Rademann v. State Dept. of Transp.

• Citation: 642 N.W.2d 600,2002 WI App 59,252 Wis.2d 191
• Decision Date: 20 February 2002
• Docket Number: No. 00-2995.,00-2995.
• Parties: Bruce W. RADEMANN and Oakfield Stone Company, Inc., a domestic corporation, Plaintiffs-Appellants, v. STATE OF WISCONSIN DEPARTMENT OF TRANSPORTATION, Defendant-Respondent.
• Court: Court of Appeals of Wisconsin

252 Wis.2d 191

2002 WI App 59

642 N.W.2d 600

Bruce W. RADEMANN and Oakfield Stone Company, Inc., a domestic corporation, Plaintiffs-Appellants,¹ v. STATE OF WISCONSIN DEPARTMENT OF TRANSPORTATION, Defendant-Respondent.

No. 00-2995.

Court of Appeals of Wisconsin.

Oral argument January 17, 2002.

Decided February 20, 2002.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Benjamin Southwick of Richland Center and Russell J. Reff of Reff, Baivier, Bermingham, Zierdt & Lim, S.C. of Oshkosh. There was oral argument by Benjamin Southwick.

On behalf of the defendant-respondent, the cause was submitted on the brief of Sandra L. Tarver, assistant attorney general, and James E. Doyle, attorney general. There was oral argument by Kathleen M. Ptacek, assistant attorney general. Before Nettesheim, P.J., Brown and Snyder, JJ.

¶ 1. SNYDER, J.

Bruce W. Rademann, as president of Oakfield Stone Company, Inc. (Oakfield) appeals a judgment awarding the Department of Transportation (Department) $302,500, the difference between the trial court's verdict in Rademann's condemnation case ($57,500) and the basic award Rademann received from the Department before trial ($360,000). Rademann argues that the trial court erroneously exercised its discretion when it (1) held that the market approach to appraisal of the subject properties was admissible; (2) barred the use of the income approach to appraisal of the subject properties; (3) prevented Rademann from discovering a purchase contract related to the sale of the Fond du Lac Stone Company; and (4) held that the three parcels at issue should be considered as one parcel and that the middle parcel was not landlocked after the taking. We conclude that the trial court reasonably exercised its discretion as to all of these issues and affirm the judgment.

FACTS²

¶ 2. Rademann and Oakfield were adjacent owners of certain real estate located in the town of Byron in Fond du Lac county. The parcels at issue included Old Parcel #19, Old Parcel #20 and Old Parcel #24. Old Parcel #19 was the western-most parcel containing 8.09 acres and owned by Oakfield since August 1985. Old Parcel #20 was the middle parcel containing 26.68 acres and owned by Rademann since June 26, 1991. Old Parcel #24 is the eastern-most parcel containing 37.97 acres and owned by Oakfield since June 23, 1989.

¶ 3. Old Parcel #20, the middle parcel, contained an active, operating, fully-permitted quarry from which building stone, or dimension stone, was quarried. To the west, Old Parcel #19 contained some buildings which were used in this quarrying operation. To the east, Old Parcel #24 contained a deposit of building stone beneath its surface and had all the necessary permits for quarrying; however, quarrying operations had not commenced on Old Parcel #24 at the time of the taking.

¶ 4. The Department exercised its power of eminent domain under WIS. STAT. § 32.05 and acquired a portion of all three parcels for highway improvement purposes. The Department took title to a total of approximately ten acres from all three separate parcels. The Department obtained appraisal reports from professional appraisers prior to issuing its Award of Damages. Appraiser J. Martin Hogan, Jr. and review appraiser Michael A. Pitts appraised Old Parcel #20 using an income approach and concluded that just compensation was $229,800. Appraiser Robert E. Davies, using an income approach, concluded that just compensation for the taking of a portion of all three parcels was $331,000. Appraiser Curt G. Olson concluded that just compensation for the taking of a portion of all three parcels was $360,000. Olson valued the deposit stone in Old Parcel #20 using a capitalization of royalties version of the income approach and valued the underlying land using a market approach.

¶ 5. The Department paid $360,000 as its Award of Damages, thereby adopting Olson's conclusion, and recorded its Award of Damages on March 15, 1996.

¶ 6. Rademann and Oakfield filed an appeal from the Award of Damages on July 19, 1996. The sole issue in the appeal was the amount of just compensation that the Department must pay to Rademann for its partial taking from each of the three parcels.

