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City of Missoula v. Mountain Water Company

Supreme Court of Montana

May 8, 2018

CITY OF MISSOULA, Plaintiff and Appellee,
v.
MOUNTAIN WATER COMPANY, et al., Defendants and Appellants, and EMPLOYEES OF MOUNTAIN WATER COMPANY, Intervenors.

          Submitted on Briefs: April 4, 2018

          District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV-14-352 Honorable Karen Townsend, Presiding Judge

          For Appellant Mountain Water Company: William T. Wagner, Stephen R. Brown, Kathleen L. DeSoto, Garlington, Lohn & Robinson, PLLP, Missoula, Montana Joe Conner, Adam Sanders, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., Chattanooga, Tennessee

          For Appellants: William W. Mercer, Kyle Anne Gray, Brian M. Murphy, Billings, Montana (for Carlyle Infrastructure Partners, LP) Michael W. Green; D. Wiley Barker, Crowley Fleck PLLP, Helena, Montana

          For Appellee: Scott M. Stearns, Natasha Prinzing Jones, Zachary Aaron Franz, Randy J. Tanner, Boone Karlberg P.C., Missoula, Montana William K. VanCanagan, Datsopoulos, MacDonald & Lind, P.C., Missoula, Montana Harry H. Schneider, Jr., Perkins Coie LLP, Seattle, Washington

          INGRID GUSTAFSON JUSTICE.

         ¶1 Appellant Mountain Water Company (Mountain Water) appeals from the November 9, 2017 order of the Fourth Judicial District Court, Missoula County, denying Mountain Water's motion for post-summons interest.

         ¶2 We restate the issue on appeal as follows:

Whether the District Court erred when it determined Mountain Water was not entitled to interest pursuant to § 70-30-302(2), MCA.

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶3 Mountain Water operated a water delivery system located in and around Missoula, Montana. On May 5, 2014, the City of Missoula (the City) filed an amended complaint seeking condemnation of the water system. The Fourth Judicial District Court issued a Preliminary Order of Condemnation under § 70-30-206, MCA, on June 15, 2015. This Court affirmed the Preliminary Order of Condemnation in City of Missoula v. Mt. Water Co., 2016 MT 183, 384 Mont. 193, 378 P.3d 1113.

         ¶4 On October 26, 2015, the District Court concluded that § 70-30-302(5), MCA, which provides that an award of compensation does not include improvements made to condemned property, was unconstitutional as applied to Mountain Water. Therefore, Mountain Water sought compensation for improvements made to the condemned property after May 5, 2014. A Condemnation Commissioner hearing was held in November 2015 to determine the amount of just compensation. The Commissioners determined that the fair market value of the water system, including all improvements, was $88.6 million.

         ¶5 Following the Commissioners' valuation, Mountain Water sought interest for the time period prior to the City taking possession based on the Commissioners' $88.6 million valuation. On April 6, 2016, the District Court denied an award of interest concluding the plain language of § 70-30-302(2), MCA, in conjunction with § 70-30-311, MCA, did not entitle Mountain Water to post-summons interest because the City never took interlocutory possession of the condemned property.

         ¶6 On May 3, 2016, the District Court determined Mountain Water and Carlyle were prevailing parties entitled to recover necessary expenses pursuant to § 70-30-305(2), MCA. After an evidentiary hearing, the District Court awarded Carlyle $1, 111, 659.94 and Mountain Water $2, 800, 745.57 for litigation expenses. However, Carlyle's litigation expenses remain in escrow pending the outcome of the appeal to the Montana Supreme Court.[1]

         ¶7 The City then moved for the Court to "oversee and supervise the transition of ownership and possession." The City specifically sought access to data such as customer and human resource information prior to taking possession. On January 4, 2017, the District Court granted the City limited access to Mountain Water's data to ensure a smooth transition of the public utility. However, the District Court repeatedly stated giving limited access to the City did not grant the City a possessory right in the water system. Consequently, the District Court rejected Mountain Water's argument that allowing the City access to limited data qualified as a transfer of possession pursuant to § 70-30-311, MCA.

         ¶8 On June 5, 2017, Mountain Water and the City entered into a Settlement Agreement. The Settlement Agreement provided the City would take possession of Mountain Water's condemned property simultaneously upon the City paying Mountain Water for all assets and claims[2] asserted in the condemnation action, the FBO refunds and the Carlyle Litigation Expenses. The Settlement Agreement provided the City would pay approximately $84 ...


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