SWMBIA v. City of Bozeman

03/27/2018
DA 17-0401
Case Number: DA 17-0401
IN THE SUPREME COURT OF THE STATE OF MONTANA
2018 MT 62SOUTHWEST MONTANA BUILDING
INDUSTRY ASSOCIATION, et al.,
Plaintiff and Appellant,
v.
THE CITY OF BOZEMAN,
Respondent and Appellee.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and For the County of Gallatin, Cause No. DV 99-71
Honorable David Cybulski, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Arthur V. Wittich, Montana Law Company; Bozeman, Montana
For Appellee:
J. Robert Planalp, Patrick C. Riley, Planalp, Reida, Roots & Riley, P.C.;
Bozeman, Montana
Submitted on Briefs: March 7, 2018
Decided: March 27, 2018
Filed:
__________________________________________
Clerk
Justice Ingrid Gustafson delivered the Opinion of the Court.
¶1 Southwest Montana Building Industry Association (SWMBIA) appeals three orders
of the Eighteenth Judicial District Court, Gallatin County, which directed SWMBIA to
transfer funds from the Impact Fee Payer Class Refund Account (Refund Account) to the
City of Bozeman (Bozeman), to submit an accounting of the Refund Account, and for
contempt of court. We affirm.
¶2 We restate the issues on appeal as follows:
1. Did the District Court exceed its authority when it ordered SWMBIA to
transfer the funds remaining in the Refund Account to Bozeman?
2. Is the District Court’s December 19, 2011 Order regarding the transfer of
the remaining Refund Account funds enforceable?
3. Did the District Court err by not disposing of the remaining Refund Account
funds in accordance with M. R. Civ. P. 23(i)(3)?
4. Did the District Court abuse its discretion when it ordered SWMBIA to
provide an accounting of the Refund Account?
5. Can SWMBIA obtain relief from the District Court’s contempt order?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 This case concerns the final disposition of approximately $227,000 remaining from
a class action settlement. These funds currently reside in the Refund Account, which the
District Court established and placed in SWMBIA’s control to provide refunds to certain
individuals and business entities who had paid “impact fees.”
¶4 Pursuant to an ordinance adopted in 1996, Bozeman assessed these impact fees
against property owners within certain “impact fee districts” for street, water, wastewater,
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and fire protection. Bozeman collected the fees as a precondition to obtaining permits for
construction or connecting to city services.
¶5 In 1998, Bozeman increased some of the impact fees, and a citizens’ group
submitted an initiative petition to further raise the fees for street, water, and wastewater.
Voters approved this initiative and the increases became effective January 15, 1999.
¶6 On February 17, 1999, SWMBIA, a non-profit organization whose members include
businesses involved in residential and commercial construction in Bozeman and the
surrounding area, sued for declaratory relief. SWMBIA alleged the impact fee ordinances
and their amendments were unconstitutional. SWMBIA did not itself pay impact fees, but
it represented the interests of its members who had paid, and continued to pay, them.
Among other relief, SWMBIA requested class action certification and a refund to the fee
payers.
¶7 Over the next few years, SWMBIA amended its complaint and joined additional
plaintiffs. The District Court granted SWMBIA’s motion to certify the class, defining it
as all persons and entities who paid or will pay an impact fee due to the 1996 ordinance or
its amendments. The District Court designated SWMBIA as the class representative and
SWMBIA’s counsel, Arthur V. Wittich (Wittich), as class counsel.
¶8 After several years of litigation, the parties submitted a proposed settlement
agreement to the District Court. On April 15, 2005, the District Court entered a Consent
Decree and Judgment (Consent Decree) in which it declared Bozeman’s impact fee
ordinances and their amendments, and all impact fees assessed and collected thereto, were
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valid and enforceable. Bozeman would pay the court $5,000,000, and these funds would
be used to distribute partial refunds to the certified class and to pay Wittich as class counsel.
Bozeman would also temporarily reduce its impact fee rates and employ a consultant to
advise it on determining appropriate rates for future impact fees.
¶9 After receiving $5,000,000 from Bozeman, the District Court awarded Wittich
attorney fees of $500,000. The District Court held all eligible class members who paid
impact fees on or after July 1, 2001, would receive a 10% refund out of the settlement
funds, “and those paying to the City under general governing powers prior to July 1, 2001
shall receive the balance of the lump sum payment as refunds.” The District Court
transferred the funds to the Refund Account and ordered Wittich to attempt to complete
the refund process within six months.
¶10 By December 13, 2006, Wittich had calculated the refunds due the class members
and distributed over $4,250,000 from the Refund Account. He informed the District Court
he had been unable to locate or elicit a response from 87 potential claimants and their
refunds remained undistributed. Wittich intended to keep the refund process open one
more year, and promised the court a status report and closure recommendation by the end
of 2007.
