PUBLISHED
OPINION
COURT OF
APPEALS
DECISION
DATED AND FILED
August 22,
2001
Cornelia G. Clark
Clerk, Court of Appeals
of
Wisconsin
NOTICE
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.
No. 99-2306
STATE OF
WISCONSIN IN COURT OF APPEALS
DISTRICT
II
ABKA Limited
Partnership, an Illinois limited
partnership,
Petitioner-Appellant,
The Abbey Harbor
Condominium Association, Ltd.,
a Wisconsin nonprofit
corporation,
Petitioner-Co-Appellant,
v.
Wisconsin Department of
Natural Resources,
Geneva Lake
Conservancy, Inc., and Oneida
County,
Respondents-Respondents.
__________________________________
Wisconsin Realtors
Association, Inc.,
Petitioner-Appellant,
v.
Wisconsin Department of
Natural Resources,
Respondent-Respondent.
_________________________________
ABKA Limited
Partnership, an Illinois limited
partnership,
Petitioner-Appellant,
The Abbey Harbor
Condominium Association, Ltd.,
a Wisconsin nonprofit
corporation,
Petitioner-Co-Appellant,
v.
Wisconsin Department of
Natural Resources,
Respondent-Respondent.
__________________________________
Wisconsin Association of
Lakes, Inc.,
Petitioner-Appellant,
v.
Wisconsin Department of
Natural Resources,
Respondent-Respondent.
__________________________________
Wisconsin Realtors
Association, Inc.,
Petitioner-Appellant,
v.
Wisconsin Department of
Natural Resources,
Respondent-Respondent.
APPEAL from an order of the circuit court for Walworth County: MICHAEL S.
GIBBS, Judge. Reversed.
Before Nettesheim, P.J., Brown and Snyder, JJ.
¶1. SNYDER, J. This case is the result of five separate cases consolidated
before the circuit court. ABKA Limited Partnership (ABKA) and The Abbey Harbor
Condominium Association, Ltd. (the Association) appeal from a circuit court order denying
their joint petition for review of an administrative law judge's (ALJ) decision regarding their
Wis. Stat. ch. 30 (1999-2000)1
permit application to the Wisconsin Department of Natural Resources (DNR). ABKA owned
a public marina and sought to convert ownership of all 407 boat slips to a condominium-style
ownership called "dockominiums." The ALJ expressly limited the number of
boat slips that ABKA can convert to dockominiums. ABKA and the Association challenge
the DNR's jurisdiction to require a new permit and to limit the number of dockominiums in
the Marina. In addition, ABKA and the Association argue that the ALJ's decision to limit
the number of dockominiums is arbitrary and unsupported by record evidence.
¶2. The Wisconsin Realtors Association, Inc. (WRA) also appeals the circuit
court's order, arguing that the DNR's guidances, used by the DNR to arrive at the
appropriate number of dockominiums, are illegal attempts to circumvent the rule-making
requirements of Wis. Stat. ch. 227, that Wis. Admin. Code § NR 326.04(8) is invalid,
that the change in ownership to condominium-style ownership is allowed, and that the DNR
did not have the authority to require a new Wis. Stat. §30.12 permit.
¶3. In addition, the Wisconsin Association of Lakes, Inc. (WAL) appeals the
circuit court's order. In contrast to ABKA and WRA, WAL argues that ABKA's
dockominium development violates the public trust doctrine by purporting to convey a
perpetual exclusive right to a portion of Lake Geneva, exceeds reasonable riparian rights,
and violates the provisions of Wis. Stat. §30.133.
¶4. We agree with WAL that the dockominium development proposed
by ABKA and the Association violates the public trust doctrine.
FACTS
¶5. In 1994, ABKA was the owner of the Abbey at Fontana at Lake Geneva; the
Abbey Harbor (the Harbor) was created by the dredging of Potawatomi Creek pursuant to a
permit issued in July 1962 by the Wisconsin Public Service Commission. When issuing this
permit, the PSC also authorized the construction of the first 200 boat slips of what would
eventually become the 407-slip Marina. Additional permits were later issued, the most
recent issued in 1987 for the construction of additional piers and slips in the Harbor.
¶6. The Harbor consists of a man-made basin with 407 boat slips, a swimming
pool, a parking area, and a Harbor House. The Marina's 407 boat slips were rented to boat
owners on an annual basis with the option to renew. In late 1994, ABKA, the private owner
of the Marina, decided to convert the Marina to a condominium form of ownership and
began preparation of a condominium declaration. ABKA's proposal did not change the
number, size or configuration of any structure in the Marina, but simply changed the
ownership to condominium style. During these preparations, the DNR contacted ABKA and
asked to review the language of the proposed condominium declaration.
¶7. After reviewing the language of the proposed condominium declaration, the
DNR insisted upon language changes in the declaration. The DNR approved the revised
language changes of the Abbey Harbor Condominium Declaration (Declaration), which was
filed on February 28, 1995.
¶8. Under the revised terms of the Declaration, each unit is separately owned
property held in fee simple title by the unit owner. A dockominium unit is defined as a
cubicle of space in a lock-box located within a building known as the Harbor House at the
Marina. Each unit/lock-box has a number which corresponds to an existing boat slip at the
Marina. Each unit owner has the right to use the space beside the pier or piers
corresponding to the unit number.
¶9. In addition to the independent ownership of each unit, the unit owners own,
as tenants in common with each other, all of the common elements of the condominium,
including all of the real estate, the Harbor House, the parking lots, all docks and piers, and
the swimming pool. A unit owner is entitled to freely sell, lease, sublease, rent or license
the unit, and is required to keep the structures adjacent to the unit in good repair.
¶10. Under the terms of the Declaration, each unit owner is required to be a
member of the Association, which is responsible for the maintenance, repair and replacement
of all common elements, dredging the Harbor and landscaping. The Declaration also endows
the Association with the authority to enforce compliance with its terms and to assess unit
owners for the costs associated with the operation, maintenance and repair of the Marina.
¶11. After the language of the Declaration was changed, the DNR maintained
that ABKA had to apply for a new Wis. Stat. §30.12 permit to convert the Marina to
condominium ownership. The DNR maintained that under § 30.12, a certain number
of boat slips needed to be withheld from sale and set aside for seasonal rental to the public.
