Loss of Homes to Flood Not a Taking

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The Wisconsin Court of Appeals decided today that property owners whose homes were destroyed by a dam breach could not recover on an inverse condemnation claim against the village owning the dam. The decision itself is not nearly as remarkable as the event causing the alleged taking. In June 2008, the area in the vicinity of Lake Delton, Wisconsin, experienced a 1,000-year rainfall and flooding event that caused the failure of the dam forming Lake Delton which, in turn, caused several homes to literally fall into the water as it rushed by their property. Video of the events appeared on national news for several days. You can see a few examples here and here.

Several lakefront property owners brought an inverse condemnation claim against the Village of Lake Delton, which acquired ownership of the dam in 1994. Under both federal and Wisconsin constitutional law, two types of government action can result in a taking:  (1) an “actual physical occupation” of private property, or (2) a restriction that deprives an owner of “all, or substantially all, of the beneficial use of his or her property.” To succeed on their inverse condemnation claims, the property owners would have to prove actual, physical occupation in this case since there were no restrictions at issue. It would be difficult to argue there was no “physical occupation” of their property. However, the Court held that the physical occupation had to be caused by some government action (rather than merely an omission) which caused the taking. In this case, the landowners offered no evidence linking any affirmative government action to the cause of the flooding.

The landowners alternatively argued that, even if they failed to identify specific action by the Village that caused the flooding, the Court should adopt a rule that the underlying facts amount to a per se taking. Their argument was simply this: the mere fact the dam was placed across a navigable waterway, forming a lake, makes the government responsible for any “consequential significant property damage” flowing from uncontrolled water in the lake. The Court of Appeals found no law supporting the argument, and declined the invitation to adopt a rule essentially making government units strictly liable in the takings context for all flooding associated with a dam.

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