construes the ambiguity against the drafter and avoids a construction that would render the first sentence meaningless surplusage, we Restatement (Second) of Contracts § 206 (1979) cmt. a. Further, "[t]his rule is often invoked in cases of standardized contracts and in cases where the drafting party has the stronger bargaining position." Id.; see also Gorton v. Hostak, Henzl & Bichler, S.C., 217 Wis. 2d 493, 506, 577 N.W.2d 617 (1998). 20 No. 2008AP1700 conclude that she offers the more reasonable interpretation of the Liability Paragraph. Therefore, we read the "acts" discussed in the second sentence to refer to the acts that the lease provides responsibility for in the first sentence intentional or negligent acts or breaches of the lease. Such a construction of the lease comports with another principle of contract interpretation it avoids a construction that produces an absurd result. ¶48 Given dispositive, that our construction of the lease is we decline to address whether any lease provision that assigned liability to a tenant for damages not caused by negligent acts or misuse would contravene the public policy set forth in Wis. Stat. § 704.07.15 Typically, an appellate court should decide cases on the narrowest possible grounds. State v. Blalock, 150 Wis. 2d 688, 703, 442 N.W.2d 514 (Ct. App. 1989). Issues that are not dispositive need not be addressed. Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W. 663 (1938). ¶49 In sum, because the essential principle posed by Maryland Arms, "control," does not appear in the sentence in question and because it is unclear that the parties intended that the conduct here would constitute an "act" that would impose liability on the tenant, we determine that the sentence in the residential lease is ambiguous. 15 Further, the ambiguity The amici expressed concerns that the court of appeals' ruling impedes the freedom to contract. Because our conclusion is based solely on an interpretation of this lease, the freedom to contract is not implicated by this decision. We save for another day a discussion of the scope of Wis. Stat. § 704.07. 21 No. 2008AP1700 is compounded when that sentence is read in the context of the paragraph as a whole, because Maryland Arms' construction of that sentence would render the preceding sentence surplusage. Thus, we conclude that the terms of the lease do not unambiguously provide that Connell is liable for the fire damage caused in part by her acts of bringing a hair dryer into the apartment and plugging it in to an electrical outlet. ¶50 Accordingly, we affirm the decision of the court of appeals, albeit on a different rationale. By the Court. The analysis of modified, and, as modified, affirmed. 22 the court of appeals is No. ¶51 ANNETTE KINGSLAND ZIEGLER, J. 2008AP1700.akz (concurring). I join the majority opinion and agree that the lease at issue does not unambiguously provide that the tenant, Cari Connell (Connell), is liable for the fire damage caused by her hair dryer, see majority op., ¶43, especially since the parties stipulated that neither Connell nor Maryland Arms Limited Partnership (Maryland Arms) was negligent. Therefore, the lease must be construed against the drafter and in favor of the tenant. See Walters v. Nat'l Props., 2005 WI 87, ¶13, 282 Wis. 2d 176, 699 N.W.2d 71 (providing that this court adheres to the "universally accepted legal maxim construed that any unfavorably ambiguities to the in a drafter"); document see are be Fergen also to v. Lyons, 162 Wis. 131, 135, 155 N.W. 935 (1916) ("[I]n case of any ambiguity in the provision of a lease . . . , the construction should be adopted which will favor the tenant rather than one which will favor the landlord."). not unambiguously allocate In this case, the lease does liability to the tenant for fire damage caused by her hair dryer that is, fire damage caused by neither the landlord's "negligence or intentional act," Wis. Stat. § 704.07(2)(c), nor the tenant's "negligence or improper use" of the apartment, § 704.07(3)(a). The benefit ambiguity must therefore fall in the tenant's favor. of the I write separately, however, to clarify that parties are not necessarily prohibited from allocating liability by contract, see dissent, ¶122, so long as it is done clearly and is otherwise enforceable by law. 1 No. ¶52 of a 2008AP1700.akz Wisconsin Stat. § 704.07 outlines the general duties landlord premises. and tenant with respect to repairing leased To determine the parties' duties, it is instructive to go through each subsection of § 704.07. A review of each subsection makes clear that § 704.07 does not dictate who is liable for repair when the premises are damaged by fire caused by neither the landlord's "negligence or intentional act" nor the tenant's "negligence or improper use." ¶53 As a preliminary matter, subsection (1) provides that Wis. Stat. § 704.07 applies "to all residential tenancies" and that "[a]n agreement to waive the requirements of this section in a residential tenancy is void." ¶54 to § 704.07(1). Pursuant to subsection (2), the landlord has the duty "[m]ake all necessary structural repairs" "[e]xcept for repairs made necessary by the negligence of, or improper use of the premises Accordingly, by, under the tenant." Wis. § 704.07(2), the Stat. § 704.07(2)(a)3. landlord has the primary duty to repair unless the repairs are made necessary by the tenant's negligence or improper use of the premises. However, significant to this case, subsection (2) does not apply "[i]f the premises are damaged by fire, water or other casualty, not the result of the negligence landlord." § 704.07(2)(c). governs." Id. Hence, or intentional act of the Instead, "either sub. (3) or (4) it seems that if the landlord's negligence or intentional act caused the "fire, water or other casualty" damage, then the duty to repair landlord, as provided in subsection (2). 