While ABKA challenged the DNR's authority to require both a new permit and a certain
number of set-asides, on March 13, 1995, ABKA filed an application for a new §
30.12 permit, requesting authorization for the conveyance of 407 boat slips to private owners
under a condominium form of ownership and reserving the right to challenge the DNR's
jurisdiction in this matter. The Association was subsequently made a co-applicant in the
proceedings. On April 5, 1995, Geneva Lake Conservancy, Inc. (Geneva Lake) objected to
the permit application, which was then referred to the Division of Hearings and Appeals for
a contested case hearing. Pending a hearing on the permit application, the DNR and ABKA
reached an agreement that ABKA could file the Declaration; that the current structures at the
Marina were validly permitted; that a contested case hearing would determine how many boat
slips, if any, needed to be set aside; and that ABKA could begin selling up to 282 units,
setting aside at least 125 units until a hearing decision was rendered.
¶12. On November 13-17 and December 18, 1995, a contested case hearing was
held before an ALJ regarding ABKA and the Association's permit application. Geneva
Lake, WRA, WAL and Oneida County (Oneida) fully participated in the contested case
hearing as intervening parties; WRA was in support of the condominium project, while
Geneva Lake, WAL and Oneida were opposed. On July 29, 1996, the ALJ issued his
decision, finding that the DNR did have jurisdiction to require a new Wis. Stat. §
30.12 permit, and that 287 of the 407 slips at the Marina must be set aside for seasonal
rental.
¶13. On August 23, 1996, ABKA filed a petition for judicial review of the
ALJ's decision in both Walworth county and Dane county. WRA also filed a petition for
judicial review in Walworth and Dane counties. WAL then filed a petition for review of the
ALJ's decision in Dane county. By stipulation, on October 14, 1996, the Walworth County
Circuit Court entered an order transferring the Dane county cases to Walworth county and
consolidating all of the above actions.2
¶14. After briefing and oral argument, on June 4, 1999, the circuit court
issued a decision affirming the ALJ's decision and entered a final order denying the petitions
for review on June 24, 1999. ABKA, the Association, WRA and WAL filed notices of
appeal. Geneva Lake and Oneida filed separate petitions to intervene. On October 19,
1999, ABKA filed a motion, with all parties agreeing to said motion, to consolidate the
above appeals. We determined that consolidation of the above actions was unnecessary
because the cases were consolidated in the circuit court and were resolved in a single circuit
court order; thus, the notices of appeal of the various appellants gave rise to a single appeal
proceeding. Furthermore, we denied Oneida's and Geneva Lake's petitions to intervene.
However, we held that because they were parties in the circuit court, and were adverse to
some or all of the appellants, they were respondents who could defend the circuit court's
order against challenges made to it by the appellants.
¶15. On September 20, 2000, we certified this matter to the Wisconsin
Supreme Court, as the matters at issue are ones of first impression and represent important
public policy questions regarding riparian rights and the public trust doctrine. We certified
as to one issue: Is a dockominium development, based upon condominium real estate law,
that limits public access to navigable waters in favor of private riparian ownership a violation
of the Wisconsin public trust doctrine and Wis. Stat. ch. 30? After our request for
certification, ABKA filed a motion for leave to file a supplemental brief. The Wisconsin
Supreme Court accepted certification on October 19, 2000.
¶16. On November 13, 2000, ABKA and the Association filed a motion
to clarify the scope of the issues certified. Following all parties' numerous and varied
responses to ABKA and the Association's motion, the Wisconsin Supreme Court rescinded
and withdrew its order accepting certification, and this matter was returned to us.
STANDARD OF REVIEW
¶17. This case involves an appeal from a circuit court order affirming the
decision of an administrative agency. In an appeal from such an order, we review the
decision of the agency, not the circuit court. Sea View Estates Beach Club, Inc. v.
DNR, 223 Wis. 2d 138, 145, 588 N.W.2d 667 (Ct. App. 1998). Review of an
agency's decision is confined to the record. Sterlingworth Condo. Ass'n v.
DNR, 205 Wis. 2d 710, 720, 556 N.W.2d 791 (Ct. App. 1996).
¶18. A different standard of review for agency decisions is applied for questions
of law and questions of fact. Sea View Estates, 223 Wis. 2d at 148. If
presented with a question of fact, we employ the "substantial evidence" standard.
Id. Substantial evidence is such relevant evidence as a reasonable mind
would accept as adequate to support a conclusion. Id. If the issue
presents a question of law, we must set aside or modify the agency action if we find that the
agency has erroneously interpreted a provision of law and a correct interpretation compels a
particular action, or we shall remand the case to the agency for further action under a correct
interpretation of the provision of law. Id. To this end, we apply one of
three levels of deference to the conclusion of the agency: "great weight,"
"due weight" or "de novo." Id.
¶19. An agency's interpretation or application of a statute may be accorded great
weight deference, due weight deference or de novo review, depending on the circumstances.
UFE, Inc. v. LIRC, 201 Wis. 2d 274, 284, 548N.W.2d 57 (1996). We
accord great weight deference only when all four of the following requirements are met: the
agency was charged by the legislature with the duty of administering the statute; the
interpretation of the agency is one of long standing; the agency employed its expertise or
specialized knowledge in forming the interpretation; and the agency's interpretation will
provide uniformity and consistency in the application of the statute. Id.
Under the great weight standard, we will uphold an agency's reasonable interpretation that is
not contrary to the clear meaning of the statute, even if we determine that an alternative
interpretation is more reasonable. Id. at 287.
¶20. We will accord due weight deference when "the agency has some
experience in an area, but has not developed the expertise which necessarily places it in a
better position to make judgments regarding the interpretation of the statute than a
court." Id. at 286. The deference allowed an administrative agency
under due weight review is accorded largely because the legislature has charged the agency
with the enforcement of the statute in question. Id. Under this standard,
we will not overturn a reasonable agency decision that furthers the purpose of the statute
unless we determine that there is a more reasonable interpretation under the applicable facts
than that made by the agency. Id. at 286-87. Finally, we will employ
denovo review when the legal conclusion reached by the agency is one of first impression or
when the agency's position on the statute has been so inconsistent as to provide no real
guidance. Id. at 285.
