City can take business property

Listen to this article

It takes a scorecard to keep track of exactly what the fractured Wisconsin Supreme Court did, and did not, hold in its July 11 eminent domain decision. The case produced a lead opinion, two concurrences, and two dissents.

The court reversed a published court of appeals decision, City of Janesville v. CC Midwest, Inc., 2006 WI App 21, 289 Wis.2d 453, 710 N.W.2d 713, which held that a condemning authority could not remove the owner, because it could not make comparable replacement property available, as required by sec. 32.05.

The Supreme Court agreed that a condemning authority must identify at least one comparable property available as replacement property, but concluded that the City of Janesville did so in this case.

CC Midwest, Inc., is a division of a corporation that owned approximately nine acres of land in Janesville. CC Midwest rented the property and operated a trucking terminal there.

The city sought to acquire the property via eminent domain. It offered several comparable replacement properties, but CC Midwest found none acceptable, for one reason or another — some were too small, some were vacant, some were too distant, some lacked cross-docks (where materials could be unloaded from an incoming semi-trailer truck and loaded onto outbound trailers, with little or no storage in between).

Rock County Circuit Court Judge John W. Roethe granted a writ of assistance, holding that the city had complied with its required duties, and CC Midwest appealed. The court of appeals certified the case to the Supreme Court, but certification was declined. The court of appeals then reversed, holding that none of the properties were comparable, and therefore, the writ could not issue.

The Supreme Court accepted review and reversed.

Roggensack

The lead opinion was written by Justice Patience Drake Roggensack, and joined in its entirety only by Justice N. Patrick Crooks.

The opinion began by asserting that relocation assistance benefits are “purely statutory” and are not required to satisfy constitutional mandates for just compensation under the Takings Clause.

Section 32.05(8)(b) provides in relevant part, “The circuit court shall grant the writ of assistance [to the condemnor] if all jurisdictional requirements have been complied with, if the award has been paid or tendered as required and if the condemnor has made a comparable replacement property available to the occupants…”

The lead opinion concluded that the correct standard for determining when a condemnor had provided comparable property was set forth by the court of appeals in a different case, Dotty Dumpling’s Dowry, Ltd., v. Community Development Authority of Madison, 2002 WI App 200, 257 Wis.2d 377, 651 N.W.2d 1.

In Dotty, the court of appeals concluded that a condemnor “made available” a comparable replacement property to the necessary extent by: identifying potential replacement properties; obtaining renovation cost estimates for properties in which the condemnee expressed an interest; tendering the maximum business replacement payment; and offering to reimburse the condemnee for its other statutorily authorized relocation expenses.

The court in Dotty expressly rejected the condemnee’s argument that a condemnee would never have to vacate the condemned property unless the condemnor could identify a replacement property acceptable to the condemnee that could be acquired for an amount not exceeding the condemnation award plus relocation benefits (In Dotty, this would have required almost $1 million more than the fair market value of the property taken).

Agreeing with the reasoning in Dotty, the lead opinion set forth the following rule of law:

“[R]elocation assistance provided under Wis. Stat. Sec. 32.19(2)(c) does not require identification of a property that is identical to the property condemned or that, at the moment of identification, the property, without modification, can be used by the business that was relocated. Rather, it requires identification of a property that with modification can be used for the occupier’s business. For example, the land area of a property identified may be sufficient, but the building may have been used for another purpose and may need remodeling in order for the business to carry on its activities as it has in the past.”

Turning to the properties offered by the city, the lead opinion described one as being comparable, located at 1700 E. Delevan Drive, in Janesville, even though the property lacked cross-docks.

Wilcox

Justice Jon P. Wilcox wrote a concurring opinion, agreeing that the city made a comparable offer, but emphasizing that only the property at 1700 E. Delevan Drive constituted comparable property.

Some of the other properties offered by the city, Wilcox called “not even close to satisfying the sec. 32.19(2)(c) criteria,” noting that some were more than 100 miles away, and some were vacant lots.

Wilcox concluded, “I raise the nature of some of the properties proposed by the City merely to reiterate that a government does not satisfy its sec. 32.19(2)(c) burden simply by proposing numerous properties.”

Bradley

Justice Ann Walsh Bradley penned another concurrence, joined by Chief Justice Shirley S. Abrahamson, which joined the lead opinion, except for that portion which held that the Takings Clause has no relevance to compensation for obtaining replacement property.

Only one of the parties (the city of Janesville) briefed the issue, so the concurrence deemed the issue waived by CC Midwest.

Bradley wrote, “Perhaps the lead opinion is correct in its constitutional conclusions. Without argument and briefs I am unsure. However, there is one thing about which I am sure: the rule of law is best developed when issues are raised by the parties and then tested by the fire of adversarial argument.”

Prosser

Justice David T. Prosser Jr. wrote a dissent, arguing that the court of appeals reached the correct result, and maintaining that the Takings Clause is implicated by the inadequacy of replacement property.

Prosser acknowledged that the constitutional rule — that a property owner is entitled to be put in as good position pecuniary as if his property had not been taken — has been “largely disregarded in the compensation of business owners whose business owners have been damaged or destroyed by government condemnation of underlying land,” pursuant to the “business losses rule,” which limits owners to the “value of the real property and fixtures taken.”

Nevertheless, Prosser argued, “Over time, the business losses rule has been subject to withering criticism because it conflicts with the plain language of the Fifth Amendment and because it can be so palpably unfair to business interests.”

Later, Prosser called judicial defenses of the business loss rule “bogus.”

Turning to the statutory issue, the Prosser dissent not only agreed with the court of appeals decision, but reprinted 13 paragraphs of it verbatim.

Adding his own additional comment to that opinion, Prosser opined, “Strict compliance requires a condemnor to identify a ‘comparable replacement property’ that exists. Strict compliance may nudge the parties to negotiate time to turn a potential ‘comparable replacement property’ into an available ‘comparable replacement property’ — current availability being a condition precent to issuance of a writ. This is precisely what the statute requires (emphasis in original).”

	Related Article Case Analysis

Prosser found nothing unreasonable with the argument of the city and the lead opinion that, in some cases, because of the lack of any replacement property, a condemnor could be prevented from ever removing a condemnee.

Butler

Justice Louis B. Butler Jr. also dissented. Butler stated that he agreed with Justice Wilcox’s concurrence in its entirety, except for that part which concluded that the 1700 E. Delevan property was a comparable replacement business.

Butler concluded, “Without cross-docking capabilities, the property was not adequate for the needs of the business, was not reasonably similar in all major characteristics, was not functionally equivalent with respect to its condition, and was not suited for the same type of business conducted by the acquired business at the time of the acquisition (cites omitted).”

Click here for Case Analysis.

David Ziemer can be reached by email.