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Notice of claim statute inapplicable to condemnation

“The inquiry is to determine whether some legislative goal, be it prompt resolution or another purpose, will be thwarted by requiring compliance with sec. 893.80(1) as a precondition to commencing an action under the statute.”

Judge David G. Deininger
Wisconsin Court of Appeals

Property owners are not required to file a notice of claim when challenging a condemnation by a municipality, the Wisconsin Court of Appeals held on May 8.

The City of Madison condemned a 17.853-acre parcel belonging to Nesbit Farms, LLC, and Wilshire Develop-ments, LLC, (owners), for public use as a storm water detention pond. The City recorded an “Award of Compensation” for the parcel.

The owners, within the two year statute of limitations, appealed the amount of compensation awarded in Dane County Circuit Court. The City moved to dismiss the appeal on the grounds that the owners had not filed a notice of claim with the City, pursuant to sec. 893.80(1). The owners claimed such a notice was not necessary given the statutory procedure for appealing a condemnation award in sec. 32.05(11).

Judge Angela B. Bartell disagreed, and entered summary judgment in favor of the City. The owners appealed, and the court of appeals reversed in a decision by Judge David G. Deininger, concluding that the statutory procedure in Chapter 32 exempted the owners from the notice of claim statute.

Conflicting Statutes

Section 32.05(11) provides, in relevant part, “The owner of any interest in the property condemned named in the basic award may … within 2 years after the date of taking, appeal to the circuit court of the county wherein the property is located.”

However, sec. 893.80(1) provides, in relevant part, “[N]o action may be brought or maintained against any … political corporation, governmental subdivision or agency thereof … upon a claim or cause of action unless: (a) Within 120 days after the happening of the event giving rise to the claim, written notice of the circumstances of the claim signed by the party, agent or attorney is served on the … political corporation, governmental subdivision or agency …; and (b) A claim containing the address of the claimant and an itemized statement of the relief sought is presented to the appropriate clerk or person who performs the duties of a clerk or secretary for the defendant … corporation, subdivision or agency and the claim is disallowed.”

If the municipality does not act on the claim within 120 days, it is deemed disallowed, and the claimant may file suit.

Case Law

Historically, sec. 893.80(1) was interpreted to be limited to tort actions. However, in DNR v. City of Waukesha, 184 Wis.2d 178, 515 N.W.2d 888 (1994), the Supreme Court held that the, “language of [Wis. Stat. sec. 893.80(1)] clearly and unambiguously makes the notice of claim requirements applicable to all actions. The legislature’s decision to remove the language limiting the statute to tort claims reinforces this conclusion. Thus, we now hold that sec. 893.80 applies to all causes of action, not just those in tort and not just those for money damages.”

Despite the broad pronouncement, however, the rule has been consistently distinguished in cases where another statute provides specific and different procedures for suing municipalities: actions to enjoin violations of the public trust doctrine; actions under the open records and open meetings laws; objections to annexation; appeals of special assessments; and appeals concerning a party’s tax-exempt status.

In the case of Town of Burke v. City of Madison, 225 Wis. 2d 615, 625, 593 N.W.2d 822 (Ct.App. 1999), the court of appeals set forth three factors to consider in determining whether sec. 893.80(1) applies to an action against a municipality: (1) whether there is a specific statutory scheme for which the plaintiff seeks exemption; (2) whether enforcement of sec. 893.80(1) would hinder a legislative preference for a prompt resolution of the type of claim under consideration; and (3) whether the purposes for which sec. 893.80(1) was enacted would be furthered by requiring that a notice of claim be filed.

Application

What the court held

Case: Nesb
it Farms, LLC, and Wilshire Developments, LLC, v. City of Madison, No. 02-2212.

Issue: Must a property owner who seeks additional compensation for a municipality’s condemnation of his property comply with the notice of claim requirement in sec. 893.80(1)?

Holding: No. Requiring a notice of claim would thwart the statutory scheme for review of compensation awards, and thwart the legislative preference for efficiency and consistency.

Counsel: Ian A.J. Pitz, Madison; H. Nia Enemuoh-Trammell, Madison, for appellant; Katherine C. Noonan, Madison, for respondent.

