May 23, 2014 at 1:51 p.m.
O'Melia: DOT exceeded its legal authority in Hwy. 51 project
O'Melia: DOT exceeded its legal authority in Hwy. 51 project
In what may well be a landmark ruling, Oneida County judge Patrick O'Melia has further barred the DOT from trying to enforce the provisions of older permits he has deemed invalid.
He granted summary judgment to plaintiffs Michael Meyers, Max Building Investments LLC (MBI), and Ring Kings, Inc. (RKI), all of whom charged the DOT with engaging in a faulty process when it altered their driveways.
During the project, the agency eliminated completely Meyers' driveway access on Hwy. 51, consolidated two Hwy. 51 driveways into one for MBI, and relocated two RKI entrances to share with adjoining property owners.
To make the changes, the DOT acted on its purported authority in state statute 86.07(2), which requires DOT permits to alter or install driveways, and which includes an established right to revoke permits. It had issued previous property owners the permits in 1970 - without any of them applying for one - then revoked them in 2012 and replaced them with new permits for the reconfigured accesses, again without anybody asking for new ones.
That process was indeed flawed, O'Melia ruled; it exceeded the agency's authority and rendered the 1970 permits invalid.
The case leaves many unsettled questions, however, and the DOT will undoubtedly appeal. One question is whether the 1970 permits and their subsequent revocation represents a taking of land by the state, especially given that the driveway changes have already occurred.
Another question is whether the DOT can now use other existing grants of authority to sustain the changes they have already made, an issue that will overlap the takings' question.
Just the facts
The plaintiffs - there were six originally - filed a complaint in November 2012. That case was removed to federal court but returned after the plaintiffs, represented by John Kassner of Von Briesen & Roper, filed an amended complaint in December.
O'Melia said the basic facts of the case, which loops back to 1970, were not in dispute. That year, the DOT undertook a curb-and-gutter reconstruction of Hwy. 51. In doing so, O'Melia stated, the agency unilaterally issued permits to the plaintiffs' predecessors in title.
The DOT issued the permits, O'Melia observed, without any of the property owners applying for them. The permits purported to allow the property owners to keep their current driveways.
Not only did the property owners not apply for the permits, they also did not sign them on the line "Signature of Applicant." What's more, the DOT conceded, the agency never recorded the permits with the Oneida County Register of Deeds.
Despite the lack of an official imprint or even the signature of an applicant, the permits contained extensive parameters for use of the driveways, according to the decision.
"The permit indicated that the 'permittee,' in this case the applicant, represented 'all parties of interest' and that the subject driveway was 'for the bona fide purpose of securing access to his or her property ....,' O'Melia wrote in laying out the facts. "The permits also indicated that the department could change or revoke permission for the subject driveway, within statutory limits."
O'Melia said there was no dispute the DOT issued the permits without an application under statute 86.07(2).
Fast forward to 2012. That year, O'Melia summarized, the DOT notified the property owners that, due to the reconstruction of Hwy. 51, the DOT would be "modifying access to most of the properties along the highway." The agency sent letters to the plaintiffs revoking the 1970 permits and issuing new permits under statute 86.07(2) to "document these changes."
That letter, O'Melia pointed out, clearly indicates the DOT's affirmative intent to exercise its authority under the specific statute, 86.07(2), instead of employing other sources of authority that the agency possessed.
The judge even quotes the 2012 letter to property owners to score the point: "We [wisDOT] originally intended to manage the access using Wisconsin State Statute 84.09, which allows the department to alter and eliminate unnecessary or unsafe access points, as well as to restrict or prohibit additional accesses by purchasing access rights."
The letter further explained that the DOT decided to change its approach after receiving input from town officials and property owners, and, instead of invoking authority under statute 84.09, the agency told property owners it would use its authority under 86.07(2) and Wisconsin administrative code rule Trans 231 to change the number and location of driveways along Hwy. 51, the decision stated.
Deja vu all over again
The 2012 permits have language similar to the 1970 permits, O'Melia observed: They purport to not create a right of access, to be revocable, to empower the DOT to remove the driveways, and to limit the use of the driveways, he wrote.
There is also no dispute that the 2012 permits were issued without an application under statute 86.07(2), the judge stated, and at no point has the DOT offered to pay any of the plaintiffs for the closing, removal, relocation, or sharing of their driveways.
"The department has not offered to pay for the issuance of the 1970 permits, nor did they pay for them in 1970," O'Melia wrote. "None of the plaintiffs desired to move or alter their driveways. They did not apply for any of the above-mentioned permits, nor have they agreed to the department's 'representing their interests' in connection with any of the permits."
