MADISON — A Wisconsin Supreme Court ruling Tuesday allows the owners of the former Maple Grove Country Club to seek compensation for the wastewater plant it built but was operated rent-free the past eight years by the Maple Grove Estates Sanitary District.
The 6-0 decision, with Justice Shirley Abrahamson not participating, takes a defense away from the sanitary district that an appeals court and La Crosse County Circuit Judge Elliott Levine found it could use at a condemnation trial.
According to court documents:
Tony Ceresa, a former owner of the country club, built a wastewater plant to serve the golf course clubhouse, banquet facilities and a planned 162-unit housing development on 181 acres in the town of Hamilton, near West Salem.
Ceresa operated the wastewater plant from 1990 to 1998 until the Department of Natural Resources ordered the town to take over what was the probably the only privately operated wastewater plant in the state.
The town created the sanitary district and signed a multi-year agreement with MGCC in 1997 to lease or own the plant.
By 2009, the country club told the sanitary district it wanted to sell the wastewater plant but the district balked at buying or continuing to lease it until it learned what upgrades the DNR require in the future.
Only 45 houses were built at Maple Grove Estates and the country club, which was the district’s largest customer, ceased operations by 2013. The 180-acre golf course property was sold a year later for $1.15 million. The property hosts the annual Country Boom music event.
The country club told the sanitary district that some payment was necessary if the district was going to continue to use the plant. Instead, the district operated the plant without a lease agreement and paid no rent to the country club from 2011-2014. In 2015, it offered a $14,000 rent payment to the country club, which it found to be inadequate.
“It was worth twice that amount,” said Patrick Houlihan, attorney for the country club.
The country club didn’t pay its sewer bills to the district.
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The country club filed a notice of claim with the district and then an inverse condemnation lawsuit in 2014. The suit alleged that the district had taken ownership of the plant by using it but not paying for it. A governmental entity like the district can seize property for a public purpose through the eminent domain process but it must offer the owner it fair market value, the country club’s suit contended.
The district sought to dismiss the suit. It denied that the country club’s notice of claim complied with state law contending that it wasn’t complete or filed timely. The country club noted that since the district did not include the alleged inadequate notice of claim allegation among the six other defenses it listed in its answer to the suit, it couldn’t raise it now.
Judge Levine dismissed the country club’s suit concluding that its notice of claim was inadequate. Levine was upheld in an April 2018 decision by the District IV Court of Appeals, finding it was bound by a wrongly decided prior case.
The state’s high court rejected the district’s argument that the notice statue serves as a condition to filing a suit. Instead, it functions as a defense to a suit but must be raised early in proceedings.
“We conclude that noncompliance with the notice of claim statute is an affirmative defense that must be set forth in a responsive pleading. Because the Sanitary District failed to set forth the defense in its answer and it has not amended its answer to include it, such a defense is deemed waived,” wrote Justice Ann Walsh Bradley in a 24-page opinion.
The parties have not been able to agree the value of the treatment plant, collector mains and an easement that the district would have to pay to the country club. Barring a settlement, Houlihan said the country club’s inverse condemnation suit can now return to Levine to determine that amount.
“There’s also legal costs, engineering costs that have been incurred over the years as the parties have sought to find a value for the plant,” he said.
The ruling is important to private property owners without a lot of money to contest a government taking an asset without paying for it, Houlihan said.
“This decision says there’s an eminent domain law and it must be followed,” he said.
A call to Blaine Lee, Hamilton town chair, wasn’t returned by deadline. Kraig Byron, attorney for the town’s insurer, also did not return a call seeking comment.