The court found that the first factor plainly weighs in favor of an exception. The court noted, “Wis. Stat. sec. 32.05(11) provides a ‘specific statutory scheme’ for landowners to seek court review of condemnation awards. The statute details the procedure and deadline for commencing such actions, as well as specifying other matters, such as how other interested parties may join the appeal and what issues may be tried. The Supreme Court, moreover, has described Wis. Stat. ch. 32 as providing ‘the “complete and exclusive” procedures’ for appealing condemnation awards (cites omitted).”

Turning to the second factor, the court acknowledged that in all of the previous cases finding an exception to the notice of claim requirement, the specific statutory schemes contained statutes of limitation less than 120 days in sec. 893.80(1). For condemnations, however, the statute of limitations is longer.

Thus, the court found that a landowner could file a notice of claim, and still comply with the statute of limitations, an impossibility in the other cases that created exemptions. Accordingly, the court acknowledged that the notice of claim requirement cannot be said to “hinder a legislative preference for a prompt resolution” of the claim.

Nevertheless, the court found the second factor was met. The court reasoned, “hindering a legislative preference for ‘promptness’ is not the only way in which the requirements of Wis. Stat. sec. 893.80(1) might interfere with legislative purposes. The second Town of Burke factor may properly be read to require a court to inquire into the legislative intent underlying a particular statutory procedure. The inquiry is to determine whether some legislative goal, be it prompt resolution or another purpose, will be thwarted by requiring compliance with sec. 893.80(1) as a precondition to commencing an action under the statute.”

The court found that compliance with the notice of claim requirement would thwart additional parties from joining the action. Additional parties have only 10 days after receiving notice of the appeal in which to join it, and could not comply with the notice of claim statute and still file a timely appeal.

Accordingly, the court found that applying the notice of claim requirement to condemnations would hinder a legislative preference for efficiency and consistency.

Turning to the third factor, the court also concluded that filing a notice of claim in condemnation actions is not necessary to serve the purpose of the statute.

The city argued that “the itemized statement of the relief sought,” required by sec. 893.80(1) is necessary to enable a municipality to “evaluate a claim and its potential financial impact on the City without the added financial burden of litigation.”

The court disagreed, noting that sec. 32.05 does not require owners to disclose the specific amount of additional compensation they seek, even though sec. 32.20 requires those seeking relocation damages from condemnation to do so.

The court concluded, “the absence of a similar requirement in Wis. Stat. sec. 32.05 is an indication that the legislature did not intend to make pre-appeal disclosure of the sum sought a prerequisite for commencing appeals of condemnation awards. By holding Wis. Stat. sec. 893.80(1) applicable to appeals of condemnation awards under sec. 32.05(11), we would place an obligation on landowners which the legislature has chosen not to place on them under sec. 32.05.”

Links

Wisconsin Court of Appeals

Related Article

Case Analysis

Noting that the purpose of sec. 32.05 is to ensure that condemnors pay a fair price for the property they acquire, the court added, “If we were to conclude that the requirements of Wis. Stat. sec. 893.80(1) must be layered onto the provisions of sec. 32.05, the incentives for a condemnor to tender fair compensation might well be disrupted. That is, a municipal condemnor might find it expedient to ‘lowball’ jurisdictional offers in the hopes that many landowners will not contest their awards, and the claims of those who do could be compromised and settled after a notice of claim is filed, thereby avoiding the potential adverse consequences of defending an appeal.”

Rejecting the city’s argument that a notice of claim is necessary to evaluate the worth of the claim against it, the court noted, “By undertaking the condemnation process, a municipality not only acquires notice of a potential claim against it regarding the value of the property taken, it actually creates the claim by acting in the first instance to acquire the property. Provided a municipality discharges in good faith its obligations as condemnor under sec. 32.05, it will learn the amount of compensation reasonably due a landowner, and it will have the opportunity to minimize the possibility of litigation through negotiation and the making of a fair jurisdictional offer.”

Accordingly, the court reversed.

Click here for Case Analysis.

David Ziemer can be reached by email.

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