¶21. While Oneida argues that the DNR's decision should be accorded great
weight, ABKA, the Association, WRA, WAL, the DNR and Geneva Lake all maintain that
the agency's decision should be accorded no weight and should be reviewed de novo. The
agency's decision does not meet the "great weight" standard; although the
legislature has charged the DNR with the duty of enforcing environmental laws, including the
regulation of piers in navigable water, Sea View Estates, 223 Wis. 2d at
149, the issue of a public marina's conversion to private property and condominium
ownership is an issue of first impression. This also precludes "due weight"
deference, and thus de novo review is required.
PRINCIPLES OF PROPERTY OWNERSHIP,
REAL AND RIPARIAN
¶22. The instant issue involves the conversion of real riparian property, a marina
privately owned by a limited partnership, to another form of private property ownership.
Identification and definition of the pertinent legal terms and doctrines is necessary for a
thorough understanding of the issues.
¶23. In 1995, ABKA privately owned the 407-slip Marina.
A "marina" is defined as "a boat basin that has docks, moorings,
supplies, and other facilities for small boats." American Heritage Dictionary 766 (2d
College ed. 1982). The ownership of land has often been referred to as a "bundle of
rights." State ex rel. Wis. Edison Corp. v. Robertson, 99 Wis. 2d
561, 569, 299 N.W.2d 626 (Ct. App. 1980). This "bundle of rights" real
property theory asserts that the owner has the right to enter it, use it, sell it, lease it, or give
it away, as he or she so chooses. Id. at 569 n.11. These rights are
guaranteed by law but are also subject to certain governmental and private restrictions.
Id.
¶24. The Marina, because it borders Lake Geneva, is also riparian property, and
thus ABKA is a riparian owner. Riparian owners are those who have title to the ownership
of land on the bank of a body of water. Ellingsworth v. Swiggum, 195
Wis. 2d 142, 148, 536 N.W.2d 112 (Ct. App. 1995). A riparian owner is accorded certain
rights based upon title to the ownership of shorefront property. Sea View
Estates, 223 Wis. 2d at 157. These rights are well defined and include the
right to use the shoreline and have access to the waters, the right to reasonable use of the
waters for domestic, agricultural and recreational purposes, and the right to construct a pier
or similar structure in aid of navigation. Id. A riparian owner is entitled
to exclusive possession to the extent necessary to reach navigable water and to have
reasonable access for bathing and swimming. Id.
¶25. In February 1995, ABKA filed a condominium Declaration to convert and
sell the Marina boat slips to private owners as "dockominium" units; this
dockominium scheme is, in essence, a condominium type of ownership of the Marina.
Dockominium projects are typically premised on condominium law because a dockominium
is similar to a condominium in that both involve the division and co-ownership of an asset
previously owned by a single entity. KarinJ. Wagner, Geneva Lake Dockominiums:
An Exercise of Riparian Rights in Violation of the Public Trust Doctrine, 4 Wis.
Envtl. L.J. 243, 245 (Summer 1997).
¶26. "Condominium" is defined as "property subject to a
condominium declaration established under this chapter." Wis. Stat. §703.02(4).
A "declaration" is defined as "the instrument by which a property becomes
subject to this chapter, and that declaration as amended from time to time,"
§703.02(8), and must contain all of the elements set forth at Wis. Stat. §703.09.
A condominium "unit" is defined as
a part of a condominium
intended for any type of independent use, including one or more cubicles of air at one or
more levels of space or one or more rooms or enclosed spaces located on one or more
floors, or parts thereof, in a building. A unit may include 2 or more noncontiguous
areas.
Sec.703.02(15). The "common
elements" of a condominium are defined as "all of a condominium except its
units," §703.02(2), while the "limited common elements" are defined
as "those common elements identified in a declaration or on a condominium plat as
reserved for the exclusive use of one or more but less than all of the unit owners."
Sec.703.02(10).
¶27. No similar statutory definition for "dockominium" exists.
While a dockominium can be considered, from the mere origin of its name, a
condominium-style marina, a dockominium has been more precisely defined as a
"dockside community of privately owned boats moored in slips that are purchased for
year-round living.... A slip in such a community." American Heritage Dictionary (4th
ed. 2000) at http://www.bartleby.com/61/53/D0315300.html. A
"slip" is defined as a "docking place for a ship between two piers."
Id. at http://www.bartleby.com/61/54/S0475400.html.
¶28. Here, under the Declaration, a dockominium unit consists of
that separate area of the
condominium intended for independent, private use, comprised of a cubicle of space defined
by a "Lock Box" located within the Harbor House .... Each unit shall include as
an appurtenance,3 standard riparian
rights of owners of waterfront real estate under Wisconsin Law, and the use of an assigned
boat slip corresponding to the unit designation as a part of the common elements ....
The Declaration also states that the
common elements do not include the above-described individual units, but "[e]ach unit
owner, as a limited common element appurtenant exclusively to his unit, shall have riparian
rights to use of the space beside the pier or piers corresponding to his unit number ... for use
as a boat slip." Each unit owner has a fee simple interest in his or her dockominium
unit, and an undivided interest in the common elements and facilities and limited common
elements as a tenant in common with all other unit owners. A fee simple interest means
"an interest in land that, being the broadest property interest allowed by law, endures
until a current holder dies without heirs." Black's Law Dictionary 630 (9th ed. 1999).
"Tenancy in common" is defined as "[a] tenancy by two or more persons,
in equal or unequal undivided shares, each person having an equal right to possess the whole
property but no right of survivorship." Id. at 1478.
¶29. While riparian owners such as ABKA have certain well-established rights
that are incidents of their ownership of property adjacent to the water, under the public trust
doctrine, these rights are subject to the public's right to use navigable waters. State v.
Bleck, 114 Wis. 2d 454, 469, 338 N.W.2d 492 (1983). The public trust
doctrine has its roots in article IX, section 1 of the Wisconsin Constitution, under which the
state holds the beds of navigable waters in trust for public use.4 Borsellino v. DNR, 232
Wis. 2d 430, 443, 606 N.W.2d 255 (Ct. App. 1999). The regulation and enforcement of
this public trust rests with the legislature and the DNR. Id.
