Klemm v. American Transmission Co.Klemm v. American Transmission Co.
¶ 1. This is a review of a published opinion of the court of appeals
¶ 2. This case presents a question of statutory interpretation: Shall litigation expenses be awarded to an owner of property pursuant to
• the owner conveys the property under the negotiated price procedure and receives a certificate of compensation pursuant to § 32.06(2a), with no jurisdictional offer issued under § 32.06(3);
• the owner timely appeals to the circuit court, which refers the matter to the chairperson of the county condemnation commissioners for a hearing;
• the owner is awarded at least $700 and at least 15% more than the negotiated price under § 32.06(2a); and
• neither party appeals the commission's award?4
¶ 3. The question whether or not litigation expenses shall be awarded when an appeal is taken from a "negotiated price" recorded in a certificate of compensation was identified soon after the legislature's 1977 revision of chapter 32, entitled "Eminent Domain." In 1979, James Thiel, the director of the office of advisory services of the Wisconsin Department of Transportation at that time, wrote: "It is not clear whether litigation expenses may be awarded if an appeal is taken from a negotiated price, i.e. certificate of compensation."
¶ 4. The circuit court answered the question presented in the affirmative. The court of appeals answered in the negative, ruling that
¶ 5. We examine the texts of
I
¶ 6. The underlying facts in the case are brief and undisputed. In stating the facts we set forth the two statutes at issue.
¶ 7. ATC initiated condemnation proceedings against the condemnees under
¶ 8. Under
¶ 9. In addition, under
¶ 10. Wisconsin Stat.
(2a) Agreed price. Before making the jurisdictional offer under sub. (3) the condemnor shall attempt to negotiate personally with the owner... of the property ... for the purchase of the same.... The condemnor shall record any conveyance by or on behalf of the owner of the property to the condemnor executed as a result of negotiations under this subsection with the register of deeds... . The condemnor shall also record a certificate of compensation stating ... the compensation for such acquisition. The condemnor shall serve upon ... [the owner] the statement and a notice of the right to appeal the amount of compensation under this subsection. Any person named in the certificate may, within 6 months after the date of its recording, appeal from the amount of compensation therein stated by filing a petition with the judge of the circuit court of the county in which the property is located for proceedings to determine the amount of just compensation.... The judge shall forthwith assign the matter to the chairperson of the county condemnation commissioners for hearing under sub. (8).. . (emphasis added).
¶ 11. ATC provided the condemnees with an appraisal that estimated the fair market value of the easement at $7,750. The condemnees agreed to convey the easement for that price. Proceeding under
¶ 12. In compliance with
¶ 13. Following the commission's award, ATC and the condemnees negotiated a settlement for $30,000 as compensation for the easement. The settlement provided that neither party would appeal the commission's award but that the circuit court for Marathon County would determine whether the condemnees are entitled to litigation expenses under
¶ 14. Wisconsin Stat.
¶ 15. The condemnees filed a motion in circuit court seeking an order awarding litigation expenses. The circuit court ruled that the condemnees were entitled to litigation expenses under
¶ 16. The court of appeals ruled that the condemnees were not entitled to litigation expenses under
II
¶ 17. The instant case presents a question of statutory interpretation and
Ill
¶ 18. Statutory interpretation begins with the text of the statute. Statutory language is construed according to its common and approved usage; technical words and phrases and others that have a peculiar meaning in the law shall be construed according to such meaning.
¶ 19. Wisconsin Stat.§ 32.28(3)(d) provides:
(3) In lieu of costs under ch. 814, litigation expenses shall be awarded to the condemnee if:
(d) The award of the condemnation commission under s. 32.05(9) or 32.06(8) exceeds the jurisdictional offer or the highest written offer prior to the jurisdictional offer by at least $700 and at least 15% and neither party appeals the award to the circuit court;....
