April 21, 2023 – A lawsuit challenging a decision by the state to close a driveway failed because the statute under which the lawsuit was filed is limited to the scope of the state’s eminent domain offer, which didn’t mention the driveway, the Wisconsin Supreme Court has ruled.

In DEKK Property Development, LLC v. Wisconsin Department of Transportation, 2023 WI 30 (April 18, 2023), the supreme court held that a highway construction project may include both compensable and non-compensable property actions.

Justice Jill Karofsky wrote the majority opinion, joined by Chief Justice Annette Ziegler, Justice Ann Walsh Bradley, Justice Patience Roggensack, Justice Rebecca Dallet, and Justice Brian Hagedorn. Justice Rebecca Grassl Bradley filed a concurring opinion.

Dual Driveways

DEKK Property Development, LLC (DEKK) owns a parcel of land in Kenosha County. The north side of the parcel is bordered by State Highway 50 (STH 50); the west side is bordered by County Road H.

The property contains two driveways: one that connects to STH 50 and one that connects to County Road H.

Under a deed filed in 1961, the former owners of a portion of DEKK’s property granted to Kenosha County, which was acting as an agent for the state Department of Transportation (DOT),  “all existing, future, or potential common law ... rights of access” to State Highway 50 and an adjacent piece of land that contained the driveway linking to State Highway 50.

The grant in the 1961 deed reserved a right of access to STH 50 via the driveway, solely for the purpose of a barber shop, with the reservation of rights to last for 15 years; after that term, the driveway was to become a private driveway that adhered to the regulations of the State Highway Commission.

Highway Project

In 2019, DOT decided to acquire a strip of the DEKK property that runs along County Road H, as part of a project to improve STH 50.

DOT sent DEKK an appraisal report that said that:

• DOT was not seeking access rights;

• DOT would close the driveway to STH 50; and

• DOT would not pay DEKK for closing the driveway to STH 50, because the building served by the driveway was no longer standing.

The report also said that redevelopment of the property would most likely require DEKK to obtain approval for any new driveways in a location farther away from the intersection of STH 50 and County Road H.

Offer Letter, Lawsuit

DOT sent a jurisdictional offer to DEKK, as required by Wis. Stat. section 32.05(3).

DOT offered to purchase the strip of land along County Road H for $272,000. The offer did not include any offer to buy access rights or allocation of compensation for the loss of access rights, nor did it mention of closing a driveway.

DEKK filed an action in Kenosha County Circuit Court under section 32.05(5), challenging DOT’s authority to cut off DEKK’s access rights to State Highway 50 and seeking an injunction.

The circuit court granted the injunction and granted DEKK’s motion for summary judgment.

DOT appealed, and the Wisconsin Court of Appeals reversed.

DEKK appealed.

Police Power v. Eminent Domain

Justice Karofsky began her opinion for the majority by explaining that not all state takings of private property require the state to pay the property owner.

“Injuries to property that result from a valid exercise of the state’s police power are generally not compensable,” wrote Karofsky, citing a 1961 Wisconsin Supreme Court case.

Moreover, Justice Karofsky pointed out, the law allows DOT to exercise its police power and eminent domain power – the latter of which requires compensation – on the same construction project.

Which Statute?

A party seeking to challenge DOT’s use of its eminent domain power must follow section 32.05, Karofsky explained. But, she noted, there are multiple statutes for challenging DOT projects that affect private property.

“The appropriate statute depends on the facts of the case and the nature of the challenged governmental action,” Justice Karofsky wrote.

“These statutes are not interchangeable, and ‘even if a highway construction projection results in damages that are compensable under a particular statute, those damages cannot be recovered in a claim brought under the wrong statute,” Karofsky wrote.

Justice Karofsky also explained that different parts of a highway construction project do not necessarily merge into a single act for which DOT owes compensation.

Section 32.05(5) Limited to Offer

Karofsky noted that the plain text of section 32.05(5) limits actions filed under that section to issues related to the condemnation of the property listed in the jurisdictional offer.

Justice Karofsky noted that DOT’s jurisdictional offer to DEKK listed only the property adjacent to County Road H.

“The parcel described [in the offer] does not touch the STH 50 driveway that is in dispute here,” Karofsky wrote.

She also pointed out that the plat that DOT included with the jurisdictional offer did not indicate any removal of the STH 50 access.

An action filed under Section 32.05 was not the legally appropriate method of challenging DOT’s decision to close the driveway linking DEKK’s property to STH 50, Karofsky concluded.

Concurrence: Loose Wording About Police Power

Justice R.G. Bradley explained that she agreed with the result reached by the majority. But she argued that the majority erred by its inaccurate discussion of the police power.

R.G. Bradley argued that the majority was wrong not to mention the numerous exceptions and caveats to the state’s police power.

“The majority’s framing of its holding suggests DOT could avoid paying just compensation by simply omitting the removal of access to STH 50 from its jurisdictional offer,” Justice R.G. Bradley wrote. “Of course the law would not countenance such gamesmanship.”

R.G. Bradley explained that section 32.09 was the proper statute to use when whether the state had offered fair compensation for a taking.

“This is a complex area of the law,” Justice R.G. Bradley wrote. “Generalized statements without proper attention to legal nuances may inadvertently have profound implications for private property owners.”