2021 Second Quarter Case Roundup (Through June 30): A Review of Wisconsin Cases
By: Attorney Isaiah M. Richie, Schloemer Law Firm, S.C.
We are back with more cases for our second quarter of the year Wisconsin court case roundup! This quarter features two (hopefully final) COVID related cases, some property law use and damages cases, as well as an assortment of other cases in between. There are some key takeaways to discuss throughout.
Abandonment of a Nonconforming Use: Village of Slinger v. Polk Properties, LLC
In Village of Slinger v. Polk Properties, LLC, the Wisconsin Supreme Court overturned a trial court decision in favor of the Village. The Village of Slinger argued that the developer, Polk Properties, had abandoned its nonconforming use of a large parcel of land which had been planned for development in 2007 just before the 2008 recession. The Village based its argument on the fact that the developer had requested to have the property rezoned, entered into a subdivision development agreement with the Village, and filed declarations of restrictive covenants, all of which limited the property to residential use. The developer pointed to the fact that even though all those things had happened, the land had never ceased to be farmed, and so was a legal nonconforming use.
The Village sued the developer, arguing that the developer’s actions evidenced intent to abandon the nonconforming use. The jury agreed and entered a verdict in favor of the Village and assessed forfeitures, taxes due, special assessments, and an injunction against farming the land. The developer appealed up to the Wisconsin Supreme Court.
The Supreme Court chose to analyze the case under a two-prong common law test instead of relying solely on Wisconsin statutes. The two-prong test for abandonment asks the following questions:
- Was there actual cessation of the nonconforming use?
- Was there an intent to abandon the nonconforming use?
While the Court agreed that there was certainly evidence of intent to abandon the nonconforming use, there was never actual cessation of the nonconforming use. Accordingly, the Court reversed the trial verdict and held that the nonconforming use was legal and could continue. This test should be considered along with the statutory test of whether a nonconforming use has been discontinued for more than 12 months, which will also act to eliminate the nonconforming use.
- There are two tests for whether a legal nonconforming use was abandoned.
- Under the Court’s two part test, did the nonconforming use actually cease and was there intent to abandon the nonconforming use?
- Under Wisconsin Statute § 59.69(10)(am), if the nonconforming use is discontinued for a period of 12 months, it loses its nonconforming status.
Court Adjustment of Right of First Refusal Price: County Visions Cooperative v. Archer-Daniels
In County Visions Cooperative v. Archer-Daniels, 2021 WI 35, a unanimous Wisconsin Supreme Court confirmed that the circuit court was right to revise the exercise price on a right of first refusal.
The long story short is that Plaintiff had a right of first refusal to buy a grain facility in Ripon. The Defendants entered preliminary negotiations for the sale of the Ripon property along with several other properties. When the Plaintiff heard of these negotiations, it informed Defendants of its right of first refusal. The Defendants then restructured and formalized the sale to put a much higher purchase price on the Ripon property which was offset by lower prices on the other properties. Thus, Plaintiff had to pay a much higher price to exercise its option. Plaintiff sued, and the circuit court held that yes, the change in price was a “sham” and did not represent the true right of first refusal value. However, the circuit court concluded that the Ripon property did provide more value to the purchasing defendant due to its “synergies” with other properties that defendant owned. The circuit court set the exercise price at around $16 million, about $5 million less than the contract price, but around $9 million more than the Plaintiff’s expert had testified as to the appraised value of the property.
The Supreme Court first discussed general refusal law but noted that jurisdictions across the States have taken a variety of approaches when the “burdened” property is sold as part of a package of properties which don’t all include the same right. To address this issue, the Court recognized a former appellate decision which determined the “most equitable resolution is to determine the fair market value” of the encumbered property. It ultimately concluded that because the purchaser placed a higher value on the Ripon property than other parties might, that was the fair market value.
- A sham transaction reallocating the purchase price to artificially lower the price on a property subject to the right of first refusal can be refuted by the Court.
- The “fair market” value of the property isn’t always the appraised value but can include premiums for things like buyer synergies. In other words, as long as one buyer wants it at a certain price, it doesn’t matter if the average buyer would pay less.
