Missoula v. Mountain Water ( 2021 )

05/18/2021
DA 20-0115
IN THE SUPREME COURT OF THE STATE OF MONTANA
2021 MT 122THE CITY OF MISSOULA,
Plaintiff, Appellee, and Cross-Appellant,
v.
MOUNTAIN WATER COMPANY, a Montana Corporation;
and CARLYLE INFRASTRUCTURE PARTNERS, LP,
a Delaware limited partnership,
Defendants, Appellants, and Cross-Appellees,
and
THE EMPLOYEES OF MOUNTAIN WATER COMPANY, et al,
Intervenors.
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV-14-352
Honorable Karen S. Townsend, Presiding Judge
COUNSEL OF RECORD:
For Appellant Carlyle Infrastructure Partners, LP:
William W. Mercer, Kyle Anne Gray, Brianne C. McClafferty,
Holland & Hart LLP, Billings, Montana
For Appellant Mountain Water Company:
Nicholas J. Lofing, Garlington, Lohn & Robinson, PLLP, Missoula,
Montana
Joe Conner, Adam Sanders, Baker, Donelson, Bearman & Berkowitz, P.C.,
Chattanooga, Tennessee
For Appellee:
Scott M. Stearns, Natasha Prinzing Jones, Randy J. Tanner, Thomas J.
Leonard, Boone Karlberg P.C., Missoula, Montana
Harry H. Schneider, Jr., Perkins Coie LLP, Seattle, Washington
William K. VanCanagan, Datsopoulos, MacDonald & Lind, P.C., Missoula,
Montana
Submitted on Briefs: March 17, 2021
Decided: May 18, 2021
Filed:
c.,.--.6--4(
__________________________________________
Clerk
2
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 Mountain Water Company and Carlyle Infrastructure Partners, LP (collectively,
Owners), appeal an order issued by the Fourth Judicial District Court, Missoula County,
denying a motion for substitution of judge that was made after this Court reversed the
District Court’s summary judgment order and remanded for further proceedings.
See City of Missoula v. Mt. Water Co., 2018 MT 139, 391 Mont. 422, 419 P.3d 685(Mountain Water III). While Owners raise numerous issues on appeal, the dispositive issue
we address is whether the District Court erred in denying Owners’ motion for substitution
of judge. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Since April 2014, condemnation proceedings before the District Court and this
Court concerning the water supply system serving the Missoula urban area have been
lengthy, complex, and contentious. The underlying facts have been adequately set forth in
our prior opinions and will not be recited again, except to the extent they are necessary.
See City of Missoula v. Mt. Water Co., 2016 MT 183, 384 Mont. 193, 378 P.3d 1113(Mountain Water I); City of Missoula v. Mt. Water Co., 2018 MT 114, 391 Mont. 288,
417 P.3d 321 (Mountain Water II); Mountain Water III; City of Missoula v. Mt. Water Co.,
2018 MT 245, 393 Mont. 68, 427 P.3d 1018 (Mountain Water IV). To address whether the
District Court erred when it denied Owners’ substitution motion following our reversal in
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Mountain Water III, some discussion of the issues raised and considered in
Mountain Water III is necessary.
¶3 In April 2016, Owners filed a notice of constitutional question and motion for partial
summary judgment contending § 70-30-306(2) and (3), MCA, which cap reimbursement
for attorney and expert fees to the prevailing party at the customary rate in the county where
the case is tried, were unconstitutional facially and as-applied.1 The City also filed a
motion for partial summary judgment arguing Owners were not the prevailing party and
that the statute was constitutional. The parties’ arguments over the validity of the statute
began with Article II, Section 29, of the Montana Constitution, which addresses
eminent domain and provides, in relevant part, that “[i]n the event of litigation, just
compensation shall include necessary expenses of litigation to be awarded by the court
when the private property owner prevails.” Owners sought to discover the City’s legal bills
to establish the necessity and reasonableness of their own expenses, and to provide context
and comparison in support of their argument that they must be justly compensated. The
District Court held Owners were prevailing parties with the right to be reimbursed for their
necessary litigation expenses but concluded that the City’s litigation costs were irrelevant
to whether the Owners met the requirements of § 70-30-306, MCA. The District Court
received evidence of the customary rates of Missoula counsel in determining the statutory
1
Section 70-30-306(2), MCA, states: “Reasonable and necessary attorney fees are the customary
hourly rates for an attorney’s services in the county in which the trial is held. Reasonable and
necessary attorney fees must be computed on an hourly basis and may not be computed on the
basis of any contingent fee contract.” Section 70-30-306(3), MCA, states: “Reasonable and
necessary expert witness fees may not exceed the customary rate for the services of a witness of
that expertise in the county in which the trial is held.”
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cap and concluded § 70-30-306, MCA, was constitutional facially and as-applied. The
District Court significantly reduced the amount of attorney and expert witness fees claimed
by Owners.
¶4 On appeal, this Court considered whether § 70-30-306, MCA, improperly restricted
the protections found within the constitutional provision. The Court determined that
Owners failed to establish that no application of the statute comported with Article II,
Section 29, because a condemnation case could involve a minor property owner for which
the owner retains local counsel who charge at the “customary” rate for the county. The
Court observed that in these scenarios the statute could constitutionally be applied, thus
defeating a facial challenge. However, Owners also argued that the statutory cap, as
applied to them, violated their constitutional rights to “just compensation” and
reimbursement of their “necessary expenses of litigation.”