¶30. Although the public trust doctrine was originally designed to protect
commercial navigation, it has been expanded to protect the public's use of navigable waters
for purely recreational and nonmonetary purposes. Bleck, 114 Wis. 2d at
465. Public policy factors signifying the public interest include the wish to preserve the
natural beauty of our navigable waters, to obtain the fullest public use of these waters,
including but not limited to navigation, and to provide for the convenience of riparian
owners. Sea View Estates, 223 Wis. 2d at 159. Such public interest
concerns also include maintaining the safe and healthful condition of the water, protecting
spawning grounds and aquatic life, controlling the placement of structures and land uses,
preserving shore cover and natural beauty, and promoting the general attractiveness and
character of the community environment. Id. at 160.
¶31. The common law also requires reasonable use by riparian owners.
Sterlingworth, 205 Wis. 2d at 731. "[E]very ... right which a
riparian owner acquires, as such, to the waters ... by his land, is restricted always to that
which is a ... reasonable use, and these terms are to be measured and determined by the
extent and capacity of the [lake], the uses to which it has been put, and the rights that other
riparian owners on the same [lake] also have." Id. (citation
omitted).
¶32. The legislature has charged the DNR with the duty of enforcing
environmental laws, including the regulation of piers in navigable waters pursuant to Wis.
Stat. §§30.12 and 30.13. Both § 30.12 and Wis. Stat. ch. 30 generally
codify a number of common law doctrines regarding the ownership of the beds of navigable
waters. State v. Trudeau, 139 Wis. 2d 91, 101, 408 N.W.2d 337 (1987).
Section 30.12 is a codification of the common law restriction against encroachments on
publicly held lake beds, Trudeau, 139 Wis.2d at 102, and its function is
to regulate the placement of fill or structures on the beds of navigable waters, but not to
regulate the use and enjoyment of those waters. Bleck, 114 Wis.2d at
467. Section30.12 is a rational way of accommodating both the public trust doctrine and the
reasonable use doctrine, as it "recognizes the tradition of certain rights unique to
riparian owners, yet ensures that riparians will not be able to place structures on the beds of
navigable waters if they are detrimental to the paramount public interest."
Bleck, 114 Wis. 2d at 469-70. A § 30.12 permit will not be
authorized if the structure proposed by the riparian owner materially obstructs navigation or
if the structure infringes upon the public interest. Bleck, 114 Wis.2d at
469.
¶33. The Wisconsin Supreme Court has stated that
[t]he title to the beds of all lakes
and ponds, and of rivers navigable in fact as well, up to the line of ordinary
high-water mark, within the boundaries of the state, became vested in it at the instant of its
admission into the Union, in trust to hold the same so as to preserve to the people forever
the enjoyment of the waters of such lakes, ponds, and rivers, to the same extent that the
public are entitled to enjoy tidal waters at the common law.
Trudeau, 139 Wis. 2d
at 101 (citation omitted).
DISCUSSION
Jurisdiction of the DNR
¶34. ABKA5 first
argues that the DNR lacked jurisdiction to require it and the Association to apply for a new
Wis. Stat. § 30.12 permit. Specifically, ABKA argues that §30.12 does not
provide a valid basis for the DNR to review its existing permit.
¶35. ABKA and the DNR reached an agreement wherein ABKA agreed to
apply for a new permit, but reserved the right to contest the DNR's jurisdiction. However,
as both this agreement and the ALJ noted, we are not bound by this understanding. In
addition, while the ALJ provided a thorough and well-reasoned analysis of the reach of Wis.
Stat. § 30.12 and the DNR's authority, we hold that ABKA waived this argument by
applying for the new permit in the first place.
¶36. The application filed by ABKA specifically states that the application is
filed pursuant to Wis. Stat.ch. 30. While ABKA asserts in the application that "the
DNR has no jurisdiction to require a review or modification of" the permit, and that
ABKA was not "waiving or limiting its rights to contest" the DNR's jurisdiction,
by applying for the permit it willingly placed itself under the DNR's jurisdiction and the
reach of ch.30. ABKA may have filed the application under protest, but the DNR did not
force it to file the application. ABKA could have refused to file the application and risked
an enforcement proceeding or the imposition of fines and penalties, wherein it could have
challenged the DNR's authority. See Sterlingworth, 205 Wis. 2d at
726-27. Furthermore, ABKA could have filed a declaratory judgment action in circuit court
under Wis. Stat. §227.05(1), asking a circuit court to determine its rights and
obligations under Wis. Stat. § 30.12. Instead, it chose to file a ch. 30 permit
application. As both the agreement and the ALJ noted, any reliance on the agreement was
the result of a calculated business gamble by ABKA, done at ABKA's own risk. As
applicants, ABKA and the Association placed themselves under the DNR's jurisdiction,
thereby foreclosing the argument that the DNR had no jurisdiction over this project.
Public Trust Doctrine
¶37. WAL argues that ABKA's dockominium development violates the public
trust doctrine by attempting to convey a perpetual exclusive right to a portion of Lake
Geneva.
¶38. We pause to commend the ALJ for the careful, extensive and professional
analysis that resulted in the agency decision under review. As the ALJ noted in his
comprehensive and in-depth analysis, this is a matter of first impression in Wisconsin and the
law is silent on the issue of whether the dockominium form of ownership is permissible
under the public trust doctrine. It is clear that the dockominium concept represents a
confrontation between a private claim in boat slip space and public interests in the water.
Mark Cheung, Dockominiums: An Expansion of Riparian Rights that Violates the
Public Trust Doctrine, 16 B.C. Envtl. Aff. L. Rev. 821, 825 (Summer 1989).
¶39. The United States Supreme Court's seminal decision on the public trust
doctrine held that the state is directed to act as trustee of the waters within its borders and to
protect the public's right to use the waters. Illinois Cent. R.R. v. Illinois,
146 U.S. 387, 435 (1892). The public trust doctrine is premised on the idea that private
ownership of public resources is improper and provides the public with a right to the benefit
of certain public resources. Cheung, supra, at 830-31. This right supplants any
private interests and imposes strict responsibilities upon the government as trustee of these
public resources. Id. The government cannot relinquish its trust duties
associated with any public property. Id. at 831.
¶40. Regulation of private riparian uses is essential if the state is to fulfill its
role of protecting state waters. Wagner, supra, at 247. When conflicts occur
over the use of the waters of the state, riparian rights must always surrender to the public
interest. Id. at 248. Wisconsin has repeatedly acknowledged its
obligation to safeguard the state's navigable water resources for the use, enjoyment and
benefit of the public. Id. at 247.