The central issue before the court, then, was whether the DOT had authority to revoke permits it unilaterally issued under statute 86.07(2) and administrative rule Trans 231, O'Melia wrote.
Before that could be decided, however, O'Melia said the issue of sovereign immunity had to be resolved. That is to say, in general terms, the Legislature is the only entity that can authorize lawsuits against the state, and no agency has the express authority to waive the state's immunity from litigation.
In this case, the plaintiffs are suing a state agency. The DOT, though, claims it was merely exercising its statutory authority through legislatively-derived rulemaking, and so, by suing the agency, the plaintiffs are suing the state, and sovereign immunity kicks in, unless the Legislature authorizes such a suit.
However, O'Melia observed, there are exceptions in which such lawsuits are allowed to continue because the cases presented are "ripe for resolving constitutional issues or proper construction of statutes." For what if the agency is acting beyond its statutory authority?
"The court recognized that this requires courts 'to engage in a fiction that allows such actions to be brought against the officer or agency charged with administering the statute on the theory that a suit against a state officer or agency is not a suit against the state when it is based on the premise that the officer or agency is acting outside the bounds of his or its constitutional or jurisdictional authority,'" O'Melia quoted the high court.
And that was precisely what the plaintiffs were doing in the present case, O'Melia wrote - seeking judicial review of the validity of a rule, namely Trans 231, which was the rule the DOT adopted to implement statute 86.07(2).
Specifically, O'Melia wrote, the plaintiffs assert that the state had in fact consented to being sued through another statute, which grants an exception to the sovereign immunity doctrine for actions seeking a declaration that an agency has exceeded its statutory authority.
Rather than seeking money, O'Melia wrote, the plaintiffs were seeking a declaration from the court regarding whether the DOT exceeded its statutory authority by unilaterally issuing, revoking, and imposing conditions on the plaintiffs' property pursuant to the agency's declared authority under statute 86.07(2) and Trans 231.
"Wisconsin statutes and case law provide that courts may declare that an agency has exceeded its statutory authority, and the proper avenue for a party to seek that is through a declaratory judgment action," O'Melia wrote. "Therefore, the court finds that this declaratory action is not barred by sovereign immunity."
O'Melia also rejected a DOT argument that actions relating to the use, construction, or maintenance of highways are expressly exempted from the definition of 'rules' subject to review under the above statute and, because the judicial review of Trans 231 would relate to the Hwy. 51 project, judicial review was effectively off limits.
The plaintiffs responded by saying they were not challenging the Hwy. 51 project, only the authority the DOT claimed it had to issue and revoke driveway permits within the context of the Hwy. 51 project.
O'Melia agreed.
"The Court agrees with the Plaintiffs on this point, and finds that the nature of this declaratory judgment has everything to do with the specific authority in which WisDOT purports to act, and nothing to do with the actual construction or maintenance of Highway 51," O'Melia wrote.
To the access point
Those issues resolved, O'Melia turned to the central question: Does the department have the authority under statute 86.07(2) and Trans 231 to issue and revoke permits that were never requested by the plaintiffs or their predecessors in title?
Well, no, of course not, and O'Melia explained.
The plain language of the statute 86.07(2) clearly requires those attempting to alter or install driveways to apply for a permit with the DOT, the judge wrote. The department promulgated administrative rule Trans 231 to govern the requirements for those permits, the first of which is that the applicant must represent "all parties of interest."
But, O'Melia continued, neither the statute nor the rule grants the DOT the authority to simply issue permits without a property owner applicant.
"No such grant of authority seems to exist anywhere," O'Melia wrote. "Again, as stated in the court's prior decision, even if the department could act as an applicant, it does not represent all interested parties. If the department would like the power to issue and revoke permits unilaterally as another tool of access management, then the department should ask the Wisconsin Legislature to amend the existing statute or create a new statute that expressly confers that power to the department."
What's more, he wrote, the DOT conceded that the 1970 permits were never recorded with the Oneida County Register of Deeds office, and so the plaintiffs and their predecessors-in-title had no way of knowing the permits had ever been issued until the department revoked the 1970 permits in 2012.
"Neither Wis. Stat S 86.07(2) nor Trans S 231 expressly grants the department authority to issue permits without a property owner applicant," O'Melia concluded. "Therefore, the court finds that the permits are invalid."
If that doesn't work, try this
Another critical question is whether the DOT can now use other grants of authority within its scope of jurisdiction to alter the access points, if the use of statute 86.07(2) and Trans 231 falls by the DOT wayside.