¶11 On February 7, 2008, Wittich filed another status report, along with SWMBIA’s
motion for final distribution and closure. In that report, Wittich reported he had distributed
$25,746.67 since the previous status report, but over $211,000 remained in the Refund
Account. SWMBIA asked the District Court to close the refund process and allow for a
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final distribution of the funds to a new account not subject to the refund process. Since the
class definition included payers who would be required to pay an impact fee in the future,
SWMBIA recommended using the remaining funds to hire consultants to investigate and
recommend future impact fee levels.
¶12 Bozeman objected to SWMBIA’s recommendations. It contended using the
remaining funds to hire consultants would violate the Consent Decree. Bozeman argued it
should receive the remaining funds. Bozeman further moved the District Court to order
Wittich to provide an exact accounting of the remaining funds.
¶13 On July 27, 2011, SWMBIA withdrew its motion for final distribution and closure.
On August 1, 2011, the District Court held a hearing to discuss the status of the case. The
District Court asked the parties either to agree on a plan or to submit proposals on how to
resolve the case. Wittich doubted the parties could reach agreement and told the court, “I
think we need an order.” The District Court offered the parties the opportunity to submit
proposals for resolving the case. SWMBIA and Bozeman agreed to do so.
¶14 After the hearing, SWMBIA proposed the District Court either follow the procedure
SWMBIA had proposed in its withdrawn motion for final distribution and closure, or order
the funds distributed to the parties who had already received refunds. SWMBIA proposed
any funds unclaimed after additional refunds should escheat to the State. SWMBIA
objected to any plan which allowed funds to return to Bozeman.
¶15 Bozeman objected to allowing SWMBIA to use the funds to hire consultants―a
move which Bozeman characterized as “fund[ing] future litigation.” Bozeman proposed it
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take possession of the funds, advertise the funds’ existence annually for the next three
years, and then deliver any remaining funds to the Montana Department of Revenue in
accordance with the Uniform Unclaimed Property Act.
¶16 On December 19, 2011, the District Court ordered SWMBIA to turn over all
undistributed settlement funds to Bozeman within 14 days of receipt of the Order. It further
ordered Bozeman to hold the funds and annually advertise or publish a notice that the
unclaimed funds were available to class members who had not received settlement funds.
The District Court held if any funds remained unpaid after ten years from April 15,
2005―the date of the Consent Decree―Bozeman could retain those funds.
¶17 However, the District Court inadvertently failed to send this order to the parties.
The case fell dormant while the parties awaited a ruling until January 2017, when Bozeman
filed a Notice of Issue with the District Court, and the District Court discovered its error
and provided the December 19, 2011 Order to the parties.
¶18 Concurrent with its Notice of Issue, Bozeman also moved for an accounting of the
Refund Account, after which SWMBIA voluntarily provided a status report and stated
$227,077.79 remained in the Refund Account. Bozeman found this statement inadequate,
and it moved the District Court to order SWMBIA to provide a detailed accounting of the
Refund Account since February 1, 2008―the date of its previous status report. Bozeman
advised the District Court SWMBIA had not yet turned over the funds remaining in the
Refund Account in accordance with the December 19, 2011 Order.
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¶19 On February 17, 2017, Bozeman petitioned the District Court for an Order to Show
Cause why SWMBIA had not transferred the Refund Account funds to Bozeman as
ordered. On June 13, 2017, the District Court held a hearing on the matter and found
SWMBIA in contempt for not transferring the Refund Account funds to Bozeman. At that
hearing, SWMBIA provided some bank records regarding the Refund Account which the
court admitted under seal. SWMBIA also testified that between February 2008 and
January 2017, when it received the District Court’s December 19, 2011 Order, SWMBIA
spent approximately $100,000 from the Refund Account on “fee consultants.” The District
Court ordered SWMBIA to provide an accounting of the Refund Account. This appeal
followed.
STANDARDS OF REVIEW
¶20 We review a district court’s legal conclusions for correctness. Guill v. Guill, 2014
MT 316, ¶ 9, 377 Mont. 216, 339 P.3d 81 (citation omitted).
¶21 Whether a district court has jurisdiction to rule on a matter is a question of law which
we review to determine whether the district court had authority to act. A court exceeds
jurisdiction through acts which exceed the defined power of a court, whether that power be
defined by constitutional provisions, express statutes, or rules developed by the courts.
Green v. Gerber, 2013 MT 35, ¶ 12, 369 Mont. 20, 303 P.3d 729 (citation omitted).
¶22 Matters of administration of the litigation are left to the broad discretion of the
District Court. Fink v. Williams, 2012 MT 304, ¶ 18, 367 Mont. 431, 291 P.3d 1140(citation omitted).