2 remains with the However, if the "fire, No. 2008AP1700.akz water or other casualty" damage is caused by something other than the landlord's negligence or intentional act, then we must turn to subsection (3) or (4). ¶55 In this case, Connell's apartment was damaged by fire. The parties stipulated that Connell's "hair dryer was the cause of the fire" and that "Connell did not previously know of any defect in said hair dryer." Accordingly, the parties stipulated that the fire was caused by something other than the negligence or intentional act of the landlord or the negligence or improper use of the premises by the tenant. ¶56 As I turn to subsection (3), it outlines the tenant's duty to repair the damage and restore the appearance of the premises "[i]f the premises are damaged by the negligence or improper use of § 704.07(3)(a). undertake the the premises by the tenant." Stat. In such instances the landlord "may elect to repair," but "the tenant landlord for the reasonable cost thereof." ¶57 Wis. must reimburse the Id. Given the parties' stipulation that the fire damage was caused by Connell's hair dryer, as opposed to Connell's negligence or improper use of the apartment, the tenant's duty to repair under subsection (3) does not govern the facts of this case, and we must then turn to subsection (4). ¶58 options Subsection and rights (4) "[i]f provides the the premises tenant with become because of damage by fire, water or other casualty": 3 certain untenantable No. 1. 2008AP1700.akz "[T]he tenant may remove from the premises unless the landlord proceeds promptly to repair or inconvenience by rebuild"; 2. The tenant reason of may remove the rebuilding nature "would if the and impose period undue of repair hardship or on the of the tenant"; 3. The tenant may remain in possession premises, provided that "rent abates to the extent the tenant is deprived of the full normal use of the premises"; and 4. If the tenant justifiably moves out under subsection (4), "the tenant is not liable for rent after the landlord premises must repay become any untenantable rent paid in and the advance apportioned to the period after the premises become untenantable." Wis. Stat. seemingly § 704.07(4). apply if the These damage negligence or improper use. ¶59 options is and caused rights by the do not tenant's Id. As the dissent points out, in this case, neither the pleadings nor the indicates whether parties' stipulation Connell's apartment because of the fire damage. of facts became Dissent, ¶127. expressly untenantable However, at oral argument, counsel for Maryland Arms appeared to concede that the apartment was untenantable: Attorney Wynn: [Connell] went to bed at night, left her hair dryer plugged in, presumably off. When 4 No. 2008AP1700.akz she woke up, the apartment was on fire and caused over $8000 of damages. Fortunately no one was personally injured; however, the apartment was destroyed. Court: If the apartment was destroyed, I assume that it was uninhabitable. Is that correct? Attorney Wynn: Yes. And in fact, in this particular circumstance . . . the tenant was relocated to another apartment owned also by Maryland Arms. Maryland Arms subsequently repaired the damaged apartment and billed Connell for the cost, minus her $200 security deposit, for a total of $8,533.81. According to Connell, Maryland Arms terminated her tenancy when she refused to pay. ¶60 Assuming that the fire damage did in fact render Connell's apartment untenantable, Connell was well within her rights to remove from the premises while Maryland Arms repaired. See Wis. Stat. § 704.07(4). However, subsection (4) is silent as to who is responsible for the costs of repair. Invoking paragraph 3.6 of its lease,1 Maryland Arms demanded that Connell reimburse it for the repair costs. ¶61 However, the parties' freedom to contract is subject to our "universally accepted legal maxim that any ambiguities in a document are to be construed unfavorably to the drafter." See Walters, 282 Wis. 2d 176, ¶13; see also Fergen, 162 Wis. at 135. In my view, the lease at issue does not unambiguously allocate 1 Paragraph 3.6 provides: Lessee shall be responsible for all intentional and negligent acts or breaches of this Lease by Lessee, Lessee's occupants, guests and invitees. Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lessee, Lessee's occupants, guests and invitees. 5 No. 2008AP1700.akz liability to Connell for the fire damage caused by her hair dryer and must therefore be construed in her favor. ¶62 According paragraph 3.6 Maryland the of to lease Arms, the second unambiguously sentence imposes of absolute liability on the tenant for all damage "in any way" caused by the tenant's "acts," be they negligent or otherwise. Maryland Arms argues that Connell is therefore liable for the fire damage because Connell brought the hair dryer into the apartment. I do not agree with Maryland Arms' and the dissent's position that the lease unambiguously allocates liability to the tenant for any damage apartment. ¶63 we to caused by anything the tenant brings into her See dissent, ¶¶74-76. The ambiguity is further shown by the fact that were accept Maryland Arms' interpretation of the second sentence of paragraph 3.6, the first sentence would be rendered meaningless. See majority op., ¶41. The first sentence imposes responsibility onto the tenant for all the tenant's "intentional and negligent acts or breaches." negligent acts" are necessarily The tenant's "intentional and encompassed sentence's category of the tenant's "acts." in the second Thus, "[c]onstruing the second sentence as broadly as Maryland Arms asserts would subsume the meaning of the first sentence." Majority op., ¶42. We must avoid a construction of the lease which renders portions of the "'meaningless, inexplicable or mere surplusage.'" Kasten v. Doral Dental USA, LLC, 2007 WI 76, ¶48, 301 Wis. 2d 598, 733 N.W.2d 300 (quoting Goebel v. First Fed. Sav. & Loan Ass'n of Racine, 83 Wis. 2d 668, 680, 266 N.W.2d 352 (1978)); see also 6 No. Baker v. McDel Corp., 53 Because the lease Wis. 2d 71, 76-77, 2008AP1700.akz 191 N.W.2d 846 (1971). ¶64 does not unambiguously allocate liability to Connell for fire damage caused by the mere fact that she construe brought the a lease hair in dryer her into favor. respectfully concur. 7 her apartment, For that we must reason, I No. ¶65 DAVID T. PROSSER, J. (dissenting). 2008AP1700.dtp This dispute requires us to interpret an apartment lease and to square its terms with Wis. Stat. § 704.07, which sets out certain rights and duties of landlords and tenants. THE LEASE ¶66 In November 2005, Cari Connell, apartment in a 41-unit building in Milwaukee. page lease. 