Opinion ID: 2045142
Heading Depth: 1
Heading Rank: 4

Heading: Remedy for an Unconstitutional Taking

Text: ¶ 40. We next determine the remedy for the taking of the plaintiffs' property rights. Initially, we address sovereign immunity and the plaintiffs' failure to file a Wis. Stat. § 893.82 notice of injury, [22] as either may serve to substantially limit the scope of remedies available to the plaintiffs. ¶ 41. Sovereign immunity exists in this State by virtue of Article IV, § 27 of the Wisconsin constitution, [23] and unless waived, generally precludes suits in which a prevailing plaintiff would be entitled to recover money from the State. Lister v. Board of Regents, 72 Wis. 2d 282, 292, 240 N.W.2d 610 (1976) (holding that when a judgment for plaintiffs would require payment from State funds, the State may invoke its immunity from suit). However, sovereign immunity will not bar recovery for a taking, because just compensation following a taking is a constitutional necessity rather than a legislative dole. Luber v. Milwaukee County, 47 Wis. 2d 271, 277, 177 N.W.2d 380 (1970). In this sense, Article I, § 13 is a self-executing constitutional waiver of sovereign immunity. Zinn, 112 Wis. 2d at 436. We therefore determine that sovereign immunity does not bar the plaintiffs' claims under Article I, § 13. ¶ 42. The Administration Defendants concede, and we agree, that the plaintiffs' request for just compensation under Wis. Const. art. I, § 13 is not barred by their failure to file a notice of injury prior to commencing the present action. In their concession, the Administration Defendants state: The takings clause is a self-executing constitutional provision. Zinn v. State, 112 Wis. 2d 417, 334 N.W.2d 67 (1983). While sovereign immunity and failure to file a notice of injury bar plaintiffs' damage claims to the extent they depend upon the non-self-executing contracts clause (art. I, § 12) and extra compensation clause (art. IV, § 26) of the Wisconsin constitution. . .they do not preclude just compensation for a taking. The SIPD, however, does not constitute a taking. Petitioners' Reply Brief at 21, n. 5 (emphasis added). [10] ¶ 43. This court has previously held that when the legislature has not provided specific procedures for the recovery of just compensation following a taking, an aggrieved property owner may proceed directly under Article I, § 13. Zinn, 112 Wis. 2d at 437-38; see also, Kallembach v. State, 129 Wis. 2d 402, 409, 385 N.W.2d 215 (Ct. App. 1986). Section § 893.82 does not set out specific procedures for the recovery of just compensation. Indeed, the section's recovery limitation of $250,000 indicates that the statute was not intended to apply in the takings context. § 893.82(6). A taking may result in the State's obligation to pay far more than $250,000, and the constitutional mandate of just compensation cannot be limited in amount by statute. Zinn, 112 Wis. 2d at 437, citing Luber, 47 Wis. 2d at 283. [11] ¶ 44. Well-settled law supports the Administration Defendants' concession that § 893.82 does not apply in the takings context. We therefore conclude that the plaintiffs' claim for just compensation is not barred by their failure to file a notice of injury. [24] ¶ 45. As noted, just compensation is the constitutionally prescribed remedy for a taking of the plaintiffs' property interest in the earnings of the annuity reserve account. What remains for our consideration is the appropriate method of valuing that property right. [12] ¶ 46. Just compensation is measured by the loss incurred by the property owner as a result of the taking. See Luber, 47 Wis. 2d at 279, citing Volbrecht v. State Highway Comm., 31 Wis. 2d 640, 647, 143 N.W.2d 429 (1966). Applying that principle to this case, we determine that just compensation is required to the extent of any diminishment of the balance of the annuity reserve caused by Act 27. [13, 14] ¶ 47. We agree with the court of appeals that the circuit court erred in exercising its equitable powers to order a minimalist remedy. Inherent in the concept of just compensation is an equitable principle: if just compensation is warranted in a particular instance, it is because a property owner should not be required to bear alone an expense that in all fairness must be borne by the public. Noranda, 113 Wis. 2d at 624. Thus, to the extent that a court awards less than just compensation for a taking out of concern for the public purse, it has provided a constitutionally insufficient remedy. First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 322 (1987). [15] ¶ 48. However, the court of appeals erred when it limited just compensation to the portion of SIPD payments that replaced GPR expenditures. Nor is the amount taken equal to the SIPD already distributed because not all distributed SIPD served to replace supplemental benefits. The SIPD distributed to some annuitants exceeded the supplemental benefits they were receiving, and that excess did not reduce GPR expenditures for supplemental benefits. Retired Teachers Ass'n, 195 Wis. 2d at 1033. Just compensation is not measured by the economic benefit to the State resulting from the taking. Luber, 47 Wis. 2d at 279. It is the property owner's loss that Wis. Const. art. I, § 13 compensates. ¶ 49. Because all SIPD payments were made in derogation of the plaintiffs' right to have annuity reserve payments made consistent with § 40.27(2), just compensation requires that all such payments be returned to the annuity reserve. Similarly, because the reimbursement to GPR also violated § 40.27(2), the amount reimbursed must also be returned to the annuity reserve. ¶ 50. This court rejects the Administration Defendants' argument that a recovery of all payments made under Act 27 would overcompensate the plaintiffs for the taking effected by the Act. The defendants base their assertion on the fact that SIPD recipients could have received a similar distribution had the ETF Board been allowed to exercise its equitable discretion. Essentially, the defendants ask this court to reduce an award of just compensation by the amount that pre-1974 annuitants would have received in the Board's discretion. ¶ 51. We decline the defendants' invitation because it is impossible to know how the ETF Board would have equitably distributed the $84.7 million annuity reserve surplus. The Board might have distributed the surplus in precisely the manner mandated by Act 27, or it might have given no portion of the surplus to any SIPD recipient. The point is, it is for the Board alone to equitably distribute any surplus in the annuity reserve. This court has neither the inclination nor the expertise to substitute its estimate of an equitable distribution for that of the ETF Board. [16] ¶ 52. We therefore conclude that just compensation requires the following: 1) the Administration Defendants shall pay from the State treasury to the annuity reserve account an amount equal to all SIPD payments made out of the annuity reserve; 2) any undistributed portion of the SIPD remaining in the annuity reserve shall be unencumbered by the provisions of Act 27; 3) the ETF Board shall distribute the amount recovered and any undistributed SIPD in its equitable discretion. [25]