City
can take business property
'Comparable'
replacement property need not be perfect fit
By
David Ziemer
david.ziemer@wislawjournal.com
July
16, 2007
| What
the court held Case:
City of Janesville v. CC Midwest, Inc., No. 2004AP267. Issue:
Must a condemnor make comparable replacement property available to a business
owner as a condition precedent to removing the owner from the property? Holding:
Yes, but the
replacement property need only be reasonably similar. Attorneys:
For Appellant:
Marcuvitz, Alan, Milwaukee; Roschke, Andrea H., Milwaukee; Sager, Susan M., Milwaukee;
For Respondent: Klimczyk, Waldemar H., Janesville; Steichen, Mark J., Madison
|
It
takes a scorecard to keep track of exactly what the fractured Wisconsin Supreme
Court did, and did not, hold in its July 11 eminent domain decision. The case
produced a lead opinion, two concurrences, and two dissents.
The
court reversed a published court of appeals decision, City of Janesville v. CC
Midwest, Inc., 2006 WI App 21, 289 Wis.2d 453, 710 N.W.2d 713, which held that
a condemning authority could not remove the owner, because it could not make comparable
replacement property available, as required by sec. 32.05.
The
Supreme Court agreed that a condemning authority must identify at least one comparable
property available as replacement property, but concluded that the City of Janesville
did so in this case.
CC
Midwest, Inc., is a division of a corporation that owned approximately nine acres
of land in Janesville. CC Midwest rented the property and operated a trucking
terminal there.
The
city sought to acquire the property via eminent domain. It offered several comparable
replacement properties, but CC Midwest found none acceptable, for one reason or
another — some were too small, some were vacant, some were too distant, some
lacked cross-docks (where materials could be unloaded from an incoming semi-trailer
truck and loaded onto outbound trailers, with little or no storage in between).
Rock
County Circuit Court Judge John W. Roethe granted a writ of assistance, holding
that the city had complied with its required duties, and CC Midwest appealed.
The court of appeals certified the case to the Supreme Court, but certification
was declined. The court of appeals then reversed, holding that none of the properties
were comparable, and therefore, the writ could not issue.
The
Supreme Court accepted review and reversed.
Roggensack
The
lead opinion was written by Justice Patience Drake Roggensack, and joined in its
entirety only by Justice N. Patrick Crooks.
The
opinion began by asserting that relocation assistance benefits are “purely
statutory” and are not required to satisfy constitutional mandates for just
compensation under the Takings Clause.
Section
32.05(8)(b) provides in relevant part, “The circuit court shall grant the
writ of assistance [to the condemnor] if all jurisdictional requirements have
been complied with, if the award has been paid or tendered as required and if
the condemnor has made a comparable replacement property available to the occupants...”
The
lead opinion concluded that the correct standard for determining when a condemnor
had provided comparable property was set forth by the court of appeals in a different
case, Dotty Dumpling’s Dowry, Ltd., v. Community Development Authority of
Madison, 2002 WI App 200, 257 Wis.2d 377, 651 N.W.2d 1.
In
Dotty, the court of appeals concluded that a condemnor “made available”
a comparable replacement property to the necessary extent by: identifying potential
replacement properties; obtaining renovation cost estimates for properties in
which the condemnee expressed an interest; tendering the maximum business replacement
payment; and offering to reimburse the condemnee for its other statutorily authorized
relocation expenses.
The
court in Dotty expressly rejected the condemnee’s argument that a condemnee
would never have to vacate the condemned property unless the condemnor could identify
a replacement property acceptable to the condemnee that could be acquired for
an amount not exceeding the condemnation award plus relocation benefits (In Dotty,
this would have required almost $1 million more than the fair market value of
the property taken).
Agreeing
with the reasoning in Dotty, the lead opinion set forth the following rule of
law:
“[R]elocation
assistance provided under Wis. Stat. Sec. 32.19(2)(c) does not require identification
of a property that is identical to the property condemned or that, at the moment
of identification, the property, without modification, can be used by the business
that was relocated. Rather, it requires identification of a property that with
modification can be used for the occupier’s business. For example, the land
area of a property identified may be sufficient, but the building may have been
used for another purpose and may need remodeling in order for the business to
carry on its activities as it has in the past.”
Turning
to the properties offered by the city, the lead opinion described one as being
comparable, located at 1700 E. Delevan Drive, in Janesville, even though the property
lacked cross-docks.
Wilcox
Justice
Jon P. Wilcox wrote a concurring opinion, agreeing that the city made a comparable
offer, but emphasizing that only the property at 1700 E. Delevan Drive constituted
comparable property.
Some
of the other properties offered by the city, Wilcox called “not even close
to satisfying the sec. 32.19(2)(c) criteria,” noting that some were more
than 100 miles away, and some were vacant lots.
Wilcox
concluded, “I raise the nature of some of the properties proposed by the
City merely to reiterate that a government does not satisfy its sec. 32.19(2)(c)
burden simply by proposing numerous properties.”
Bradley
Justice
Ann Walsh Bradley penned another concurrence, joined by Chief Justice Shirley
S. Abrahamson, which joined the lead opinion, except for that portion which held
that the Takings Clause has no relevance to compensation for obtaining replacement
property.
Only
one of the parties (the city of Janesville) briefed the issue, so the concurrence
deemed the issue waived by CC Midwest.
Bradley
wrote, “Perhaps the lead opinion is correct in its constitutional conclusions.
Without argument and briefs I am unsure. However, there is one thing about which
I am sure: the rule of law is best developed when issues are raised by the parties
and then tested by the fire of adversarial argument.”
Prosser
Justice
David T. Prosser Jr. wrote a dissent, arguing that the court of appeals reached
the correct result, and maintaining that the Takings Clause is implicated by the
inadequacy of replacement property.
Prosser
acknowledged that the constitutional rule — that a property owner is entitled
to be put in as good position pecuniary as if his property had not been taken
— has been “largely disregarded in the compensation of business owners
whose business owners have been damaged or destroyed by government condemnation
of underlying land,” pursuant to the “business losses rule,” which
limits owners to the “value of the real property and fixtures taken.”
Nevertheless,
Prosser argued, “Over time, the business losses rule has been subject to
withering criticism because it conflicts with the plain language of the Fifth
Amendment and because it can be so palpably unfair to business interests.”
Later,
Prosser called judicial defenses of the business loss rule “bogus.”
Turning
to the statutory issue, the Prosser dissent not only agreed with the court of
appeals decision, but reprinted 13 paragraphs of it verbatim.
Adding
his own additional comment to that opinion, Prosser opined, “Strict compliance
requires a condemnor to identify a ‘comparable replacement property’
that exists. Strict compliance may nudge the parties to negotiate time to turn
a potential ‘comparable replacement property’ into an available ‘comparable
replacement property’ — current availability being a condition precent
to issuance of a writ. This is precisely what the statute requires (emphasis in
original).”
Prosser
found nothing unreasonable with the argument of the city and the lead opinion
that, in some cases, because of the lack of any replacement property, a condemnor
could be prevented from ever removing a condemnee.
Butler
Justice
Louis B. Butler Jr. also dissented. Butler stated that he agreed with Justice
Wilcox’s concurrence in its entirety, except for that part which concluded
that the 1700 E. Delevan property was a comparable replacement business.
Butler
concluded, “Without cross-docking capabilities, the property was not adequate
for the needs of the business, was not reasonably similar in all major characteristics,
was not functionally equivalent with respect to its condition, and was not suited
for the same type of business conducted by the acquired business at the time of
the acquisition (cites omitted).”
Click
here for Case Analysis.
David
Ziemer can be reached by email.