21, rented an She signed a 9- The lease was co-signed by Cari's mother, Linda, who personally guaranteed payment of any and all sums due to the lessor under the lease. The lease was renewed for a second year in 2006. ¶67 The lease contains numerous provisions pertaining to such matters as rent, the security deposit, the obligations of the lessee (tenant), and the rights of the lessor (landlord). Among these provisions are the following: 2.3 Said premises shall be left by Lessee in a clean and undamaged condition. The cost or estimate of repairing any damage to said premises which is not listed in the Apartment Inspection Report shall be deducted from the security deposit, as will the cost of restoring the premises to a clean and rentable condition, normal wear and tear excepted. . . . . 3.3 Lessor not liable for property damage or loss. Lessee expressly agrees that Lessor shall not be liable to Lessee or others, including Lessee's guests, occupants and invitees, for any damage to or loss of any personal property located in or about the premises, or the building of which the premises are a part, where said damage or loss results from any cause whatsoever, other than the negligent acts of Lessor. It is the responsibility of the Lessee to provide insurance for their personal property. 1 No. 2008AP1700.dtp . . . . 3.5 Lessee to keep premises clean and in good repair. Lessee shall keep the premises in a clean, tenantable condition and in as good repair as at the beginning of the Lease term, normal wear and tear excepted. 3.6 Lessee responsible for acts and breaches of Lease by Lessee and Lessee's occupants, guests and invitees. Lessee shall be responsible for all intentional and negligent acts or breaches of this Lease by Lessee, Lessee's occupants, guests and invitees. Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lessee, Lessee's occupants, guests and invitees. . . . . 6. DAMAGE OR DESTRUCTION BY FIRE OR OTHER CASUALTY. Subject to Wisconsin Law, in the event that the Leased premises suffers casualty loss or damage as a result of fire or other casualty, and in the event that, as a result of said loss or damage, the Leased premises are rendered uninhabitable, and in the event the premises may be restored or the damages repaired, this Lease and the liability for rent shall continue, except that said liability for rent shall be abated during any period of repair or reconstruction. In the event the premises cannot be repaired within sixty (60) days from the happening of such injury, then this Lease shall cease and terminate from the date of such injury. Said liability for rent shall not abate if the loss, damages or injury to the demised premises is caused by the negligence of Lessee, Lessee's occupants, guests or invitees. (Emphasis added.) ¶68 The purpose of several of the lease provisions is to limit the liability of one of the parties. The lease also allocates liability for a casualty like fire or other damage to the premises in situations where neither party is at fault. For instance, the lessee is made responsible for intentional and negligent acts or breaches of 2 the lease by the lessee's No. occupants, guests and invitees, even personally may be wholly without fault. 2008AP1700.dtp though the lessee in Cari's Section 3.6. INTERPRETING THE LEASE ¶69 This case involves an accidental fire apartment in 2007 that caused more than $8,500 in damage to the premises. The first issue is whether the lease assigns liability for this damage to the tenant under circumstances in which the fire was caused by a hair dryer owned by the tenant, after the tenant brought the hair dryer into the apartment, plugged it in, and left it plugged in overnight. ¶70 The critical lease provision, Section 3.6, reads as follows: Lessee shall be responsible for all intentional and negligent acts or breaches of this Lease by Lessee, Lessee's occupants, guests and invitees. Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lessee, Lessee's occupants, guests and invitees. (Emphasis added.) ¶71 negligent The or landlord that does the provision of the lease. not claim tenant that the intentionally tenant was breached any The landlord does claim, however, that the tenant caused the damage. The landlord claims that the tenant "caused" the damage by acts which, though in themselves innocent, were nonetheless intentional and led to the fire in Cari's bathroom. ¶72 The Wisconsin law. word "cause" When has a determining well-established whether an act meaning in "caused" an injury or harm as a factual matter, the test is whether the act was a "substantial factor" in 3 causing the injury or harm. No. Richards v. Badger Mut. Ins. Co., 2008 WI 2008AP1700.dtp 52, ¶47, 309 Wis. 2d 541, 749 N.W.2d 581 ("One is causally negligent when his or her conduct is a substantial factor in causing injury to another."); see Wis. JI Civil 1500. ¶73 Causation negligence is claim. one Cause of the fundamental questions ask elements whether there in a was a causal connection between the negligence of any person and the injury claimed. The questions do not ask about "the cause" but rather "a cause." Ultimately, the fact-finder must determine whether negligence a party's producing the injury. ¶74 Here, negligence. the The was a substantial factor in Wis. JI Civil 1500. landlord landlord is is not not required required to even establish to allege negligence because the lease makes the tenant liable for damage to the premises "in any way caused by the acts of the Lessee." (Emphasis added.) The focus, then, is on the causal connection between acts of the tenant and damage to the premises. Were the acts of the tenant substantial factors in producing the damage to the premises? Specifically, were Cari's acts in plugging in her hair dryer and leaving it plugged in overnight, or longer, substantial factors in causing the fire? The circuit court found that "the defendants [were] liable for the fire caused by the hair dryer." ¶75 whether Employing the "substantial factor" test to determine Cari's acts produced the fire is a rational and reasonable way to interpret the word "cause" in the lease and to determine liability. See Clark v. Leisure Wis. 2d 607, 617-18, 292 N.W.2d 630 (1980). 