2009 WI App 15
court of appeals of
published opinion
Case No.: |
2008AP921 |
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Complete Title of Case: |
†Petition for Review |
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E-L Enterprises, Inc., Plaintiff-Respondent, v. Milwaukee Metropolitan Sewerage District, Defendant-Appellant.† |
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Opinion Filed: |
December 23, 2008 |
Submitted on Briefs: |
December 2, 2008 |
Oral Argument: |
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JUDGES: |
Fine, Kessler and Brennan, JJ. |
Concurred: |
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Dissented: |
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Appellant |
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ATTORNEYS: |
On behalf of the defendant-appellant, the cause was submitted on the briefs of Michael J. McCabe, James H. Petersen and Lauri A. Rollings. |
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Respondent |
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ATTORNEYS: |
On behalf of the plaintiff-respondent, the cause was
submitted on the brief of Jerome R. Kerman and Joseph R. Cincotta of Kerkman & Dunn, |
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2009 WI App 15
COURT OF APPEALS DECISION DATED AND FILED December 23, 2008 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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Appeal No. |
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STATE OF |
IN COURT OF APPEALS |
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E-L Enterprises, Inc., Plaintiff-Respondent, v. Milwaukee Metropolitan Sewerage District, Defendant-Appellant. |
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APPEAL
from a judgment of the circuit court for
Before Fine, Kessler and Brennan, JJ.
¶1 FINE, J. The Milwaukee Metropolitan Sewerage District appeals a judgment entered on a jury verdict in favor of E-L Enterprises, Inc., that found the Sewerage District liable to E-L Enterprises under an inverse-condemnation theory for damage to E-L Enterprises’s property as the result of the Sewerage District having drained groundwater from around the pilings supporting the building.[1] The Sewerage District contends that the requisites to inverse condemnation under both article I, section 13 of the Wisconsin Constitution and Wis. Stat. § 32.10 were not met. The Sewerage District also argues that the calculation of damages was erroneous and that the statute of limitations barred the action. We affirm.
I.
¶2 This case has its beginnings in the Sewerage District’s
construction of a deep-tunnel storm-water system in
¶3 Part of the work in connection with the Sewerage District’s
deep-tunnel project required that the work area be kept dry. The jury found that this resulted in the
draining of groundwater that was keeping the pilings of a building owned by E-L
Enterprises sufficiently saturated to support the building. The jury also found that the “District’s
removal of groundwater from E-L’s property [was] unreasonable,” was “a taking,”
and caused E-L Enterprises’s “building to settle.” The trial court summed it up nicely in its
written order denying the Sewerage District’s post-verdict motions: “E-L persuaded the jury that the District
took
E-L’s groundwater permanently, deliberately and for a public purpose and that
E-L should be compensated for the lost groundwater and the accompanying loss in
property value.”
¶4 The Sewerage District does not dispute that there is sufficient evidence to support the jury’s findings, other than its contention that there was no “taking” as a matter of law under either article I, section 13 of the Wisconsin Constitution or Wis. Stat. § 32.10. It also does not dispute that there was sufficient evidence for the jury to find in its answers to the special-verdict questions under the trial court’s instructions that the diversion of the water, what the jury found was a “taking,” was deliberate, that the diversion benefited the public, and that the removal of the water was permanent.[2] We address the Sewerage District’s legal contentions in turn.
II.
¶5 This appeal presents issues of law, and although we have been
assisted by the trial court’s cogent analyses of the complex issues with which
it had to deal, our review is de novo. See Truttschel v. Martin, 208
A. Inverse condemnation.
¶6 Article I, section 13 of the Wisconsin Constitution declares: “The property of no person shall be taken for public use without just compensation therefor.” Where there has been a “taking” but the entity with condemnation power does not pay “just compensation,” the property owner may seek so-called inverse condemnation under Wis. Stat. § 32.10, which, as material, provides:
If any property has been occupied by a person possessing the power of condemnation and if the person has not exercised the power, the owner, to institute condemnation proceedings, shall present a verified petition to the circuit judge of the county wherein the land is situated asking that such proceedings be commenced. The petition shall describe the land, state the person against which the condemnation proceedings are instituted and the use to which it has been put or is designed to have been put by the person against which the proceedings are instituted.… The court shall make a finding of whether the defendant is occupying property of the plaintiff without having the right to do so. If the court determines that the defendant is occupying such property of the plaintiff without having the right to do so, it shall treat the matter in accordance with the provisions of this subchapter assuming the plaintiff has received from the defendant a jurisdictional offer and has failed to accept the same and assuming the plaintiff is not questioning the right of the defendant to condemn the property so occupied.
