1033 North 7th Street v. City of Fond du Lac

2021 WI APP 38
COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION
Case No.: 2020AP92
Complete Title of Case:
1033 NORTH 7TH STREET, A CALIFORNIA CORPORATION,
PLAINTIFF-APPELLANT,
V.
CITY OF FOND DU LAC AND DOUG HOERTH, CITY OF FOND DU LAC
BUILDING INSPECTOR,
DEFENDANTS-RESPONDENTS.
Opinion Filed: May 5, 2021
Submitted on Briefs: February 11, 2021
JUDGES: Neubauer, C.J., Reilly, P.J., and Gundrum, J.
Concurred:
Dissented:
Appellant
ATTORNEYS: On behalf of the plaintiff-appellant, the cause was submitted on the
briefs of Kimberly Penix of Alderman Law Firm, Fort Collins, CO.
Respondent
ATTORNEYS: On behalf of the defendants-respondent, the cause was submitted on
the brief of Remzy D. Bitar and Anthony J. Garcia of Municipal Law &
Litigation Group, S.C., Waukesha.
2021 WI App 38COURT 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.
May 5, 2021
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. 2020AP92 Cir. Ct. No. 2018CV374
STATE OF WISCONSIN IN COURT OF APPEALS
1033 NORTH 7TH STREET, A CALIFORNIA CORPORATION,
PLAINTIFF-APPELLANT,
V.
CITY OF FOND DU LAC AND DOUG HOERTH, CITY OF FOND DU LAC
BUILDING INSPECTOR,
DEFENDANTS-RESPONDENTS.
APPEAL from an order of the circuit court for Fond du Lac County:
ROBERT J. WIRTZ, Judge. Reversed and cause remanded.
Before Neubauer, C.J., Reilly, P.J., and Gundrum, J.
¶1 NEUBAUER, C.J. 1033 North 7th Street (the corporation) appeals
from an order granting the City of Fond du Lac (the City) and its building inspector
Doug Hoerth’s motion to dismiss the corporation’s complaint as untimely. The
No. 2020AP92
complaint, filed in September 2018, requested declaratory relief stating that a raze
or repair order the City1 issued to the corporation in 2015 was no longer in effect.2
The order was issued by the City under WIS. STAT. § 66.0413 (2019-20).3 The
corporation alleged that it relied on Hoerth’s assurances that the order had been
satisfied by repairs and there was no deadline to complete the remaining repairs.
The City argues, and the circuit court found, that as a matter of law, the corporation’s
claim was barred by its failure to pursue the statute’s exclusive remedy under
subsection (1)(h), which has a thirty-day statute of limitations to challenge the order.
The corporation contends that the circuit court erred in its interpretation of
§ 66.0413(1)(h). We agree. The exclusive remedy provision of § 66.0413(1)(h)
applies only to claims premised on the reasonableness of the order to raze. It does
not apply to this challenge, which is based on acts occurring during the subsequent
repairs required under the order. We reverse the order of dismissal and remand for
further proceedings.
BACKGROUND
¶2 The following facts are taken from the complaint filed by the
corporation in this action and the exhibits accompanying the complaint.4
1
We at times refer to the City and Hoerth collectively as the City, given that their interests
are aligned for purposes of this appeal.
2
The corporation also sought a permanent injunction to prevent the City from razing the
historic building. Prior to the hearing on the motion to dismiss, the circuit court took limited
testimony at a separate hearing and granted continuation of a temporary restraining order pending
this litigation, which remains in place.
3
All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise
noted.
4
See Soderlund v. Zibolski, 2016 WI App 6, ¶¶37-38, 366 Wis. 2d 579, 874 N.W.2d 561(holding that documents referenced by pleadings may be considered in a motion to dismiss).
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¶3 The corporation is the owner of the land and structures located at 101
East Division Street in Fond du Lac, Wisconsin, which is known locally by several
other names, including the Convent of the Sisters of the Holy Nativity (the convent).
It is a designated state and local historical building.
¶4 In June 2015, the convent was vandalized and partially set on fire.
