# Opposition Brief — E-L Enterprises, Inc. v. Milwaukee Metropolitan Sewerage District

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2560%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2010
- **Citation:** 562 U.S. 1091

## Text

Supreme Court, U 5S
PILED

4 NOV 3- 2010 |

No. 10°448

OFFICE OF 1... 4! |

In the

Supreme Court of the United States

KL, ENTERPRISES, INC.,

Petitioner,
V.

MILWAUKEE METROPOLITAN SEWERAGE DISTRICT,

Respondent

On Petition for a Writ of Certiorari to the
Supreme Court of Wisconsin

BRIEF IN OPPOSITION

JAMES H. PETERSEN G. MICHAEL HALFENGER
MILWAUKEE METROPOLITAN Counsel of Record
SEWERAGE DISTRICT WILLIAM J. KATT, JR

260 W. Seeboth Street FOLEY & LARDNER LLP
Milwaukee, Wis. 53204 777 Kast Wisconsin Avenue
(414) 225-2102 Milwaukee, Wis. 63202

(414) 271-2400
mhalfenger@foley.com

Attorneys for Respondent

Ne pte _—
Wit SON-F PES PRINTING CO , INC (202) 789 0096 Wasnincton,D C 20002

QUESTION PRESENTED

Respondent's extraction of groundwater during
sewer construction on an easement next to peti
tioner’s building caused some of the building’s wood
foundational piles to decay and ultimately fail. Peti-
tioner’s use of the commercial real estate was never
interrupted, but repairs were required.

Does the Takings Clause of the Fifth Amendment
entitle petitioner to recover from respondent the
costs of repairing its building?

il
RULE 29.6 STATEMENT

Respondent, defendant-appellant-petitioner below,
is Milwaukee Metropolitan Sewerage District, a spe-
cial purpose entity organized under Chapter 200 of
the Wisconsin Statutes. See Wis. Stat. § 200.21, ef
seq. It has no parent corporation, and no publicly
held company owns 10% or more of its stock.

TABLE OF CONTENTS

Page
QUESTION PRESENTED .........................0...... i
RULE 29.6 STATEMENT........................ aren 1
TPs MP FR RPM Or enev scecndccoussoccncscacsesss iV
BRIEF IN OPPOSITION ..... PRS e ne SUCRE i a ]
I ccanvcedcseeconansiceceavies l
COUNTERS LATEOMENNT .......0cccccccccccoroscsscccccess 1
REASONS FOR DENYING THE WRIT........... 5
:. This Case Presents a Poor Vehicle to
Consider a Federal Takings Law
Issue Because E-L Based Its Claim
Ne es eutiowes 5
Il. The Wisconsin Supreme _ Court
Correctly Applied Settled Law. ................. 6
III. The Wisconsin Supreme Court Did
Not Construe Federal Law so as to
Conflict With Other Federal or State
ee ins cuceasndde 11
20 & Bho 1S 14

(iii)

TABLE OF AUTHORITIES

Page(s)

CASES
Bedford v. United States,

192 U.S. BUF teas seacsesc. a i
Blum v. Ist Auto & Cas. Ins. Co.,

786 N.W.2d 78 (Wis. 2010) ...............ccceceeeeceeeeee 10
Cline v. Am. Aggregates Corp.,

474 N.E.2d 324 (Ohio 1984).................. 1 12
Colher v. Merced Irrigation D1st.,

DP Deb FOG ee oi vcccocccccccccccccesess 13
Dugan v. Rank,

372 U.S. Be iis snacesasss....... 9-10
Gibson v. United States,

166 U.S. Be ee vovececcce.sc0.....000:. G6
Hensley v. City of Columbus,

557 F.3d 693 (6th Cir. 2009)...........c.ccccccececceece: 12
Hensley v. City of Columbus,

433 F.3d 494 (6th Cir. 2006).......... ae 11-12

Hensley v. City of Columbus,
No. 02-3778,
2004 WL 1152836 (6th Cir. Feb. 20, 2004) ...... 1]

