Garfield Baptist Church v. City of Pewaukee ( 2019 )

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
July 24, 2019
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.
Appeal No. 2018AP673 Cir. Ct. No. 2015CV315
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II
GARFIELD BAPTIST CHURCH DBA SPRING CREEK CHURCH,
PLAINTIFF-RESPONDENT,
V.
CITY OF PEWAUKEE,
DEFENDANT-APPELLANT.
APPEAL from a judgment of the circuit court for Waukesha County:
KATHRYN W. FOSTER, Judge. Reversed and cause remanded.
Before Reilly, P.J., Gundrum and Hagedorn, JJ.
¶1 HAGEDORN, J. This case involves a challenge by Garfield Baptist
Church to the City of Pewaukee’s charges for use of its storm water management
system. The Church alleged that the charges constituted political subdivision fees
that did not “bear a reasonable relationship to the service for which the fee is
No. 2018AP673
imposed” under WIS. STAT. § 66.0628(2) (2017-18),1 and that the charges violated
WIS. STAT. § 66.0821, which allows challenges to sewerage and storm water
charges. At a bench trial, the circuit court placed the burden on the City to prove
that its charges bore the required “reasonable relationship” under § 66.0628(2).
The circuit court found that the City did not meet this burden, ruling for the
Church. The circuit court also declared the charges “inequitable” under
§ 66.0821(4)(c). We reverse.
¶2 WISCONSIN STAT. § 66.0821(4)(c) is not an acceptable vehicle for
challenging sewerage and storm water charges. Challenges of that kind may be
raised pursuant to subsec. (5) of that statute; however, our cases have made clear
that the public service commission has exclusive jurisdiction to make an initial
determination that charges are unreasonable or unjustly discriminatory, and its
determination is subject to review in our courts via WIS. STAT. ch. 227. Therefore,
the circuit court’s determination on this ground was in error.
¶3 The circuit court’s separate determination that the charges did not
bear a “reasonable relationship” to the services provided under WIS. STAT.
§ 66.0628(2) also must be overturned because the circuit court erroneously placed
the burden of proof at trial on the City rather than the Church. And because this
error affected the substantial rights of the City, we reverse the judgment and
remand.
1
All references to the Wisconsin Statutes are to the 2017-18 version.
2
No. 2018AP673
BACKGROUND
¶4 The City established its storm water utility through an ordinance
passed in 2010. Acting through the utility, the City maintains a storm water
management system that is designed to provide storm water services to users of
the system. By ordinance, the system is to be funded through annual utility
charges assessed against property owners based on their respective system usage.
¶5 The City also employs—via ordinance—a credit policy that allows
for reductions of a charge on the basis of property-specific practices that are
beneficial to the system as a whole. Available credits include a quantity credit of
up to 15% for a property that utilizes best storm water management practices and a
quality credit of up to 25% for a property that reduces discharge on-site. While
these and other credits may be applied simultaneously, the City’s policy allows for
no more than 40% credit.
¶6 Starting in 2010, the Church was assessed an annual utility charge of
$13,428 for its use of the storm water management system. Following an
objection from the Church, the City applied the 25% quality credit, reducing the
annual charge to $10,003.43. The annual charge was later reduced to $8056.80
after the Church again objected and the City applied the 15% quantity credit.
¶7 Still unhappy with the charges, the Church filed an action with the
circuit court asserting it was not a user of the storm water management system and
therefore should not be charged at all. The Church also contended that the charges
violated the prohibition in WIS. STAT. § 66.0628 against unreasonable political
subdivision fees and the requirement under WIS. STAT. § 66.0821 for equitable
storm water service charges. As an alternative basis for relief, the Church sought a
declaration that the charges constituted a tax from which it was exempt.
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¶8 Following a three-day bench trial, the circuit court declared that the
Church was a user of the storm water management system and that, at a global
level, the City’s methodology for imposing charges, granting credits, and
recovering costs was reasonable. Nevertheless, the court concluded that the
Church’s individual charges were unreasonable under WIS. STAT. § 66.0628(2)
and inequitable under WIS. STAT. § 66.0821(4)(c). The court’s remedy involved
applying additional credits adding up to 90%, leaving the Church with a payment
of 10% of the original charge. This new discounted amount was applied to past
and future charges. The City appeals.
DISCUSSION
¶9 In concluding that the Church was entitled to relief, the circuit court
found that the City’s utility charges violated both WIS. STAT. § 66.0628(2) and
WIS. STAT. § 66.0821(4)(c). As to the latter conclusion, the statute itself and cases
interpreting it establish that the legislature has delegated the authority to make
initial determinations under § 66.0821 to the public service commission (PSC).