Citing the resulting fire damage, Hoerth issued a raze or repair order in September
2015, which was served in October. Hoerth’s order gave the corporation ninety
days to make the repairs specified in the order necessary to avoid razing the
convent.5 The order notified the corporation that, if it failed to comply within the
time prescribed by the order, the building would be razed and removed. The order
5
The 2015 order reads, in pertinent part, as follows:
THEREFORE, YOU ARE HEREBY ORDERED to make
specific repairs to the building to make the building safe and
sanitary or to raze the building (meaning to demolish and remove
the building and to restore the site to a dust-free and erosion-free
condition) within ninety (90) days from the date of service of this
order upon you. The specific repairs required to make the
commercial building safe and sanitary are enumerated on the
attached Exhibit A.
YOU ARE FURTHER NOTIFIED that this order is served
upon you pursuant to the terms and provision of Section 66.0413
of the Wisconsin Statutes. If you shall fail or refuse to comply
within the time prescribed in this order, the commercial building
shall be razed and removed and the site restored to a dust-free and
erosion-free condition by the City of Fond du Lac, Wisconsin, or
its agents or contractors, and the cost of such razing, removal and
restoration of the site to a dust-free and erosion-free condition
shall be charged against the property, shall be a lien thereon, and
may be assessed and collected as a special tax.
YOU ARE FURTHER NOTIFIED that pursuant to Sections
66.0413(1)(h) and 893.76 of the Wisconsin Statutes, you must
make application to the circuit court within thirty (30) days of
service of this order if you wish to contest this order.
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also advised that the corporation had thirty days to contest the order in a court action
under WIS. STAT. §§ 66.0413(1)(h) and 893.76.
¶5 The corporation chose the option provided in the raze or repair order
of repairing the convent. The corporation hired Saul Marroquin, a general
contractor specializing in historic properties, to supervise the repairs. In November
2015, Marroquin met with Hoerth to discuss the required repairs, and then
supervised the restoration of the roof, electrical service, and plumbing. The work
discussed by the corporation and Hoerth was completed in 2015. Hoerth approved
the repairs, which totaled over $150,000, after they were completed.
¶6 After Hoerth inspected the repairs to that point, he advised Marroquin
and the corporation that, because the building was dry and sealed, there was no rush
to complete remaining cosmetic repairs. As Marroquin understood things, after
Hoerth indicated his approval of the repairs done up to that point, “[n]o further
timeline was set or demanded by [Hoerth] at that time.”
¶7 Based on Hoerth’s representation that the essential repairs were
approved, no further immediate work was necessary, and there was no deadline to
complete the restoration, the corporation believed that the raze or repair order was
satisfied, the remaining cosmetic repairs were not subject to any time line, and the
convent was no longer subject to the 2015 order or in danger of being razed by the
City.
¶8 Between November 2015 and November 2016, neither Hoerth nor any
other representative from the City suggested to the corporation or Marroquin that
any further repair was necessary to satisfy the raze or repair order. Nor did the City
make any attempt to move forward with the order. The corporation therefore paused
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No. 2020AP92
restoration efforts to focus on raising money for final restorations and never
attempted to challenge the order.
¶9 In November 2016, Hoerth created and filed an “Endorsement on
Special Inspections Warrant,” certifying sixteen items that he believed needed to be
repaired. Those sixteen items were different from the repairs set forth in the exhibit
attached to the September 2015 raze or repair order. Neither the warrant, the
endorsement, nor the cover letter accompanying the documents contained any time
deadline within which the new list of repairs had to be completed to avoid razing
the convent.
¶10 Sometime after April 2017, the City, at the recommendation of its
development director, accepted a bid to raze the convent pursuant to the 2015 order.
The corporation filed the current action shortly after it realized the City’s intentions
to go forward with the razing.6 The City filed a motion to dismiss, primarily on the
ground that the corporation’s challenge to the raze or repair order was untimely as
a matter of law.
