Court of Appeals: Just Compensation Claims Naming City Instead of CDA were Proper under Doctrine of Apparent Authority
A recent published opinion from the Wisconsin Court of Appeals used the doctrine of apparent authority to clear up confusion in a compensation action. Haas v. City of Oconomowoc, 2017 WI App 10, 373 Wis. 2d 737, 892 N.W.2d 324.
The case arose from the City and its community development authority’s condemnation of the landowners’ property as part of a downtown revitalization project. After years of negotiations, appraisals, and discussions between the landowners on one side and the City and Community Development Authority on the other, the landowners filed just compensation appeals in Waukesha County Circuit Court. The appeals named the City of Oconomowoc – not the Community Development Authority – as the defendant. Adding to the confusion is that neither the City nor the CDA directly performed all the steps required of condemnors. See Haas, 2017 WI App 10, ¶ 18.
The City moved to dismiss the complaint for naming the wrong defendant and the Waukesha County circuit court granted this motion. The landowners appealed and the court of appeals reversed after considering (1) whether the City was properly named as the defendant and (2) if there was a problem with the circuit court’s jurisdiction over the CDA.
Apparent Authority In determining whether the City was properly named, the landowners argued that any steps in the condemnation process that the City did not do itself, it did through the CDA acting as the City’s agent. Thus, the court of appeals examined whether the doctrine of “apparent authority” meant that it was appropriate to sue the City rather than the Community Development Authority.
Early in its analysis, the court of appeals recognized that the City failed to adequately respond to the landowners’ argument on the doctrine of apparent authority. This is interesting because this might have been the end of the court’s analysis. Id. ¶ 19 (recognizing it “could readily conclude the City concedes the CDA was acting on its behalf under that doctrine.” Nevertheless, the court of appeals decided to go through the analysis before siding with the landowners.
The appeals court set forth three elements for apparent authority: “(1) Acts by the agent or principal justifying belief in the agency; (2) knowledge thereof by the party sought to be held [here, the City]; (3) reliance thereon by the plaintiff, consistent with ordinary care and prudence.” Id. ¶ 20 (quoting Pamperin v. Trinity Mem’l Hosp., 144 Wis. 2d 188, 203, 423 N.W.2d 848 (1988)). The appeals court examined these three points in turn.
Acts justifying belief – First, it determined that the City’s substantial efforts to acquire the property, the years of communication between the landowners and the City, and the City and CDA’s actions made it so “[a]ny reasonable person…would have been entirely justified in believing the CDA’s actions toward condemnation of the property were being done as an agent for the City.” Haas, 2017 WI App 10, ¶ 24.
The court pointed to various occasions on which the City and CDA’s work overlapped. Both the CDA and the City determined condemnation of the property was necessary. Id. ¶ 21. The city council voted to approve the condemnation. Id. ¶ 21. The mayor, who also served as Economic Development Director for the City and the Executive Director for the CDA sent a letter to the landowners indicating that the City through the CDA made the determination to acquire the property and the steps that the City had performed. Id. ¶ 22. The letter was sent on City letterhead and was signed “Sincerely, City of Oconomowoc, Robert K. Duffy, Economic Development Director.” A month later, the CDA provided the landowners with a jurisdictional offer and submitted a lis pendens stating that the City…, through its [CDA] has issued and served a Jurisdictional Offer to/upon” the landowners. Id. ¶ 23. (There were numerous facts regarding the negotiations that the appeals court detailed in its opinion, which you can read here. This is an abbreviated summary of those facts the court reiterated in its analysis section.)
The City’s Knowledge – Next, the court of appeals concluded that the second element of apparent authority could not be disputed because the City’s acts justified the landowners’ belief in the CDA’s agency. Id. ¶ 25 (citing Pamperin, 144 Wis. 2d at 208, 210–11).
Landowners’ Reliance – Third, the appeals court addressed the reliance element. The court determined that this was satisfied by the landowners’ decision to “file suit against the City, which was the only entity that could have been considered to have fulfilled the statutory requirements for condemnation.” Haas, 2017 WI App 10, ¶ 25.
Rejecting the City’s Response – With the three elements met, the court of appeals turned to the City’s contention that two documents showed that the CDA was the entity that condemned the property. Id. ¶ 26. First, as the City noted, the landowners’ own letter rejecting the jurisdictional offer characterized it as the jurisdictional offer “of the [CDA].” Second, the City pointed to the “Award of Compensation/Damages,” which named the CDA as the condemnor. In rejecting these arguments, the court of appeals reasoned that the actions leading up to those documents already clearly established that the City was the entity condemning the property and any of the CDA’s actions were taken on behalf of the City.
Jurisdiction over the CDA Having resolved the first issue in favor of the landowners, the court of appeals next addressed the City’s argument that the circuit court lacked personal jurisdiction over the CDA. The City argued that the CDA rather than the City was the proper condemnor and because the landowner failed to name the CDA, the circuit court lacked jurisdiction over the CDA. However, the court of appeals concluded that this argument was a non-starter. The landowners named the City not the CDA in the complaint so the landowners did not intend for the court to have jurisdiction over the CDA. Because the court of appeals concluded that the City was the proper condemnor, jurisdiction over the CDA was irrelevant. See id. ¶ 28.
Conclusion It can be difficult to navigate pre-condemnation negotiations. High voltage transmission lines easements may be acquired by multiple utilities at the same time. Landowners might only meet with acquisition agents rather than an employee of a pipeline itself. This can leave anyone perplexed. Fortunately for the landowners in this case, the doctrine of apparent authority helped to avoid harm from such confusing circumstances.