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  • WisBar News
    May 25, 2011

    In condemnation case, 'uneconomic remnant' determination comes first

    Uneconomic remnant issue must be decided before the court decides the value of property that remains from a partial taking through eminent domain.

    In condemnation case,  May 25, 2011 – When property owners contest a taking of private property through condemnation proceedings, a circuit court must first determine whether any remaining property is an “uneconomic remnant” before deciding the value of just compensation.

    That’s what the District II Wisconsin Court of Appeals ruled in Waller v. American Transmission Co., 2010AP1447 (May 25, 2011), a case in which American Transmission Co. (ATC) obtained state approval to condemn more than half the Waller property to construct transmission lines.

    ATC offered $99,500 for the partial taking, but the Wallers rejected the offer and contested the condemnation, arguing that ATC was required to purchase the whole property. Any portion that remained after the taking, the Wallers argued, would be an “uneconomic remnant.”

    Under Wis. Stat. section 32.06(3m), an uneconomic remnant is “property remaining after a partial taking of property, if the property remaining is of such size, shape or condition as to be of little value or of substantially impaired economic viability.”

    At trial, the circuit court directed a determination of the just compensation issue first, before deciding whether the remaining property constituted an uneconomic remnant.

    The jury determined that as a result of the partial taking, the Wallers property declined in value from $132,000 to $38,000. Because the value of the remaining property was greater than zero, the circuit court entered judgment against the Wallers without deciding the uneconomic remnant issue at all. This was reversible error, the appeals court determined.

    “[A] court must first determine whether a property is an uneconomic remnant before moving on to the just compensation issue,” Judge Paul Reilly wrote. “Contrary to what the circuit court stated, the inquiry does not end once the dollar value of the remaining property is determined.”

    The appeals court clarified that an uneconomic remnant analysis requires a circuit court to determine whether economic viability of property has been “substantially impaired,” not just whether all value is lost through a partial taking.

    “A $10 million property subjected to a partial taking leaving a $100,000 property might be an uneconomic remnant, whereas the partial taking of a $150,000 property leaving a $100,000 property might not be an uneconomic remnant. The reverse could also be true depending on the facts and circumstances of each case,” Judge Reilly wrote. 

    By Joe Forward, Legal Writer, State Bar of Wisconsin

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