Klein v. Wis. Dep't of Revenue

Decision Date11 August 2020
Docket NumberAppeal No. 2018AP1133
Citation2020 WI App 56,949 N.W.2d 608,394 Wis.2d 66
Parties Darrell KLEIN, Richard Mitchell, Linda Mitchell and Scott Bretting, Plaintiffs-Respondents, v. The WISCONSIN DEPARTMENT OF REVENUE and Richard Chandler, Secretary, Defendants-Appellants.
CourtWisconsin Court of Appeals

On behalf of the defendants-appellants, the cause was submitted on the briefs of Joshua L. Kaul, attorney general, and Colin T. Roth, assistant attorney general.

On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Frank W. Kowalkowski of von Briesen & Roper, S.C., Green Bay, and Linda I. Coleman of Spears, Carlson & Coleman, SC, Washburn.

Before Stark, P.J., Hruz and Seidl, JJ.


¶1 In response to a federal court decision, the Town of Sanborn (the "Town") decided in 2007 to remove from its property tax rolls all land belonging to the Bad River Band of Lake Superior Tribe of Chippewa Indians (the "Bad River Band") and its members. The Wisconsin Department of Revenue (the "Department") subsequently issued guidance encouraging municipalities to review, on a property-by-property basis, whether Native American property qualified under federal law for property tax exemption. Nonetheless, the Town continued its blanket exemption for all Bad River Band tribal and member property until it was ordered to return those properties to the tax rolls as part of another lawsuit.

¶2 Darrell Klein and the other taxpayer plaintiffs (collectively, the "Taxpayers") commenced this action against the Department after the Sanborn Town Board disallowed their claims regarding excessive and unlawful taxation. The Taxpayers alleged the Department had failed to act sufficiently to stop the Town's unlawful taxation policy. As a result, they alleged the Department has allowed the non-uniform taxation of property. The Taxpayers asserted they were entitled to recover an alleged $1.5 million in excessive taxes from the Department on behalf of themselves and other taxpayers in Ashland County. They also sought damages for the alleged diminution of their property values, a town-wide reassessment, and a writ of mandamus compelling the Department to comply with its statutory obligations under WIS. STAT. ch. 73 (2017-18).1 The Taxpayers further sought attorney fees and declaratory relief.

¶3 The circuit court granted the Taxpayers’ summary judgment motion, and we agree with the Department that it erred by doing so. Instead, the Department was entitled to summary judgment because sovereign immunity bars the Taxpayers’ claims against it for damages and attorney fees, as a matter of law. When the action is one for the recovery of money from the State, as here, the State—including one of its agencies like the Department—may not be sued without its consent (i.e., an express directive by the legislature). The application of sovereign immunity here required the circuit court to dismiss all of the Taxpayers’ non-mandamus claims, including their request for attorney fees. Moreover, given the circumstances in this case, any claim for the recovery of unlawful taxes lies against the municipality that collected them, not with the Department.

¶4 As for the Taxpayers’ mandamus claim, we conclude they have failed to demonstrate that the Department had a "positive and plain duty" that it failed to perform. Rather, the duties the Taxpayers point to are investigative and prosecutorial functions that have long been treated as discretionary. Accordingly, we conclude that summary judgment was appropriate in the Department's favor on all of the Taxpayers’ claims. We reverse and remand with directions for the circuit court to dismiss the claims against the Department.


¶5 Although this appeal presents purely questions of law, we set forth some background information for purposes of framing the legal issues presented. In 2006, a federal appellate court held that property allotted to a Chippewa tribe pursuant to an 1854 treaty with the United States could not be taxed by the State of Michigan pursuant to the terms of that treaty. See Keweenaw Bay Indian Cmty. v. Naftaly , 452 F.3d 514, 525-27 (6th Cir. 2006). The Bad River Band, which had also been allotted reservation land under that treaty and had paid property taxes on that land for years under protest, then requested that the Town remove from its tax rolls all fee simple land within the reservation owned by the Bad River Band or its members.