¶41. Here, section 5 of the Declaration provides definitions and a description
of the units; a dockominium unit is
that separate area of the
condominium intended for independent, private use, comprised of a cubicle of space defined
by a "Lock Box" located within the Harbor House as shown in the Condominium
Plat.... Each unit shall include as an appurtenance, standard riparian rights of owners of
waterfront real estate under Wisconsin Law, and the use of an assigned boat slip
corresponding to the unit designation as a part of the common elements of THE ABBEY
HARBOR CONDOMINIUM.
According to the Declaration, the common
elements and facilities consist of the real property, and real property interests, improvements
and appurtenances described in this Declaration, except the above-described individual units;
the common elements and facilities
shall include, without limitation, the land
and real property interests described ... herein including the buildings and improvements
located thereon, the marina shoreline, sea wall and sidewalk along said shoreline ... all
docks, boardwalks, piers and pilings contained within the marina, all as shown on the
Condominium Plat ... the Harbor House, outdoor swimming pool, boat launching ramp,
sidewalks, driveways and walkways, utility services, utility lines and conduits including those
leading up to the utility pedestal boxes serving the respective boat slips, parking areas within
the condominium Property, and those improvements, structures and facilities shown on the
Condominium Plat as well as certain "Dock Boxes" located on the condominium
Property, but not shown on the Condominium Plat, and any and all other parts or elements
of the condominium Property as described in this Declaration and additions thereto in the
future made by the unit owners or the Association of Unit Owners (hereinafter described).
The limited common elements include the
boat slips:
Each unit owner, as a limited common
element appurtenant exclusively to his unit, shall have riparian rights to use of the space
beside the pier or piers corresponding to his unit number as shown in the Condominium Plat,
for use as a boat slip.... The placement of riparian structures in, and the use of, the waters
of the marina as a part of THE ABBEY HARBOR CONDOMINIUM is
subject to the rights of the members of the public and the State of Wisconsin under
Wisconsin law and subject to permits issued by the State of Wisconsin.
¶42. Each unit owner owns a fee
simple interest in his or her condominium unit and an undivided interest in the common
elements and facilities and limited common elements as a tenant in common with all other
unit owners. Unit owners can sell, lease, sublease, rent, license or otherwise contract for the
usage of their respective boat slip, without restriction, subject to state permits, on a
long-term or short-term basis, in their sole discretion. Individual unit owners are required to
maintain or provide all necessary insurance for their unit and its appurtenance.
¶43. Technically, the conveyance of the dockominium unit as defined by the
Declaration fulfills the requirements of Wisconsin's condominium law because the unit is
intended for independent use and is an enclosed space located within a building, a lock-box
in the Harbor House. Wagner, supra, at 251. However, unlike most
condominium units, the lock-box itself has no inherent value; rather, the appurtenant rights
attached to the conveyance are the valuable commodity. Id. We agree
with the ALJ that, to some degree, "the dockominium concept involves a legal fiction:
that ABKA is selling the lock-box condominium units, rather than the pier
slips."
¶44. By definition, a "dockominium" is a "dockside
community of privately owned boats moored in slips that are purchased for year-round
living.... A slip in such a community." American Heritage Dictionary (4th ed. 2000)
at http://www.bartleby.com/61/53/D0315300.html. Here, while a
dockominium unit is labeled a lock-box, appurtenant to the lock-box is the exclusive use of
an assigned boat slip as part of the common elements. As a common element, the boat slip
is conveyed to the unit owners and the Association as tenants in common. But a boat
"slip" is, by definition, a "docking place for a ship between two
piers." Id. at
http://www.bartleby.com/61/54/S0475400.html. In other words, a
boat slip is the water and the lake bed under the water. Thus, ABKA is
attempting to convey a portion of the waters of Lake Geneva to the unit owners as tenants in
common. The ALJ's decision acknowledges that under the Declaration, the "pier slip
is [the individual owner's] and cannot be considered to provide a public benefit." The
public trust doctrine should not be manipulated to allow a conveyance of interest in the water
as tenants in common. Cheung, supra, at 852.
¶45. An examination of existing literature on dockominiums confirms this
conclusion. A dockominium does not adversely impact water quality, quantity or flow, but
despite the dockominium's creative manipulation of riparian rights, it does obstruct the
public's complete access to the waterways and creates a claim of private ownership upon
water owned by the public. Id. at 825. In fact, the dockominium concept
is founded on the idea that individuals may own exclusive control of the water within a boat
slip space. Id. at 822.
¶46. Dockominium purchasers become riparian owners of the individual
parcels of riparian rights and understandably expect that no other boater, or even a swimmer,
can occupy the slip space. Id. at 844. This expectation suggests that the
dockominium owner owns the water within the slip space. Id. As the
ALJ noted, the use of the waters of Abbey Harbor, including the waters in the boat slips, is
legally open to members of the public. However, the ALJ also acknowledged that
"there is an inherent conflict between the public's use of these waters and the
expectations of an exclusive property interest in the pier slips."
¶47. ABKA's marketing materials do nothing to dispel that expectation. One
advertisement purporting to explain the dockominium program addresses the purchase price
of a slip and the advantages of owning a slip versus renting one. This advertisement asserts
that a dockominium can be sold, transferred or passed by inheritance at any time. ABKA
and the Association advised prospective buyers to "look into a permanent berth"
at the Marina and stated that "individual slips can be owned and transferred by
deed." The ALJ commented that without question the initial marketing of the
dockominiums "sought to blatantly sell public waters for private benefit." As the
ALJ noted, the marketing language was less blatant in more recent versions; however,
"dockominium purchasers may still believe they are purchasing permanent rights in
public waters as a result of the purchase of a ... unit."
