Condemnation Litigation Expenses and WDOT…Again

January 23, 2022

Compared to most states, Wisconsin law is quite favorable to landowners in condemnation valuation litigation seeking to recover their litigation expenses. Landowners can recover all expenses – including reasonable attorney’s fees, appraisal, and engineering fees – if they recover at least 15% more than the highest amount offered by the condemnor, as long as the amount is also at least $700 more than the offer. The Wisconsin Department of Transportation (“DOT”) is trying to change that statute…again.

In 2008, in anticipation of an enormously expensive road construction project, the DOT sought to change the statute to cap the amount of litigation expenses available, primarily attorney’s fees. Here is a story summarizing the DOT request back then. The reasoning was, in part, that the Department was paying out more in attorney’s fees to landowner attorneys than just compensation to the same landowners who were litigating the just compensation amount. The Wisconsin legislature was apparently unsympathetic because the law was not changed.

The DOT is trying again. In its 2015-17 Biennial Budget Request (starting on page 355), it is again asking the legislature to change the terms of § 32.28 of the Wisconsin Statutes to cap attorney’s fees. The request includes increasing the $700 figure mentioned above to $5,000 and raising the threshold from 15% to 20%. The DOT argues that landowner attorneys often discourage their clients to negotiate with the Department or accept settlements. Thus, the threshold the landowner must overcome to obtain litigation expenses is lower than if meaningful negotiation takes place.

In my own experience, there are certain attorneys who will advise their clients against negotiating and take the very first offer given. Again, this keeps the threshold low for obtaining litigation expenses. Landowner’s counsel will say this should encourage condemnors to make reasonable initial offers. True, but it’s not uncommon that project impacts exist on a particular piece of property that the condemnor will only be aware of after meaningful negotiation. But there doesn’t appear to be any requirement that landowners negotiate with the condemnor. Only the condemnor is statutorily required to negotiate – or at least attempt negotiation.

The DOT’s budget request also seeks to modify the statutes to expressly state that § 814.045 of the Wisconsin Statutes applies in condemnation cases. That statute sets forth numerous factors a court should consider when determining if an attorney fee request is reasonable and also caps attorney’s fees at three times the amount of compensatory damages awarded. The DOT proposal asks for a change in §814.045(2)(a) to limit reasonable attorney fees to three times the amount of additional compensation recovered.

The Wisconsin legislature has been very hesitant to make any changes to Chapter 32 in recent years. My guess is they view it as politically unwise. In the early 2000s when a change of law was needed to prevent Douglas County from stopping construction of the Arrowhead-Weston electric transmission line – instead of giving transmission utilities condemnation rights on county land – it crafted a strange provision requiring governmental subdivisions to give an easement, and buried the provision in Chapter 196 (§196.491(3e)). The legislature clearly didn’t want it to be viewed as pro-condemnor legislation. It’s unlikely the legislature’s reaction to the current DOT’s proposal will be any different than it was in 2008.