The Sewerage District has the power to condemn “any real property situated in the state and all tenements, hereditaments and appurtenances belonging or in any way appertaining to, or in any interest, franchise, easement, right or privilege therein, that may be needed for the purpose of projecting, planning, constructing and maintaining the sewerage system, that may be needed for the collection, transmission or disposal of all sewage or drainage of the district.” Wis. Stat. § 200.43(1).
¶7 In determining that the Sewerage District’s removal of the groundwater supporting E-L Enterprises’s building was a “taking,” the jury applied the trial court’s instructions:
A government agency commits a taking of property for which a court may order compensation if the following three elements are present: First, the taking must be deliberate, not accidental. Second, the property must be taken for some use that benefits the public. Third, the property must be taken permanently. If you are satisfied by the greater weight of the credible evidence, to a reasonable certainty that all three of these elements are present, you should answer [the “taking” question] yes.
The Sewerage District contends
that as a matter of law its diversion of the groundwater
was neither a “taking” under Wis. Const.
art. I, § 13, nor an “occupation” under Wis. Stat. § 32.10. We disagree.
¶8 The law in
¶9 In a decision most analogous to what we have here, Damkoehler
v. City of Milwaukee, 124 Wis. 144, 151, 101 N.W. 706, 708 (1904), held
that the removal of a building’s lateral support by the grading of a street was
a compensable “taking … for public purposes” and, as characterized by Dahlman
v. City of Milwaukee, 131
¶10 In Wisconsin Power & Light,
the County relocated a county road and in the process dumped “a large amount of
sand and gravel in the swamp adjacent to” Wisconsin Power & Light’s
electrical power line and close to
one of its towers.
[T]he tower had
no utility, direct or indirect, to the highway project, that the county did not
need or desire the tower or the land on which it rested and did not intend to
acquire or affect either the tower or the land, that the public obtained no
benefit from injuring it, that the county had no reason to anticipate that
damage would result from its acts, and that the injury to the tower was purely
accidental. Whatever might be the
significance of any of these facts standing alone, collectively they negative a
taking in the constitutional sense. We
think that for presently pertinent purposes, the case is substantially the same
as if one of defendant’s trucks hauling the sand and gravel had accidentally
collided with and demolished one of the plaintiff’s automobiles on the highway.
In both cases there is damage, for which
the county may or may not be liable in tort, depending on such factors as
negligence and sovereign immunity; but plaintiff’s property is not taken for
public use within the meaning of sec. 13, art. I,
Wisconsin Power & Light, 3
¶11 We see no logical basis
to distinguish between the removal of soil providing lateral support and the
diversion of groundwater performing essentially the same function—that is, supporting
the structural integrity of a building like that owned by E-L
Enterprises. This is especially true
because
B. Damages—the joint venture.
¶12 E-L Enterprises sued both the Sewerage District and the joint venture’s insurance company for the damages it claimed to have sustained as a result of the deep-tunnel project near its building. As we have seen, it sought inverse-condemnation damages from the District. It also asserted negligence and nuisance claims against the District. The latter two claims against the District were dismissed and E-L Enterprises has not appealed.
¶13 E-L Enterprises’s claims against the joint venture’s insurer
were also for negligence and nuisance.
E-L Enterprises settled these claims via
what both parties agree was a release authorized by Pierringer v. Hoger, 21
Wis. 2d 182, 124 N.W.2d 106 (1963). “[A]
Pierringer
release operates to impute to the settling plaintiff whatever liability in
contribution the settling defendant may have to non-settling defendants and to
bar subsequent contribution actions the non-settling defendants might assert
against the settling defendants.” VanCleve v. City of Marinette, 2003
WI 2, ¶39, 258
¶14 The crux of the Sewerage District’s argument on appeal in connection with the joint venture is that the trial court should have required E-L Enterprises to have disclosed to the jury the amount of its settlement with the insurance company, and that the trial court should have put the joint venture on the verdict so the jury could have compared the respective contributions of the District and the joint venture to E-L Enterprises’s damages. This, the District contends, would have prevented the danger that E-L Enterprises would get a double recovery. There are two fatal flaws to these contentions.
¶15 First, the Sewerage District admits that it never specifically
asked that the joint venture be included on the special verdict. Thus, it waived the right to assert as error
that the joint venture was not on the verdict.