¶ 20. In analyzing the text of 32.28(3)(d), we point out that in the instant case the award of the condemnation commission was made under
¶ 21. The focus of the present case is on that part of the text of
¶ 22. As we explained above, the parties proceeded under
¶ 23. Both the circuit court and the court of appeals agreed that the statutory language of
¶ 24. The different results reached by the two courts may be explained by their different approaches to statutory interpretation. The circuit court interpreted the text of
¶ 25. In contrast, the court of appeals interpreted the text of
¶ 26. The circuit court viewed the "negotiated price" under
¶ 27. The circuit court interpreted
¶ 28. The other route is for the condemnor to make a jurisdictional offer under
¶ 30. 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. The circuit court concluded correctly that "the statutory condemnation procedure offers two different routes to the same destination."
¶ 31. The circuit court concluded that the plain language of
¶ 32. In contrast, the court of appeals based its interpretation on the text of
¶ 33. Resting its decision on the article "the" in
¶ 34. The court of appeals' emphasis on the article "the" in its interpretation of
¶ 35. The article "the" is used throughout
¶ 36. We have considered the interpretations of the circuit court and court of appeals and the arguments of the parties. We are persuaded by the circuit court's interpretation of the text and context of the statutes. The court of appeals' emphasis on the article "the" is too restrictive a reading of the statute; the emphasis on "the" does not fit the statutory language in
¶ 37. We conclude that reading the text of
¶ 38.
¶ 39. The text of
¶ 40. Evaluating the statutory language of
¶ 41. The legislative purpose of chapter 32 and specifically of
¶ 42. Under the American Rule, litigants must pay their own attorney fees unless there is a statute or enforceable contract providing otherwise.
¶ 43. To assist us in determining the meaning and application of
¶ 44. The court has concluded, in cases in which a jurisdictional offer was made and a condemnee asserted a right to litigation expenses, that the litigation expense statute has a dual purpose. The legislature's dual purpose in awarding litigation expenses under the jurisdictional offer route is "(1) to discourage the condemnor from making inequitably low jurisdictional offers and (2) to make the condemnee, who meets the statutory requirements, whole."
¶ 45. The same dual purpose identified in awarding litigation expenses pursuant to
¶ 46. This statement of the dual purpose of
¶ 47. Although the Warehouse II court examined
[A]ll [are] directed at actions that significantly shortchange the property owner in some respect. For example, in paras. (3)(d)-(i), if the compensation offered by the condemnor was at least $700 and 15% too low, the condemnee "shall" be awarded the reasonable litigation expense incurred.... These paragraphs of subsec. (3) level the playing field by shifting the obligation to pay expenses that may have been unnecessary if the condemnor shouldered its responsibilities properly.22
¶ 48. In a similar vein, the Warehouse II court also declared that "the overall purpose of the 1977 amendments was to provide more specific and concrete opportunities to recover litigation expenses for condemnees with legitimate challenges to the actions of condemnors."
¶ 49. The condemnees in the present case have a legitimate challenge to the price offered by ATC.
¶ 50. We conclude that our interpretation of
V
¶ 51. The legislative history of
¶ 52. The eminent domain statutes were substantially revised in 1977 by Laws of 1977, ch. 440, which was the culmination of the work of the Legislative Council Special Committee on Eminent Domain.
¶ 53. Prior to 1977, the statutes permitted recovery of costs and attorney fees only when a condemnor abandoned the condemnation proceeding after the commission's award.
¶ 55. Although the proceedings of the Special Committee demonstrate that the purpose of the more robust litigation-expense-shifting statute is to allow condemnees to receive a fair and reasonable amount of compensation, the materials speak in terms of jurisdictional offers and jury awards. That references are to jurisdictional offers and jury awards, and that no reference is made to negotiated price appeals or to "the highest written offer prior to the jurisdictional offer," is to be expected because the only route to the county condemnation commission or a jury was, under the Special Committee materials, through the jurisdictional offer route. The Special Committee did not propose the negotiated price appeal route that ultimately became part of the 1977 legislation.
¶ 56. Accordingly, the legislative history evidenced by the material of the Legislative Council Special Committee on Eminent Domain does not enlighten us about the legislature's intended meaning of the language "or the highest written offer prior to the jurisdictional offer."
