Jan. 16, 2014 – The Town of Delavan under-taxed “off-lake” real estate and over-taxed more than 50 lakefront homes, a violation of Wisconsin law. But the lakefront homeowners won’t get their desired remedy, a state appeals court has ruled.
The Wisconsin Constitution’s “uniformity clause” requires municipalities to tax properties in a “uniform” manner. Additionally, Wis. Stat. section 70.32 requires real estate assessments to be uniform and consistent based on acceptable appraisal practices.
Delevan property assessments violated these mandates, argued the lakefront property owners, who filed two lawsuits for tax year refunds and alleged the town “has a long history of discriminating against taxpayers who own property on Delavan Lake.”
A trial court found that property tax assessments on lakefront properties were excessive by three percent. The plaintiffs had argued that increased assessments were levied despite evidence that properties declined in value for those tax years. In the same tax years, the town assessed off-lake properties at 45 percent below fair market value.
In addition to tax refunds for excessive payments in the subject tax years, plaintiffs wanted damages for the town’s constitutional uniformity violation: they too wanted property assessments based on 45 percent of fair market value. However, the circuit court declined that request.
The circuit court fashioned a “made whole” remedy that would allow the lakefront property owners to recoup additional taxes paid. But allowing a 45 percent discount, the circuit court ruled, would result in a “windfall” tax reduction for lakefront property owners.
In 3301 Bay Road LLC v. Town of Delavan, 2013AP148 (Jan. 15, 2014), a three-judge panel for the District II Court of Appeals upheld the circuit court’s ruling.
“The circuit court did not erroneously exercise its discretion in fashioning a fair remedy for the uniformity violation,” Judge Paul Reilly wrote.
Although plaintiffs lost on this point, they will get another chance to argue their case on expert witness fees. Two expert witnesses cost close to $30,000. The plaintiffs sought recovery of up to $300 per expert, per individual plaintiff named in the cases.
Under Wis. Stat. section 814.04(2), expert witness fees may not exceed $300 for each expert who testifies. The circuit court viewed this as limiting recoverable costs to $300 per expert, per case in the aggregate – the 50 plaintiffs would split $1,200.
But the appeals court reversed. “To the extent that the circuit court based its decision on the belief that it could not award more than $1,200, the court erred,” Reilly wrote.
The three-judge panel said the plaintiffs may recover expert fees as if they filed separate actions, even though they joined together to file a single complaint.
However, the panel noted that costs are discretionary in “special proceedings,” pursuant to section 814.02(2), including excessive assessment actions. Thus, the court remanded the case for a redetermination of expert witness costs that may be recovered.