Given this, the circuit court did not have a proper legal basis for its decision under
§ 66.0821. The circuit court’s decision based on § 66.0628(2) also must be
reversed because the circuit court applied an incorrect burden of proof.
WISCONSIN STAT. § 66.0821
¶10 The circuit court rested its decision in part on the ground that the
charges were “inequitable” under WIS. STAT. § 66.0821(4)(c). That statute
provides:
For the purpose of making equitable charges for all
services rendered by a storm water and surface water
sewerage system to users, the property served may be
classified, taking into consideration the volume or peaking
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of storm water or surface water discharge that is caused by
the area of impervious surfaces, topography, impervious
surfaces and other surface characteristics, extent and
reliability of mitigation or treatment measures available to
service the property, apart from measures provided by the
storm water and surface water sewerage system, and any
other considerations that are reasonably relevant to a use
made of the storm water and surface water sewerage
system. The charges may also include standby charges to
property not yet developed with significant impervious
surfaces for which capacity has been made available in the
storm water and surface water sewerage system. No
additional charges, beyond those charged to similar
properties, may be charged to a property for services
rendered by a storm and surface water system for a
property that continually retains 90 percent of the
difference between the post-development and
predevelopment runoff on site.
Id. (emphasis added). While this provision does discuss the goal of equity,
nothing in this statute provides a separate right for users of the system to challenge
charges as inequitable. Rather, this provision on its face authorizes municipalities
to consider various relevant factors when establishing service charges.
¶11 This reading is not only manifest in the language, it is confirmed by
the fact that the legislature enacted a separate provision—WIS.
STAT. § 66.0821(5)—that gives users the right to challenge “rates, rules and
practices” that “are unreasonable or unjustly discriminatory.” Id. Such
complaints under subsec. (5) are to be directed to the public service commission.
The statute authorizes the PSC to investigate such complaints, and, if necessary,
conduct hearings and issue orders to fix reasonable rates and settle any other
matters. Sec. 66.0821(5)(a). Determinations of the PSC may then be judicially
reviewed pursuant to WIS. STAT. ch. 227. Sec. 66.0821(5)(b).
¶12 Based on this statutory structure, our cases have made clear that the
PSC is vested with the “exclusive jurisdiction” to make initial determinations on
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No. 2018AP673
whether charges are unreasonable or discriminatory under WIS. STAT. § 66.0821.
See Kimberly-Clark Corp. v. PSC, 110 Wis. 2d 455, 461, 329 N.W.2d 143 (1983)
(citing statutory predecessor to § 66.0821). But the PSC was not able to make
such a determination in this case. While the record shows that the Church filed an
informal complaint with the PSC, that matter was withdrawn before a final ruling
was issued.
¶13 In rejecting the City’s argument on the PSC’s jurisdiction, the circuit
court stated that deferring a decision after significant time had passed would be a
“travesty in pragmatic terms, and a colossal waste of judicial resources, first of all,
but more importantly the resources of both parties here.” As prudent as those
concerns may be, the legislature has not recognized exceptions to the procedure
for challenging the reasonableness of service charges under WIS. STAT.
§ 66.0821(5). Nor does anything in the rest of the statutory language authorize a
separate challenge to charges in the circuit court as inequitable. Therefore, the
circuit court’s ruling was not based on a proper legal basis and must be reversed.2
WISCONSIN STAT. § 66.0628
¶14 Even though the circuit court’s reliance on WIS. STAT.
§ 66.0821(4)(c) was erroneous, the court also based its decision on WIS. STAT.
2
We note the City did not renew its argument as to this issue on appeal. Even so, we
deem it necessary to apply binding statutory and case law, as well as provide further guidance for
the parties and the circuit court on remand. Bartus v. DHSS, 176 Wis. 2d 1063, 1071, 501
N.W.2d 419 (1993) (addressing this court’s authority to raise questions of law sua sponte).
The concurrence argues that WIS. STAT. § 66.0821(5) does not apply at all—that is, the
Church could not bring a claim to the PSC under this section because the City’s storm water
utility charges are not “rates.” The parties made no such arguments, and therefore we express no
opinion on this contention. It is sufficient here to reject the circuit court’s decision based on this
statute because the Church’s claim was not brought to the PSC first.
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§ 66.0628 as an independent basis for relief. The operative language of § 66.0628
comes from subsec. (2), which states: “Any fee that is imposed by a political
subdivision shall bear a reasonable relationship to the service for which the fee is
imposed.” In relying on this statute, the circuit court placed the burden of proof
on the City, a conclusion we believe was in error.
¶15 WISCONSIN STAT. § 66.0628 was originally enacted in 2003 to
codify the common law. 2003 Wis. Act 134, Legislative Memo (Mar. 29, 2004).
