Christus Lutheran Church of Appleton v. Wis. Dep't of Transp.

396 Wis.2d 302

956 N.W.2d 837

2021 WI 30

CHRISTUS LUTHERAN CHURCH OF APPLETON, Plaintiff-Appellant,

v.WISCONSIN DEPARTMENT OF TRANSPORTATION, Defendant-Respondent-Petitioner.

No. 2018AP1114

Supreme Court of Wisconsin.

Oral Argument: October 5, 2020

Opinion Filed: April 1, 2021

For the defendant-respondent-petitioner, there were briefs filed by Hannah S. Jurss, assistant attorney general; with whom on the brief was Joshua L. Kaul attorney general. There was an oral argument by Hannah S. Jurss.

For the plaintiff-appellant, there was a brief filed by Alan Marcuvitz, Smitha Chintamaneni, Andrea Roschke, and Von Briesen & Roper, S.C., Milwaukee. There was an oral argument by Alan Marcuvitz.

An amicus curiae brief was filed on behalf of American Transmission Company LLC and its corporate manager ATC Management Inc.; Wisconsin Public Service Corporation, Wisconsin Electric Power Company, and Wisconsin Gas LLC by Sara K. Beachy and Axley Brynelson, LLP, Madison.

An amicus curiae brief was filed on behalf of Wisconsin Realtors Association by Cori Moore Lamont and Wisconsin Realtors Association, Madison.

An amicus curiae brief was filed on behalf of Owners’ Counsel of America by Joseph C. Niebler, Jr. and Niebler, Pyzyk, Carrig, Jelenchick & Hanley, LLP, Menomonee Falls; with whom on the brief was Michael W. Ryan and Ryan and Ryan, Rosemont, Illinois.

An amicus curiae brief was filed on behalf of Eminent Domain Services, LLC by Erik S. Olsen and Andrew D. Weininger, Madison.

KAROFSKY, J., delivered the majority opinion of the Court, in which ANN WALSH BRADLEY, DALLET, and HAGEDORN, JJ., joined. ROGGENSACK, C.J., filed a dissenting opinion, in which ZIEGLER and REBECCA GRASSL BRADLEY, JJ., joined.

JILL J. KAROFSKY, J.

¶1 In this case, the Wisconsin Department of Transportation ("DOT") acquired a portion of land owned by Christus Lutheran Church of Appleton ("Christus") through eminent domain. As part of that process, DOT issued a jurisdictional offer to purchase. We are tasked with determining the validity of that offer under the requirements of Wis. Stat. § 32.05 (2017-18).¹

¶2 Christus filed the present action asserting that DOT's jurisdictional offer was invalid because DOT failed to provide "any appraisal upon which the Jurisdictional Offer of $403,200 is based, as required by Wis. Stat. § 32.05(2)(b) and (3)(e)." The parties filed competing summary judgment motions. The circuit court granted DOT's motion and denied Christus’ motion, holding that DOT's jurisdictional offer was based on the initial appraisal.² The court of appeals disagreed, reversed the circuit court's decision, and remanded for further proceedings.³

¶3 We uphold the circuit court's grant of summary judgment to DOT and conclude that the jurisdictional offer was valid because it was "based" "upon" an initial appraisal of "all property proposed to be acquired," pursuant to Wis. Stat. § 32.05(2)(a)-(b), and (3)(e). Accordingly, we reverse the decision of the court of appeals.

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

¶4 Christus is a non-profit entity that owns and operates a church in Greenville that abuts State Trunk Highway 15. As part of a major project to improve and reconstruct a portion of the highway, DOT sought to acquire 5.87 acres of Christus’ property and obtain a temporary limited easement of 0.198 acres.

¶5 DOT began the condemnation process with a letter dated October 3, 2016, advising Christus: "In compliance with Wisconsin statutes and federal regulations, you are receiving this letter, along with the enclosed appraisal report, to initiate negotiations for the acquisition of your property and/or property interests."⁴ In that letter, DOT stated that the estimated fair market value of the property to be acquired was $133,400, based on a third-party appraisal by Single Source, Inc.⁵ DOT provided Christus with an offer in that amount.