Initial Appraisal was Sufficient Basis for Eminent Domain – Christus Lutheran Church of Appleton v. DOT, 2021 WI 30.
Eminent domain case which determined whether the DOT had met its requirements under Wis. Stat. § 32.05(2)(b) and (3)(e) which requires any jurisdictional offer to be based upon an appraisal.
DOT had offered an initial appraisal and — after the church had largely refused to communicate or negotiate — had conducted further investigations which led to a substantially larger offer and final payment after it had proceeded with the jurisdictional offer.
The Supreme Court affirmed because it concluded that the final offer was based upon the initial appraisal of all property proposed to be acquired and that any adjustment had been higher than or equal to the original appraisal.
Pursuant to § 32.05, a condemnor is required to:
- “cause at least one, or more in the condemnor’s discretion,” appraisal to be made of “all property proposed to be acquired,” § 32.05(2)(a);
- “provide the owner with a full narrative appraisal upon which the jurisdictional offer is based and a copy of any other appraisal made under par. (a),” § 32.05(2)(b);
- inform the owner of his or her right to obtain an appraisal at the condemnor’s expense, § 32.05(2)(b); and
- attempt to negotiate personally with the owner, § 32.05(2)(a).1
The court reaffirmed the Otterstatter which concluded that the statute is satisfied even if the final amount is higher than the appraisal and that the phrase “based upon” means that the appraisal must be a “supporting part of fundamental ingredient of the jurisdictional offer” and not the literal price given.
Even though there were some new line items in the final amount issued to Christus, the court determined that the additional of new allocations does not make the initial appraisal any less foundational to the offer.
Next, the Court differentiated between “property” and “damages” in the requirement that the appraisal must include a value for “all property proposed to be acquired.” Simply because new categories of allotment were added to the final offer, the Court concluded that the initial appraisal did include all of the physical property subject to the taking.
- If you receive a notice of eminent domain, early communication is key to obtaining good value for your property.
- The state is not required to obtain a new appraisal as long as the initial appraisal is used as the foundation of the final offer, which may include adjustements.
No, You’re Still Not Allowed to do That – Tavern League of Wisconsin v. Andrea Palm
In a COVID hangover case, the Wisconsin Supreme Court determined that Emergency Order 3 which limited the size of indoor public gatherings met the definition of a rule and therefore should have been promulgated according to the rulemaking procedures in Wis. Stat. ch. 227.
After nearly dismissing the case as moot, the court revived it under its exceptions to mootness.
The Court then agreed with the appellate court’s determination that Emergency Order 3 was a rule because “it was issued by DHS purportedly pursuant to its authority under Wis. Stat. § 252.02(3), it imposed statewide restrictions on public gatherings and it made subjective policy decisions regarding which entities were subject to its mandate and which entities were exempt.”
The Court leaned heavily on its prior decision in Wisconsin Legislature v. Palm, 2020 WI 42, and applied the same principles to this rule.
Concurrence – If stare decisis is to mean anything, it means that when a party has been told by a court that it cannot do something, and that party does the very same thing again under the same circumstances, that it should not be permitted to continue. “Some details have changed, but this case arises because Palm issued another order doing exactly what this court said she may not do: limit public gatherings by statewide order without promulgating a rule.”
- If the State intends to promulgate a rule, it must follow the proper procedures.
- Covid continues to effect business and regulations, and policies should be reviewed often as changes in the law are occurring on a regular basis.
If You Aren’t a “Possessor” Don’t Hurt That Trespasser – Stroede v. Society Insurance, 2021 WI 43
Wisconsin Statutes grant immunity to “possessors of real property” from claims of trespassers for certain conduct. The question here was whether the definition of “possessor” applied to the defendant.
- Plaintiff gets drunk at a bar and punches a patron.
- Bartender orders plaintiff to leave and he is escorted out.
- Plaintiff decides to come back in to bar several minutes later (because that’s what you do).
- Defendant (an “off duty” employee of the bar who was there as a patron) sees Plaintiff, grabs Plaintiff, walks him backwards to the entrance of the bar, and lets go of him.