See Wis. Stat. Rule 805.13(3) (“Counsel may object to the
proposed instructions or verdict on the grounds of incompleteness or other
error, stating the grounds for objection with particularity on the record. Failure to object at the conference
constitutes a waiver of any error in the proposed instructions or verdict.”); D.L. Anderson’s Lakeside Leisure Co. v.
Anderson, 2008 WI 126,
¶41, ___ Wis. 2d ___, ___, 757 N.W.2d 803, 814 (the objection must be
“explicit”). Although we have the authority to disregard the waiver, id.,
2008 WI 126, ¶39, ___ Wis. 2d at ___, 757 N.W.2d at 813, we decline to do so
because the jury would have had no basis from the evidence to make any
apportionment; the District does not in its reply brief dispute E-L
Enterprises’s assertion that the District presented no evidence of the joint venture’s
culpability. Thus, we take that
assertion as given. See Charolais
Breeding Ranches, Ltd. v. FPC Secs. Corp., 90
¶16 Second, although, as we have seen, the joint venture agreed to
be liable to the Sewerage District for damages resulting from “removal or
disturbance of groundwater,” the District did not pursue its cross-claim
against the joint venture’s insurance company seeking to recover against it for
the joint venture’s potential liability to the District as a result of the
groundwater diversion, even though in a letter to the trial court dated June
18, 2007, the District asserted that “the only ‘Taking’ was done by the [joint
venture].” (Capitalization in
original.) See Wis. Stat. Rule
802.07(3) (“A pleading may state as a cross claim any claim by one party
against a coparty if the cross claim is based on the same transaction,
occurrence, or series of transactions or occurrences as is the claim in the
original action.… [T]he cross claim may
include a claim that the party against whom it is asserted is or may be liable
to the cross claimant for all or part of a claim asserted in the action against
the cross claimant.”). Had the District pursued
its cross-claim, the liability of the joint venture could have been
established, and, under the Pierringer release, the joint
venture’s responsibility for the damages to E-L Enterprises’s building would
have been imputed to E-L Enterprises. It
is too late in the day for the District to complain that it did not have a
chance to argue to the jury that the joint venture was responsible.
C. Damages—calculation.
¶17 The Sewerage District complains that the trial court did not
determine a “date of taking” so the jury could apportion the diminution of
value of E-L Enterprises’s building before and after that date. The trial court instructed the jury on how it
should determine E-L Enterprises’s damages:
If the government takes private property for a public use, the government must pay the owner the fair market value of the property that is taken. If only part of an owner’s property is taken, and if taking part of the property reduces the value of the property that remains, the government must pay the difference between the fair market value of the property before the taking and the fair market value of the property after the taking.
….
E-L contends that the fair market value of its property was reduced by the cost of repairs a purchaser would be required to perform if the building were sold.…
In considering what is just compensation to E-L, consider whether the repairs that actually were performed were necessary, whether the cost of the repairs was reasonable and whether and by how much the need to perform such repairs would have lower[ed] the fair market value of the property in the eyes of a prospective purchaser.
E-L Enterprises asserts in its brief that the Sewerage District “does
not cite to the record where it objected to” the trial court’s
just-compensation instruction. The
Sewerage District’s reply brief does not dispute this and does not point to a
place in the Record where it
objected to this instruction. Accordingly,
it waived its right to complain on appeal.
See Wis. Stat. Rule 805.13(3); Charolais Breeding Ranches, Ltd.,
90
¶18 First, the cost of repair, as the trial court’s instruction
indicated, is a factor that a prospective purchaser would consider to determine
the fair market value of the property.
This is why “fixer-uppers” go for less than houses that do not need
extensive repairs.
¶19 Second, the jury also knew from the instruction that it had
to consider the effect of the diversion of the groundwater on E-L Enterprises’s
property “after the taking.”
Significantly, unlike the traditional “takings” case, where there is a
sharp “takings” demarcation, the accretion of damages in this case was, in more
than one sense, fluid—they developed over time.
The jury knew this, and was able to consider the evidence submitted by
both E-L Enterprises and the Sewerage District.
See Milwaukee Rescue Mission, Inc. v. Redevelopment Auth. of City of
Milwaukee, 161
D. Damages—legal
fees incurred to permit remediation of damage.
¶20 E-L Enterprises had the right to an easement for “ingress
and egress” through land abutting its building.