¶11 The City also subsequently filed an Answer and Affirmative Defenses
denying, as it pertains to this appeal, the allegations regarding Hoerth’s
representations that the repairs were sufficient for the time being and that there was
no deadline to complete the remaining repairs. The City pled the corporation’s
failure to meet the statute of limitations as one of its affirmative defenses.
¶12 The circuit court granted the City’s motion to dismiss, ruling that WIS.
STAT. § 66.0413(1)(h) provides the corporation’s exclusive remedy and requires
that a challenge to a raze or repair order be made within the thirty-day statute of
6
The complaint seeking declaratory and injunctive relief does not include a jury demand.
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limitations under WIS. STAT. § 893.76. The court did not address whether the facts
alleged in the complaint supported the corporation’s contention that the City was
equitably estopped from enforcing the order.7 The corporation appeals.
DISCUSSION
Standards of Review
¶13 The corporation argues that the circuit court incorrectly interpreted
WIS. STAT. § 66.0413 to bar this action. It contends that the exclusive remedy
provision in that subsection relates only to challenging the reasonableness of the
order to raze or repair and not to claims arising from acts that occur while carrying
out repairs under the order—specifically, an assurance that the order was satisfied
and no longer in effect. We are therefore presented with an issue of statutory
interpretation, a question of law, which we review de novo. See Smith v. Williams,
2001 WI App 285, ¶8, 249 Wis. 2d 419, 638 N.W.2d 635.
¶14 “A motion to dismiss for failure to state a claim tests the legal
sufficiency of the complaint.” Data Key Partners v. Permira Advisers LLC, 2014
WI 86, ¶19, 356 Wis. 2d 665, 849 N.W.2d 693 (citation omitted). “Whether a
complaint states a claim upon which relief can be granted is a question of law for
our independent review.” Id., ¶17. When we review a circuit court’s ruling on a
motion to dismiss, “we accept as true all facts well-pleaded in the complaint and the
reasonable inferences therefrom.” Id., ¶19. In order to withstand a motion to
7
The corporation argues that the circuit court improperly converted the motion to dismiss
to a motion for summary judgment by considering items outside of the pleadings without providing
it an opportunity to be meaningfully heard. The City contends that the matter was submitted and
decided as a motion to dismiss. Our review shows that the circuit court dismissed the action as a
matter of law based on the pleadings and materials attached thereto, as discussed herein. Neither
party moved for summary judgment or seeks review of the circuit court’s decision as one deciding
summary judgment; as such, we review this appeal under the framework of a motion to dismiss.
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dismiss for failure to state a claim, “a complaint must plead facts, which if true,
would entitle the plaintiff to relief.” Id., ¶21.
WISCONSIN STAT. § 66.0413(1)(h) Does Not Bar Claims Arising From Acts Related
to Carrying Out the Raze or Repair Order
¶15 The raze or repair order at issue here was entered by the City pursuant
to its authority under WIS. STAT. § 66.0413. The order references three applicable
provisions. First, § 66.0413(1)(b)1. provides, in pertinent part, that
[t]he governing body, building inspector or other designated
officer of a municipality may:
1. If a building is old, dilapidated or out of repair and
consequently dangerous, unsafe, unsanitary or otherwise
unfit for human habitation and unreasonable to repair, order
the owner of the building to raze the building or, if the
building can be made safe by reasonable repairs, order the
owner to either make the building safe and sanitary or to raze
the building, at the owner’s option.
Section 66.0413(1)(f) provides:
Failure to comply with order; razing building. An order
under par[a]. (b) shall specify the time within which the
owner of the building is required to comply with the order
and shall specify repairs, if any. If the owner fails or refuses
to comply within the time prescribed, the building inspector
or other designated officer may proceed to raze the building
....
While not mentioned in the order, or by the parties, § 66.0413(1)(g) provides that
“[a] municipality ... may commence and prosecute an action in circuit court for an
order of the court requiring the owner to comply with an order to raze a building
issued under this subsection if the owner fails or refuses to do so within the time
prescribed in the order.”
