260 North 12th St., LLC v. State Dep't of Transp.

• Decision Date: 22 December 2011
• Docket Number: No. 2009AP1557.,2009AP1557.
• Citation: 2011 WI 103,338 Wis.2d 34,808 N.W.2d 372
• Parties: 260 NORTH 12TH STREET, LLC and Basil E. Ryan, Jr., Plaintiffs–Appellants–Petitioners, v. STATE OF WISCONSIN DEPARTMENT OF TRANSPORTATION, Defendant–Respondent.
• Court: Wisconsin Supreme Court

2011 WI 103

338 Wis.2d 34

808 N.W.2d 372

260 NORTH 12TH STREET, LLC and Basil E. Ryan, Jr., Plaintiffs–Appellants–Petitioners,

v.STATE OF WISCONSIN DEPARTMENT OF TRANSPORTATION, Defendant–Respondent.

No. 2009AP1557.

Supreme Court of Wisconsin.

Argued Sept. 16, 2011.Decided Dec. 22, 2011.

For the plaintiffs-appellants-petitioners there were briefs by Dan Biersdorf, E. Kelly Keady and Biersdorf & Associates, S.C., Milwaukee, and oral argument by Dan Biersdorf.

For the defendant-respondent there was a brief by Charlotte Gibson, assistant attorney general, with whom on the brief was J.B. Van Hollen, attorney general and oral argument by Charlotte Gibson.

An amicus curiae brief was filed by Grant F. Langley, city attorney and Gregg C. Hagopian, assistant attorney general for the City of Milwaukee.ANNETTE KINGSLAND ZIEGLER, J.

[338 Wis.2d 39] ¶ 1 This is a review of a published decision of the court of appeals, 260 North 12th Street, LLC v. Wisconsin DOT, 2010 WI App 138, 329 Wis.2d 748, 792 N.W.2d 572, that affirmed a judgment entered by the Milwaukee County Circuit Court ¹ on a jury verdict in favor of 260 North 12th Street, LLC and Basil E. Ryan, Jr. (collectively, Ryan).

¶ 2 Pursuant to its power of eminent domain, the Wisconsin Department of Transportation (DOT) acquired Ryan's property as part of a plan to reconstruct a major freeway interchange in downtown Milwaukee, commonly known as the Marquette Interchange. A jury awarded Ryan $2,001,725 as just compensation for the taking of his property. Over Ryan's objection, the jury was presented evidence concerning the environmental contamination of Ryan's property and the cost to remediate it.

¶ 3 Ryan moved the circuit court for a judgment notwithstanding the verdict or, alternatively, for a new trial, maintaining that evidence of environmental contamination and of remediation costs are inadmissible in condemnation proceedings as a matter of law. In addition, Ryan argued that the circuit court erroneously exercised its discretion when it (1) admitted speculative testimony by the DOT's appraiser, (2) excluded Ryan's expert witnesses, and (3) rejected Ryan's proposed jury instructions.

¶ 4 The circuit court denied Ryan's motion and entered judgment on the jury verdict. The court of appeals affirmed.

¶ 5 We granted Ryan's petition for review and now affirm.

¶ 6 This case presents the following four issues:

(1) Are evidence of environmental contamination and of remediation costs admissible in condemnation proceedings under Wis. Stat. ch. 32?

(2) Assuming evidence of environmental contamination and of remediation costs were admissible in this case, did the circuit court erroneously exercise its discretion when it admitted at trial testimony by the DOT's appraiser over Ryan's objection that the testimony was speculative?

(3) Did the circuit court erroneously exercise its discretion when it excluded Ryan's expert witnesses as a result of Ryan's failure to timely disclose the witnesses in accordance with the court's scheduling order?

(4) Did the circuit court erroneously exercise its discretion when it rejected Ryan's proposed jury instructions in favor of the standard jury instruction on fair market value in the case of a total taking?

¶ 7 First, we conclude that evidence of environmental contamination and of remediation costs are admissible in condemnation proceedings under Wis. Stat. ch. 32, subject to the circuit court's broad discretion. Such evidence is admissible in condemnation proceedings in the circuit court's discretion so long as it is relevant to the fair market value of the property. A property's environmental contamination and the costs to remediate it are relevant to the property's fair market value if they would influence a prudent purchaser who is willing and able, but not obliged, to buy the property.

¶ 8 We emphasize that our holding speaks only to a circuit court's discretionary authority to admit evidence of environmental contamination and of remediation costs in condemnation proceedings. We take no position on how the admission of such evidence in a condemnation proceeding may affect the property owner in a future environmental action, if one should occur.

¶ 9 Second, we conclude that the circuit court appropriately exercised its discretion when it admitted at trial testimony by the DOT's appraiser over Ryan's objection that the testimony was speculative. Ryan does not take issue with the appraiser's qualifications or the relevance of his testimony; rather, Ryan objects to the method by which the appraiser valued Ryan's property. However, any flaws in the appraiser's methodology properly went to the weight of his testimony, not its admissibility.

