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When Taking Part is Taking All: Eminent Domain and Uneconomic Remnants in Wisconsin

Real Estate Law Update Kevin M. Long, Katherine M. Perhach

Eminent domain or condemnation, the process by which governmental entities may acquire land, is a significant and often-changing legal and social issue. In a recent Wisconsin Supreme Court decision, Waller, 2013 WI 77, the court ruled in favor of the landowners and provided guidance as to procedure and substance when the taking constitutes part, but not all of a parcel of land.

The court concluded that when landowners believe that the taking of part of their property has left them with a parcel with substantially impaired economic viability, they may challenge the entire taking under Wis. Stat. ยง 32.06(5). The term for such a parcel is an "uneconomic remnant." When the condemnor serves the offer to purchase (called the jurisdictional offer) and includes only part of a parcel, if the landowners believe they have been left with an uneconomic remnant, the landowners must promptly begin action to contest the taking within 40 days of service of that jurisdictional offer. If the landowners miss that deadline, they may no longer challenge the right of the condemnor to take the property. The court noted that such challenges should be decided promptly and do not prevent the condemnor from taking any property interests whose condemnation is not being directly contested by the owner.

One notable feature of the Waller decision was the fact that the taking was only for two power line easements. The easements, however, ran the length of two sides of the landowners' triangular-shaped parcel. Some (including the dissent) were surprised that the court would find that easement takings alone could create an uneconomic remnant. The court, however, confirmed that a circuit court's determination that the parcel at issue was an uneconomic remnant, was not clearly erroneous. Accordingly, the condemning entity needed to purchase the entire parcel.

This holding by the majority resulted in a vigorous dissent, which warned that the majority's finding had enormous implications for condemnation orders in the state, and that the finding had "the potential to spawn a cottage industry of uneconomic remnants." The extent of that impact remains to be seen. The court found only that, under the facts of this case, it was not clearly erroneous for the circuit court to determine that the remaining parcel had substantially impaired economic viability. It did not hold that every such instance will result in a similar finding. The dissent accuses the majority of replacing the term "substantially impaired economic viability" with "diminished desirability, practicality and value."

The decision also awarded the landowners their fees, over the objection of the condemnor, and found that the landowners were entitled to relocation expenses. The landowners were physically able to occupy their property after the taking. They were not forced by move, but rather chose to move. However, the court held that the statute contained no explicit requirement that a person's move must be "forced" or involuntary in order to render that person "displaced." Because the court found that the landowners moved as a direct result of the condemnation proceeding, the landowners were entitled to relocation expenses.

There is no question that the Waller case requires both condemnors and landowners to reassess their rights and obligations when a partial taking is being considered. Key points for landowners to keep in mind are to ensure that the very quick deadlines are met, and the right process is followed if they contend they have been left with an uneconomic remnant. For the condemnor, the case teaches that condemnors must, with each partial taking, make an independent determination regarding whether the taking leaves a remaining parcel with "substantially impaired economic viability." What that means is in the eye of the beholder, but here, the beholder will be the circuit court judge. If there is a sufficient possibility that the threshold can be met, Waller teaches that dollars spent at the outset may be well worth it in the long run.

If you have questions concerning a partial or complete taking via eminent domain or condemnation, please contact Kevin Long at (414) 277-5163 / kevin.long@quarles.com, Katie Perhach at (414) 277-5699 / katherine.perhach@quarles.com, or your Quarles & Brady attorney.