¶ 57. The legislative drafting record of ch. 440 of the Laws of 1977 provides some guidance about the meaning of the language "or the highest written offer prior to the jurisdictional offer," as it relates to an
¶ 58. The legislature added both the negotiated price appeal route in
¶ 59. Representative Francis J. Lallensack, a member of the Assembly Highway Committee, asked the Legislative Reference Bureau to draft an amendment to
¶ 60. Thomas S. Hanson, who had been the chairperson of the Special Committee,
¶ 61. Nothing in the legislative history clarifies the impetus for these amendments.
¶ 62. There is nothing explicit in the drafting records that suggests that the creation of the negotiated price appeal route in
¶ 64. We conclude that the limited legislative history gives some support to our interpretation of the statutory language to provide condemnees litigation expenses when the owner agrees to a price with a condemnor under
¶ 65. This interpretation comports not only with the text and the text viewed in the context of the condemnation statutes, but with the legislature's purpose of promoting fair negotiations and providing owners with full compensation for property taken through the condemnation process.
VI
¶ 66. Before we wrap up, we address several arguments ATC makes criticizing the circuit court's and our interpretation of
¶ 67. ATC asserts that an interpretation that allows condemnees who accept a negotiated price to recover litigation expenses does not comport with the purpose of good faith negotiation. ATC contends that the condemnees in the present case did not negotiate with ATC, and that if the condemnees in the present case did not think that its offer was just compensation then they should have negotiated and should not have agreed to the price.
¶ 68. We agree with ATC that the condemnees in the present case did not exhaust the options that the statutes provide them to more effectively negotiate just compensation. For instance, the condemnees did not get their own appraisal at the expense of ATC prior to agreeing on a price. The condemnees did not submit a counter-offer.
¶ 69. That the condemnees in the present case did not use all of the procedures available to them to negotiate a price does not support ATC's conclusion that the statutes prevent the condemnees (and all other property owners reaching a negotiated price) from recovering litigation expenses when the condemnation award is $700 and 15% higher than the negotiated price. The statute provides that the condemnor shall record any conveyance by the owner "executed as a result of negotiations." By recording the conveyance, ATC appears to have indicated that the conveyance and the certificate of conveyance stating the compensation were the result of negotiations. If the condemnor is not satisfied that the compensation was determined by good faith negotiations, the condemnor can make a jurisdictional offer.
¶ 70. ATC also suggests that our interpretation of
¶ 71. ATC further contends that the interpretation we reach will encourage litigation and will increase the cost of condemnation for the State and other condemnors. In turn, this added cost will be borne by
¶ 72. Fee shifting may encourage litigation by ensuring owners that they will have access to representation if they believe the condemnor's offer is inequitable.
¶ 73. While it is axiomatic that an interpretation that allows condemnees to recover litigation expenses provides a greater opportunity for condemnees to exercise their statutory right to appeal a negotiated price and will increase the costs of condemnation, we disagree with ATC's assertion that this interpretation is not commensurate with the public policy established by the legislature. The legislature was advised of the potential fiscal impacts of enacting additional fee-shifting statutes in favor of condemnees.
¶ 74. Further, we are not persuaded that our interpretation will open the floodgates for litigation in the condemnation process. First, as ATC itself acknowledges, in the majority of cases in which the condemnee and condemnor reach a negotiated settlement, the property owner is satisfied with the value received and there is no further litigation. Second, property owners recover litigation expenses only when the award is $700 and 15% higher than the offer. In many instances, owners will be reluctant to take the risk that the award will not reach these thresholds, in which case they must pay their own litigation expenses.
¶ 75. ATC suggests that as a result of our interpretation today, condemnors will present initial offers that exceed the just compensation value because of the specter of litigation expenses if the condemnor misses the mark. In other words, ATC argues that condemnors will consistently skew their initial offers higher than the actual value of the property. Such a result would not be in keeping with the legislative policy underlying eminent domain — that compensation must be just in regard to both the owner and the public.