¶48. ABKA argued before the ALJ that a dockominium conveyance is
consistent with the public trust doctrine because the language in the Declaration continues to
subject dockominium slip holders to state regulation. However, we agree with the ALJ that
"[m]arketing of the pier slips ... could give unit owners a false expectation of a
property interest in public waters" and that any restrictions "could be rendered
meaningless once the expectation of a property interest has been
established."6
¶49. Despite the use of the restrictive language in the Declaration, approval of
ABKA's application would give prospective unit owners the expectation that they would gain
vested private rights in public waters. ABKA's plan purports to create permanent rights in
an area of public water. The ALJ aptly stated that "[c]onversion of all 407 slips to
dockominium status would violate long-held notions of the reasonable use of public trust
waters by a riparian." We fail to see how the conveyance of 407 separate private
property interests in public waters is violative of the public trust doctrine, but the conveyance
of 120 separate private property interests in public waters is not. Put simply, the conveyance
of 7 or the conveyance of 407 boat slips in the manner proposed by ABKA violates the
public trust doctrine.
¶50. In essence, a dockominium development attempts to offer a small class of
boat owners the exclusive and permanent right to own and to occupy a portion of public trust
waters and provides access to the waters to a select group of the public, which fails to satisfy
the purpose of the public trust doctrine. Catherine Robinson Hall, Dockominiums: In
Conflict with the Public Trust Doctrine, 24Suffolk U. L. Rev. 331, 343 (Summer
1990). A dockominium removes a portion of the public trust area from free availability for
the citizens, which directly conflicts with the underpinning and careful limitations of the
public trust doctrine. Id. Exclusive private ownership of water is
completely contrary to the foundation of the public trust doctrine.
Id.
¶51. The DNR may allow individuals to place docks in the water for access
and reasonable use of the water by issuing permits but may not allow the passing of title to
the water. Cheung, supra, at 852. Navigable waters unquestionably belong to
the people, and to allow private individuals to claim the dockominium slip space or the water
within the slip as a property interest is violative of the public trust doctrine.
Id. By permitting the conversion of marinas to private dockominiums as
ABKA proposed here, the DNR has allowed control over public trust lands to be vested in
private individuals, in violation of the public trust doctrine.7
CONCLUSION
¶52. A boat slip is by definition the water and lake bed between two piers; but
no one but the state can own the water and the lake bed. Riparian owners do not possess
water in a lake, but only the right to reasonable use of the water in the lake; "[r]iparian
owners acquire at most the usufructuary right to water based on possession or dominion, but
not outright ownership of the water." Id. at 839.
¶53. ABKA's dockominium proposal allows ABKA and the Association to
transfer ownership of public waters to private individuals and therefore is in direct conflict
with the public trust doctrine. We therefore reverse the order of the circuit court affirming
the ALJ's decision granting ABKA a Wis. Stat. ch. 30 permit.
By the Court.-Order reversed.
Recommended for publication in the official reports.
¶54. BROWN, J. (dissenting). I join in the majority's
commendation of the ALJ's work.8
Unlike the majority, however, I agree with the ALJ's reasoning and conclusions. I would
affirm the circuit court which affirmed the ALJ's decision.
¶55. At bottom, the engine powering the majority opinion is the thought that
dockominiums are a marketing "scheme" or "creative manipulation"
by which persons purport to sell the water within a boat slip space. The factual predicate for
this idea is that the purchaser is not really a riparian owner in the normal sense of the term,
but the owner of a lock-box, a small metal enclosure that looks like a post office box. The
majority likens this to a ruse because the lock-box is absent any value without the ownership
of the water within the slip. What the majority opinion attempts to do is to outlaw this
marketing concept as antithetical to the public trust doctrine.
¶56. The factual predicate is wrong and, once we understand the true
facts at hand, then the conclusion that the concept violates the public trust doctrine must fall.
The purchasers here do not own simply a lock-box. They own more and when we
understand what they own, it is apparent that they are common owners of riparian land. I
quote the ALJ:
The individual "condominium
unit" owners individually own only a lock-box, similar to a post office box, located in
the Harbor House.... The lock-box constitutes "the unit" within the meaning of
sec. 703.02(15), Stats. The unit is separately and independently owned by each
condominium owner and is intended for independent, private use. In itself, the lock-box
does not confer riparian status on condominium unit owners.
However, the Declaration provides that the unit owners are tenants in common
with each other of all of the common elements including all of the riparian real estate and
improvements such as the Harbor House, seawall, sidewalk, boat launch, parking lot, docks
and piers and swimming pool.... The legal question is whether holding such property in the
form of a common element of a Condominium Declaration constitutes "riparian"
status under sec. 30.12, Stats. Section 703.04, Stats., provides that: "A unit, together
with its undivided interest in the common elements, for all purposes constitutes real
property." The individual lock-box condominium unit owners are tenants in common
in the property subject to the Declaration, including approximately 20 acres of riparian
property and nearly 4200 feet of riparian shoreline property.... Accordingly, riparian status
vests from holding these lands in common under the terms of the Declaration.
¶57. From the above passage, it is
clear that the purchasers are more than simply owners of a lock-box. They are not bogus
riparian owners. They share ownership of more shoreline than most individual owners of
riparian land in this state. They also share twenty acres of total land. They further share
ownership of a swimming pool and a Harbor House. Certainly, the owners do not live on
the land. But there is no law that says they have to before they can be considered riparian
owners. I think where the majority opinion goes wrong is that it considers the purchasers to
be fake riparian owners. They are not. They are real owners, albeit sharing the property in
common.
¶58. The majority is disturbed by the marketing concept of the sellers. They
are disturbed by the notion that the buyers will consider themselves owners of the water.
The ALJ spoke to that as well. I quote the ALJ again:
There is no question that the
initial marketing of the dockominiums sought to blatantly sell public waters for private
benefit.... While the language has been less blatant in recent versions, dockominium
purchasers may still believe they are purchasing permanent rights in public waters as a result
of the purchase of a condominium unit. Section 7.2 of the Declaration states that each boat
slip owner will have "as a limited common element appurtenant exclusively to his unit
... riparian rights to use of the space beside the pier or piers corresponding to his unit
number." However, it is clear that riparian rights derive not from the purchase
of a unit as such, but from the common elements which include riparian lands.
(Emphasis added.)
¶59. The ALJ had it correct. The
purchasers may believe they have bought ownership rights to the water.
