Condemnee can get litigation expenses without a jurisdictional offer, supreme court rules

By Joe Forward, Legal Writer, State Bar of Wisconsin

June 6, 2011 – The Wisconsin Supreme Court recently clarified that a condemning party need not make a jurisdictional offer of compensation in order for the condemnee to recover litigation costs.

American Transmission Company (ATC) filed a condemnation proceeding against property owners Mark and Jeanna Klemm, hoping to obtain an easement on the Klemms land to lay transmission lines.

Under Wis. Stat. section 32.06(2a), the condemnor must attempt to negotiate personally with the owner before making a jurisdictional offer. ATC appraised the market value of the easement at $7,750, and the Klemms agreed to convey the easement at that price. No jurisdictional offer was made.

In Klemm v. American Transmission Co. LLC, 2011 WI 37 (May 26, 2011), a unanimous supreme court ruled the Klemms were entitled to litigation expenses based on the negotiated price, even though ATC never made a jurisdictional offer of compensation for the easement.

In general, section 32.28(3)(d) allows a party to obtain litigation expenses where the award of a condemnation commission exceeds the jurisdictional offer “or the highest written offer prior to the jurisdictional offer by at least $700 and at least 15 percent.”

Under statute, a jurisdictional offer or a negotiated price goes to the county condemnation commissioner for approval. The commissioner here valued the easement at $10,000, and awarded that amount as just compensation. The parties subsequently agreed on a $30,000 settlement.

The Klemms filed an action in circuit court to collect litigation expenses under section 32.28(3)(d). The circuit court awarded litigation expenses, but the appeals court reversed, concluding that litigation expenses are not available unless the condemnor makes a jurisdictional offer.

But the supreme court agreed with the circuit court’s analysis.

“Regardless of whether the parties proceed under the negotiated price appeal route or the jurisdictional offer route, the county condemnation commission and court procedures are the same,” wrote Chief Justice Shirley Abrahamson in her opinion.

The purpose of awarding litigation expenses in these cases discourages the condemnor from making inequitably low jurisdictional offers and to make the condemnee whole, the court explained.

“It is unreasonable to conclude that the legislature intended to treat better the contentious owner who forces the condemnor to go through the hoops of a jurisdictional offer than the cooperating owner who takes the negotiated price appeal route.”

The court rejected ATC’s other arguments, including the argument that fee shifting will “open the floodgates of litigation in the condemnation process.”

“Awarding litigation expenses has the same function in both the negotiated price appeal route and the jurisdictional offer route: to encourage condemnors to be fair and reasonable in calculating just compensation and to make the owner whole.”

Attorneys

Shane J. Vanderwaal of Pietz, Vanderwaal, Stacker & Rottier S.C., Wausau, represented the Klemms. Steven M. Streck and Sara K. Beachy of Axley Brynelson LLP, Madison, represented American Transmission Company.