¶ 10 Third, we conclude that the circuit court appropriately exercised its discretion when it excluded Ryan's expert witnesses as a result of Ryan's failure to timely disclose the witnesses in accordance with the court's scheduling order. The circuit court acted under its express statutory authority to sanction Ryan and made a reasoned decision to exclude the expert witnesses after carefully considering the facts of record.

[338 Wis.2d 42] ¶ 11 Fourth and finally, we conclude that the circuit court appropriately exercised its discretion when it rejected Ryan's proposed jury instructions in favor of the standard jury instruction on fair market value in the case of a total taking. Ryan's bald assertion that the given jury instructions were insufficient does not meet the standard for reversal.

I. FACTUAL BACKGROUND

¶ 12 Pursuant to its power of eminent domain under Wis. Stat. § 32.05, the DOT acquired Ryan's property as part of a plan to reconstruct the Marquette Interchange. Exercising his right under § 32.05(2)(b), Ryan obtained his own appraisal of his property, completed by Wisconsin-certified general appraiser Lawrence R. Nicholson (Nicholson). Nicholson valued Ryan's property at $3,497,000. However, based upon its own appraisal, the DOT offered Ryan compensation of $1,348,000. See § 32.05(3). Ryan rejected the DOT's offer. Consequently, on March 30, 2005, the DOT recorded in the office of the Register of Deeds of Milwaukee County an award of damages equal to the jurisdictional offer and took Ryan's property. See § 32.05(7).

II. PROCEDURAL POSTURE

¶ 13 On June 22, 2005, pursuant to Wis. Stat. § 32.05(11), Ryan appealed the DOT's award of damages to the Milwaukee County Circuit Court. The sole issue on appeal was the amount of just compensation owed to Ryan by the DOT, as determined by a jury. See § 32.05(11).

¶ 14 On December 13, 2005, the Honorable Francis T. Wasielewski conducted the case's first scheduling conference. Ryan's counsel, Attorney Alan Marcuvitz, was present. Judge Wasielewski issued a scheduling order, which, inter alia, set February 15, 2006, as the date by which Ryan was required to disclose his witnesses, including experts.² The order explicitly provided, in bold-faced type, “Witnesses not timely named and described shall not be called as witnesses at trial, except for good cause shown.”

¶ 15 Adhering to the scheduling order, Ryan submitted his list of witnesses on February 15, 2006. His list disclosed two expert witnesses: Nicholson and an unnamed “Surveyor/Engineer” from Kapur & Associates. In addition, at the end of his witness list, Ryan “reserve[d] the right ... to name witnesses to be called in rebuttal including, but not limited to” appraisers Stuart M. Fritz and Mark A. Athanas.

¶ 16 On May 8, 2006, the DOT filed its list of witnesses. The DOT named 17 expert witnesses, including Wisconsin-certified general appraiser Scott L. MacWilliams (MacWilliams) and professional engineer and geologist Kenneth S. Wade (Wade). The DOT explained that MacWilliams was expected to testify as to the value of Ryan's property, and Wade was expected to testify as to the discovery of environmental contamination on Ryan's property and the estimated costs of remediation. At that time, the DOT served upon Ryan copies of both MacWilliams' appraisal report and Wade's memorandum.

¶ 17 Nicholson and MacWilliams were deposed on July 12, 2006, and August 30, 2006, respectively. Nicholson testified that his appraisal of Ryan's property assumed that the property was environmentally clean. Still, Nicholson conceded that a prudent buyer of property would deduct from his or her offer price the cost to remediate any environmental contamination. MacWilliams, in turn, confirmed that his appraisal of Ryan's property included a deduction for environmental contamination and the estimated costs of remediation.

¶ 18 On May 23, 2007, notice was sent to the parties that effective August 1, 2007, the case would be transferred to the Honorable Michael B. Brennan because of judicial rotation. Soon after August 1, 2007, Attorney Marcuvitz informed Judge Brennan that he intended to withdraw as Ryan's counsel. Based on that information, on August 27, 2007, Judge Brennan suspended the court's scheduling order, pending the resolution of the status of Ryan's counsel. However, the court's order specifically provided, “It is the present understanding of the Court that the deadlines for disclosure of lay and expert witnesses, which deadlines have been met in this matter, will not be reset at [the] new scheduling conference.”

¶ 19 On October 4, 2007, the circuit court granted Attorney Marcuvitz's motion to withdraw as Ryan's counsel. By that time, Ryan had yet to secure new counsel.

¶ 20 On January 10, 2008, the circuit court held a status conference and issued an amended scheduling order. The order, in relevant part, set March 15, 2008, as the date by which Ryan was required to respond to written discovery requests; May 15, 2008, as the date by which the parties had to file any dispositive motions; and June 30, 2008, as the date by which discovery had to be completed. The order did not, however, amend Ryan's deadline for disclosure of witnesses.

¶ 21 On March 17, 2008, Ryan retained Attorney Dan Biersdorf as...