Supreme Court: Loss of property value outside scope of ‘damages to lands’ for WisDOT claims

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The Wisconsin Supreme Court has decided that a gas-station property’s loss of value following a state highway project fell outside the definition of “damages to lands” found a state statute meant to allow property owners to claim damages from the Wisconsin Department of Transportation.

The court released its opinion on United America LLC v. Wisconsin Department of Transportation on Tuesday. The lawsuit involved access to a Lincoln County gas station owned by a company called United America.

The gas station abutted Highway 51 and Northstar Road but provided no direct means of getting to the highway. To go to the station, drivers instead had to turn off Highway 51 and onto Northstar Road. In 2013, WisDOT began a highway-safety project near where Highway 51 meets Northstar Road. The work turned Northstar Road into an overpass, meaning drivers could no longer turn off the highway onto Northstar.

The change in traffic patterns caused United America to lose about 90% of its business at the gas station. The company responded to that loss by making an administrative claim under Wis. Stat. § 32.18, which provides that the owners of land abutting a project that changes the grade of a street or highway can make a claim for damages to their land.

WisDOT denied the claim, prompting United America to bring a civil claim in circuit court for damages under the same statute. The circuit court ruled in favor of United America, entering a judgment in the amount of $528,500 plus costs.

The DOT appealed, arguing the statute’s plain language allows compensation to be paid only for physical or structural damage to land itself. The Court of Appeals agreed and reversed the decision.

Upon review, a state Supreme Court majority agreed with the appellate court’s holding. Justice Rebecca Dallet, writing for the majority, said the court had concluded that a property’s diminution in value falls outside the definition of “damages to lands.” The ruling resolved the case without the court’s having to decide the full scope of the meaning of “damages to lands.”

The majority said its plain-meaning analysis shows two ways in which § 32.18 excludes a property’s diminution in value from its specified class of compensable injuries. First, the Legislature chose to use the narrow phrase “damages to lands” rather than the broad “damages to property.” Second, it made no clear, unambiguous and peremptory statement that § 32.18 repeals common law concerning a property’s diminution in value.

“Given the plain meaning of Wis. Stat. § 32.18, its application to United America’s claim is straightforward,” Dallet wrote. “United America seeks compensation only under § 32.18 and only for the diminution in its property value. A property’s diminution in value, however, is not compensable under § 32.18. Therefore, United America’s claim fails.”

Chief Justice Annette Ziegler and justices Ann Walsh Bradley, Brian Hagedorn and Jill Karofsky joined Dallet in the majority.

Justice Rebecca Bradley dissented, writing that the majority had misread the statute. The improper reading narrowed the meaning of “any damages,” Bradley said, arguing there was no textual reason to support the exclusion of a property’s diminution in value.

“Ignoring the plain text of Wis. Stat. § 32.18, the majority delivers a troubling blow to the statutory rights of Wisconsin’s property owners,” Bradley wrote.

In Bradley’s view, United America was entitled to the circuit court’s full award of damages.

In a footnote, Dallet wrote that the dissent ignored “nearly two centuries’ worth of law” and relied on one extrinsic source that’s “ironically, consistent with our holding here and contrary to the dissent’s position.” Follow @WLJReporter