Wisconsin Supreme Court Restores Reason in Christus Lutheran Church of Appleton v. Wisconsin Department of Transportation

April 17, 2021

In prior posts, A New Wisconsin Court of Appeals Decision Leaves Condemnors Scratching Their Heads and Christus Lutheran Church of Appleton v. State Department of Transportation Update, we discussed the Court of Appeals’ disconcerting decision in Christus Lutheran Church of Appleton v. Wisconsin Department of Transportation.  On April 1, 2021, the Wisconsin Supreme Court reversed that decision in its entirety.

The DOT issued a jurisdictional offer to Christus Lutheran in an amount higher than its appraised damages and which contained items of compensation that were not itemized in that appraisal.  Christus Lutheran complained that the Jurisdictional Offer was too high – that the DOT had offered it too much compensation.   In reversing the Court of Appeals, the Supreme Court saw Christus Lutheran’s objection for what it was – an attempt to prevent the DOT from offering it more compensation in order to increase the chances that Christus Lutheran could recover litigation expenses.

The Supreme Court first concluded that although the DOT’s Jurisdictional Offer was higher than its appraisal, the offer was nonetheless “based upon” the appraisal, as required by Wis. Stat. § 32.05(3).  The main issue with the Court of Appeals decision was that it ignored the holding in Otterstatter v. City of Watertown.  In Otterstatter, the Court of Appeals addressed the issue of whether a jurisdictional offer in excess of the damages in the appraisal was “based upon” that appraisal.  The Otterstatter court concluded that it was not improper for a jurisdictional offer amount to be greater than the appraisal amount because the requirement in Wis. Stat. § 32.05(2)(b) that the offer be “based upon” the appraisal does not mean the offer must be “equal to” the appraisal. The Supreme Court, in reversing the Court of Appeals in Christus Lutheran, concluded that the holding in Otterstatter applied and that the “DOT’s actions in re-examining and reassessing several items that were considered but not fully addressed in the initial appraisal [did] not mean the jurisdictional offer [was] not ‘based’ ‘upon’ the appraisal under Wis. Stat. § 32.05(2)(b) and (3)(e).”

The Supreme Court also found that the DOT’s appraisal met the requirement in Wis. Stat. § 32.05(2)(a) to appraise all of the property being acquired.  It further concluded that the fact that the Jurisdictional Offer contained items of damages that were not specifically itemized in the appraisal was of no consequence.  The Court of Appeals had decided that the DOT’s appraisal did not appraise all of the property being acquired because it did not provide the same itemization of damages as the Jurisdictional Offer.  In reversing the Court of Appeals, the Supreme Court reasoned that the Court of Appeals conflated “property” and “damages,” that the DOT’s appraisal valued all of the property proposed to be acquired, and that the appraisal did not need to track the DOT’s itemization of damages in the Jurisdictional Offer.

Lastly, the Supreme Court rejected the Court of Appeals’ newly-created requirement that if the DOT did not agree with its appraiser’s damages, it was required to obtain a second appraisal that would substantiate the DOT’s position.  In discarding this new requirement, the Supreme Court noted that not only is this obligation unsupported by the statutes, but it also raises ethical concerns for condemning authorities and their appraisers.

As hoped, the Wisconsin Supreme Court set things straight and did not leave condemnors in a “heads I win, tails you lose” quandary.