The order further referenced § 66.0413(1)(h):
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No. 2020AP92
A person affected by an order issued under par[a]. (b) may
within the time provided by [WIS. STAT. §] 893.76 apply to
the circuit court for an order restraining the building
inspector or other designated officer from razing the
building or forever be barred. The hearing shall be held
within 20 days and shall be given preference. The court shall
determine whether the raze order is reasonable. If the order
is found reasonable the court shall dissolve the restraining
order. If the order is found not reasonable the court shall
continue the restraining order or modify it as the
circumstances require.... The remedies provided in this
paragraph are exclusive remedies and anyone affected by an
order issued under par[a]. (b) is not entitled to recover any
damages for the razing of the building.
Id. (emphasis added). The time limit for challenging the raze or repair order under
§ 66.0413(1)(h) is set forth in WIS. STAT. § 893.76, which is thirty days.
¶16 The corporation argues the exclusive remedy set forth in WIS. STAT.
§ 66.0413(1)(h) does not preclude its claim that, after it undertook the required
repairs, the City’s assurances that the order’s deadlines were no longer applicable
could equitably estop the City from moving forward to raze the convent under the
order. The corporation further contends that the allegations of the complaint stated
a claim for relief: that it relied to its detriment on Hoerth’s assurances that the order
had been satisfied. We agree.
¶17 The statutory analysis set forth in Smith, 249 Wis. 2d 419, compels
our conclusion.
¶18 In that case, a property owner asserted tort claims against the city, city
inspector, and a contractor arising from acts that occurred during the razing,
challenged the reasonableness of the raze costs, and sought credit for removal of
salvage from the site. Id., ¶¶1-4. The defendants argued that the plaintiff’s
exclusive remedy was to challenge the raze order within the prescribed thirty-day
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No. 2020AP92
time limit and the circuit court agreed, dismissing the claims as a matter of law. Id.,
¶¶5-6.
¶19 We reversed. We found that the language of WIS. STAT. § 66.05(3)8
provides a procedure for obtaining court review of the reasonableness of the raze
order, and that it is the “only issue” the court is to determine. Smith, 249 Wis. 2d
419, ¶12. The only relief available is a restraining order against razing the building.
Id.¶20 However, while the plain language of WIS. STAT. § 66.05(3) barred
damages for the razing of a building carried out pursuant to an unchallenged raze
order, we saw “nothing in the language of § 66.05(3), nor any other subsection, that
indicates a legislative intent to bar claims for torts committed in the carrying out of
the order.” Smith, 249 Wis. 2d 419, ¶¶12, 15.
¶21 We reasoned that “[s]ince the only issue the court may decide in a
proceeding under WIS. STAT. § 66.05(3) is whether the raze order is reasonable, and
since the court decides this issue before the razing and removal of the building
occurs, it is not possible—either as a matter of statutory construction or a matter of
logic—for a court in that proceeding to review the claims that [the property owner]
asserts in this action.” Smith, 249 Wis. 2d 419, ¶13. Moreover, because the
property owner was not challenging the reasonableness of the order, no purpose
would have been served by pursuing a restraining order. Id., ¶14.
8
The raze or repair order statute in effect in Smith v. Williams, 2001 WI App 285, 249
Wis. 2d 419, 638 N.W.2d 635, was numbered as WIS. STAT. § 66.05 (1997-98). The statute was
renumbered to WIS. STAT. § 66.0413 and repealed in part effective January 1, 2001. However,
neither of the parties point to any difference that matters to our analysis between the statutory
language at issue in Smith and other pre-2001 cases cited by the parties and that at issue in this
appeal.
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¶22 Our application of this analysis to the other specific claims at issue
aptly illustrated the point. We noted that the amount of the lien for the costs of
carrying out the raze order was not addressed in WIS. STAT. § 66.05(3), and during
the first thirty days, it was unknown whether there would be a lien, much less what
the cost of the razing and removing would be. Smith, 249 Wis. 2d 419, ¶24. There
would be little point in challenging the reasonableness or seeking a restraining order.