Hensley v. City of Columbus,
No. 2:99-CV-888,
2007 WL 2902943 (S.D. Ohio Oct. 1, 2007)...... 12

Vv

International Paper Co. v. United States,
282 U.S. 399 (1931)

Lingle v. Chevron U.S.A. Inc.,
544 U.S. 528 (2005)

Loretto v. Teleprompter Manhattan CATV
Corp.,
GOB CB. CUO CIO socks ccisceciccavsessiaccrnscencs

McNamara v. City of Rittman,

838 N.E.2d 640 (Ohio 2005)...........c.cccccceecceceee-

Sanguinetti v. United States,

264 U.S. 146 (1924).................. Nise epeereaacesdaioeas

Stop the Beach Renourtshment, Inc. v. Fla.
Dep't of Envtl. Prot.,

130 S. Ct. 2592 (2010)...... se oad Coane ee .

United States v. Cress,

BES Ue Be nO atin ok see

United States v. Kansas City Life Ins. Co.,

339 U.S. 799 (1950) .0....cccccccececccesececeeeceeceeeeceeee

United States v. Lynah,

168 U.S. 445 (1008) .......0...00..00ccessscscsvecessesesesase

United States v. Willow River Power Cce.,

Sia OF a Cr oe ee ey

Wis. Power & Light Co. v. Columbia Cuty.,

BT NW .2d STO (Wik, BOGGS oi scccssccecssvcesecencorsess

Wisconsin v. Michels Pipeline Constr., Inc.,

217 N.W.2d 339 (Wis. 1974). ...........00..00- 8, 10,

fond ry
oO, f

12

10

v1

CONSTITUTIONAL PROVISIONS

rely Se SII OF soo cn cdunatusensasnesany 6, 8, 12
CAL. CONST. art. 1, § 14.................. Pace gedtavuctani ae 13
ns Ue Soins cone aks pin susie pacudabenvess 3

STATUTES

WG, Beh BB oss ivcciesoeccuvesedececsaxessapsatcesvnesesens 3

OTHER AUTHORITIES

Brief of Respondent E-L Enterprises, Inc.,
E’-L Enterprises, Inc. v. Milwaukee Metro.
Sewerage Dist.
785 N.W.2d 409 (Wis. 2010)
(No. 2008AP921), 2009 WL 2761576........... eae

RESTATEMENT OF THE LAW (SECOND) OF TORTS

BRIEF IN OPPOSITION

INTRODUCTION

Petitioner E-L Enterprises, Inc. seeks review of a
decision of the Wisconsin Supreme Court holding
that consequential damages caused to its building by
respondent’s sewer construction did not amount to a
taking of property. As a threshold matter certiorari
is inappropriate in this case because the petition
presents no important federal law issue: E-L did not
press a federal takings claim in the lower state
courts and addressed it only perfunctorily after the
Wisconsin Supreme Court ordered the parties to
brief the application of federal law; the Wisconsin
Supreme Court reversed the lower courts without
separately analyzing federal law. What is more, the
Wisconsin Supreme Court’s ruling that E-L proved
only consequential damages to its building does not
decide a question of federal law in a way that con-
flicts with any decision of this Court, a federal court
of appeals, or another state court of last resort. This
Court has held for over a century that consequential
damages do not amount to a taking of property for
purposes of the Fifth Amendment. Certiorari should
be denied.

COUNTERSTATEMENT

1. This case arises from the District’s construction
in 1987—1988 of a near-surface collector sewer con-
structed for the District by an independent contrac-
tor. App. 1:5. To construct this sewer, the contractor
dug a trench from the surface, installed sewer pipes,
and then restored the surface. /d.

2

One portion of the sewer ran next to E-L’s building.
App. 1:5-6. The building, built in 1928, was con-
structed on wood piles—long, wooden poles driven
into the ground. /d. at 1:6. Concrete pile caps were
poured on top of the piles, and the caps provided
foundational support for the rest of the building. /d.

