Split court finds DOT made valid offer for church property obtained through eminent domain

Listen to this article

A split Wisconsin Supreme Court decided the Wisconsin Department of Transportation made a valid offer to a Fox Valley church for land obtained through eminent domain.

The 4-3 majority ruled in Christus Lutheran Church of Appleton v. Wisconsin Department of Transportation on Thursday.

The high court was considering whether the DOT’s jurisdictional offer to purchase was valid under the requirements of Wis. Stat. § 32.05. The statue requires the condemnor to get an appraisal of all property proposed to be acquired, send a full narrative appraisal to the property owner, inform the property owners of their right to obtain an appraisal at the condemnor’s expense and attempt to negotiate personally with the owner.

Acquisition process

In 2017, the DOT acquired about six acres of the church’s property in Greenville for a project to improve and reconstruct part of State Trunk Highway 15.

The process to acquire the property started in 2016 with a jurisdictional offer to purchase issued to Christus. The letter included an estimated fair market value of the property of $133,400, based on a third-party appraisal, and informed Christus that it could obtain an additional appraisal at the DOT’s expense within 60 days. A DOT official also called Christus’ attorney to encourage the church to get another appraisal.

The 60-day deadline passed, but the DOT continued efforts to negotiate with the church with no response. In January 2017, the DOT asked if there had been a decision on the initial offer, and a few days later, Christus’ attorney said the church council wouldn’t agree to a voluntary sale.

The DOT decided to start an internal administrative revision process, which included obtaining additional estimates and information in order to review the initial appraisal and offer. This time, the DOT focused on severance damages related to the building’s increased proximity to the right of way, the cost to replace the loss of 26 parking spaces and the cost to move a retention pond.

As a result of the new estimates and a conversation with Christus staff, the DOT increased its offer to $403,200. The increase came from the addition of the three items considered on the second review.

In April 2017, the DOT sent the church a letter stating that due to failed negotiations, it was proceeding with a jurisdictional offer to purchase. Christus again didn’t respond.

A month later, the DOT advised the church that it was acquiring the property through the eminent domain process and issuing an award of damages pursuant to Wis. Stat. § 32.05(7). It sent a check for $403,200 and a copy of the award of damages filed with the Outagamie County Register of Deeds.

Shortly after, Christus hired a new attorney who told the DOT that the church was interested in negotiating. However, it was too late, as the check had already been mailed.

Christus then filed a lawsuit accusing the DOT of violating the statutory requirement that a jurisdictional offer be based upon the appraisal of the property. An Outagamie County judge granted summary judgment to the DOT, concluding that the jurisdictional offer was based upon the appraisal because the valuation of core line items retained a similar valuation.

The Court of Appeals disagreed and reversed that decision, reasoning that the jurisdictional offer wasn’t sufficiently based on the appraisal because it contained a new line item for severance damages.

Majority: DOT made valid offer

The state Supreme Court then took up the case for review, assessing whether the offer was valid under state law. Justices Jill Karofsky, Ann Walsh Bradley, Rebecca Dallet and Brian Hagedorn determined that it was. Karofsky explained the majority’s reasoning in the opinion released on Thursday.

The court and the parties relied on the framework of Otterstatter v. City of Watertown, a 2016 Court of Appeals decision, for evaluating whether a jurisdictional offer is based upon an appraisal under state law. The decision in that case defined “based upon” as the appraisal must be a supporting part or fundamental ingredient of the jurisdictional offer.

Most of the allocations didn’t change between the initial appraisal and the jurisdictional offer, which demonstrates that the appraisal served as the foundation for the offer, the majority reasoned.

“To summarize, just because there is a monetary difference between the initial appraisal and the jurisdictional offer does not mean the jurisdictional offer is not ‘based’ ‘upon’ the appraisal under §32.05(2)(b) and (3)(e),” Karofsky wrote.

The appellate court also said the appraisal failed to satisfy § 32.05(2)(a) because the jurisdictional offer included compensation for severance damages not found in the initial appraisal. The majority disagreed, finding Christus failed to identify any portion of its property that the initial appraisal excluded.

“In reaching this conclusion, the court of appeals conflated ‘property’ and ‘damages,'” Karofsky wrote.

The majority also rejected what it called a new requirement enunciated in the appellate opinion: If the DOT believes additional statutory items or just compensation warrant inclusion in the jurisdictional offer, it must obtain a new appraisal to substantiate that belief.

“Not only does this requirement find no support in the statutory text, it also raises a multitude of ethical concerns,” Karofsky wrote.

With such a rule in place, Karofsky said the DOT could improperly direct or coerce appraisers to act in accordance with its instructions, rather than making independent assessments.

Dissent: Appellate court should be affirmed

Chief Justice Pat Roggensack, Justice Rebecca Bradley and Justice Annette Ziegler disagreed with the majority’s conclusions. In her dissent, Roggensack wrote that she would have affirmed the appellate court because the DOT ignored fundamental statutory obligations necessary to condemn the property.

Roggensack said the term “damages” is a statutory term for items of value that are within the property taken by the DOT. She didn’t agreed that the $159,574 was identical or close to the $0 that had been originally allocated for severance damages.

“That the majority opinion sees no legal difference when interpreting ‘based upon’ between a 12.5% increase of the appraised valuation where all items were valued, as was present in Otterstatter, and the 202% increase of the appraised valuation that excluded a required value for severance damages is quite extraordinary,” Roggensack wrote. Follow @“WLJreporter”