The same held true for the salvage costs. Id., ¶¶26-27. Indeed, we noted that
another provision specifically addressed the costs of carrying out the raze order and
salvage, § 66.05(2)(a), and nothing in that provision suggested that a preemptive
thirty-day challenge, which undoubtedly would be fruitless, was required. Id. We
found it was unreasonable to construe the exclusive remedy provision of § 66.05(3)
as applicable to these claims, and found no support for so holding in all of § 66.05.
Smith, 249 Wis. 2d 419, ¶¶24, 27.
¶23 Thus, we held that the exclusive remedy provision of what has been
renumbered to WIS. STAT. § 66.0413(1)(h) applies only to claims premised on the
reasonableness of the order to raze. Smith, 249 Wis. 2d 419, ¶1. “[N]othing in the
language of § 66.05(3),” bars any claims of any nature arising from acts related to
“the carrying out of the order.” Smith, 249 Wis. 2d 419, ¶15;9 see also Gehr v. City
9
Smith also considered and distinguished the primary case the City relies on here, as well
as numerous others, as involving a challenge to the reasonableness of the order, rather than a
challenge to the implementation of the order. See id., ¶16 & n.8 (“However, in each of these cases
the property owner was challenging the reasonableness of the raze order, and … whether the
person affected by the raze order had timely and properly challenged its reasonableness .... These
cases do not aid in resolving the issue before us on this appeal.” (emphasis added; footnote
omitted)), citing Mohr v. City of Milwaukee, 101 Wis. 2d 670, 677-79, 305 N.W.2d 174 (Ct. App.
1981), rev’d on other grounds, 106 Wis. 2d 80, 88, 315 N.W.2d 504 (1982). We further noted that
the supreme court reversed our decision in Mohr (upon which the City now relies), as the City of
Milwaukee conceded error in our holding that the exclusive remedy of WIS. STAT. § 66.05(3)
would preempt a contempt challenge to a razing based on violation of a bankruptcy court’s
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No. 2020AP92
of Sheboygan, 81 Wis. 2d 117, 125-28, 260 N.W.2d 30 (1977) (court considered
whether raze order had lapsed and whether the city would be estopped from
enforcing the order rather than applying § 66.05(3) to preclude claims).
¶24 Here, the corporation is not challenging the reasonableness of the raze
or repair order. We are bound by Smith’s holding. As a matter of statutory
construction and logic, there was no basis for the corporation to file an immediate
challenge within thirty days, nor a purpose to pursue a restraining order, as the facts
at issue—the subsequent repairs that were undertaken and the City’s assurances—
had not yet occurred, and a court hearing at that juncture would have been
pointless.10
¶25 Notably, neither party addresses WIS. STAT. § 66.0413(1)(f), which
was identified in the City’s order, or paragraph (g), both of which specifically
address the owner’s failure to comply with the order specifying the repairs required
under the time provided—in this case, ninety days. As did the separate statutory
provision relating to the costs of razing and salvage discussed in Smith, subsection
(1)(f) directly addresses the separate avenue provided to the property owner—
repair—and subsection (1)(g) specifically provides the City with the ability to seek
a court order when a property owner fails to comply with the order within the time
prescribed.
¶26 In short, when the property owner is provided ninety days to effect
identified repairs, and the City is authorized to seek a court order to address
injunction. Smith, 249 Wis. 2d 419, ¶16 n.8; Mohr, 106 Wis. 2d at 88, 90. Again, this decision
underscores the limited application of the exclusive remedy, as it did not apply there to the City’s
acts that occurred in carrying out the order.
10
WISCONSIN STAT. § 66.0413(1)(h) requires a challenge to the reasonableness of the
order be heard within twenty days.
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No. 2020AP92
noncompliance, it would be unreasonable to apply subsection (1)(h)’s limited
challenge to the order’s reasonableness to the acts occurring during the subsequent
repairs at issue.
¶27 Consequently, we also reject as inapplicable the City’s contention that
the corporation could not have reasonably relied11 on assurances from Hoerth
because the statute made clear that the thirty-day time frame to challenge the order
was the corporation’s exclusive remedy. The exclusive thirty-day remedy of WIS.