The contractor constructed the sewer in the Dis-
trict’s easement under a private alley next to the
south wall of E-L’s building. Jd. at 1:5-6. Neither the
contractor, the construction trench, nor the District
ever entered E-L’s property. /d. at 1:6 n.8.

When construction approached E-L’s_ building,
groundwater entered the trench and interrupted
construction. /d. at 1:6. Beginning October 26, 1987,
the contractor pumped water from the trench for 17
days in order to dry it sufficiently to allow construc”
tion to resume under safe conditions. Jd. Groundwa-
ter measurements at the time of construction in 1987
and when the sewer was completed in 1988 showed a
groundwater level reduction near E-L’s building. /d.
The levels recovered over the course of the next two
years. /d.

In 1998, ten years after the sewer was constructed,
E-L’s owner began monitoring the building’s settle-
ment rate. /d. In 2001, E-L had an engineer examine
the building’s foundational piles. /d. E-L’s engineer
determined that the tops of 14 wood piles under the
building’s south wall (and the first piles north of
each corner) had rotted and were no longer able to
support the building. /d. To repair the problem,
damaged portions of these piles were sawed off and
replaced with concrete. /d.

The repairs ultimately cost $309,388, including at-
torneys’ fees E-L incurred litigating with a neighbor

3

who obstructed the repair effort by refusing access to
his adjacent alley. App. 1:7. E-L continued to lease
space in the building throughout the entire period.
Id.

2. In June 2004, E-L filed this lawsuit against the
District and the insurer for the now-defunct contrac-
tor. Jd. E-L principally pleaded negligence and nui-
sance claims. /d. It also pleaded a claim for “inverse
condemnation’—effectively a takings claim under
Art. I, § 13 of the Wisconsin Constitution—against
the District. Jd.

The contractor’s insurer resolved E-L’s negligence
and nuisance claims against the contractor in a con:
fidential agreement. /d. at 1:7 n.9. E-L has refused to
disclose the amount it recovered in the settlement.

The trial court dismissed E-L’s negligence and nui-
sance claims against the District under Wis. Stat.
§ 893.80(4), which affords governmental entities im-
munity from tort claims based on discretionary con-
duct. Jd. at 1:7. The trial court allowed E-L to pre-
sent its takings claim to a jury. App. 1°9.

The jury found that the District's removal of
groundwater was unreasonable and a_ taking.
App. 1:9-10. The special verdict asked the jury
whether the District's removal of groundwater
caused E-L’s building to settle. App. 1:10. The jury
answered “yes” and awarded E-L $309,388, the
amount of the foundation repairs, plus other inciden-
tal repair costs, including attorneys’ fees incurred in
litigating access rights with the neighbor. Jd at
1:10—11.

The District appealed. Jd. at 1:11. The court of ap-
peals, addressing E-L’s takings claim under the state

4

constitution only, affirmed. App. 2:1—20. It concluded
that “this case is on the ‘taking’ side of the line rec-
ognized by Wisconsin Power & Light |Co. v. Colum-
bia County, 87 N.W.2d 279 (Wis. 1958)]” (App. 2:10)
dividing non-compensable governmental damage to
property from governmental conduct that constitutes
a taking of property (App. 2:7-8).

3. The Wisconsin Supreme Court reversed. The
Court explained that two types of governmental con-
duct can give rise to a compensable taking under the
Wisconsin Constitution and the Constitution of the
United States—(i) physical occupations or appropria-
tions and (ii) regulatory conduct that approximates a
physical cccupation because it deprives an owner of
all beneficial use of the property. App. 1:14—15 (citing
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005)).