"The department argues that even if this court invalidates the permits, the department may still act under other grants of authority to close or change the plaintiffs' driveway entrances," O'Melia wrote. "WisDOT claims that it has police power authority, both express and implied, to design, maintain, and construct highways in the interest of public health, safety, and welfare, including portions of plaintiffs' driveway aprons and entrances located in the U.S. 51 Highway right-of-way."
The DOT claims rights as a landowner to design and construct facilities in the highway right-of-way that the department owns and/or controls, O'Melia continued, and he said the department additionally argued that it has authority to disturb and alter driveway entrances under statute 86.05 as long as a "suitable" entrance remains for the property owner.
While the court did not deny that the DOT has other grants of authority it may use to close or change the plaintiffs' driveways, O'Melia stated, the letter the agency sent to the property owners was specific as to which authority the agency was invoking.
"As evidenced by the language from the department's letter, it is clear that WisDOT actively chose to attempt to invoke authority under a specific statute, S 86.07(2), and under Wisconsin Administrative Code Trans S 231," O'Melia wrote.
The judge then quoted a popular saying: "[i]t's often easier to ask forgiveness than it is to ask for permission."
That may be, O'Melia allowed, but the judge suggested the agency would not be able to get away with that on this matter.
"But the department cannot simply ask for forgiveness and claim after the fact that it had the power all along to alter the driveways," the judge wrote. "The court recognizes that the Highway 51 construction project is complete and the changes to the plaintiffs' access to the highway have already occurred. The court also recognizes that it may seem like the department is being forced to engage in a fiction by having to go back and use a grant of authority under a different statute, such as S 84.09, to obtain the right to alter the Plaintiffs' access to Highway 51 when those alterations have already been made."
However, O'Melia concluded, this is the chance the DOT took when it chose to attempt to use its purported authority under S 86.07(2) and Trans 231 instead of under S 84.09, or any of its other grants of authority- a chance that now does not bode well for the future.
"The court acknowledges that the department has other grants of authority it could have used to close or change the plaintiffs'," the decision stated. "The department acted under a statute that this court finds did not grant it authority to take the actions it did, but the department's actions cannot stand simply by the department invoking a different authority after the fact."
Takings claim undecided
If O'Melia's ruling stands on appeal, that brings up a host of other questions beyond what authority the DOT may yet use, one of the most important of which is whether the agency's actions constitute a state takings of private property.
It's a question O'Melia left on the table, saying it was not before him.
If it is a takings, the DOT says the plaintiffs' remedy is an inverse condemnation claim, or a lawsuit seeking a finding of liability on the part of the state and compensation from the government.
The DOT also argued that the plaintiffs may not use the declaratory review statute as a "backdoor to challenge the minute aspects of the department's highway designs or to circumvent the elements required to prove a taking in an inverse condemnation claim," O'Melia wrote.
However, O'Melia observed, the plaintiffs pointed out in their reply brief that they are not in fact claiming there has been a taking.
"In fact, the only claim made by the plaintiffs is that the department has exceeded its authority with respect to the issuance and revocation of permits," O'Melia wrote. "The plaintiffs do point out that they may pursue an inverse condemnation claim later, but that is not what the plaintiffs are seeking at this time."
In other aspects of the decision, O'Melia found that the plaintiffs did not have to exhaust all administrative remedies before proceeding to court for a declaratory judgment.
That's because the DOT does not have authority under statute 86.07(2) and Trans 231 to unilaterally issue permits, revoke them, and impose conditions on the property owners, O'Melia found. Because the resulting permits are invalid, the corresponding appeals process is invalid, too, O'Melia found.
O'Melia also found that the statute of limitations has not run out on this action - the DOT argued it had - because the cause of action relating to the 1970 permits did not accrue until the plaintiffs were notified by WisDOT in May 2012 that the permits were being revoked.
Finally, the plaintiffs had some concern that the DOT, having been told they couldn't unilaterally revoke the 1970 permits, could try to enforce them.
O'Melia soothed that anxiety, too.
"Finally, the plaintiffs argue that the Statute of Frauds bars the department from attempting to enforce the 1970 permits," O'Melia wrote. "The plaintiffs provided affidavits demonstrating that they paid valuable consideration for their properties, and that they purchased their properties without any notice or knowledge of the 1970 permits."
Though he had already determined that the DOT exceeded its statutory authority by attempting to unilaterally issue and enforce the permits under statute 86.07(2), he also agreed that the Statute of Frauds barred the agency from attempting to enforce the 1970 permits, precisely because the 1970 permits were unknown to the plaintiffs at the time they purchased their properties.
O'Melia said the DOT also failed to refute the plaintiffs' Statute of Frauds arguments in its response brief.
"Unrefuted arguments are deemed conceded," he wrote.
Richard Moore may be reached at [email protected]
Comments:
You must login to comment.