4 Vehicles, 96 No. ¶76 Using unambiguously caused by that test, renders her apartment, plugging the lease tenant liable for bringing her hair dryer into the and leaving the hair the acts of in 2008AP1700.dtp the hair dryer, provision issue fire the at damage dryer plugged in for hours when it was not being used. THE LANDLORD'S INTEREST ¶77 Residential appliance fires cause an estimated 25 deaths, 525 injuries, and $211 million in property damage each year. See United Safety: States Fire Administration, Appliance Fires, Focus on Fire available at http://www.usfa.dhs.gov/citizens/focus/appliances.shtm. The appliances involved include everything from television sets to hair dryers. USFA Fire Cause Methodology, available at http://www.usfa.dhs.gov/fireservice/nfirs/tools/fire_cause_categ ory_matrix.shtm. According to the National Fire Protection Association, fire from electrical equipment, like hair dryers, was the third leading cause of house fires in 1998. Ken Amaro, Hair Dryer May Be Too Hot to Handle, First Coast News (May 6, 2004), available at http://www.firstcoastnews.com/news/news- article.aspx?storyid=18342. ¶78 Residential financial risks appliance facing fires property are owners, Some of these risks are unavoidable. only one including of many landlords. Prudent property owners acquire insurance to cover these risks, but the more risks they seek to cover, irrespective of fault and irrespective of their ability insureds economic to are control likely incentive the to to risks, pay. the Thus, allocate 5 higher the landlords liability premiums have to a the strong tenants in No. situations where tenants are better able to 2008AP1700.dtp control risk or where tenants are actually at fault. ¶79 tenants, When landlords their allocate objectives would some be risk of liability undermined if they to got tripped up in problems of proof. ¶80 Section 2.3 of the lease is a classic example of risk allocation: 2.3 Said premises shall be left by Lessee in a clean and undamaged condition. The cost or estimate of repairing any damage to said premises which is not listed in the Apartment Inspection Report shall be deducted from the security deposit, as will the cost of restoring the premises to a clean and rentable condition, normal wear and tear excepted. Section 2.3 does not require the landlord to prove that the tenant caused the damage found in the tenant's apartment. ¶81 Section 3.6 does require proof of causation, but it does not require proof of negligence. ¶82 As negligence. not be noted above, the landlord did not allege The lease was drafted so that the landlord would required to prove negligence, inasmuch as proof of negligence as opposed to proof of cause could be both costly and difficult. fault in It does not follow, however, that there was no Cari's actions simply because the landlord did not allege negligence. ¶83 Since at least the late 1970s, Underwriters Laboratories, Inc. has required all electronic personal grooming appliances, e.g., hair dryers, bearing the UL seal, to attach tags to the power supply cord 6 warning users to unplug the No. appliance after using.1 2008AP1700.dtp See Underwriters Laboratories, Inc., Standard for Safety: Electric Personal Grooming Appliances 38 (5th ed., Apr. 9, 1979) (UL 859). Warnings are also included in the instructional materials accompanying the product: WARNING To reduce the risk of electrocution, fire, or injury to persons: burns, 1. An appliance should never be left unattended when plugged in. Id. ¶84 The reason for this warning is that parts in many hair dryers are electrically live even when the switch is off.2 1 The UL standards state: An appliance of the type described in paragraph 37.6 [[a] hand supported hair dryer blower styler, styler dryer, heated air comb, etc.] shall be provided with a tag that is permanently attached to the power supply cord. The following warning instruction shall be included on the tag: DANGER TO REDUCE THE RISK OF ELECTROCUTION: 1. Always unplug this appliance after using. . . . . DO NOT REMOVE THIS TAG. Underwriters Laboratories, Inc., Standard for Safety: Electric Personal Grooming Appliances 36A (5th ed., Apr. 9, 1979) (UL 859). 2 Several current brands of hair dryers (Conair, Revlon, Vidal Sassoon) attach warning labels that read: "UNPLUG IT[.] As with most electrical appliances parts in this dryer are electrically live even when switch is off: To Reduce Risk of Death by Electric Shock: 1. Always 'Unplug It' After Use." 7 No. ¶85 a 2008AP1700.dtp Against this background, requiring a landlord to prove tenant's negligence before allocating liability for an appliance fire would require the landlord to investigate the circumstances surrounding a tenant's use of the appliance before the fire: What brand of appliance was involved? label attached to the appliance? Had the appliance been dropped or a cord damaged before use? plugged in before the fire? Was a warning Was the appliance turned on or Was an appliance that was turned on left unattended? How long was an appliance left plugged in? Most of this information would have to be obtained from the tenant. ¶86 In this case, the landlord did not attempt to determine the brand of hair dryer, whether it had a warning label, or how long it had been plugged in because the landlord did not have to prove negligence. Instead, the landlord established that Cari left her hair dryer plugged in at least overnight and that the hair dryer caused the fire. Leaving the hair dryer plugged in was a substantial factor in causing the fire, and this evidence satisfied the landlord's burden under the lease. MAJORITY OPINION ¶87 The majority does not like this result because it believes the tenant, who knowingly accepted liability for damage caused by her acts, is not as able to bear the cost of that damage as the argument to lease. It landlord. The divert attention concludes that majority from the 8 the engages plain language in fanciful language of the of lease the is No. 2008AP1700.dtp ambiguous, and, therefore, the lease must be construed against the drafter. ¶88 The central provision of the lease reads: 3.6 Lessee responsible for acts and breaches of Lease by Lessee and Lessee's occupants, guests and invitees. [1] Lessee shall be responsible for all intentional and negligent acts or breaches of this Lease by Lessee, Lessee's occupants, guests and invitees. [2] Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lessee, Lessee's occupants, guests and invitees. ¶89 ambiguous The and majority that the argues that ambiguity the sentence compounded "is second when is that sentence is read in the context of the paragraph [Section 3.6] as a whole, because Maryland Arms' construction of that sentence would render the preceding sentence surplusage." ¶3. Majority op., The majority writes: [I]f the second sentence is read as broadly as Maryland Arms asserts, then