¶ 7. Rademann retained Craig Hungerford as an appraiser. Hungerford used a capitalization of royalties version of the income approach to appraisal and in his final appraisal report concluded that just compensation for the taking from the three parcels was $3,860,000. The Department obtained David L. Gagnow as its appraiser for trial. Gagnow appraised the three parcels using the market approach and concluded that just compensation for the taking from the three parcels was $57,500. ¶ 8. Rademann and Oakfield filed several pretrial motions; Rademann and Oakfield filed a motion to trifurcate the trial, asking for a separate trial for each of the three parcels. The trial court ruled that this issue had not been timely raised. Rademann also moved to have Old Parcel #20 declared landlocked as a result of the taking. The trial court held that the three parcels should be considered as one parcel for the purposes of this litigation.

¶ 9. Rademann also filed a motion to bar the use of the market approach to appraisal of the three parcels. The Department filed a simultaneous motion to bar the use of the income approach of appraisal at trial. The trial court ruled in favor of the Department, allowing the use of the market approach and barring the use of the income approach.³ After the trial court prohibited the use of the income approach and only allowed use of the market approach to appraisal, Hungerford, Rademann's appraiser, issued a second report in which he concluded that he could not reach a conclusion to a reasonable degree of appraisal certainty regarding just compensation relying on the market, or comparable sales, approach.

¶ 10. Rademann then sought information relating to the sale of a different quarry operation. In 1997, Michels Pipeline Construction Company (Michels) purchased a building stone quarry business known as Fond du Lac Stone Company via a stock transfer. Rademann issued subpoenas duces tecum to take depositions of the principals to the stock transaction, commanding the witnesses to bring with them any and all documents related to the terms of the transaction. The Department filed a motion to bar Rademann from obtaining a copy of a purchase contract relating to that sale and from discovering the details of that transaction.

¶ 11. The trial court agreed with Rademann that if the parties to the stock sale had placed an independent fair market value on the real estate, that information would be relevant. However, the trial court also noted that unless the parties placed an independent value on the real estate, the information would be irrelevant income evidence as the sale was via a stock transfer. Initially, the trial court denied the Department's motions but limited Rademann's inquiry to whether or not any monetary value was placed on the real estate during negotiations. An executive from Fond du Lac Stone Company testified during depositions that there was never any discussion during negotiations of purchasing the real estate separately, there was no separate allocation of value for the real estate and no appraisals of the real estate had been done. Because no independent value had been placed on the real estate, per the trial court's ruling any information relating to the stock transfer was considered irrelevant income evidence and inadmissible. Rademann then filed a motion to compel Michels to produce a copy of the purchase contract for the trial court to review in camera. The trial court denied this motion on September 16, 1999.

¶ 12. After disposing of these motions, the parties stipulated to waiving a jury trial and the just compensation issue was tried to the court. After trial, the court awarded compensation of $57,500 to Rademann based on the opinion of the Department's appraiser. Because the Department had paid Rademann $360,000 as its Award of Damages, the final judgment reflected a pay-back by Rademann to the Department of $302,500 plus interest. The trial court also awarded the Department its taxable costs and disbursements. Rademann then commenced this appeal. Further facts will be provided in this decision as necessary.

DISCUSSION

[1]

¶ 13. The sole issues to be tried in an eminent domain case are questions of title and just compensation. WIS. STAT. § 32.05(11). Here we address only the issue of just compensation. The rules that govern the determination of just compensation are provided in WIS. STAT. § 32.09. In a partial takings case, like the one here, the measure of just compensation is the difference between the fair market value of the whole property before the taking and the fair market value of the remaining property immediately after the taking. Sec. 32.09(6); Besnah v. City of Fond du Lac, 35 Wis. 2d 755, 758, 151 N.W.2d 725 (1967).

¶ 14. Rademann makes four arguments on appeal: (1) the trial court erred in holding that the market approach to appraisal of the subject properties was admissible; (2) the trial court erred in barring the using of the income approach to appraisal of the subject properties; (3) the trial court erred in preventing Rademann from discovering a purchase contract related to the sale of the Fond du Lac Stone Company; and (4) the trial court erred by holding that the three parcels should be considered as one parcel and Old Parcel #20 was not landlocked after the taking.

[2, 3]

¶ 15. The admission of evidence regarding fair market value in condemnation cases is left to the trial court's discretion. Calaway v. Brown County, 202 Wis. 2d 736, 741, 553 N.W.2d 809 (Ct. App. 1996). The burden of showing an unreasonable exercise of discretion rests upon the party challenging the trial court's exclusion of that evidence. Id. Here, that burden rests upon Rademann. Each of Rademann's arguments...