As the court stated, E-L claimed only that the Dis-
trict physically took its property. App. 1:15—-16; see
also App. 1:16 n.15. But, as the court recognized, “It
is undisputed that the Sewerage District did not
physically occupy the property for which E-L seeks
compensation.” /d. at 1:33. And, as the court ex-
plained, E-L could not claim that the District’s con-
duct deprived “E-L of all, or substantially all, of the
beneficial use of its building. .. . The fact that E-L
continued to lease the building throughout this en-
tire period is alone sufficient to show that the value
of E-L’s building was not destroyed for all purposes.”
App. 1:30-31.

Because E-L proved only camage to its property
caused by the District’s removal of groundwater on
the District’s property, the court held that E-L had
not demonstrated a compensable taking: “[T]he U.S.
Constitution and the Wisconsin Constitution, unlike

5

the constitutions of other states, provide only that
the property of no person shall be ‘taken’ for public
use without just compensation; there is no mention
of just compensation for property that is merely
‘damaged’ for public use.” App. 1:25 (footnote omit-
ted). Indeed, as the court stated, “Both the United
States Supreme Court and this court have consis”
tently recognized that ‘government action outside the
owner's property that causes consequential damages
within’ does not constitute a taking.” App. 1:24 (quot:
ing Loretto v. Teleprompter Manhatian CATV Corp.,
458 U.S. 419, 428 (1982)). See also App. 1:28.

REASONS FOR DENYING THE WRIT

I. This Case Presents a Poor Vehicle to Consider
a Federal Takings Law Issue Because E-L
Based Its Claim on State Law.

Petitioner did not raise a federal takings law issue
in the Wisconsin courts, and none was well devel:
oped there. See App. 1:2 n.2 (“The issue of whether
the Sewerage District’s conduct constituted a taking
under the U.S. Constitution was not invoked, argued,
or appealed below.”). The Wisconsin Supreme Court
interjected the federal law issue sua sponte when, in
granting review, it ordered that “the parties’ briefs
shall address the following additional issue: the ap-
plicability of the United States Constitution’s provi-
sions regarding takings of property.”

EK-L had consistently relied only on Wisconsin law
in the trial court, the court of appeals, and in oppos-
ing the District’s petition for review in the Wisconsin
Supreme Court. Neither the trial court nor the court
of appeals considered the judgment to be one driven
by federal law.

6

E-L’s brief in the Wisconsin Supreme Court dealt
with federal law only in passing. See Brief of Re-
spondent E-L Enterprises, Inc. at 25-30, #-L Enter-
prises, Inc. v. Milwaukee Metro. Sewerage Dist., 785
N.W.2d 409 (Wis. 2010) (No. 2008AP921), 2009 WL
2761575. And the Wisconsin Supreme Court simply
resolved the federal-law issue in tandem with the
state constitutional question, belying any claim that
the case presents an important federal-law issue that
deserves this Court’s consideration. See App. 1:14
17.

Il. The Wisconsin Supreme Court Correctly Ap-
plied Settled Law.

A. E-L proved only consequential damages not re-
coverable as a taking. This Court’s Takings Clause
jurisprudence has long adhered to the principle that
consequential damages from non-invasive govern-
ment conduct do not amount to “takings”: “Opera-
tions of the Government. . . oft times inflict serious
damage .. . but damage alone gives courts no power
to require compensation where there is not an actual
taking of property.” United States v. Willow River
Power Co., 324 U.S. 499, 510 (1945); see also Bedford
v. United States, 192 U.S. 217, 225 (1904) (no taking
where government obstruction of river alleged to
cause damage that “was strictly consequentiall |
[and] was the result of the action of the river through
a course of years”); Gibson v. United States, 166 U.S.
269, 275 (1897) (damage resulting from construction
of dike “was not the result of the taking of any part
of her property ... but the incidental consequence of
the lawful and proper exercise of a governmental
power”).