the first sentence has no independent meaning. . . . Intentional acts, negligent acts, and breaches are subsets of the broader category "any acts." If the second sentence covered any and all "acts," then it would necessarily cover the types of acts described in the first sentence. Construing the second sentence as broadly as Maryland Arms asserts would subsume the meaning of the first sentence, rendering it mere surplusage. Majority op., ¶¶41-42. ¶90 This interpretation is not correct. The first sentence reads: "Lessee shall be responsible for all intentional and negligent acts or breaches of this Lessee's occupants, guests and invitees." deconstructed as follows: 9 Lease by Lessee and This sentence may be No. 2008AP1700.dtp A. Lessee shall be responsible for all intentional B. Lessee C. Lessee shall be responsible for all breaches of D. Lessee also is responsible when one of these acts acts. shall be responsible for all negligent acts. the lease. or breaches is done by Lessee's occupants, guests or invitees. ¶91 the The first sentence makes the tenant "responsible" for tenant's "breaches intentional of this or negligent Lease." A acts tenant's or the tenant's intentional acts, negligent acts, or breaches of the lease may have nothing to do with "damage to the [tenant's] premises" or with "liability" therefor, which is the subject of the second sentence. ¶92 To illustrate, the lease contains a number of duties and prohibitions for the tenant. prohibited from keeping any pets For example, the tenant is on the premises, using the premises for immoral or unlawful purposes, creating noise or disturbances, dropping items from windows, allowing water to run except when in use, allowing the apartment to be used as a place of business, using grills, obstructing sidewalks and entryways, or interfering apparatuses. with heating, lighting, and other building Furthermore, the tenant is required to maintain the apartment in a way that will not increase the risk of fire, keep the premises clean and in good repair, remove garbage from the premises, park vehicles in a proper manner, and pay utility bills when due. 10 No. ¶93 2008AP1700.dtp The first sentence of Section 3.6 holds the tenant responsible for all these requirements, even when they are committed by a person, like a guest, other than the tenant. So long as these acts do not result in damage to the premises, however, they do not come within the purview of the second sentence. ¶94 lessee To illustrate specifically, from permission. keeping pets on the Section premises 3.1 prohibits a without written When a tenant keeps a pet without permission, the tenant breaches the lease. When that pet bites or scratches a child walking in the hallway of the building, the tenant will be "responsible" for injury, not the landlord. In neither situation is there "damage to the premises." ¶95 One can easily imagine situations in which a tenant causes injury to another by a negligent act but does not damage the premises. Improper treatment of garbage may not damage the premises or create "liability," but it may drive other tenants crazy. ¶96 Scrutinizing what is covered in the first sentence of Section 3.6 makes the scope of the second sentence clear. The second sentence introduces an element not necessarily present in the first sentence; namely, "damage to the premises" and it omits prerequisite conditions present in the first namely, intent, negligence, or breach of the lease. sentence; Because the second sentence does not require a breach of the lease as a prerequisite for liability, it reaches acts that would not be objectionable if they had not 11 resulted in "damage to the No. 2008AP1700.dtp premises," e.g., leaving a hair dryer plugged in when not in use. ¶97 Conversely, the second sentence does not reach a broad swath of activity for which the tenant might be "responsible" but would not premises." be The "liable" second on account sentence of to the liability allocates "damage to the tenant for damage to the premises, irrespective of whether the tenant's causative acts involved intent, negligence, or breach of the lease. ¶98 For the majority to insist that Maryland Arms' construction of the second sentence renders the first sentence surplusage disregards the different terms and different scope of the two sentences. ¶99 Section The majority 3.6, "responsibility" "breaches of for this the tenant's which under adopts the first "intentional lease," and or the interpretation sentence negligent second assigns acts" sentence of and assigns liability caused only by breaches of the duties enumerated in the first sentence. Majority op., ¶46. ¶100 The majority, in effect, concludes that Section 3.6 intends to say: "Lessee shall be liable for all damage to the premises caused by the tenant's intentional or negligent acts or breaches of this lease," and nothing more. This interpretation erases distinctions and disregards the import of plain language, and, of course, it would force elements as negligence. 12 the landlord to prove such No. 2008AP1700.dtp ¶101 The sentence "Lessee shall be liable for all damage to the premises . . . in any way caused by the acts of Lessee" could not be more clear. ¶102 The majority also attacks counsel's explanation of the lease in declares, terms does of "not "control." appear Liability Paragraph." [3.6] "[C]ontrol," in the majority evidently majority sentence of the Indeed, the "concept of 'control' appears nowhere in the entire lease." the second the forgets is Majority op., ¶32. that the landlord's What legal rights are not grounded in the rhetoric or analysis of counsel; they are grounded in the language of the lease. ¶103 The truth is, however, that the concept of "control" is at the heart of a lease that allocates liability to the party best able to control risk. When a tenant rents an apartment, the tenant takes custody and control of the premises.3 The landlord may establish rules and regulations; but in almost all circumstances, the tenant controls who goes into the apartment, what goes apartment. into the apartment, and what transpires in the Under these circumstances, the tenant is in the best position to manage the premises in a way that minimizes risk. When the landlord later discovers damage to the premises, the landlord cannot be expected to prove that the damage was caused by the tenant's negligence as opposed to, say, an invitee's negligence, or whether the damage was simply the result of an accident. For sound policy 3 reasons related to control, Wisconsin Stat. § 704.05(2) notes that, with a few exceptions, "the tenant has the right to exclusive possession of the premises." 