- Plaintiff then fell down some steps located at the entrance and was (seriously) injured.
Because the parties all agreed that the Plaintiff was trespassing, the case turned on whether the Defendant was an “other lawful occupant of real property.” The circuit court held that he was not, because in the circuit court’s mind, the occupant was required to have some degree of control of over the property including the right to exclude others. The Court of Appeals reversed that holding, and concluded that he did in fact have immunity because he was an “other lawful occupant.”
The SC compared standard dictionaries (which supported the COA) to legal dictionaries (which supported the circuit court),and concluded that simply using the definitions was not sufficient and that the context of “other lawful occupant of real property” was necessary.
Specifically, the phrase must be considered in light of the more specific words immediately preceding it (a tool of statutory construction called ejusdem generis, and similarly, noscitur a sociis, which means “words are known from their associates.”). Applying those principles, the SC limited the phrase “other lawful occupant of real property” to a person who as some sort of possession or control of the property as well as the ability to give or withdraw consent to enter or remain there.
The SC concluded that the record lacked any evidence that the defendant had possession or control over the bar or the ability to give consent to remain, and therefore the circuit court had been correct in its conclusion that the defendant was not an “other lawful occupant of real property.”
- Business owners need to adequately train their employees on appropriate conduct and when they are entitled to act on behalf of the business.
- It’s generally a bad idea to push someone down a flight of steps, even if “they started it.”
Loss of Convenience is Dot Damage to Property: United America, LLC v. Wisconsin Department of Transportation, 2021 WI 44.
In this Wisconsin Supreme Court case, United America, LLC brought an action against the Wisconsin Department of Transportation for damages to United’s property. United claimed that when the WDOT changed the grading of an abutting highway, it made access to United’s property less convenient and therefore lowered the property value. The question considered by the Court was whether such diminution of property value was damage under Wisconsin Statute § 32.18 which specifically includes grading under the eminent domain statutes.
The change at issue in this case was going from a flat grade turn from Highway 51 onto the road accessing United’s service station. WDOT limited access to the station by installing a bridge over Highway 51 without any direct on or off ramps to the station road.
Ultimately, the change in the road made it much less convenient for drivers to pull off the highway and utilize the station, thus decreasing business for United. United lost much of its business, and the property value of the station decreased significantly.
While the circuit court determined that the damages statute was broad so as to include diminution of value, the Court of Appeals and Supreme Court disagreed, concluding that diminution in property value was not “damages to the lands” for purposes of the statute. The Court summarized its analysis as follows:
To summarize our plain-meaning analysis, the legislature indicated in two ways that Wis. Stat. § 32.18 excludes from its specified class of compensable injuries a property’s diminution in value. First, instead of using “damages to property,” which we have said includes a property’s diminution in value, it used the narrower phrase “damages to the lands.” Second, the legislature made no clear, unambiguous, and peremptory statement that § 32.18 abrogates the common law with respect to compensation for a property’s diminution in value. Therefore, we conclude that an abutting landowner is not entitled to compensation for its diminution in property value under § 32.18.
- Mere loss of revenue that results from changes in the road are likely not enough to trigger damages or compensation from the State, so it is important to try to negotiate with the State to try to maintain access and business. But ultimately, it may be impossible to receive compensation for your loss.
Summary of Additional Opinions
Graef v. Continental Indemnity Company, 2021 WI 45 – Confirmed that the Workers Compensation Act was the exclusive remedy for employee who was injured on the job and as an alleged result of that injury attempted suicide when his insurance company refused to renew a prescription medication.
Collison v. City of Milwaukee Board of Review, 2021 WI 48 – Affirmed ruling in favor of the City which assessed plaintiff’s contaminated property at its “highest and best use” as a parking lot generating income.
Southport Commons, LLC v. Wisconsin Department of Transportation, 2021 WI 52 – Confirmed that the notice period for claims of damage to property based on construction or maintenance of a highway or railway grade must be noticed within three years from when the damage occurred, not when it was discovered.