¶5 The Court recognized that “[a]t the center of Property Owners’ as-applied challenge
to the statutory caps, and of their demonstration of necessity, was a comparison of the costs
of their legal defense efforts with the costs of the City’s efforts in prosecuting the action.”
Mountain Water III, ¶ 27. The Court concluded that because the District Court prohibited
such discovery, Owners were not permitted to make their as-applied constitutional
challenge to the statute. The Court held “given that reimbursement of ‘necessary’ expenses
is a ‘constitutional directive,’ a limitation upon reimbursement of litigation expenses
proven to be necessary would violate Article II, Section 29, under any level of scrutiny.”
Mountain Water III, ¶ 31. The Court reversed the District Court’s summary judgment
ruling that Owners had failed to meet their evidentiary burden on their as-applied
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constitutional challenge and remanded to allow Owners discovery. The Court
held: “Regarding Property Owners’ as-applied constitutional challenge to
§ 70-30-306, MCA, we reverse and remand for further proceedings to permit
Property Owners to conduct limited discovery upon which to lay the factual foundation for
their claim.” Mountain Water III, ¶ 38.
¶6 On remand, Owners filed a motion for substitution of district judge under
§ 3-1-804(12), MCA. The City asserted this Court remanded only for limited discovery
and that § 3-1-804(12), MCA, did not apply. In August 2018, the District Court denied
Owners’ motion as untimely although it noted that Owners had met all the statutory filing
requirements. The court further reasoned that the reversal and remand in
Mountain Water III did “not squarely meet the description of reversal of a summary
judgment” in “§ 3-1-804(12)[,] MCA.”
¶7 Owners appeal the District Court’s denial of their motion for substitution.
STANDARDS OF REVIEW
¶8 “A district court’s determination whether to substitute a judge is a question of law
that we review for correctness.” Labair v. Carey, 2017 MT 286, ¶ 11, 389 Mont. 366,
405 P.3d 1284 (citing Mines Mgmt. v. Fus, 2014 MT 256, ¶ 5, 376 Mont. 375,
334 P.3d 929).
DISCUSSION
¶9 Substitution of district judges is governed by § 3-1-804, MCA.2 Pursuant to
2
There is no dispute that Owners complied with the filing requirements of § 3-1-804(1), MCA.
6
§ 3-1-804(1), MCA, each adverse party is entitled to one substitution of a district judge.
Section 3-1-804(12), MCA, provides:
When a judgment or order is reversed or modified on appeal and the cause is
remanded to the district court for a new trial, or when a summary judgment
or judgment of dismissal is reversed and the cause remanded, each adverse
party is entitled to one motion for substitution of district judge. The motion
must be filed, with the required filing fee, within 20 calendar days after the
remittitur from the supreme court has been filed with the district court. There
is no other right of substitution in cases remanded by this Court.
(Emphasis added.) Section 3-1-804(4), MCA, further provides: “The district judge for
whom substitution is sought has jurisdiction to determine timeliness, and if the motion for
substitution is untimely, shall enter an order denying the motion.” “After a timely motion
has been filed, the substituted district judge does not have the power to act on the merits of
the case or to decide legal issues in the case.” Section 3-1-804(5), MCA.
¶10 The plain language of the statute provides that when “a summary judgment . . . is
reversed and the cause remanded,” each party is entitled to one motion for substitution of
judge. This Court’s decision in Mountain Water III specifically held that the
District Court’s summary judgment motion was “reversed” and the cause “remanded” for
further proceedings. Accordingly, each party had a right of substitution under
§ 3-1-804(12), MCA.
¶11 The City contends this Court only remanded for the limited purpose of conducting
discovery and compares the remand here to Mines Mgmt. However, in contrast to the
remand in Mines Mgmt. to permit entry of findings to explain an order, this Court ruled in
Mountain Water III that the District Court’s partial summary judgment granted to the City
on Owners’ as-applied constitutional challenge was “reversed.” Cf Mines Mgmt., ¶ 11
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(holding this Court’s “[remand] for further proceedings to permit entry of the findings
necessary for issuance of an interlocutory injunction” had “nothing to do with the summary
judgment itself,” and thus § 3-1-804, MCA, did not apply). We cannot put a different gloss
to our ruling in Mountain Water III than what was stated: “[r]egarding Property Owners
as-applied constitutional challenge to § 70-30-306, MCA, we reverse and remand for
further proceedings . . . .” Mountain Water III, ¶ 38. And we will not qualify what
otherwise is the plain language of a statute providing for a right of substitution when a
“summary judgment” order has been “reversed” and the cause “remanded.”
Section 3-1-804(12), MCA, is clear. The Court in Mountain Water III reversed the
District Court’s summary judgment order on Owners’ as-applied constitutional challenge
and remanded the cause for further proceedings, thereby invoking Owners’ right of
substitution under § 3-1-804, MCA.
¶12 Section 3-1-804(5), MCA, also provides that “[a]fter a timely motion has been filed,
the substituted district judge does not have the power to act on the merits of the case or to
decide legal issues in the case.” Accordingly, all orders or rulings made by the
District Court following Owners’ timely motion for substitution are vacated.
CONCLUSION
¶13 Owners were denied their right of substitution upon this Court’s reversal in
Mountain Water III of the District Court’s summary judgment order. Upon Owners’ timely
filing of their motion, the District Court was without authority to act on the merits of the
case and such order or ruling is vacated.
/S/ MIKE McGRATH
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We concur:
/S/ JAMES JEREMIAH SHEA
/S/ BETH BAKER
/S/ INGRID GUSTAFSON
/S/ DIRK M. SANDEFUR
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