However, this does not mean that they actually own it. If ownership of the water is illegal,
and it is, then they have bought only common ownership of the terra firma with
right of access to the water. If they think they got a raw deal because they bought something
they are not entitled to buy, their recourse is to sue the developer or the seller or even the
broker for selling an illusion.9
¶60. There is nothing inherently wrong or illegal about taking a piece of
riparian land and selling it in condominium form so that the end result is many owners of
that land. There is nothing inherently wrong with these owners sharing common access to
the water and assigning between themselves who is going to get which boat slip. It is not as
if the riparian rights are increased by increasing the number of owners. The riparian rights
remain the same and those rights are regulated by the DNR. I fail to see how that violates
the public trust doctrine. The bottom line is that the water is not sold because it cannot be
sold. Any marketing scheme purporting to sell the water within the slip is the selling of an
illusion. But we are not today faced with a question of whether the seller should be exposed
to suit because it sold an illusion. Our purpose is to ask whether the dockominium owners
are real riparian owners. If they are, then they have a right to put a pier in the water and
sell the exclusive, perpetual right to have a pier in the water subject to DNR regulations.
The bottom line is that a change in ownership is not a violation of the public trust doctrine
and that is all this is: a change in ownership from one big hotel concern to many different
persons who own big boats.
¶61. I add that I view the dockominium concept under the facts of
this case as passing muster. If the purchasers were to own no riparian land and
were sold only the pier slips, I believe that this status would be illegal. But this is because
the purchasers would not be riparian owners, not because the purchasers believed they were
purchasing ownership in the water appurtenant to a pier. I can think of several other
instances where the dockominium project would probably not get off the ground. But this is
not the time to discuss them. Suffice it to say, each project must stand or fall on its own
facts.
¶62. Before leaving this subject, I quote the ALJ once more:
[C]ondominium ownership of the
marina does not in itself violate the public trust doctrine. Conversion of all of the pier slips
to dockominium status would violate the public trust doctrine and would be detrimental to the
public interest in maintaining public access to public waters. However, complete rejection of
the proposed dockominium conversion would unfairly discriminate against the condominium
form of ownership. Riparian owners in Wisconsin, including riparians who gain such a
status by holding land in common through the condominium form of ownership, have the
limited right to place a reasonable number of pier slips in public waters to gain access to said
waters. The condominium unit-holders in this matter own riparian lands in common with
other unit holders including ABKA.... Condominium unit-owning riparians are entitled to no
more and no less access than other riparians.
¶63. I agree with the sentiments
expressed by the ALJ. The dockominium concept is simply a creative means by which to
convey riparian land. It does no violence, per se, to the public's right to use the waters.
Riparians have always had rights of use to the water. The dockominium concept does not
change that fact. These rights of use are regulated by the DNR on behalf of the public.
This does not change with the advent of dockominiums.
¶64. If the public trust doctrine is not violated by the dockominium concept,
then we get to the next two questions, whether the DNR had the power to reduce the number
of slips that the condominium owners could enjoy and, if so, whether the exercise of that
power was reasonable. The parties briefed these issues voluminously and raised and argued
subissues. If this were the majority opinion, I would address each point made. But in a
dissent, it is unnecessary. All I need to do is get my point across.
¶65. ABKA notes that it originally had a permit from the DNR to put up 407
piers when it owned the property by itself. Since all that has occurred is a change in
ownership from one owner to multiple owners of riparian land, ABKA asserts that there is
no justification for the DNR to regulate the conversion. ABKA observes that this was
always a private dock, never a public dock. It then reasons that the public trust doctrine is
not violated by maintaining the status quo. ABKA argues that the riparian use is not changed
and since it is not changed, the use of the waters is not changed and the DNR simply has no
authority to come in absent a change in the use. ABKA therefore asserts that its permit is
still good.
¶66. I disagree. As ABKA itself stated at oral argument, the docks in question
here are meant to harbor big boats. I now quote a statement made during oral argument by
ABKA's counsel: "This case is really about one rich person who leases versus one
rich person who owns, not the average little guy who wants to take his family out for an
outing. This is not a meaningful distinction relevant to the public trust doctrine." I
agree that this case is about big boat owners who own riparian land versus big boat owners
who lease slips on a seasonal basis. But just because we are not dealing with "the little
guy" does not mean that the public trust doctrine is irrelevant.
¶67. The burning question is still access. The person who can
afford to own a big boat, but who does not have a riparian right, is entitled to access to the
lake just as is the person with a similar size boat who does have riparian status. There are
simply too few places in Wisconsin's inland waters for people with big boats. Lake Geneva
is one lake where big boats can harbor. The DNR's concern here is about access to that
lake. If ABKA's dockominium were to end up taking away all availability for leasing, the
person who had a big boat but did not have riparian rights would have less access to the
water. I would ask: where is that person going to go? This is why, in my opinion, the
conversion plan is the business of the DNR, because the DNR is in the business of assuring
access to everybody, even wealthy people.
¶68. And when the DNR looked at the facts surrounding the conversion plan,
this is what it found, as evidenced from the record before the ALJ. There are three ways to
access water: (1) by being a riparian owner, (2) by renting a slip, and (3) by public access.
In the case of big boats, public access ramps are simply unfeasible. It takes time and money
to launch these big boats and time and money to get them out. So, that leaves renting or
riparian access. The ALJ cited testimony from a warden that ABKA's conversion would
reduce the number of slips available on Lake Geneva by almost half. It stands to reason
that if the number of available slips for big boats on Lake Geneva is reduced by half, access
is compromised. That is just common sense. And that is what ultimately drove the DNR's
determination in this case.
¶69. As the ALJ related, one witness testified how she and up to 100 of her
friends were forced to leave the Abbey because of the high cost ($46,500) of purchasing a
pier slip, paying taxes and meeting condominium assessments. Similar sentiments, along
with a deep sense of regret, at having been forced off Lake Geneva because of
the high costs were expressed by another witness.
¶70. The ALJ correctly observed that the public trust doctrine reflects an effort
by the law to balance the rights of riparians with the rights of the public in waters held in
public trust. What constitutes reasonable use, under the common law test, is a factual
determination, varying from case to case, which includes factoring the subject matter of the
use and the occasion and manner of its application. The ALJ concluded that the
"subject matter of the use" and the "occasion and manner of its
application" at the Marina would be changed fundamentally if the entire Marina were
converted to dockominium status and the boat slips were no longer regularly and consistently
made available to the public by way of seasonal rental. I agree. I conclude that the DNR
had the authority to step in to protect the owners of big boats who are not riparian owners.
As I expressed before, these people are members of the public and entitled to access just like
anyone else. The public trust doctrine is not irrelevant to these people as ABKA
contends.
