National Auto Truckstops, Inc. v. DOT

• Decision Date: 08 July 2003
• Docket Number: No. 02-1384.,02-1384.
• Citation: 2003 WI 95,665 N.W.2d 198,263 Wis.2d 649
• Parties: NATIONAL AUTO TRUCKSTOPS, INC., Plaintiff-Appellant-Petitioner, v. STATE of Wisconsin, DEPARTMENT OF TRANSPORTATION, Defendant-Respondent.
• Court: Wisconsin Supreme Court

263 Wis.2d 649

2003 WI 95

665 N.W.2d 198

NATIONAL AUTO TRUCKSTOPS, INC., Plaintiff-Appellant-Petitioner, v. STATE of Wisconsin, DEPARTMENT OF TRANSPORTATION, Defendant-Respondent.

No. 02-1384.

Supreme Court of Wisconsin.

Oral argument May 28, 2003.

Decided July 8, 2003.

For the plaintiff-appellant-petitioner there were briefs by Diane P. Gerth, Bradley J. Gunn, and Leonard, Street and Deinard, Minneapolis, Minnesota, and oral argument by Brady J. Gunn.

For the defendant-respondent the cause was argued by Pamela Magee, assistant attorney general, with whom on the brief was Peggy A. Lautenschlager, attorney general.

¶ 1. WILLIAM A. BABLITCH, J.

National Auto Truckstops, Inc. (National Auto) petitions this court to review a decision of the court of appeals that affirmed the exclusion of certain evidence relating to the appropriate amount of compensation for a partial taking by the Wisconsin Department of Transportation (DOT).¹ The DOT condemned a portion of National Auto's property as part of a reconstruction project of a highway that abutted National Auto's property. We review two issues: (1) whether the circuit court erroneously excluded evidence of alleged damages due to a change in access to National Auto's property and (2) whether the circuit court erroneously excluded evidence based on the "income approach" for valuing the taken property.

¶ 2. We conclude that the circuit court erroneously excluded the evidence relating to National Auto's alleged damages resulting from the change in access. The circuit court and the court of appeals erred in presuming that a frontage road necessarily constitutes reasonable access. Therefore, we remand the issue of whether the change in access was reasonable to the circuit court. If a jury finds that the changed access is not reasonable, then National Auto is entitled to just compensation for the deprivation or restriction of its right of access.

¶ 3. We further conclude that the circuit court properly exercised its discretion in excluding evidence based on the "income approach" to valuation since "comparable sales" evidence was available. Therefore, we affirm that part of the court of appeals' decision that upheld the circuit court's exclusion of income evidence for valuation of the partial taking.

FACTS AND PROCEDURAL HISTORY

¶ 4. National Auto owns a truckstop near the intersection of U.S. Highway 12 and Interstate 94 near Hudson, Wisconsin. The truckstop is described as a travel center, providing diesel fuel sales, gasoline sales, a restaurant, convenience store, diesel truck services, and other related services. National Auto leases the truckstop to Twin City East, which operates and manages the facility. In 1996, the DOT condemned a portion (.27 acres) of National Auto's frontage along Highway 12, as part of a planned reconstruction of the intersection. The project involved widening Highway 12 to four lanes and building a frontage road on the condemned property. The DOT also acquired a temporary easement for use during the construction. Under the award of damages, in which National Auto was compensated for the partial taking, the DOT did not explicitly purport to take National Auto's right of access to Highway 12.

¶ 5. Prior to the reconstruction, the truckstop had two points of direct access on Highway 12—one intended for trucks and the other for automobiles. After the reconstruction, all vehicles must enter the truckstop via a new frontage road off of Highway 12, which can only be accessed at an intersection north of the property.

¶ 6. National Auto filed an appeal under Wis. Stat. § 32.05(11) (1999-2000)² to the Circuit Court for St. Croix County, Judge Eric J. Lundell, presiding, seeking an increased amount of compensation for the condemned property than the DOT had paid pursuant to the award of damages. In support of its appeal, National Auto retained two appraisers, who evaluated the condemnation damages at approximately $1 million. The State of Wisconsin (State) brought a motion to exclude these appraisals because they, in part, (1) took into account damages for the truckstop's change in access and (2) were partly based on the "income approach" to valuation. The circuit court granted the State's motion to exclude these appraisals, and the appraisers revised their valuations to reflect the court's order. By not using the "income approach" to valuation, the new appraisals valued the taken property at $350,000 and $12,550. The higher appraisal took into account the on-site impact of the reconstruction project (e.g. loss of parking, etc.), whereas the lower appraisal only considered the value of the land taken.