13 No. 2008AP1700.dtp liability for damage to the premises is assigned to the tenant if the landlord can show that the damage was caused by an act of the tenant, the tenant's occupants, the tenant's guests, or the tenant's invitees. The tenant is not liable for "normal wear and tear," and the tenant is not liable for damage that is fairly attributable to the landlord. ¶104 When damage is caused by an unconnected third party or an act of God, the landlord is assigned the duty to fix and pay for the damage to the premises but the tenant must assume the cost of repairing Section 3.3. and or replacing her personal property. See In these situations neither party controls events, responsibility for damage is allocated based upon the ownership of the damaged property. ¶105 When the landlord is made responsible for abnormal damage that is actually caused by tenants, the landlord must spread the resulting higher rent. expense among all tenants by charging When a tenant is made liable for damage that is caused by that tenant, the landlord is better able to contain rent and the tenant has an stewardship of the premises. economic incentive for prudent The tenant also is encouraged to buy insurance for her protection as well as the protection of others. See Section 3.3. Imposing responsibility on the landlord for damage caused by a tenant, when the landlord cannot control risks created by that tenant, defies economic logic. ¶106 The concept of control is linked to the substantial factor test which is central to causation. be liable in circumstances that are 14 A tenant would not not within the tenant's No. control. 2008AP1700.dtp The majority's attack on counsel's "control" analysis is unavailing because it fails to address a real issue. ¶107 The majority makes a third argument attacking the lease: [T]aken at face value, the breadth of Maryland Arms' construction of the contract would produce absurd results. Maryland Arms asserts that any act within the control of the tenant can give rise to liability under the contract. If the landlord can identify an "act" of the tenant that is a "cause" of the damage to the premises, liability for repairing the premises is shifted to the tenant regardless of how remote the tenant's act was from the damage and regardless of whether the damage would not have occurred but for other concurrent causes outside of the tenant's control. Majority op., ¶33. ¶108 There are several defects in this description of the landlord's position. Counsel's "control" analysis should be viewed as a limitation on a tenant's liability, not an attempt to extend it indefinitely. No rational fact-finder would hold a tenant liable for damage when a burglar breaks a window to gain entry to the tenant's apartment, or when lightning strikes the apartment. Majority op., ¶¶34-35. not the within control of the These intervening events are tenant and damage cannot be attributed to any act of the tenant. ¶109 Stated majority's causing differently, hypotheticals the purported the would damage. acts not be The of the tenant substantial acts in factors portrayed in the in the hypotheticals are very different from a tenant leaving a hair dryer plugged in overnight when it is not being used. no question that causing the damage. Cari's acts were "substantial There is factors" in When a burglar breaks a window to enter an 15 No. 2008AP1700.dtp apartment, the burglar's act is so overwhelmingly the cause of the damage that it simply could not be said that the tenant's act of locking the door was a substantial factor. ¶110 The appliances majority to liability. suggest gives the a laundry scope of list the of tenant's electrical potential It then reasons that the parties could not have intended that the tenant routinely unplug all these appliances. Majority op., ¶36. This reasoning ignores the purpose of the provision at issue: to allocate risk to the party that controls the premises and the appliances on that premises. ¶111 Is it more logical to hold the landlord responsible for fires caused by the tenant's electrical appliances even when the landlord may have no knowledge of the appliances, much less the ability to plug them in or unplug them when they are not being used? The simple fact is, if and when a fire occurs, someone will have to pay for it. situation here a fire in the In the relatively unusual tenant's apartment caused by neither the negligence or intentional act of the landlord nor the negligence or improper use of the premises by the tenant contractually allocating risk to the tenant is not less reasonable than imposing that risk on the landlord. ¶112 Causation is normally a fact question. There may be situations in which it is genuinely unclear whether a tenant's act or acts caused the damage for which the landlord is seeking to hold the tenant liable. The proper response in such a case is not to reinterpret the lease but rather to make a factual finding on the question of cause. Ins. Co., 2004 WI 62, ¶12, 272 16 See Fandrey v. Am. Fam. Mut. Wis. 2d 46, 680 N.W.2d 345 No. (cause-in-fact is an issue for the jury). 2008AP1700.dtp The word "cause" is not ambiguous simply because, in different fact situations, it is not easy to determine whether certain acts caused damage. The stipulated facts in this case show a causal chain between the tenant's acts and the fire in her apartment. In short, Cari's acts were a substantial factor in producing the damage. ¶113 Finally, the lease liability to the tenant. does not necessarily "shift" A tenant is clearly responsible for loss to her own personal property, from her hair dryer to her clothes to landlord's her furniture, negligence. The from theft landlord or fire, would absent contend that the the lease codifies a tenant's common law responsibility for other damage on these facts.4 ¶114 For all these reasons, I cannot agree majority's conclusion that the lease is ambiguous. with the The lease unambiguously renders the tenant liable for the damage to the premises caused by her acts of plugging in her hair dryer and leaving it plugged in overnight, or longer. APPLICATION OF WIS. STAT. § 704.07 ¶115 The majority declines to address the second issue, whether Wis. Stat. § 704.07 precludes a residential lease from allocating liability for damages that were caused by something other than the negligence or intentional act of the landlord or the negligence or improper use of the premises by the tenant. 