The abutting land was owned by Basil Ryan. Ryan would not let E-L Enterprises use the
easement to remediate the damage to its building caused by the diversion of the
groundwater, and E-L Enterprises spent legal fees to enjoin Ryan from
interfering with the repairs. The trial
court permitted the jury to award those fees as part of its just-compensation
instruction:
In addition to construction and repair costs, E-L contends a purchaser would have incurred the cost of bringing a lawsuit against its neighbor, Basil Ryan, to gain access to his property adjacent to E-L’s building in order to perform the repairs. The law provides that factors affecting the value of property that could influence or sway the decision of a prospective buyer should be considered in the determining [of] the fair market value of the property for purposes of determining just compensation.
The trial court’s instruction is an accurate statement of the general
rule that the expenditure of legal fees caused by someone causing damages are
recoverable by the injured party. See Weinhagen v. Hayes, 179 Wis. 62, 65, 190 N.W. 1002,
1003 (1922) (“‘[W]here the wrongful acts of the defendant have involved
the plaintiff in litigation with others, or placed him in such relation with
others as to make it necessary to incur expense to protect his interest, such
costs and expense should be treated as the legal consequences of the original
wrongful act.’”) (quoted source omitted).
The Sewerage District does not explain why this rule does not apply
here. Accordingly, we do not discuss
further its claim of error. See Vesely v. Security First Nat’l Bank of Sheboygan Trust Dep’t, 128
E. Damages—costs
under Wis. Stat.
§ 32.28(3)(c).
¶21 Wisconsin
Stat. § 32.28(3)(c) provides that a plaintiff who succeeds with its
claim under Wis. Stat. § 32.10 is
entitled to “litigation expenses.” As we
have seen, E-L Enterprises prevailed on
its inverse-condemnation claim under § 32.10, and we are affirming. Thus, the trial court did not err in awarding
to E-L Enterprises its litigation expenses.
Further,
E-L Enterprises seeks its appellate litigation expenses under
§ 32.28(3)(c), and we agree that it is entitled to those expenses as
well. See Joyce v. School Dist. of
Hudson, 169
F. Statute of limitations.
¶22 In an
undeveloped argument, the Sewerage District contends that
E-L Enterprises’s inverse-condemnation claim was barred by the six-year statute
of limitations in Wis. Stat. §
893.51(1), which declares: “Except as
provided in sub. (2), an action to recover damages for the wrongful
taking, conversion or detention of personal property shall be commenced within
6 years after the cause of action accrues or be barred. The cause of action accrues at the time the
wrongful taking or conversion occurs, or the wrongful detention begins.”[4] Without giving us any supporting authority,
the District contends that the groundwater is “personal property” under this
provision. It seems to us, however, that
groundwater is more akin to real property than it is to “personal property,”
especially because the eminent-domain chapter defines “[p]roperty” as an
all-encompassing term that “includes estates in lands, fixtures and personal
property directly connected with lands.”
Wis. Stat.
§ 32.01(2).
¶23 The trial court used the six-year
statute of limitations that applies to actions seeking to recover for damage to
“real property.” See Wis. Stat.
§ 893.52 (“An action, not arising on contract, to recover damages for an
injury to real or personal property shall be commenced within 6 years after the
cause of action accrues or be barred, except in the case where a different
period is expressly prescribed.”). A
“cause of action accrues” under this section “when the evidence of injury to
property, resulting from the negligent act upon which the action is based, is
sufficiently significant to alert the injured party to the possibility of a
defect.” Tallmadge v. Skyline Constr.,
Inc., 86
III.
¶24 We affirm
the judgment, and
remand to the trial court for a determination of reasonable
appellate-litigation expenses under Wis.
Stat. § 32.28(3)(c).
By the Court.—Judgment affirmed and cause remanded with directions.
[1]
The Sewerage District’s notice of appeal was filed on
[2] E-L
Enterprises’s brief asserts that the Sewerage District does not dispute that
the evidence before the jury supports these findings. The District’s reply brief does not contradict
this assertion. Accordingly, we take it
as given. See Charolais Breeding Ranches,
Ltd. v. FPC Secs. Corp., 90
[3]
The Sewerage District points out that during the proceedings, E-L Enterprises
conceded that it did not have a claim under Wis.
Stat. § 32.10, and that the trial court initially had that view as
well. The Sewerage District contends
that E-L Enterprises should be bound by that concession. A party’s “concession” “in respect to a
matter of law,” however, “is binding upon neither the parties nor upon any
court.” Fletcher v.
[4] Wisconsin Stat. § 893.51(2) concerns trade secrets and is not applicable here.
[5]
As we have seen, the jury answered the following special-verdict question
“[n]o”: “Did E-L know, or should it have
known, before