¶6 DOT's letter also included an itemized table that listed the allocations contained in the appraisal. The letter further informed Christus that if it was not satisfied with the appraisal's valuation of the property to be condemned, Christus was "eligible to obtain an additional appraisal from a qualified appraiser of [its] choice" at DOT's expense within 60 days, by December 5, 2016, pursuant to Wis. Stat. § 32.05(2)(b). Additionally, DOT called Christus’ representative to encourage the church to obtain a second appraisal, explaining that "this was a complex acquisition and even if the two appraisals were close in value, it would give [Christus] assurance that nothing had been missed."⁶

¶7 Over the next 60 days, DOT contacted both Christus’ representative and its attorney and attempted to negotiate, in accordance with Wis. Stat. § 32.05(2a). However, by the time of the second-appraisal deadline, Christus had not engaged in negotiations, accepted DOT's initial offer, or obtained a second appraisal at DOT's expense.

¶8 Despite the passing of the 60-day deadline, DOT continued in its efforts to negotiate with Christus. In mid-December 2016 DOT emailed Christus’ attorney asking if "there were any sticking points that needed to be worked on" and requested a response to the initial offer by the end of the year.

¶9 When Christus did not respond by January 6, 2017, DOT followed up with Christus’ attorney to see if there was a decision regarding the initial offer. At that time, DOT also reiterated that it was still interested in negotiating. Three days later, Christus’ attorney informed DOT that the church council would not agree to a voluntary sale.

¶10 DOT remained concerned about whether the initial appraisal accurately reflected, or fully addressed, the total impact of the acquisition. These concerns were exacerbated due to the complete lack of negotiations and Christus’ choice not to obtain a second appraisal. As a result, DOT emailed Christus’ attorney: "This parcel has unique challenges associated with the acquisition. That is why I had encouraged the Church to have a second appraisal done. [A second appraisal] would have provided another opinion of the effects of the acquisition." Seeking to ensure that Christus would be fairly compensated, DOT opted to initiate its internal administrative revision process, which involves obtaining additional estimates and information in order to review the initial appraisal and offer. DOT advised Christus’ attorney that: (1) it was obtaining estimates to make sure Christus was fully compensated; (2) it would be contacting Christus with a final offer; and (3) Christus’ attorney should respond with questions or if there were "any specific matters [Christus] would like the DOT to research."

¶11 In reviewing the initial offer, DOT recognized that there "were a number of factors that made this acquisition more complex than it might first appear." DOT focused on three areas that the initial appraiser considered, but ultimately did not compensate, and "items the original appraisal did not fully address," including: (1) severance damages related to the building's increased proximity to the right of way;⁷ (2) the cost to increase the parking lot to replace the loss of 26 parking spaces; and (3) the cost of "moving the retention pond."

¶12 As to severance damages, which the appraisal defined as "the loss in value to the portion of the larger parcel remaining after the taking and construction of the public improvement," the appraisal explicitly considered whether to allocate compensation for them, but did not do so. The appraiser reasoned that:

The church market is very small in Wisconsin due to the special use nature of the property. We have researched church sales in the market and could not delineate any type of proximity damage to improvements based on available market information. Due to the lack of relevant sales and few market participants we were unable to determine any severance damages to church properties based on proximity damages. Therefore, we have determined that no severance damages are caused by the closer proximity to the State Trunk Highway 15 right of way in the after condition.

(emphasis added). As to the loss of the 26 parking spaces, the appraisal concluded that "after the acquisition more than ample parking remains to service the existing church facility," so additional compensation was unnecessary. Finally, as to the pond, the appraiser acknowledged that Christus would lose a "small surface pond with a surrounding gravel foot path and native prairie plantings," but did not provide additional analysis of that loss or whether a new pond would be necessary.

¶13 During the internal administrative revision process, DOT obtained estimates and received new information regarding the original construction of the pond and parking lot on the property. On February 13, 2017, Christus’ representative spoke to DOT about the parking lot and the pond. Christus’ representative advised DOT that the landscaping pond was not a retention pond and indicated that, because of the changes to the parking lot, a new retention pond would be necessary. As a result of these new estimates and its conversations with Christus’ representatives, DOT increased the amount of its offer. By letter dated March 24, 2017, DOT rescinded its initial offer and provided a "final offer" in the amount of $403,200. The letter included the following table with line-by-line comparisons showing the change in valuation from DOT's initial offer based on the internal review:

¶14 Most of the allocations in the final offer were either identical or close to the initial appraisal valuation.⁸ DOT did not decrease any of the allocations. The final offer contained compensation for the three previously mentioned items that DOT had reviewed through the internal administrative revision process: (1) severance damages based on the church's proximity to the new right of way (approximately $160,000); (2) the cost to replace 26 lost parking spaces (approximately $30,000); and (3) the cost to add a retention pond on the property ...