4 "At common law the tenant bore the risk of a fire or any other casualty loss." Judicial Council Committee Note, 1969, Wis. Stat. § 704.07 (quoted in Maryland Arms Limited Partnership v. Connell, 2009 WI App 87, ¶10, 320 Wis. 2d 147, 769 N.W.2d 145). 17 No. The court of appeals based its decision on 2008AP1700.dtp these statutory grounds, not on a fanciful interpretation of the lease. ¶116 This case involves the interplay of several different provisions within Wis. Stat. § 704.07. The statute begins by asserting that it applies to all residential tenancies and that "[a]n agreement to waive the requirements of this section in a residential tenancy is void." § 704.07(1). The statute then sets out the duties of the landlord in subsection (2): (a) Except for repairs made necessary by the negligence of, or improper use of the premise by, the tenant, the landlord has a duty to do all of the following: 1. Keep in a reasonable state of repair portions of the premises over which the landlord maintains control. . . . . 3. Make all necessary structural repairs. . . . . (c) If the premises are damaged by fire, water or other casualty, not the result of the negligence or intentional act of the landlord, this subsection is inapplicable and either sub. (3) or (4) governs. Wis. Stat. § 704.07(2) (emphasis added). ¶117 The statute sets out the duties of the tenant subsection (3): (a) If the premises are damaged by the negligence or improper use of the premises by the tenant, the tenant must repair the damage and restore the appearance of the premises by redecorating. However, the landlord may elect to undertake the repair or redecoration, and in such case the tenant must reimburse the landlord for the reasonable cost thereof; the cost to the landlord is presumed reasonable unless proved otherwise by the tenant. 18 in No. 2008AP1700.dtp Wis. Stat. § 704.07(3)(a). ¶118 Finally, which the the premises statute become provides untenantable for the without situation the fault in of either the landlord or the tenant: If the premises become untenantable because of damage by fire, water or other casualty or because of any condition hazardous to health, or if there is a substantial violation of sub. (2) materially affecting the health or safety of the tenant, the tenant may remove from the premises unless the landlord proceeds promptly to repair or rebuild or eliminate the health hazard or the substantial violation of sub. (2) materially affecting the health or safety of the tenant; or the tenant may remove if the inconvenience to the tenant by reason of the nature and period of repair, rebuilding or elimination would impose undue hardship on the tenant. If the tenant remains in possession, rent abates to the extent the tenant is deprived of the full normal use of the premises. This section does not authorize rent to be withheld in full, if the tenant remains in possession. If the tenant justifiably moves out under this subsection, the tenant is not liable for rent after the premises become untenantable and the landlord must repay any rent paid in advance apportioned to the period after the premises become untenantable. This subsection is inapplicable if the damage or condition is caused by negligence or improper use by the tenant. Wis. Stat. § 704.07(4) (emphasis added). ¶119 The "does not damages court of explicitly caused by a appeals spell fire out when acknowledged whose the that duty it premises the is are to statute repair damaged by something other than the landlord s negligence or intentional act, or the tenant s negligence or improper use." Maryland Arms Ltd. P'ship v. Connell, 2009 WI App 87, ¶9, 320 Wis. 2d 147, 769 N.W.2d 145. conclusion" However, the court reasoned that "the only logical is that "landlords are obligated to repair the premises when the fire damage was not caused by the landlord s 19 No. negligence or intentional act improper use of the premises." or the tenant s 2008AP1700.dtp negligence or Id. ¶120 Following this logic, the court of appeals incorrectly concluded that Wis. Stat. § 704.07(3) provides the circumstance in which the tenant has a duty to repair. Arms, 320 Wis. 2d 147, ¶7. only Maryland Accordingly, it added, the lease provision was unenforceable because it attempted to waive the requirements of § 704.07. Furthermore, the court of appeals reasoned, based on the Judicial Council Note to the statute, the legislature intended "to prohibit generally worded clauses in a lease from overriding the statute." Id., ¶13. Because this line of reasoning places a restriction on residential leases that is not present in the statute, I cannot agree with the court of appeals' interpretation of the statute. ¶121 Statutory interpretation begins with the language of the statute. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶45, 271 Wis. 2d 633, 681 N.W.2d 110. If the language of the statute is plain, we inquire no further. Id. When interpreting the language of the statute, we read the language "not in isolation but as part of a whole; in relation to the language of surrounding or closely-related statutes; and reasonably, to avoid absurd or unreasonable results." Id., ¶46. ¶122 A close reading of § 704.07 reveals that it does not prohibit parties from allocating liability as the parties did in this lease. ¶123 Neither § 704.07(3) § 704.07(2) (duties of the (duties tenant) of the applies landlord) in this nor case. Section 704.07(2) does not apply because the damage was "not the 20 No. 2008AP1700.dtp result of the negligence or intentional act of the landlord." § 704.07(2)(c). Section 704.07(3) does not apply because the premises were not "damaged by the negligence or improper use of the premises by the tenant." § 704.07(3)(a). ¶124 Section 704.07(4) sets out the situation in which the premises become untenantable. In that event, the tenant may remove (1) unless the landlord promptly rebuilds or repairs; or (2) if the repair would cause an undue hardship on the tenant. Id. If the tenant chooses to remain on the premises, rent is abated "to the extent the tenant is deprived of the full normal use of the premises." Id. longer liable for rent. ¶125 In potential If