Since its enactment, this provision has been used to challenge fees in our circuit
courts. See Rusk v. City of Milwaukee, 2007 WI App 7, ¶20, 298 Wis. 2d 407,
727 N.W.2d 358.
¶16 Nothing in the statute as originally enacted or in our cases since
addressed the burden of proof for these sorts of claims.3 However, as a general
rule, “a party seeking judicial process to advance his position carries the burden of
proof.” Sausen v. Town of Black Creek Bd. of Review, 2014 WI 9, ¶19, 352
Wis. 2d 576, 843 N.W.2d 39 (citation omitted). Even more to the point, treatises
describe a general common law burden of proof applicable to challenges to
municipal fees broadly and fees of this type specifically. Namely, “the party
challenging a municipal fee bears the burden of demonstrating that the fee is
unreasonable.” 71 AM. JUR. 2D State and Local Taxation § 12 (2012); see also 56
AM. JUR. 2D Municipal Corporations § 507 (2010) (“Sewer rates fixed by a
3
We are also unaware of cases predating the statute that clearly addressed the proper
burden of proof in common law claims. See, e.g., State v. Jackman, 60 Wis. 2d 700, 707, 710,
211 N.W.2d 480 (1973); City of Milwaukee v. Milwaukee & Suburban Transp. Corp., 6 Wis. 2d
299, 303, 308, 312, 94 N.W.2d 584 (1959); see also Sluggy’s Lake Front Inn, Inc. v. Town of
Delavan, 125 Wis. 2d 199, 201-02, 372 N.W.2d 174 (Ct. App. 1985); State ex rel. Attorney Gen.
v. Wisconsin Constructors, 222 Wis. 279, 285, 290, 268 N.W. 238 (1936).
7
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municipality are presumed to be valid. A party challenging a municipality’s sewer
rates has the burden of proving that the rates are unreasonable or lacking in
uniformity with respect to service rendered.”); 64 AM. JUR. 2D Public Utilities
§ 89 (2011) (“[O]ne claiming that a rate established by a rate-making body is
unreasonable, confiscatory, excessive, or violative of constitutional immunities
has the burden of proving it to be such.”). We see nothing in prior Wisconsin
cases that challenges this default rule.
¶17 The issue became a bit more complicated when the legislature
modified WIS. STAT. § 66.0628 in 2013. 2013 Wis. Act 20, §§ 1277ee, 1277eg.
First, it created a new subsection defining “reasonable relationship” to mean “the
cost charged by a political subdivision for a service provided to a person may not
exceed the political subdivision’s reasonable direct costs that are associated with
any activity undertaken by the political subdivision that is related to the fee.”
Sec. 66.0628(1)(b). Second, it created subsec. (4), which provides4 as follows:
(a) Any person aggrieved by a fee imposed by a
political subdivision because the person does not believe
that the fee bears a reasonable relationship to the service for
which the fee is imposed may appeal the reasonableness of
the fee to the tax appeals commission by filing a petition
with the commission within 90 days after the fee is due and
payable. The commission’s decision may be reviewed
under [WIS. STAT. §] 73.015. For appeals brought under
this subsection, the filing fee required under [WIS. STAT.
§] 73.01(5)(a) does not apply.
(b) With regard to an appeal filed with the tax appeals
commission under par. (a), the political subdivision shall
bear the burden of proof to establish that a reasonable
relationship exists between the fee imposed and the
services for which the fee is imposed.
4
Minor modifications were made in 2017 that are not relevant here. 2017 Wis. Act 243,
§ 18. The provision as quoted above is the current version of the statute.
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Sec. 66.0628(4).
¶18 We note at the outset that neither party maintains that this new
provision requires aggrieved persons to bring their claims to the tax appeals
commission first. Therefore, we leave that question unaddressed and assume the
statute still allows for a separate right of action in the circuit court.5
¶19 The question, then, is what the proper burden of proof is under the
statute and in light of these statutory changes. It is clear that WIS. STAT.
§ 66.0628(4)(b) directs the burden of proof to be placed on the political
subdivision, but only “[w]ith regard to an appeal filed with the tax appeals
commission.” The statute remains silent regarding the burden of proof for
proceedings not before the tax appeals commission.
¶20 Again, assuming the statute still provides the right to challenge fees
in the circuit court, the best reading of the statutory language is that the burden of
proof remains with the party challenging the fee, as the general rule appears to
have been. A well-established canon of statutory construction is that when a
statute expresses one thing, the rational implication is that it excludes other things
(expressio unius est exclusio alterius). Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts 107 (2012). This rule is context-
driven for sure, but it is common sense as well. When I tell my son the rule is that
we don’t throw baseballs in the house, by implication this “don’t throw baseballs”
rule does not apply outside the house. Thus, the natural reading of a statute
5
The concurrence argues that the case should have gone to the tax appeals commission,
not the PSC, and presumably, not the circuit court. But the parties did not make such an
argument. We therefore deem it appropriate to withhold judgment until this issue can be fully
considered.
