Court: Village not liable for flood losses (UPDATE)

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The village of Lake Delton is not liable for damage to five houses and nine lots caused by massive flooding in June 2008, the Wisconsin Court of Appeals ruled Thursday.

The properties were part of a subdivision named “Anchorage” along the 267-acre manmade lake. The homes were destroyed or swept away when the flooding caused a blowout in the earthen bank that formed the shore of Lake Delton, sending a torrent of water to the nearby Wisconsin River and draining the lake.

The affected property owners received $2.3 million from the state in 2009 for condemnation rights to the land, where the lakeshore and a county road along it were then rebuilt. But later that year, the property owners sued the village for $1.3 million, claiming that was the supposed discrepancy between their compensation and the properties’ fair market value.

In the suit, the property owners claimed the village’s decisions and actions with a nearby dam, such as deciding to lower the threshold at which the floodgates would open, constituted a “taking” or inverse condemnation of their land, which is illegal unless the residents are fairly compensated for it. More specifically, they claimed the village should have known the properties along the lake were on a lower elevation than the dam, and that disparity caused the flooding.

Sauk County Circuit Judge James Evenson ruled against the property owners in 2013, and the appellate court, in an opinion authored by District 4 Presiding Judge Brian Blanchard, upheld Evenson’s decision.

Thursday’s appeals opinion states that though the property owners made a number of arguments to back up their claims, none stuck.

“[The group] fails to present any legal authority,” Blanchard wrote, “to persuade us that the type of failure to act alleged here, namely, the Village’s failure to act on knowledge about the relative elevations of [the properties] and the dam, constitutes an action that can support [the] takings claim.”

In particular, the property owners argued the court should create a “per se” rule because the dam was created along a navigable waterway which served to feed into the lake and “makes the government responsible for any consequential significant property damage that flows from the water not being controlled in that lake.”

But Blanchard shot that down, as well.

“While this rationale has appeal,” the opinion states, “where the government acted in a manner that took an individual’s property for the good of the public, [the group] fails to explain how this rationale supports a per se rule in the instant case, where he can identify no government action that caused the property loss.”

The village’s attorney, Ted Waskowski of Stafford Rosenbaum LLP, said Thursday he was pleased with the court’s decision.

“We think the village made herculean efforts during the period of the remarkable massive storm,” Waskowski said, “and we think the court recognized that.”

Village President John Webb did not immediately return a phone call Thursday.

In the wake of the floods, 34 Wisconsin communities received about $39 million in federal relief. About $302,000 of that went toward work on the Lake Delton dam.

The state Department of Natural Resources refilled Lake Delton in December 2008.

Madison attorney Kim Grimmer, who represents the homeowners, could not immediately be reached for comment.

Kristine Pekar, who lived in the Anchorage subdivision with her husband, Thomas, said their house that was destroyed “was going to be our retirement home.” When reached Thursday, she said she had not yet heard of the court’s decision, but was disappointed to learn the result.

“It was kind of our dream house,” Pekar said, adding that she has since moved into a farm house in Oxford. “Everything on the water was exactly what a lot of people strived for.”

The Associated Press also contributed to this report.