Evidence of contamination and remediation costs
is admissible in condemnation proceedings
Environmental contamination and remediation costs can be
considered in determining the fair market value of property taken by the
government, the Wisconsin Supreme Court has ruled, rejecting a contrary
rule applied by bordering Minnesota.
By org jforward wisbar Joe Forward, Legal Writer,
State Bar of Wisconsin
2011 – In condemnation proceedings, the government is allowed to
introduce evidence of environmental contamination and future remediation
costs to reduce the just compensation it must pay to a property owner,
the Wisconsin Supreme Court has ruled.
“Such evidence is admissible in condemnation proceedings in the
circuit court’s discretion so long as it is relevant to the fair
market value of the property,” wrote Justice Annette Ziegler for a
unanimous court in Ryan
v. Wisconsin Dept. of Transportation, 2011 WI 103 (Dec. 22,
The Wisconsin Department of Transportation (DOT) used its eminent
domain power to acquire Menomonee Valley property owned by Basil Ryan
Jr. through a LLC. The acquisition was necessary in the construction of
the Marquette Interchange project in Milwaukee.
Ryan’s appraiser valued the property at close to $3.5 million.
The appraisal assumed the property was environmentally clean.
But the DOT offered and awarded just compensation of $1.35 million,
under Wis. Stat. section 32.05(7).
The DOT’s appraisal included deductions for environmental
contamination and estimated remediation costs. Ryan appealed to the
Milwaukee County Circuit Court.
A jury awarded Ryan $2 million. Ryan appealed, arguing that evidence of
environmental contamination and costs for remediation is inadmissible. A
Wisconsin appeals court upheld
the jury award of $2 million, ruling that such evidence was admissible
in determining the fair market value of the property. Ryan sought review
before the Wisconsin Supreme Court.
Double-take argument rejected
Ryan argued that allowing contamination and clean-up cost evidence in
condemnation cases allows the government to take property through
eminent domain at a discounted rate, then pursue the same property owner
for to get clean-up costs. Such a ruling results in a
“double-take” or “double-liability” for the
property owner, Ryan argued.
In making this argument, Ryan invoked a Minnesota Supreme Court case,
Moorhead Economic Development Authority v. Anda, 789 N.W.2d 860
(Minn. 2010). The Anda court held that evidence of
environmental contamination and clean-up costs are generally
inadmissible in condemnation cases, based on fairness and due process
But the Wisconsin Supreme Court refused to adopt the Minnesota rule.
“[T]he concerns raised by Ryan and the Minnesota Supreme Court are
based on an assumption that a subsequent environmental action [against
the contaminator] is a certainty. It is not,” Justice Ziegler
“We decline to exclude evidence of environmental contamination
and of remediation costs in condemnation proceedings as a matter of law,
and thereby require the condemnor to always pay more than the
property’s fair market value, based on the mere possibility of a
‘double take,’” Justice Ziegler wrote. “Indeed,
in the case of a taking, fairness to the property owner is only half the
The supreme court noted that case law and Wisconsin’s jury
instruction on fair market value in total takings cases, Wis. JI-Civil
8100, instructs jurors to consider every element establishing fair
market value, including elements that a prudent purchaser would
Even if the contested evidence is admissible as a matter of law, Ryan
argued, the circuit court erroneously exercised its discretion to admit
testimony from the DOT’s appraiser because he did not use the
proper methodologies to appraise contaminated property.
But the supreme court disagreed, explaining that the DOT’s
appraiser was a qualified expert witness, and flaws in his methodology
concerns the weight of his testimony, not the admissibility of it. Ryan
had an opportunity to attack the methodology on cross-examination, the
court explained, and it was up to the jury to assess the
The court also ruled that two of Ryan’s expert witnesses were
properly excluded from testifying based on untimely disclosure, and
upheld the circuit court’s decision to use a standard jury
instruction for determining fair market value of the property. Ryan
argued it was insufficient.
Chief Justice Shirley Abrahamson wrote a concurring opinion, agreeing
with the result, but for a different reason. The supreme court should
have either dismissed the matter as improvidently granted or
“adopted the court of appeals decision with further
writing,” she argued.
“Why?” the chief justice asked. “Because the property
owner conceded at oral argument that evidence of contamination and
anticipated remediation costs is admissible in valuation of condemned
Dan Biersdorf of E. Kelly Keady and Biersdorf & Associates S.C.,
Milwaukee, represented the plaintiffs Basil E. Ryan and 260 North
12th Street, LLC. Assistant Attorney General Charlotte Gibson
represented the Wisconsin Department of Transportation.