¶6 The Town complied with the Bad River Band's request. In 2007, the Town passed a resolution directing its assessor to designate as "non-taxable" any land owned by the Bad River Band or its members that had been allotted in fee simple pursuant to the 1854 treaty. Afterward, the Department issued several guidance documents in response to municipal inquiries about the federal court decision. The Department's position was that property allotted under the 1854 treaty was to be presumed exempt and that any municipality bore the burden of proving the exemption no longer applied. The Department stated that if, for example, the property had been transferred out of tribal ownership, it would "likely" lose its exemption and become taxable even if subsequently transferred back to the tribe or its members.

¶7 In 2008, the Department became aware of the blanket exclusion granted by the Town, and it fielded complaints about the Town's assessment practices. The Department was also in contact with the Town's assessor during this time, during which the Town continued to assert that its legal interpretation of the Keweenaw Bay opinion was correct. Several years later, the Department ultimately adopted statewide guidance in response to the Keweenaw Bay opinion in the Wisconsin Property Assessment Manual (the "Assessment Manual"):

On February 8, 1887, Congress enacted the General Allotment Act which applies to all Wisconsin tribes. Under that Act, real property that an individual Native American owns on a reservation in fee simple is subject to property tax. However, due to certain language in the Treaty of 1854, real property located within the reservation boundary of Bad River, Lac Courte Oreilles, Lac du Flambeau, and Red Cliff Chippewa bands is exempt if:
• It was allotted before February 8, 1887 under that Treaty,
• It is owned in fee simple by the tribe or tribal members, and
• There has been no conveyance of the land to nontribal members since it was first allotted under the 1854 Treaty. For example, if the land had been exempt under the provisions of the 1854 Treaty, but was then sold to a nontribal member, the land would lose its exemption and be subject to property tax. Even if the land was later repurchased by an 1854 Tribe, the land would remain subject to property tax.
Assessors should review tax roll information at the Municipality and County along with ownership information at the Register of Deeds office. The information will assist in determining if a property has changed ownership, was subject to property tax, and remains subject to property tax even though re-purchased by an 1854 Tribe.

WISCONSIN PROPERTY ASSESSMENT MANUAL 22-25 to 22-26 (2013) (footnote omitted).

¶8 Despite the Department's guidance endorsing a property-by-property analysis, the Town persisted in its blanket exclusion for tax purposes of Bad River Band property. In 2015, the Town issued a letter expressing its refusal to rescind the 2007 resolution. The Town acknowledged that its resolution contradicted the Department's guidance in the Assessment Manual, but it stated it "respectfully disagree[d]" with the Department's directives.

¶9 Also during 2015, the Taxpayers petitioned the Department to conduct a town-wide reassessment. Following an investigation and a public hearing, the Department declined to order a reassessment. It concluded a reassessment would not promote the public interest, and, noting that the Town's assessor had recently retired, it observed that any potential errors in the tax treatment of certain parcels might be rectified by the new assessor. The Taxpayers did not appeal the Department's determination. Rather, they continued corresponding with the Department regarding particular parcels they believed should be taxed.

¶10 The Department, highlighting that property assessment and taxation is a municipal process, responded that it was in contact with the Town assessor on the issue. Indeed, in 2016, the Department engaged with the Town and its assessor through several letters, acknowledging that the new assessor had inherited the task of a parcel-by-parcel review from his predecessor but stressing the need for uniformity in taxation. When the new assessor responded that the task of gathering and reviewing real estate title data for each parcel affected by the 2007 resolution was "monumental" and would require nearly three years to complete, the Department provided further guidance in an effort to have the review completed by 2018.

¶11 Meanwhile, the Taxpayers paid their 2015 taxes under protest and then filed claims with the Town for excessive and unlawful taxation. The Town denied the claims, and the Taxpayers sought certiorari review. In December 2016, the circuit court concluded that the Town had acted contrary to the Assessment Manual and to the specific written guidance the Department had issued to the Town and its assessor.2 The Town was ordered to place all properties subject to the 2007 resolution back on the tax roll, unless there was evidence presented that an individual property was exempt from taxation in accordance with the Department's Assessment Manual guidance. The Town did not appeal that decision and order.

¶12 As the certiorari action against the Town proceeded, the Taxpayers filed the present action against the Department and Town entities and officials, purportedly on behalf of all Ashland County taxpayers. As relevant here, the Taxpayers alleged that the Department was dilatory in its efforts to...

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