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No. 2018AP673
placing the burden of proof on the City in cases before the tax appeals commission
is that this burden of proof does not apply to cases that are not before the tax
appeals commission. If the same burden of proof applied no matter the forum,
there would be no reason for the legislature to explicitly locate application of the
burden of proof to cases before the tax appeals commission. To read the statute
otherwise would render superfluous the first clause in WIS. STAT. § 66.0628(4)(b),
applying that burden of proof to “an appeal filed with the tax appeals commission
under par. (a).”6
¶21 In view of the default common law rule reflected in the treatises
along with the best reading of the statutory text, we conclude that the burden to
prove the existence of a reasonable relationship consistent with WIS. STAT.
§ 66.0628(2) should have been placed on the Church, not the City.
¶22 For relief to be granted on this error, we must also determine that
that error affected the substantial rights of the party seeking relief. WIS. STAT.
§ 805.18(2). It has long been recognized, however, that the erroneous placement
of the burden of proof as to a material issue constitutes an error affecting the
substantial rights of a party. See, e.g., Shaw v. Leatherberry, 2005 WI 163, ¶44,
286 Wis. 2d 380, 706 N.W.2d 299; Bengston v. Estes, 260 Wis. 595, 600, 51
N.W.2d 539 (1952). Accordingly, we reverse the circuit court’s judgment in favor
6
An argument could be made that the amended statute is best read as now requiring all
challenges to go to the tax appeals commission. That would also explain the statute’s silence
regarding the burden of proof in cases that do not go through the tax appeals commission
(namely, such cases would not exist). But as we have explained, no such argument was made
before us, and we render no opinion on it either way.
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of the Church and remand the cause for further proceedings consistent with this
opinion.7
By the Court.—Judgment reversed and cause remanded.
Not recommended for publication in the official reports.
7
Because we conclude that the erroneous placement of the burden of proof necessitates
reversal and remand for further proceedings, we do not reach the merits of the City’s other
challenges on appeal.
11
No. 2018AP673(C)
¶23 REILLY, P.J. (concurring). I agree that Garfield Baptist Church did
not properly appeal this matter. I differ with my colleagues as to which
commission the appeal must be made to. The majority believes the Church needed
to appeal to the Public Service Commission (PSC) under WIS. STAT. § 66.0821(5).
Majority, ¶¶11-12. I disagree as an appeal to the PSC is expressly for challenging
the reasonableness of public “rates.” See § 66.0821(5)(a) (providing mechanism
for complaints where “rates, rules and practices are unreasonable or unjustly
discriminatory). When a property owner, such as the Church, is “aggrieved by a
fee” imposed upon the property, that person is required to bring their appeal to the
tax appeals commission. See WIS. STAT. § 66.0628(4)(a) (addressing a “fee that is
imposed by a political subdivision”).
¶24 The City of Pewaukee imposes storm water “user fees” upon
property in the City. The amount of the fee is based upon the individual
characteristics of the property, meaning it is not a “rate” uniformly levied upon a
group of users similarly situated. In contrast, a sewerage system has “rates” that
are uniformly applied based upon the number of gallons of water used by the
property.1 The PSC conducts a uniform review as to whether the rate applied by
the political subdivision to the users as a whole (the public) is “unreasonable.”
See WIS. STAT. § 66.0821(5)(a). The tax appeals commission, in contrast, is
charged by the legislature to review whether a “fee … imposed by a political
1
This is measured by a meter. A storm water system has no way to “meter” the “use” of
the system.
No. 2018AP673(C)
subdivision” upon a specific property bears a “reasonable relationship to the
service for which the fee is imposed.” WIS. STAT. § 66.0628(2).
¶25 As the Church is appealing a “fee” rather than a “rate,” WIS. STAT.
§ 66.0628 expressly required the Church to bring its appeal to the tax appeals
commission (with ultimate review under WIS. STAT. ch. 227 procedures). See
§ 66.0628(4)(a); WIS. STAT. § 73.015(2).
¶26 I further disagree with the majority that the property owner has the
burden of proof. In an appeal to the tax appeals commission, the legislature has
expressly placed the burden of proof upon the political subdivision: “With regard
to an appeal filed with the tax appeals commission under par. (a), the political
subdivision shall bear the burden of proof to establish that a reasonable
relationship exists between the fee imposed and the services for which the fee is
imposed.” WIS. STAT. § 66.0628(4)(b). This allocation makes sense as the
political subdivision should have the burden to show that the individualized fee
imposed upon an individual property owner has a reasonable relationship to the
services provided by the political subdivision.
2