Harbours Pointe of Nashotah, LLC v. Village of Nashotah

Citations: 278 F.3d 701; 2002 WL 100782Docket: 01-1359

Court: Court of Appeals for the Seventh Circuit; March 19, 2002; Federal Appellate Court

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Harbours Pointe of Nashotah, LLC (Harbours Pointe) filed a lawsuit against the Village of Nashotah, asserting that the Village's collection of a special assessment constituted a taking of its property, violating rights under the U.S. and Wisconsin Constitutions and 42 U.S.C. § 1983. The district court ruled in favor of the Village, citing Harbours Pointe's failure to exhaust state remedies, and this decision was affirmed by the Seventh Circuit.

The case's background includes a 1979 contract between the Village and the Delafield-Hartland Water Pollution Control Commission, mandating the Village to construct a local sewer system. The Village duly levied reserve capacity assessments to fund the project, with public hearings held in compliance with Wisconsin law. By November 1996, the Village had collected sufficient funds for the project but continued to collect the assessments, including from Harbours Pointe, which purchased property in the Village that had not previously been assessed.

In January 1997, Harbours Pointe entered a Developer's Agreement with the Village, agreeing to pay reserve capacity assessments for the sewer system. Harbours Pointe paid a total of $291,700 under this agreement, of which $137,000 was for the December 1980 reserve capacity assessment, the core issue in the appeal. These payments occurred after the Village had already collected enough funds to cover the project's costs.

Harbours Pointe initiated a lawsuit in the Circuit Court of Waukesha County, Wisconsin, contesting the Village's collection of a special assessment after the associated debt was satisfied in 1996. The complaint sought a refund of $291,700, asserting that the Village had collected this amount without the required impact ordinance as per section 66.55 of the Wisconsin Statutes. Harbours Pointe alternatively claimed a violation of constitutional rights under 42 U.S.C. § 1983, alleging that the Village unlawfully took its property. The Village subsequently moved the case to federal court, where both parties consented to magistrate jurisdiction.

Both sides filed cross-motions for summary judgment, which the district court denied, determining that $137,000 of the payments was a reserve capacity assessment rather than an impact fee, as per a December 1980 resolution. Upon renewal of their motions, the district court granted the Village's motion, ruling that Harbours Pointe was barred from its claim due to failure to timely seek a remedy in state court, specifically under section 66.60 of the Wisconsin Statutes, which mandates a 90-day window for contesting assessments after entering a Developer's Agreement. The court concluded that Harbours Pointe's inaction forfeited its claim, prompting an appeal.

The district court's summary judgment is subject to de novo review, where evidence is viewed favorably for the non-moving party. Summary judgment is warranted when there are no genuine material fact disputes, and the moving party is entitled to judgment as a matter of law. Under 42 U.S.C. § 1983, a plaintiff must allege a deprivation of a federal right by a state actor. Additionally, both the Fifth Amendment and the Wisconsin Constitution ensure that property cannot be taken for public use without just compensation, with landowners entitled to compensation if regulations prevent economic use of their property.

Harbours Pointe contends that the Village's collection of a special assessment, after the 1996 satisfaction of debt for public improvements, constitutes a taking under the U.S. and Wisconsin Constitutions and 42 U.S.C. § 1983. The Village counters that Wisconsin Statutes § 66.60(12) provides an adequate state remedy, which Harbours Pointe did not exhaust, thereby forfeiting its right to challenge the assessments.

The court agrees with the Village, emphasizing that a property owner cannot claim a violation of federal law regarding takings until they have utilized available state remedies. The legal precedent indicates that a state action is not considered complete concerning constitutional injury until the state fails to provide an adequate post-deprivation remedy.

Wisconsin Statutes § 66.60 allows municipalities to levy special assessments for public works, contingent upon following statutory procedures. Harbours Pointe claims that this statute does not afford it a remedy under the current circumstances, but the court disagrees. The statute grants aggrieved individuals the right to appeal to the circuit court within 90 days of the municipality's final decision, as outlined in § 66.60(12)(a), which is designated as the sole remedy under § 66.60(12)(e).