¶ 76. At the same time, the legislature has recognized that condemnors have an overwhelmingly strong bargaining position and by statute have tried to level the negotiating power between condemnors and owners to discourage condemnors from offering inequitably low compensation and to ensure that owners receive just compensation for property taken. Awarding litigation expenses to a condemnee if the compensation that has been offered is too low is one means the legislature has adopted to foster just compensation.
¶ 77. Valuation is not an exact science, and we acknowledge that litigation expenses may dwarf the difference between the compensation offered and that eventually awarded. We do not doubt that our interpretation of the litigation-expense-shifting statute will factor into the calculus made by condemnors in presenting written offers in the negotiation stage of the process. If the legislature concludes that we have not correctly interpreted
¶ 78. Finally, ATC argues that if the court concludes that
¶ 79. The date of the jurisdictional offer has been viewed as an appropriate date of demarcation from which expenses are necessary to prepare for or participate in actual or anticipated proceedings.
¶ 80. ATC contends that there is no similar "official completive action" when a condemnor and condemnee reach a negotiated price. The circuit court determined that the equivalent "official completive action" under the negotiated price route is provided by
¶ 81. We need not, and therefore do not, determine the "official completive action" in a negotiated price appeal like the present case. The parties in the instant case stipulated to the amount of litigation expenses to be awarded the condemnee following the circuit court's award of litigation expenses to the condemnee. Because the issue of determining the specific "official completive action" from which time litigation expenses may be awarded is not presented by the facts of the present case, we do not address the issue.
¶ 82. In sum, the arguments of ATC do not persuade us that the circuit court's and our interpretation of
‡ H* iH %
¶ 83. We have examined the texts of
By the Court. — The decision of the court of appeals is reversed.
Notes
Klemm v. Am. Transmission Co., LLC,
Wisconsin Stat.
All references to the Wisconsin Statutes are to the 2009-10 version unless otherwise noted.
Wisconsin Stat.
James S. Thiel, New Developments in Law of Eminent Domain, Condemnation and Relocation, Wis. Bar Bull., June 1979, at 23, 25.
James Thiel is now Counsel in the Office of General Counsel of the Department of Transportation.
Wisconsin Stat. § 32.05(2a), which governs condemnation in transportation and sewerage cases, is substantially the same as
Several attorneys who routinely represent owners in condemnation actions filed a non-party (amicus curiae) brief arguing that the decision of the court of appeals violates equal protection. We need not address the equal protection argument because our interpretation of the statutes leads us to reverse the decision of the court of appeals.
For a discussion of
The parties agreed that the additional sums paid the condemnees under the settlement were not relevant to the circuit court's decision of litigation expenses.
See State v. Martin,
See Juneau County v. Courthouse Employees, Local 1312,
See also Landis v. Physicians Ins. Co. of Wis., Inc.,
County of Dane v. LIRC,
Either party may appeal the award of the county condemnation commission to the circuit court.
Klemm,
Id.
Warehouse II, LLC v. DOT,
Kolupar v. Wilde Pontiac Cadillac, Inc.,
Wieczorek v. City of Franklin,
Wieczorek,
Generally there is a "rule against taxation of costs against the state in the absence of a statute expressly allowing such taxation." Martineau,
Redev. Auth. of City of Green Bay v. Bee Frank, Inc.,
In Warehouse II,
Warehouse II,
Id., ¶ 22.
Id., ¶ 33.
See, e.g., Legislative Council Staff Brief 77-7, at 3, 4 (June 13, 1977):
Present Wisconsin Statutes do not permit recovery of any costs or expenses where the purchase price is negotiated or where the award of the condemnation commissioners is accepted by the condemnee. The condemnee bears his own expenses even when the circuit court judge or jury find the jurisdictional award too low.
. . . [M]any landowners may settle out of court for less than full compensation, in the knowledge that the cost of obtaining a fair price may exceed the difference between such price and the condemnor's offer.
The intent of the attorney fee statutes is thus not to encourage litigation, but to equalize the bargaining position of condemnor and condemnee so that the former's offers and settlements will more nearly reflect full value.
Legislative Council materials are on file with the Wis. Legislative Council and the Wis. Legislative Reference Bureau, Madison, Wis.
