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  • WisBar News
    December 10, 2014

    Commercial Property Owner Cannot Recover Value Lost to Road Relocation

    Joe Forward
    Legal Writer

    Dec. 10, 2014 – A commercial property owner sought $400,000 in just compensation because the Wisconsin Department of Transportation relocated a road, diminishing the property’s value. Recently, the state supreme court sided against the property owner.

    The aptly named 118th Street Kenosha LLC (the LLC) owned a strip mall with direct access to 118th Street in Kenosha. But in 2010, Wisconsin’s transportation department (WisDOT) undertook a construction project to relocate a portion of 118th Street.

    The relocation eliminated direct access to the LLC’s property to and from 118th Street. WisDOT paid the LLC $21,000 for taking a temporary limited easement, which allowed for the construction of a new driveway connecting the property to a side road.

    However, the LLC sought additional compensation in the amount of $400,000 for the decline in value that resulted when the LLC lost direct access to 118th Street.

    The LLC made its claim under Wis. Stat. section 32.09(6g), which says just compensation must be paid for taking an easement, with compensation calculated as the difference between the fair market value of property before and after the taking.

    WisDOT filed a motion in limine, arguing any evidence of lost value from the street relocation should be excluded as outside what is recoverable for taking an easement.

    In granting the WisDOT’s motion, the circuit court agreed that section 32.09(6g) is limited to the recovery of damages caused when the government takes an easement, and relocation of the street, not the taking, affected the property’s value.

    However, a state appeals court reversed that decision, concluding the temporary limited easement was “integrally connected” with the 118th Street relocation project, and thus the the LLC could get damages for loss of access to that road under section 32.09(6g).

    In 118th Street Kenosha LLC v. Wisconsin Department of Transportation, 2014 WI 125 (Dec. 10, 2014), the supreme court unanimously reversed the appeals court.

    Relocation eliminated direct access to the LLC’s strip mall from the main road and may have decreased the property’s fair market value, the court explained, but that’s not compensable under section 32.09(6g), which only compensates for easements.

    “Because the LLC seeks damages for its loss of direct access and proximity to 118th Avenue, the circuit court did not err by excluding evidence of those damages in the § 32.09(6g) claim for taking an easement,” wrote Justice Annette Ziegler.

    The court decided, on narrow grounds, that taking the limited temporary easement to construct a new double-throated driveway to a side road “did not cause the LLC to lose direct access and proximity to 118th Avenue” nor the resulting property value loss.

    It said the LLC was precluded from seeking damages, under section 32.09(6g), for the fair market value loss that resulted when direct access was eliminated.

    “Whether the LLC may recover damages for its loss of direct access and proximity to 118th Avenue under a different theory is reserved for another day,” Ziegler wrote.

    Is Just Compensation Required for Taking a Temporary Limited Easement?

    The supreme court did not decide that question. The majority assumed, without deciding, that a temporary limited easement (TLE) is compensable under section 32.09(6g). However, the majority suggested in a footnote that TLEs may not be compensable under that statute. WisDOT argued that TLEs are not compensable.

    Even on that assumption, the court said the LLC could not recover damages for the street relocation, because the relocation wasn’t a temporary limited easement.

    Chief Justice Shirley Abrahamson wrote a concurring opinion, taking issue with the court’s “bad habit of assuming applicable legal principles without deciding the legal issues that are presented and briefed.” She said those vital issues should be decided.

    The chief concluded that TLEs require just compensation but should be determined by calculating the fair market rental value of the temporary easement taken.

    “The majority opinion’s assumption that the statute applies, alongside its assertion that the statute seems inapplicable to TLEs, engenders confusion,” she wrote.

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