Kemper Independent Insurance Company v. Islami, 2021 WI 53:
- Husband and wife get legal separation but remain legally married.
- Wife gets ownership of house but husband remains living there.
- Wife goes on vacation and husband decides to start house on fire.
- Wife files insurance claim, which is denied by Kemper due to restrictions in the policy for an insured who intentional commits damage and conceals the cause of the damage in statements to Kemper.
- Wife claims she should still get covered under the policy as an “innocent insured.”
- Wisconsin Supreme Court – Sorry, but husband’s bad acts preclude coverage for wife because a “legal separation” is not the same as a divorce, and accordingly, husband was a “spouse who resided in [wife’s] household.”
- Summary judgment for insurance company.
Southwest Airlines Co. v. Wisconsin Department of Revenue, 2021 WI 54 – Court imposed strict reading of “hub facility” exemption which required 45 departing flights each weekday, despite bad weather or holidays.
Sara Lindsey James v. Janel Heinrich, 2021 WI 58 – The Wisconsin Supreme Court held that local health officers cannot close schools under Wisconsin Statute 252.03 and, additionally, the health officer’s orders infringed on the free exercise of religion for religious schools. Therefore, prohibitions on in-person instruction were unlawful.
In re the Marriage of Schwab v. Schwab, 2021 WI 67 – The Wisconsin Supreme Court held that the statute of repose does not bar an action to enforce a marital settlement agreement for a term which was impossible to perform or enforce until after the statute of repose had run.
Monroe v. Chase, 2021 WI 66 – The Wisconsin Supreme Court held that, as a matter of law, if Party A voluntarily withdraws a complaint against Party B, and Party B later sues Party A for malicious prosecution, the withdrawal may satisfy the required element of a favorable termination.
The Lakes of Ville Du Parc Condominium Association, Inc. v. City of Mequon, ___ – In what would normally be a simple race-notice ruling, the chain of title became distorted when a condo developer exercised developer rights and power of attorney rights which he did not legally have and essentially sold the same property twice. A later buyer of the property sought to claim legal title. The Court of Appeals sided with the Condo Association and held that the chain included references to the Declarations of the Condominium which therefore put future buyers on record notice that there was prior ownership of the property.
In re Marriage of Zimmer v. Zimmer, 2021 WI App 40 – Former husband continued making child support payments to former wife even after one of three children had turned 18. The husband later claimed that he should be credited with those overpayments. The Court of Appeals held that because he did not seek a modification of child support as soon as the child turned 18, he was not entitled to retroactive modification of support.
1033 North 7th Street v. City of Fond du Lac, 2021 WI App 38 – The City of Fond du Lac issued a raze order on a convent which had been vandalized and set on fire. The convent began making repairs and at some point the city building inspector told them that because the building had been repaired to the point where it was dry and sealed, there was no rush to complete the remaining repairs. Two years later, the City moved to raze the building. When the convent brought an action to prevent the City from Razing the building, the City pointed to the raze order statute which it claimed provided a timeline of only 30 days to contest the order. The Court of Appeals didn’t buy the argument and held that the 30 day timeline was only applicable to contesting the grounds for the original order itself. The timeline does not apply to acts related to carrying out the razer or repair order at a later date.
It has been a busy quarter for the courts, and a lot of decisions were issued that could affect you or your clients. The courts issued a lot of opinions dealing with land use, which is becoming more important as we have seen a dramatic increase in land values. Despite recent United States Supreme Court decisions which strengthened landowners’ rights against government takings, Wisconsin courts generally sided with the State this quarter in terms of what was considered a taking or damages.
For more information about how any of these decisions affects you, please contact the author of this article at [email protected] or contact our office at 262-334-3471 or email us at [email protected].
 Wilber Lime Products, Inc. v. Ahrndt, 2003 WI App 259
Originally published: July 15, 2021
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Disclaimer: The information contained in this post is for general informational purposes only and is not legal advice. Due to the rapidly changing nature of law, Schloemer Law Firm makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your unique circumstances before deciding to take—or refrain from taking—any action. If you need legal guidance, please contact us at 262-334-3471 or [email protected]