7

The effects of governmental conduct outside pri-
vate property—like the District's conduct lere—are
not takings unless they result in a complete appro-
priation of private property. For example, “this Court
has consistently distinguished between flooding
cases involving a permanent physical occupation, on
the one hand, and cases involving a more temporary
invasion, or government action outside the owner's
property that causes consequential damages within,
on the other. A taking has always been found only in
the former situation.” Loretto, 458 U.S. at 428 (citing
United States v. Lynah, 188 U.S. 445, 468-70 (1903);
Bedford, 192 U.S. at 225; United States v. Cress, 243
U.S. 316, 327-28 (1917); Sanguinetti v. United
States, 264 U.S. 146, 149 (1924); United States v.
Kansas City Life Ins. Co., 339 U.S. 799, 809-10
(1950)).

Decaying woodpiles—the consequence of lower
groundwater levels—is the only property damage or
loss E-L proved. While E-L now conteiids that “its”
groundwater was taken, it submitted no evidence of
groundwater value. The proof of reduction in “mar-
ket value” that E-L now argues is a proxy for
groundwater value was actually proof of repair costs.
As E-L told the jury, “(t]he reduction in the fair mar-
ket value was what were the repairs that had to be
done on this place. And the repairs that had to be
done are summarized in Exhibit 51... .” App. 1:19.
Exhibit 51, as the Wisconsin Supreme Court cor-
rectly recognized, made obvious that K-L proved only
consequential damages:

Exhibit 51, a five-page document titled “Costs to
Repair the Valley Business Center lor E-L’s
building],” is a comprehensive list of the repairs
made to E-L’s building and the costs thereof. The

8

document has a “Detail” list of the repairs made,
which includes “Window work,” “Foundation, In-
terior... ,” “Installed baseboard, etc.,” “Electri
cal work for wall,” “Wall repairs,” “Demo piping,

etc.,” and like repairs.
App. 1:19—20 n.17.

B. The decision below and this Court’s decisions
are in accord. In interpreting the Fifth Amendment's
Takings Clause the Court has recognized two types
of compensable government conduct: (1) direct gov:
ernment appropriations or physical invasions of pri-
vate property, and (2) non-invasive regulatory ac”
tions that force the owner to suffer a physical inva-
sion or that substantially interfere with the prop:
erty’s use. Lingle, 544 U.S. at 537-38. E-L did not
demonstrate conduct of either type.

There was no evidence of a direct government ap-
propriation or physical invasion. The District never
entered E-L’s property, and no regulatory action is at
issue. Nor does Wisconsin law grant K-L ownership
of the groundwater removed by the District’s con:
tractor from the District’s property. The controlling
Wisconsin decision, Wisconsin v. Michels Pipeline
Construction, Inc., allows landowners free use of
groundwater on their land but imposes a common:
law nuisance duty not to use groundwater on their
property in a way that unreasonably harms
neighboring properties. 217 N.W.2d 339 (Wis. 1974).
Michels did not create a property “right” or “interest”
in a specific groundwater level; indeed, it refused to
adopt the “correlative rights” doctrine of groundwa-
ter use allocation among neighboring landowners. /d.
at 349—50. Thus, under Wisconsin law, the District's
misuse of its land in violation of this duty—the most

-

that E-L has proved—
pensate the plaintiff-landowner when the district’s
dam eliminated the flow of stream water the plaintiff
had relied on for irrigation. Jd. at 794-96. The 79-
year-old Collrer decision thus involves application of
a materially different state constitutional provision
to materially different state-law property rights in
the context of materially different facts.

14

CONCLUSION

The petition for a writ of certiorari should be de-

nied.

JAMES H. PETERSEN
MILWAUKEE METROPOLITAN
SEWERAGE DISTRICT

260 W. Seeboth Street
Milwaukee, Wis. 53204
(414) 225-2102

November 2010

Respectfully submitted,

G. MICHAEL HALFENGER
Counsel of Record

WILLIAM J. KATT, JR.

FOLEY & LARDNER LLP

777 East Wisconsin Avenue

Milwaukee, Wis. 53202

(414) 271-2400

mhalfenger@foley.com

Attorneys for Petitioner

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2560%3A2. Public record. Not legal advice.