¶71. The only remaining question is whether the DNR's determination that 287
of the 407 slips remain available to the public is reasonable. Here, the DNR is accorded
great discretion. The facts and circumstances support this determination. I would affirm the
circuit court which affirmed the ALJ's decision which upheld the DNR's
determination.
1 All statutory references are to the 1999-2000 version unless otherwise noted.
2 In addition, in October 1996, DFS Development, Inc., Charles E. Eklund and Chicago
Title Insurance Company filed in the circuit court a proposed petition for judicial review by
applicants for intervention as party petitioners. This motion to intervene was denied by the
circuit court on December 12, 1996; we ultimately affirmed this denial on December 10,
1997.
3 An "appurtenance" is defined as "[s]omething that belongs or is attached
to something else." Black's Law Dictionary 98(9th ed. 1999).
4 In fact, the public trust doctrine precedes our state constitution. Borsellino v.
DNR, 232 Wis. 2d 430, 443 n.6, 606 N.W.2d 255 (Ct. App. 1999), citing to
article IV of the Northwest Ordinance of 1787.
5 ABKA submitted briefs and provided oral arguments on both its and the Association's
behalf.
6 A recent United States Supreme Court opinion lends weight to this expectation.
Palazzolo v. Rhode Island, 533 U.S. ___, 121 S. Ct. 2448 (2001), could
have an impact on whether a purchaser of a dockominium would have a future takings action
against the state if his or her riparian real estate interest in a boat slip were later challenged.
Palazzolo was a shareholder in a corporation that purchased a waterfront parcel in
1959, most of which is salt marsh subject to tidal flooding. Id. at 2455.
In 1971, Rhode Island created an agency (Council) to protect coastal wetlands that included
this wetland parcel. Id. at 2456. In 1978, Palazzolo obtained sole
ownership of the parcel after the corporation terminated. Id. In 1983,
Palazzolo asked permission to construct a wooden bulkhead and to fill in the entire
marshland area. Id. Council denied this request. Id.
In 1985, Palazzolo asked permission to fill in eleven of eighteen wetland acres
to build a private beach club. Id. Council denied this request on the
basis that no compelling public purpose would be served. Id. Palazzolo
filed an inverse condemnation action, arguing that the wetlands regulation had taken his
property without compensation even though the regulation had existed at the time he became
the sole owner. Id.
In effect, Palazzolo indicates that a buyer's acquisition of title,
even after regulatory rules become effective, does not bar a takings claim:
Were we to accept the State's
rule, the postenactment transfer of title would absolve the State of its obligation to defend
any action restricting land use, no matter how extreme or unreasonable. A State would be
allowed, in effect, to put an expiration date on the Takings Clause. This ought not to be the
rule. Future generations, too, have a right to challenge unreasonable limitations on the use
and value of land.
Nor does the justification of notice take into account the effect on owners at the
time of enactment, who are prejudiced as well. Should an owner attempt to challenge a new
regulation, but not survive the process of ripening his or her claim ... under the proposed
rule the right to compensation may not be asserted by an heir or successor, and so may not
be asserted at all. The State's rule would work a critical alteration to the nature of property,
as the newly regulated landowner is stripped of the ability to transfer the interest which was
possessed prior to the regulation. The State may not by this means secure a windfall for
itself.... The Takings Clause is not so quixotic. A blanket rule that purchasers with notice
have no compensation right when a claim becomes ripe is too blunt an instrument to accord
with the duty to compensate for what is taken.
Id. at 2462-63.
Palazzolo suggests that a dockominium owner would have a
ripened takings claim in the future if the state, exercising its public trust doctrine
responsibility, ever tried to interfere with the owner's entitlement to the appurtenant pier and
boat slip.
However, none of the parties in the case at hand have had a chance to address
Palazzolo and develop arguments regarding its issues; thus, we do not
rely on Palazzolo in making our decision. We mention it only for its
potential implications in cases such as this.
7 Because our resolution of this issue disposes of the appeal, we need not address the
remaining arguments. Sweet v. Berge, 113 Wis. 2d 61, 67, 334 N.W.2d
559 (Ct. App. 1983).
8 The ALJ was Jeffrey Boldt.
9 The majority cites Palazzolo v. Rhode Island, 533 U.S. ___, 121 S.
Ct. 2448 (2001), for the proposition that it "suggests that a dockominium owner would
have a ripened takings claim in the future if the state, exercising its public trust doctrine
responsibility, ever tried to interfere with the owner's entitlement to the appurtenant pier and
boat slip." Majority at ¶48 n.6. I disagree with that characterization of
Palazzolo.
Palazzolo has owned eighteen acres of "coastal wetlands" adjoining
uplands in Rhode Island since 1959. Id. at 2455. At that time, he
subdivided this property into eighty lots. He still owns seventy-four of them.
Id. He desired to develop the land, but because most of it was
marshland, he wanted to add dirt to raise the level of his lots and convert them to dry land
capable of development. The applications were denied based on regulations in place before
his purchase. Id. at 2456. He appealed. The case made its way to the
United States Supreme Court.
Three issues were before the Court: (1) whether a regulatory takings claim is
categorically barred whenever the enactment of the regulations predates the claimant's
acquisition of the property; (2) whether a landowner must file additional applications seeking
permission for "less ambitious uses" in order to ripen a takings claim; and (3)
whether the remaining permissible uses of regulated property are economically viable merely
because the property retains a value greater than zero. Id. at 2457-58.
The Supreme Court held that: (1) the claims were ripe for adjudication, see
id. at 2462; (2) acquisition of title after the effective date of the regulations
does not bar a takings claim, see id. at 2464; and (3) since there was
undisputed value of a portion of his land, he was precluded from making a claim that the
denial deprived him of all economic use. See id.
Palazzolo was therefore about a person who owned terra
firma; it was not about a person claiming to own a bed of water. It was about whether
a regulation in place before an owner's purchase could bar his takings claim to land for
which he had valid title. It was his land. He owned it. The Supreme Court said that even
if he bought valid title after a regulation was in place, he could still claim that a takings
occurred. The opinion says nothing about whether a person would have a takings claim for
something he or she never validly owned in the first place. In sum,
Palazzolo is totally irrelevant to the issues in this case, both factually and
analytically.
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