See Legislative Council Report no. 77-28, at 5 (Dec. 12, 1977):
[T]he Bill awards statutory costs to the successful party in condemnation actions.... The condemnee is the "successful party" whenever the award of the commissioners or verdict of the court exceeds the jurisdictional offer... .
The costs of condemnation actions are often a problem when the condemnation proceedings involve a condemnation commission. When the condemnee appeals the basic award, the condemnation commission's award is often higher than the jurisdictional offer. If the condemnor then appeals, the jury verdict is often less than the condemnation commission's award, although still more than the basic award. Under these facts, the current statutes provide that the condemnee must pay the costs of the appeal by the condemnor to the court.
This Bill changes this result and requires the condemnor to pay the costs of the condemnee's appeal if either the award of the commissioners or the verdict of the court is more than the jurisdictional offer. The Bill thus assures that the condemnee need not bear the cost of obtaining a fair amount of compensation for property taken.
Legislative Council materials are on file with the Wis. Legislative Council and the Wis. Legislative Reference Bureau, Madison, Wis.
Assembly Amendment 8 added the following language to
The condemnor shall record any conveyance by or on behalf of the owner of the property to the condemnor executed as a result of negotiations under this subsection with the register of deeds of the county in which the property is located. The condemnor shall also record a certificate of compensation stating the identity of all persons having an interest of record in the property immediately prior to its conveyance, the legal description of the property, the nature of the interest acquired and the compensation for such acquisition. The condemnor shall serve upon or mail by certified mail to all persons named therein a copy of the statement and a notice of the right to appeal the amount of compensation under this subsection. Any person named in the certificate may, within 2 years [subsequently amended to "6 months"] after the date of its recording, appeal from the amount of compensation therein stated by filing a petition with the judge of the circuit court of the county in which the property is located for proceedings to determine the amount of just compensation. Notice of such petition shall be given to all persons having an interest of record in such property. The judge shall forthwith assign the matter to the chairperson of the county condemnation commissioners for hearing under sub. (8). The procedures prescribed under subs. (9)(a) and (b), (10), (12) and 13 [subsequently amended to "subs. (9)(a) and (b), (10), and 12 and chs. 808 and 809"] shall govern such appeals. The date the conveyance is recorded shall be treated as the date of taking and the date of evaluation.
The amendment also added substantially similar language to 32.05(2a).
See drafting request for Assembly Amendment 8 in drafting record for Laws of 1977, ch. 440, on file with the Wis. Legislative Reference Bureau, Madison, Wis.
See Legislative Council Report no. 77-27, at ii (Sept. 19, 1977).
Legislative Council materials are on file with the Wis. Legislative Council, and the Wis. Legislative Reference Bureau, Madison, Wis.
See drafting request for Assembly Amendment 6 in drafting record for Laws of 1977, ch. 440, on file with the Wis. Legislative Reference Bureau, Madison, Wis.
"[A]n important purpose of fee-shifting statutes is to encourage injured parties to enforce their statutory rights when the cost of litigation, absent the fee-shifting provision, would discourage them from doing so." Kolupar,
See DOT Fiscal Estimate to 1977 A.B. 1077, at 6, 9, drafting record for 1977 ch. 440, available at the Legislative Reference Bureau, Madison, Wis.
City of Milwaukee Post No. 2874 Veterans of Foreign Wars of U.S. v. Redev. Auth. of the City of Milwaukee,
The legislature adopted several provisions intended to equalize the bargaining positions between the parties. For example, the legislature has provided that a condemnor must share its appraisal with the owner, pay for a second appraisal by a qualified appraiser of the owner's choosing, and provide the names of other owners to whom offers have been made.
See D.S.G. Evergreen F.L.P. v. Town of Perry,
The circuit court examined the following language from Kluenker:
Since there is no official completive action in a condemnation case until the jurisdictional offer, it follows that a condemnee cannot be certain of a condemnor's position until that juncture. Only then does the expectation of appeal to a commission accrue, not when the preliminary negotiations are set in motion which may or may not ultimately prove unsatisfactory.
Kluenker,