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State’s high court rules against compensation for moved road (UPDATE)

Even though a state project eliminated a Kenosha shopping center’s connection to a city street and forced customers to use a private drive, the Wisconsin Supreme Court has ruled the owners are entitled to no compensation under the state’s eminent-domain law.

The justices reached that conclusion in an opinion released Wednesday in the case of 118th Street Kenosha LLC v. Wisconsin Department of Transportation. Representatives of Port Washington-based 118th Street Kenosha wanted state compensation after contending that moving a part of the city’s 118th Avenue had pushed down the value of a nearby shopping center.

In 2010, the WisDOT moved a part of the city’s 118th Avenue east a block, eliminating a direct connection to the commercial property. To ensure shoppers could continue going to the center, transportation officials ordered the construction of a driveway leading to 74th Place, a private road.

WisDOT paid $21,000 for the temporary easement that needed to be in place while the driveway was being built. But state officials refused to provide additional compensation for what representatives of 118th Street Kenosha deemed the project’s harmful effect on the property’s value.

According to the Supreme Court, an independent appraiser determined the shopping center’s value had depreciated by $400,000 following the road relocation. Charles Graupner, a lawyer who represented 118th Street Kenosha, said the rents paid by tenants have fallen by about a third since the project was completed.

He said the property contains space for four shops but only one of those is occupied now – by an Army-recruiting office. Graupner said the shopping center once was easy to see and get to but is now hardly visible from the street.

“It’s turned into a destination location,” he said.

Attempts to reach a WisDOT representative were unsuccessful Wednesday afternoon.

WisDOT’s refusal to compensate 118th Street Kenosha for the loss of property value was upheld in Kenosha County Circuit Court but later overturned on appeal. The state Supreme Court on Wednesday supported the agency’s position.

The justices argued that the state statutes 118th Street Kenosha relied on in arguing its case provide compensation only for damages arising directly from the taking of easements. Because moving 118th Avenue was a related but separate project and did not directly encroach on the commercial property, according to the opinion, the state was not obliged to pay.

In reaching that conclusion, the justices cited precedents in which the courts had denied compensation for damage that did not result directly from the taking of land for public purposes. In one of those cases,  National Auto Truckstops Inc. v. Department of Transportation, the state paid compensation for the loss of access to a highway but only because the WisDOT took land containing the only driveways leading to a nearby truck stop.

According to the opinion: “National Auto Truckstops does not stand for the proposition that compensation for an easement includes damages for a commercial property’s diminution in value caused by a highway relocation project when no property was taken.”

According to a concurring opinion attributed to Chief Justice Shirley Abrahamson, the court should have used the opportunity to clarify whether the statutes apply in the same way to temporary easements as they do to permanent easements. The majority opinion assumed that both types of easements should be treated the same without making a definitive pronouncement on that matter.

“This court,” according to concurring opinion, “is developing the bad habit of assuming legal principles without deciding the legal issues that are presented and briefed. This habit ‘has the unfortunate effect of ducking vital issues that should be decided.’”

The justices wrote that 118th Street Kenosha could try to pursue its claim under a different statute but did not specify what the best legal strategy would be. Graupner said he and his clients are considering their options.

“We are looking into some theories as we analyze this case,” he said. “But the likelihood of recovering under those is probably not very great.”

About Dan Shaw, [email protected]

Dan Shaw is the managing editor at the Wisconsin Law Journal. He can be reached at [email protected] or at 414-225-1807.

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