Eminent domain results in litigation expenses

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Property owners who successfully contest what they receive in eminent domain proceedings can recover litigation expenses, regardless of whether they appeal from a jurisdictional offer or a negotiated price.

The May 26 opinion from the Wisconsin Supreme Court reverses a published opinion of the Court of Appeals holding that a jurisdictional offer is a prerequisite to recovering litigation expenses. Klemm v. ATC, 2010 WI App 131, 329 Wis.2d 415, 791 N.W.2d 233.

Chief Justice Shirley Abrahamson wrote for a unanimous court, “It is unreasonable to conclude that the legislature intended to treat better the contentious owner who forces the condemner to go through the hoops of a jurisdictional offer than the cooperating owner who takes the negotiated price appeal route.”

American Transmission Company LLC initiated condemnation proceedings for an easement to build an electrical transmission line across property owned by Mark and Jeanne Klemm.

ATC offered $7,750, and the Klemms agreed to convey the easement for that price. Pursuant to sec. 32.06(2a), the Klemms appealed, and the condemnation commission awarded them $10,000.

They later negotiated a settlement for $30,000 with an agreement that neither party would appeal the award, but that the circuit court would determine whether they are entitled to litigation expenses under sec. 32.28(3)(d).

The circuit court ruled the Klemms were entitled to litigation expenses, but the Court of Appeals reversed. The Supreme Court accepted review, and reversed the Court of Appeals.

Section 32.28(3)(d) provides for expenses when, “The award of the condemnation commission under s. 32.05(9) or 32.06(8) exceeds the jurisdictional offer or the highest written offer prior to the jurisdictional offer by at least $700 and at least 15 percent and neither party appeals the award to the circuit court …”

Focusing on the phrase, “prior to the jurisdictional offer,” the Court of Appeals concluded that, under the plain language of the statute, no expenses could be awarded unless a jurisdictional offer had been made.

But the court found that interpretation read the phrase in isolation, while ignoring the condemnation statutes as a whole, and the legislative purpose in awarding litigation expenses.

The court concluded, “The same … purpose identified in awarding litigation expenses pursuant to Wis. Stat. sec. 32.28(3) in cases in which a jurisdictional offer is made is applicable to the present case in which the negotiated price appeal route was taken.”

The statutes as a whole, the court found, have the purpose of encouraging condemnors to make fair offers to owners, and to compensate owners for expenses incurred when they don’t receive fair offers.

“Shifting litigation expenses to the condemnor, whether under the negotiated price appeal route or the jurisdictional offer route, ensures that the condemnee need not bear the cost of obtaining a fair amount of compensation for the property taken,” Abrahamson wrote for the court. “An award of litigation expenses in the present case discourages the condemnor from offering an inequitably low negotiated price and makes the condemnee, who meets the statutory requirements, whole.”

Left undecided by the court was the date on which litigation expenses begin to be recoverable.

When a jurisdictional offer is made, the date of the offer is the starting point, after which litigation expenses may be recovered.

The settlement agreement between ATC and the Klemms, however, included a stipulation as to the amount of expenses to be awarded. Accordingly, the court left that issue unresolved.

What the Court Held

Case: Klemm v. American Transmission Co. LLC, No. 2009AP2784

Issue: Can a property owner recover litigation expenses from a condemnor, even though the owner conveyed the property pursuant to negotiations?

Holding: Yes. The purpose of the condemnation statutes are furthered by the award of expenses.

Attorneys: For Plaintiffs: Shane VanderWaal, Wausau; For Defendant: Steven Streck, Sara Beachy, Madison.

David Ziemer can be reached at [email protected].

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