the tenant moves out, she is no Id. summary, § 704.07 circumstances: (1) if as the a whole damage describes three is caused by the landlord's negligence or intentional act, the landlord has a duty to repair; (2) if the damage is caused by the tenant's negligence or improper use of the premises, the tenant has a duty to repair (or pay for repair); (3) if the premises become untenantable, the tenant may remove unless the landlord repairs, and may abate rent. ¶126 Nothing suggests that Wis. Stat. § 704.07(4). in the § 704.07(3) language sets out or structure the only of § 704.07 circumstance which the tenant may be liable for damages caused by fire. court of appeals reasoned that this was the "only in The logical conclusion" based on the various landlord duties imposed by the statute. The statute, however, does not impose a duty to repair on the landlord when fire damage was caused by something other than the landlord's negligence 21 or improper act. It merely No. 2008AP1700.dtp allows the tenant to abate rent or remove unless the landlord repairs, if the fire renders the premises untenantable. ¶127 The specific circumstances present in this case. of § 704.07(4) are Neither the pleadings nor the stipulation indicates that the fire rendered the premises untenantable. appears that not Maryland Arms repaired the property subsequently billed Cari for the amount of repair. It and It does not appear that Cari invoked either of the remedies in § 704.07(4): removal or rent abatement. Thus, even if § 704.07(4) prohibited contractual allocation of liability where damage rendered the premises untenantable, that prohibition would not apply to these facts because there is no indication that the fire rendered the premises untenantable. ¶128 There are two additional that illuminate § 704.07(4). provisions in chapter 704 Wisconsin Stat. § 704.05(1) reads as follows: (1) When section applicable. So far as applicable, this section governs the rights and duties of the landlord and tenant in the absence of any inconsistent provision in writing signed by both the landlord and the tenant. This section applies to any tenancy. Wis. Stat. § 704.05(1) (emphasis added). This section acknowledges the parties' ability to define their rights with respect to one another applies specifically by to carries over to § 704.07. waive the requirements of contract. § 704.05, Although the the underlying language principle Thus, so long as the parties do not § 704.07, the freedom of contract embodied in § 704.05 permits them to allocate risk by the terms of the lease. 22 No. 2008AP1700.dtp ¶129 The second provision that sheds light on the proper interpretation of Section 704.09 § 704.07 governs the is Wis. transfer tenant's interest in the property. Stat. of the § 704.09(2). landlord's or Section 704.09(2) states: "In the absence of an express release or a contrary provision in the lease, transfer or consent to transfer does not relieve the transferring lease, party except" of in any a contractual specified obligations situation. under Thus, the while § 704.09(2) does not explicitly address rights under § 704.07, it supports the proposition that a tenant's liability under a lease continues even when the tenant is no longer in possession of the premises. Read together with § 704.07(4), it clarifies that § 704.07(4) does not limit the parties' ability to allocate risk for damage. A tenant may remove from the property under § 704.07(4), in which case the tenant will no longer be liable for rent. Section 704.07(4) does not, however, relieve a tenant of other liability she may have incurred under the lease. ¶130 Because nothing in Wis. Stat. § 704.07 imposes a duty on a party landlord's to repair negligent or damage that intentional was not act caused or the by the tenant's negligence or improper use of the premises, the lease provision at issue is not prohibited by the statute's command that "[a]n agreement residential to waive tenancy the requirements is void." Wis. of this section Stat. § 704.07(1). in a The statute leaves open the opportunity for landlords and tenants to allocate liability in such situations as they see fit. ¶131 The Apartment Association of South Central Wisconsin, Inc., Apartment Association of 23 Southeastern Wisconsin, Inc., No. 2008AP1700.dtp Central Wisconsin Apartment Association, and Lakeshore Apartment Association, Inc. contend that the court of appeals decision will have state negative because it consequences "assign[s] for landlords blanket the responsibility legal throughout for certain apartment damages to a landlord, regardless of whether the damages were caused by that landlord." As a result, landlords are made responsible for such losses, even when they "(1) are not in possession of the property, (2) are not in control of the instrumentality causing the damages, and (3) are otherwise wholly innocent with regard to the damages." ¶132 This case presents an important issue of statutory interpretation that will have widespread effect on residential leases in Wisconsin. The majority has failed to address this issue, limiting its attention to the language of the specific lease at hand. identified by Furthermore, the apartment it has exacerbated associations by the problem misinterpreting unambiguous language in the lease and creating a de facto rule of landlord otherwise. landlords factors responsibility, even where the parties agree This decision will increase insurance premiums for who will now beyond their be responsible control. for Renters damages caused throughout the by state will, in turn, bear this burden in the form of increased rent. CONCLUSION ¶133 In unambiguously sum, the renders lease the provision tenant at liable issue for clearly damage to and the premises resulting from the fire caused by her acts of bringing the hair dryer into the apartment, plugging it in, and leaving it plugged in overnight, or longer. 24 Wisconsin Stat. § 704.07 No. 2008AP1700.dtp does not preclude a residential lease from allocating liability for damage to the tenant's premises caused by neither the negligence of the landlord nor the negligence of the tenant. The decision Because the of the majority court of concludes appeals should otherwise, be I reversed. respectfully dissent. ¶134 I am authorized to state GABLEMAN joins this dissent. 25 that Justice MICHAEL J. No. 1 2008AP1700.dtp

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