STAT. § 66.0413(1)(h) does not bar the corporation’s defense of equitable estoppel
based on the City’s implementation of the order.12 The complaint sufficiently
11
“The estoppel doctrine, also called equitable estoppel or estoppel in pais, focuses on the
conduct of the parties.” Milas v. Labor Ass’n of Wis., Inc., 214 Wis. 2d 1, 11, 571 N.W.2d 656(1997). “The elements of equitable estoppel are: (1) action or non-action, (2) on the part of one
against whom estoppel is asserted, (3) which induces reasonable reliance thereon by the other,
either in action or non-action, and (4) which is to his or her detriment.” Id. at 11-12. Although our
supreme court noted in Milas that courts should apply the doctrine of equitable estoppel with
caution against government bodies, “we have recognized that estoppel may be available as a
defense against the government if the government’s conduct would work a serious injustice and if
the public interest would not be unduly harmed by the application of estoppel.” See id. at 14; see
also Oliveira v. City of Milwaukee, 2001 WI 27, ¶20, 242 Wis. 2d 1, 624 N.W.2d 117 (equitable
estoppel available where plaintiff reasonably relied on city’s conduct in missing statute of
limitations/notice of claim deadline); Policemen’s Annuity & Benefit Fund v. City of Milwaukee,
2001 WI App 144, ¶18, 246 Wis. 2d 196, 630 N.W.2d 236 (explaining that “[t]he test as to whether
a party should be estopped … is ‘whether the conduct and representations of [the defendant] were
so unfair and misleading as to outbalance the public’s interest in setting a limitation on bringing
[the] actions.’”) (citation omitted; alterations in original); Fritsch v. St. Croix Cent. Sch. Dist., 183
Wis. 2d 336, 344-46, 515 N.W.2d 328 (Ct. App. 1994) (equitable estoppel available where plaintiff
reasonably relied on district’s conduct in missing notice of claim deadline).
12
We find the City’s argument based on Grams v. Melrose-Mindoro Joint School District
No. 1, 78 Wis. 2d 569, 254 N.W.2d 730 (1977), to be equally unpersuasive. That case did not
involve a raze or repair order or interpretation of the statute at issue here, and, as the corporation
observes in its reply brief, our supreme court held in that case that the plaintiff’s reliance on an
“alleged ... misstatement of law” was not reasonable. Id. at 580. In the current case, we have no
allegations that the corporation relied on a misstatement of law by the City; rather, the
representations allegedly made here were of the type that could be reasonably relied on by the
corporation in believing that it was not subject to any additional deadlines by the City.
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No. 2020AP92
alleged the corporation’s assertions that the property owner was assured by the
municipality that the property was safe from being razed and under no deadline to
complete repairs, and the property owner relied on those representations to its
detriment.13
CONCLUSION
¶28 We conclude that the circuit court erred in granting the City’s motion
to dismiss based on the corporation’s failure to file its complaint within thirty days
of the issuance of the raze or repair order. The exclusive remedy provision of WIS.
STAT. § 66.0413(1)(h) applies only to claims premised on the reasonableness of the
order to raze. It does not apply to this challenge based on acts occurring during the
subsequent repairs required under the order. The corporation is not precluded from
asserting that the City is estopped from enforcing the raze or repair order. 14 We
therefore reverse and remand to the circuit court for further proceedings consistent
with this opinion.
By the Court.—Order reversed and cause remanded.
13
The City addresses in its brief on appeal only the “reasonable reliance” element of the
corporation’s equitable estoppel defense advanced in the corporation’s principal brief, thereby
conceding that the corporation’s allegations were sufficient to establish the other three elements of
its estoppel claim. See Charolais Breeding Ranches, Ltd. v. FPC Sec. Corp., 90 Wis. 2d 97, 108-
09, 279 N.W.2d 493 (Ct. App. 1979) (holding that a party’s failure to refute an argument constitutes
a concession).
14
Given our holding, we need not address the other issues addressed by the parties. See
Lake Delavan Prop. Co. v. City of Delavan, 2014 WI App 35, ¶14, 353 Wis. 2d 173, 844 N.W.2d
632 (when one issue is dispositive on appeal, we need not address other issues).
13