¶ 7. At trial, the circuit court prevented National Auto from introducing any evidence based on the "income approach" to valuation, reasoning that "there is ample evidence of comparable sales . . . the property here is not so unique that comparable sales are unavailable." The circuit court also excluded any evidence of damages regarding the change in access, concluding that the change in access was unrelated to the partial taking and that "[t]here is no property right to flow of traffic and [that] the control of highway traffic is subject to the police power of the State of Wisconsin," citing Narloch v. Dep't of Transp., 115 Wis. 2d 419, 340 N.W.2d 542 (1983) and Schneider v. State, 51 Wis. 2d 458, 187 N.W.2d 172 (1971). In addition, the court instructed the jury not to consider damages resulting from the change in access and denied National Auto's proposed jury instruction on the income approach to valuation. The jury awarded National Auto $275,000. Both parties brought motions for a new trial, which the circuit court denied. National Auto appealed, and the court of appeals affirmed the judgment and order of the circuit court.

¶ 8. At the court of appeals, National Auto argued that it had a legal right to recover damages related to the change in access. National Auto claimed that the DOT's project deprived it of its right of access to Highway 12, which is compensable under Wis. Stat. § 32.09(6)(b).³ National Auto conceded that § 32.09(6)(b) permits the State to restrict or deny access without compensation, but only if it is done pursuant to a valid exercise of its police power. National Auto argued that the only valid exercise of police power in this case would be if the State had declared Highway 12 a controlled-access highway pursuant to Wis. Stat. § 84.25(6),⁴ which the State has admittedly not done.

¶ 9. The court of appeals disagreed, stating that National Auto "misunderstood" its right of access. The court stated that the "existing right of access" under Wis. Stat. § 32.09(6)(b) is the right of an abutting property owner to "ingress and egress," emphasizing that a property owner's right is to "access," not to specific access points. Nat'l Auto Truckstops v. Wis. Dep't of Transp., 2003 WI App 14, ¶ 8, 259 Wis. 2d 745, 656 N.W.2d 798. Because the State did not completely remove National Auto's right of ingress or egress to Highway 12, the court concluded that the State did not take National Auto's right of access. The court of appeals reasoned that National Auto still had access to Highway 12 through the frontage road, that a frontage road provides reasonable access to and from a landowner's property, and that an alleged diminution in value is not compensable merely because the State makes access more circuitous. Thus, the court concluded that the circuit court did not err in excluding evidence relating to National Auto's claim for damages due to the change in access resulting from the DOT's reconstruction project.

¶ 10. With respect to the exclusion of evidence based on the "income approach" to valuation, the court of appeals concluded that the circuit court did not erroneously exercise its discretion in excluding the evidence. Reviewing the relevant case law, the court observed that "income evidence is never admissible where there is evidence of comparable sales." Leathem Smith Lodge, Inc. v. State, 94 Wis. 2d 406, 413, 288 N.W.2d 808 (1980). The court also noted that there is no dispute as to whether evidence of comparable sales was available in this case. Although the court admitted that the case law is "somewhat confusing and inconsistent in this area," it determined that income evidence is generally disfavored as a method of valuation. Nat'l Auto, 259 Wis. 2d 745, ¶ 12. Consequently, the court of appeals concluded that "the trial court did not erroneously exercise its discretion when it excluded the income evidence given the availability of comparative sales evidence ...." Id., ¶ 17.

¶ 11. National Auto petitioned this court for review of the following issues: (1) whether the circuit court erred in excluding evidence relating to National Auto's claim for damages for the change in access and (2) whether the circuit court erred in excluding evidence based on the "income approach" to valuation. This court granted National Auto's petition for review on February 19, 2003.

STANDARD OF REVIEW

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¶ 12. Questions regarding the admissibility of evidence are within the circuit court's discretion. Grube v. Daun, 213 Wis. 2d 533, 541-42, 570 N.W.2d 851 (1997) (citing State v. Pharr, 115 Wis. 2d 334, 342, 340 N.W.2d 498 (1983)). "Where this court is asked to review such rulings, we look not to see if we agree with the circuit court's determination, but rather whether `the trial court exercised its discretion in accordance with accepted legal standards and in accordance with the facts of record.'" Id. at 542 (quoting Pharr, 115 Wis. 2d at 342). A circuit court properly exercises its discretion when it considers the relevant facts, applies the correct law, and articulates a reasonable basis for its decision. In re Marriage of Krebs v. Krebs, 148 Wis. 2d 51, 55, 435 N.W.2d 240 (1989)

. Therefore, this court will affirm a discretionary decision by a circuit court as long as the court did not erroneously exercise its discretion. State...