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City of Missoula v. Mountain Water Co.

Supreme Court of Montana

October 3, 2018

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

          Submitted on Briefs: August 22, 2018

          APPEAL FROM: 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 Carlyle Infrastructure Partners, LP: William W. Mercer, Kyle Anne Gray, Holland & Hart, LLP, Billings, Montana

          For Appellee:Scott M. Stearns, Natasha Prinzing Jones, 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

          For Intervenor State of Montana Department of Transportation: David L. Ohler, Valerie D. Wilson, Special Assistant Attorneys General, Montana Department of Transportation, Helena, Montana

          OPINION

          INGRID GUSTAFSON, JUSTICE

         ¶ l Defendant Carlyle Infrastructure Partners, LP (Carlyle) appeals from findings of fact, conclusions of law, and an order regarding Carlyle's second claim for litigation expenses filed October 20, 2017, in the Fourth Judicial District Court, Missoula County. We reverse.

         ¶2 The issue on appeal is:

         Whether the District Court erred in awarding Carlyle fees from its second attorney fee request?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶3 This is yet another appeal from the proceeding initiated by the City of Missoula (City) to condemn via eminent domain the water system serving the City, previously owned by Mountain Water Company (Mountain Water) and its upstream holding company, Carlyle. Missoula v. Mountain Water Co., 228 Mont. 404, 743 P.2d 590 (1987) (Mountain Water I); Missoula v. Mountain Water Co., 236 Mont. 442, 771 P.2d 103 (1989) (Mountain Water II); Missoula v. Mountain Water Co., 2016 MT 183, 384 Mont. 193, 378 P.3d 1113 (Mountain Water III); Missoula v. Mountain Water Co., 2018 MT 114, 391 Mont. 288, 417 P.3d 321 (Mountain Water IV);Missoula v. Mountain Water Co., 2018 MT 139, 391 Mont. 422, 419 P.3d 685 (Mountain Water V). The litigation in the 1980s focused on acquisition issues and no taking occurred. Mountain Water I, 228 Mont, at 413-14, 743 P.2d at 596; Mountain Water II, 236 Mont, at 454, 771 P.2d at 110. The later condemnation litigation history is well documented in Mountain Water V at ¶¶ 2-8.

         ¶4 On February 25, 2016, Carlyle submitted its first claim for fees, costs, and expenses incurred in the condemnation litigation through January 31, 2016. On April 12, 2017, following Carlyle and Mountain Water's submission of claims, full briefing, and an evidentiary hearing, the District Court issued a Final Order on Attorneys' Fees and Expenses (Fee Order I), awarding Carlyle $1, 111, 659.94 and Mountain Water $2, 800, 745.57 for fees and expenses of litigation. Fee Order I reduced Carlyle's requested fees by 35%, which this Court affirmed. Mountain Water V, ¶ 38. Fee Order I also utilized caps imposed by § 70-30-306, MCA, which this Court found could be constitutionally challenged as-applied. Mountain Water V, ¶¶ 6, 24-31, 38.

         ¶5 On December 17, 2015, Carlyle sold all its interest in the property at issue to Liberty Utilities Co. (Liberty). On June 5, 2017, the City, Mountain Water, and Liberty entered into a Settlement Agreement which resolved all claims between the City and Mountain Water unless specifically reserved. On June 22, 2017, Carlyle and Mountain Water both filed their second claims for litigation expenses incurred since January 31, 2016. In October 2017, the District Court issued its second order on attorneys' fees and costs (Fee Order II). It denied Mountain Water's fee claim because it had not reserved the right in the Settlement Agreement. Mountain Water did not appeal.

         ¶6 Fee Order II awarded Carlyle $42, 939.00 of its claimed $113, 673.54. The District Court found "significant overlap and duplication in the work of Defendants' attorneys, which inflated attorney's fees beyond what is reasonable and necessary," and "Carlyle's claims include matters that are not reimbursable as reasonable and necessary expenses of the litigation." The District Court found a 1ine-by-1ine adjustment of fees was not feasible due to inconsistent billing practices, vague descriptions of work, and billing for matters which should not have been included as necessary expenses of the condemnation litigation, and concluded a 35% reduction in attorney's fees would be appropriate. We affirmed this same percentage reduction in Fee Order I. Mountain Water V, ¶ 38. The court awarded no costs as it found all $18, 483.35 requested should not have been included as "necessary expenses of litigation." Unlike Fee Order I, Fee Order II did not reference the caps imposed by § 70-30-306, MCA. Mountain Water ...


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