The SCOW docket: WisDOT church property condemnation upheld despite appraisal omissions

Note: We are crunching Supreme Court of Wisconsin decisions down to size. The rule for this is that no justice gets more than 10 paragraphs as written in the actual decision. The "upshot" and "background" sections do not count as part of the 10 paragraphs because of their summary and very necessary nature. We've also removed citations from the opinion for ease of reading, but have linked to important cases cited or information about them. ​Italics indicate WJI insertions.

Karofsky

The case: Christus Lutheran Church of Appleton v. Wisconsin Department of Transportation

Majority: Justice Jill J. Karofsky (24 pages), joined by Justices Ann Walsh Bradley, Brian  Hagedorn, and Rebecca F. Dallet.

Dissent: Justice Patience D. Roggensack (18 pages), joined by Justices Rebecca Grassl Bradley and Annette K. Ziegler.

The upshot 

​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.

We uphold the circuit court's grant of summary judgment to DOT and conclude that the jurisdictional offer was valid.

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Background

Christus is a nonprofit 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.

 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. DOT provided Christus with an offer in that amount.

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.

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."

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....Christus' attorney informed DOT that the church council would not agree to a voluntary sale.

(WisDOT conducted an internal review of the appraisal).

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; (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."

By letter dated March 24, 2017, DOT rescinded its initial offer and provided a "final offer" in the amount of $403,200.

Christus commenced an action alleging that DOT violated the statutory requirement that a jurisdictional offer be "based" "upon" the appraisal of the property...The circuit court granted summary judgment to DOT....The court of appeals reversed the circuit court's decision, reasoning that "the jurisdictional offer in this case was not sufficiently based on the appraisal" as required by (state law) because it included a new line item for severance damages, which the initial appraisal did not contain.

The guts

A right-to-take action, which Christus filed, is used "to contest the right of the condemnor to condemn the property described in the jurisdictional offer, for any reason other than that the amount of compensation offered is inadequate."

Christus first asserts that DOT's jurisdictional offer was not "based" "upon" an appraisal, as required by (statute) because the jurisdictional offer contained several new line items, including severance damages, not found in the appraisal. Further, Christus claims that the appraisal failed to satisfy (state law's) "all property" requirement. Christus' arguments fail.

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 (state law).

The initial appraisal discussed and considered severance damages, the loss of 26 parking spaces, and the loss of the current pond on the property, despite not allocating compensation for these items. A side-by-side comparison shows that no allocation decreased between the initial appraisal and jurisdictional offer. As the circuit court properly noted, most of the allocations "are relatively close in value," if not "actually identical in both offers." The significant changes between the initial appraisal and the jurisdictional offer, as a result of DOT's internal administrative revision process, included increased allocations for: (1) severance damages because of the proximity of the new right of way; (2) compensation for the cost to replace the 26 lost parking spaces; and (3) compensation to add a retention pond. Adding these new amounts to the initial appraisal valuation does not make the initial appraisal something other than a foundation for the jurisdictional offer. To the contrary, the fact that most of the allocations remained unchanged from the beginning to the end of the process demonstrates that the appraisal served as the foundation for the offer....

According to the court of appeals, because the jurisdictional offer included compensation for severance damages not found in the initial appraisal, the appraisal failed to satisfy (state law).

(The statute) defines "property" as "includ[ing] estates in lands, fixtures and personal property directly connected with lands." Damages are not included in (the) definition of "property" and we do not "read into the statute words the legislature did not see fit to write." Ultimately Christus failed to identify any portion of its property, as defined in chapter 32 (of the statutes), that the initial appraisal excluded, and therefore the offer satisfies (legal requirements).

Finally, we must explicitly reject the new requirement that the court of appeals enunciated in its opinion: "if the DOT, based solely upon its independent review of an appraisal, believes additional statutory items of just compensation warrant inclusion in the jurisdictional offer, it must obtain a new appraisal that substantiates that belief and provides an opinion as to the value of those interests."

Not only does this requirement find no support in the statutory text,  it also raises a multitude of ethical concerns. The only way for condemnors like DOT to "obtain a new appraisal that substantiates [a particular] belief" would be for DOT either to improperly direct or to coerce its in-house appraisers or third-party appraisers into acting in accordance with DOT's instructions rather than making independent assessments. Yet, Wisconsin appraisers must comply with the Uniform Standards of Professional Appraisal Practice ("USPAP").... USPAP ethics rules outline an appraiser's ethical obligation to be independent, impartial, and objective and forbids appraisers from "agree[ing] to perform an assignment that includes the reporting of predetermined opinions and conclusions."...Therefore, any appraiser who provides an estimate or opinion based on DOT's directive would be in violation of her ethical code. 

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."

Roggensack

The dissent

Christus Lutheran contends that DOT did not make a jurisdictional offer sufficient to satisfy necessary statutory requirements and therefore, it lacks the right to condemn its property. I agree, for a number of reasons.

First, DOT did not provide Christus Lutheran with an appraisal sufficient to comply with the directive of (state law). 

(Second,) Because a jurisdictional offer is required to include severance damages which occurred here and because the jurisdictional offer must be based on a full narrative appraisal, severance damages must be a component of that full narrative appraisal. 

The majority opinion concludes that totally missing severance damages is no problem because DOT is required to pay just compensation for "property," which is different from "damages." The majority opinion asserts that the court of appeals conflated 'property' and 'damages.'" It then relates that the definition of "property" found in (statutes) does not include the word, "damages." 

Before condemnation, Christus Lutheran's church building had a 147.7 foot side yard buffer from the Highway 15 right-of-way. After condemnation, the church building would be only 9 feet from Highway 15's right-of-way. Certainly, having trucks rumble-by only 9 feet from where church services are being conducted removed a significant sound buffer and safety barrier that the land DOT is taking had provided to religious service participants. 

The majority opinion also creates facts to excuse the Single Source appraisal's failure to include any value for severance damages, parking replacement or a retention pond and its gross undervaluation for landscaping and acreage taken. It does so in part by repeatedly misstating facts. For example, the majority opinion says: "Most of the allocations in the final offer were either identical or close to the initial appraisal valuation." "[T]he fact that most of the allocations remained unchanged from the beginning to the end of the process demonstrates that the appraisal served as the foundation for the offer."

The record shows that all totaled, Single Source valued the property taken at $269,800 less than DOT's jurisdictional offer. 

I agree with the court of appeals that the jurisdictional offer was not based upon the appraisal that DOT provided. The jurisdictional offer was based upon DOT's own internal review.

The majority opinion also repeats and repeats that Christus Lutheran was told it had the right to get its own appraisal for which DOT would pay. However, that Christus Lutheran did not obtain an appraisal has nothing to do with whether DOT complied with its statutory obligations. 

(DOT) ignored fundamental statutory obligations necessary to its jurisdiction to condemn Christus Lutheran's property and, therefore, DOT lacks jurisdiction. Jurisdictional errors cannot be overlooked. 

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