High court refuses deep tunnel case

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The Milwaukee Metropolitan Sewerage District has lost its attempt to avoid paying a property owner more than $1 million in damages caused by failure to properly maintain the deep tunnel system.

The Wisconsin Supreme Court on Wednesday denied MMSD’s petition for review, letting stand an appeals court opinion affirming the judgment in favor of property owner Cianciola LLP.

According to court documents, Bay View-based Cianciola owns a warehouse on Lincoln Avenue in Milwaukee, and MMSD obtained an easement allowing for construction of the tunnel under the property.

The 13,000-square-foot warehouse is operated by Cianciola-owned Pre-Pac Produce Distributors Inc., which processes, packs and ships potatoes to grocery stores nationwide.

In a 1988 deal, MMSD agreed to maintain the sewer, and to pay Cianciola for any damage resulting from MMSD’s failure to maintain the sewer.

MMSD paid Cianciola about $81,866 in 1991 for soil compression and property damage caused by tunnel construction, according to court documents.

In 2007, Cianciola sued MMSD, contending that leakage from the tunnel caused the property to settle. A circuit court judge agreed and awarded Cianciola $1.08 million in damages.

In its appeal of the decision, MMSD claimed the action was barred by the builders’ statute of repose, which, in general, bars lawsuits based on faulty construction projects more than 10 years after completion of the project.

MMSD, according to court documents, also argued the claims were barred by the six-year statute of limitation for contract claims on the grounds that its obligation to maintain the tunnel started on the date the project finished.

But an appeals court rejected those arguments last fall, holding that an exception applies when the defendant expressly warrants or guarantees the quality of the work. Because the easement between MMSD and Cianciola included the provision that MMSD would “maintain” the tunnel in good order, the court held the lawsuit was not barred as untimely.

Brookfield real estate attorney Brent Nistler, who represented Cianciola, said the circumstances and arguments in the case were unique.

“What the case developed,” he said, “is that an easement agreement, at least the one in this case, qualified as a warranty and guarantee.”

Attorneys for MMSD declined to comment on the Supreme Court’s decision not to take the case.