Moreover, § 66.60(11) mandates that if project costs are less than the levied assessments, the governing body must proportionately reduce assessments or refund excess amounts. Harbours Pointe argues that the Village's failure to refund excess collections invalidates § 66.60(12)(a) as a remedy. However, the court finds that § 66.60(12)(a) explicitly provides the sole remedy for challenges to municipal assessment collections, and any other interpretation would contravene the Wisconsin legislature's intent.

A remedy must be deemed adequate to prevent federal claims of takings. The remedies available under Wisconsin Statute § 66.60(12) are considered sufficient, as they allow for appeals to be tried similarly to court cases, with costs awarded. The statute also permits courts to adjust excessive or insufficient assessments without annulment. Harbours Pointe, which acquired property in November 1996, failed to contest a special assessment within the required 90-day period following a December 1980 resolution. The 90 days began upon entering a Developer's Agreement on January 15, 1997, which informed Harbours Pointe of the assessment, allowing them until April 15, 1997, to challenge it. The court emphasized that a property owner cannot neglect to seek state remedies and then pursue federal claims based on the absence of state options. Harbours Pointe's delay of nineteen months in filing a complaint after receiving notice of the assessment resulted in a forfeiture of their rights to seek compensation, both under state and federal law. The judgment of the district court was affirmed, and it was noted that changes to § 66.60 after 2001 do not affect this appeal. The district court's summary judgment was reviewed de novo, with the court favoring the non-moving party's evidence, and it was determined that there were no genuine material facts in dispute that warranted a trial. Claims under 42 U.S.C. § 1983 require a demonstration of deprivation of federal rights by someone acting under state law. The Fifth Amendment mandates just compensation for the taking of private property for public use, a principle echoed in the Wisconsin Constitution.

A landowner is entitled to just compensation if their property is taken by the state or if regulations prevent economic use of the land. Harbours Pointe contends that the Village's actions in collecting a special assessment after the debt for public improvements was satisfied constituted an unconstitutional taking under both state and federal law. The Village counters that Harbours Pointe did not exhaust state remedies available under Wis. Stat. § 66.60(12), which addresses appeals for aggrieved parties regarding special assessments. The court agrees with the Village, noting that a property owner cannot claim a violation of federal law until they have pursued state remedies and been denied compensation. 

Wis. Stat. § 66.60 allows municipalities to levy special assessments for public works, requiring proper statutory procedures. Harbours Pointe claims this statute does not provide adequate remedies under the circumstances, but the court disagrees. The statute allows for appeals to circuit court for aggrieved individuals, with section 66.60(12)(e) stating that such appeals are the sole remedy. Furthermore, section 66.60(11) mandates that if project costs are less than assessments, the governing body must proportionately reduce assessments or refund the excess to property owners. Harbours Pointe argues without support that the Village was obligated to refund excess funds and that the failure to do so invalidates the appeal remedy provided by section 66.60(12)(a).

Section 66.60(12)(a) of the Wisconsin Statutes provides the exclusive remedy for claims regarding a municipality's assessment collections, specifically governing the dispute between Harbours Pointe and the Village. Any interpretation contrary to this statute would contradict the Wisconsin legislature's intent. The statute's remedies are deemed adequate to prevent federal takings claims, as supported by case law. Appeals under section 66.60(12)(b) are handled as original court cases, with costs awarded. Additionally, section 66.60(12)(d) allows courts to modify excessive or insufficient assessments or damage awards without annulment.

Harbours Pointe failed to utilize these remedies after acquiring property in November 1996 and thus could not contest the special assessment from December 1980 within the required 90 days. The Developer's Agreement signed on January 15, 1997, triggered the 90-day period for contesting the assessment, which expired on April 15, 1997. Harbours Pointe's inaction for nineteen months before filing a complaint on July 16, 1998, resulted in the forfeiture of their right to seek a refund from the Village. Consequently, Harbours Pointe's failure to timely pursue state remedies precludes any claims for just compensation under state or federal law. The judgment of the district court is affirmed. 

Note: Section 66.60 has been renumbered and partially repealed by 1999 Wis. Act 150, but the substance relevant to this case remains unchanged.