Background
In 1998, the Town of Fond du Lac and the Wisconsin Department of Transportation entered into a jurisdictional transfer agreement tied to a highway project creating a new State Trunk Highway 175. The agreement provided that jurisdiction over portions of Van Dyne Road, also known as Old STH 175, and a connection to Lakeshore Drive would transfer to the Town on November 15 of the year the improvement project was completed and opened to traffic. The new highway opened in September 2001, and the DOT regarded the transfer as effective November 15, 2001.
The Town maintained the transferred roadways beginning in the early 2000s and annually certified its jurisdiction to obtain state transportation funding. After a culvert over Supple Creek needed replacement, however, the Town sued in 2022 for a declaration that the DOT remained responsible and later sought rescission. The Town argued that the transfer condition was never satisfied because a planned culvert replacement had been removed from the project. The circuit court granted summary judgment to the DOT, concluding both that laches barred the claim and that jurisdiction had transferred in 2001.
The Court’s Holding
The Court of Appeals affirmed, holding that the jurisdictional transfer agreement unambiguously transferred jurisdiction over Old STH 175 and the Lakeshore Drive connection to the Town on November 15, 2001. The only reasonable interpretation of the agreement’s reference to the “improvement project” was the broader project that removed Old STH 175 from the state highway system, added the new STH 175, and placed the former state roadway under Town jurisdiction. The agreement did not mention Supple Creek or require replacement of its culvert as a condition of transfer.
The court also rejected rescission based on an alleged breach of the duty of good faith and fair dealing. The parties performed consistently with the agreement’s express terms, and the Town could not use the implied covenant to undo those terms. Because the contract ruling resolved the appeal, the court did not decide whether laches applied.
Key Takeaways
- The jurisdictional transfer agreement unambiguously placed the disputed roadways under the Town’s jurisdiction as of November 15, 2001.
- Removal of the culvert replacement from the project plans did not prevent the transfer because the agreement did not identify that work as a condition of transfer.
- The implied duty of good faith and fair dealing cannot be used to negate the express terms of an agreement.
Why It Matters
The decision confirms that jurisdictional transfer agreements are interpreted according to their text and the highway-system change they implement. A municipality cannot avoid responsibility for a transferred roadway by treating omitted work that the agreement never identified as a condition precedent.
The ruling leaves the Town responsible for administering, controlling, constructing, maintaining, and operating the roadway segments covered by the agreement, including the area of the Supple Creek culvert.