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¶23 The judgment and orders of the court or judge made in cases of contempt are final
and conclusive, but may be reviewed by the Montana Supreme Court on a writ of certiorari.
Section 3-1-523, MCA.
DISCUSSION
¶24 1. Did the District Court exceed its authority when it ordered SWMBIA to transfer
the funds remaining in the Refund Account to Bozeman?
¶25 SWMBIA argues the District Court’s December 19, 2011 Order requiring it to turn
over all undistributed settlement funds to Bozeman is invalid. SWMBIA argues its own
proposals were consistent with the Consent Decree and the District Court could have
adopted either of them. SWMBIA maintains that, by issuing a ruling more consistent with
Bozeman’s proposal, the District Court ruled inconsistently with the Consent Decree and
thus exceeded its authority and jurisdiction by effectively amending the Consent Decree
with its December 19, 2011 Order.
¶26 SWMBIA argues the District Court could only have amended the Consent Decree
under either M. R. Civ. P. 59(e), which provides a motion to alter or amend must be filed
within 28 days after the entry of judgment, or pursuant to M. R. Civ. P. 59(f), which
provides a motion to alter or amend be deemed denied if the court does not rule on it within
60 days. Thus, SWMBIA maintains the December 19, 2011 Order impermissibly
substantively amended the Consent Decree.
¶27 Bozeman responds that SWMBIA is barred from arguing the December 19, 2011
Order improperly amended the Consent Decree under M. R. Civ. P. 59 because SWMBIA
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did not raise this argument in the court below. Bozeman further responds SWMBIA is
barred from arguing the December 19, 2011 Order is invalid because it failed to object in
the District Court when it had the opportunity to do so.
¶28 This Court will not address an issue raised for the first time on appeal. Larson v.
Larson, 2017 MT 299, ¶ 28, 389 Mont. 458, 406 P.3d 925 (citation omitted). In Guill, we
held that where the appellant failed to object to, or move the district court to alter or amend,
a judgment under M. R. Civ. P. 59(e), he could not raise the issue for the first time on
appeal. Guill, ¶ 17. As such, SWMBIA cannot do so here. As SWMBIA failed to raise
this issue below, we will not consider it now on appeal.
¶29 During the August 1, 2011 status hearing, SWMBIA conceded “we need an order”
and readily agreed to provide a proposal in accordance with the District Court’s plan.
SWMBIA availed itself of the process, making no objections to the District Court’s request
for proposals, and then submitted a proposal without objection. Given this, it is
disingenuous for SWMBIA to now take the position the District Court’s Order was
unnecessary.
¶30 Moreover, SWMBIA’s argument the District Court’s alleged failure to comply with
M. R. Civ. P. 59(e) is “jurisdictional” is misplaced. SWMBIA relies on In re Jennings’
Estate, 79 Mont. 73, 254 P. 1067 (1927), arguing the District Court was “without
jurisdiction to subsequently amend or modify the judgment so as to change the substantial
rights of the parties . . . .” In more recent times, we have cautioned against confusing time
prescriptions with jurisdictional provisions. Miller v. Eighteenth Judicial Dist. Ct., 2007
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MT 149, ¶ 43, 337 Mont. 488, 162 P.3d 121 (citation omitted); Green, ¶ 22 (citation
omitted). In Miller, we explained subject-matter jurisdiction involves the court’s power to
hear the case and can never be forfeited, waived, or conferred by a party’s consent, while
a time prescription “can nonetheless be forfeited if the party asserting the rule waits too
long to raise the point.” Miller, ¶ 44 (citations omitted).
¶31 Here, M. R. Civ. P. 59(e) provides a time prescription; it does not involve the
District Court’s power to hear the case. SWMBIA has waited too long to raise the point,
and any alleged failure to comply with M. R. Civ. P. 59(e) did not divest the District Court
of jurisdiction in this case. Therefore, the District Court did not exceed its authority when
it ordered SWMBIA to transfer the funds remaining in the Refund Account to Bozeman.
¶32 2. Is the District Court’s December 19, 2011 Order regarding the transfer of the
remaining Refund Account funds enforceable?
¶33 SWMBIA next argues the District Court’s December 19, 2011 Order is
unenforceable because it is based on an expired judgment. SWMBIA maintains the
Consent Decree, issued April 15, 2005, expired April 15, 2015. SWMBIA relies on
§ 27-2-201(1), MCA, which, notwithstanding exceptions not applicable here, provides that
the period prescribed for the commencement of an action upon a judgment or decree
rendered in a court of record is within ten years.
¶34 Bozeman argues the ten-year time limit is inapplicable because the District Court
retains the equitable power to administer this case as long as funds remain in the Refund
Account. Bozeman alleges SWMBIA mischaracterizes the District Court’s actions,
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stating, “[T]his is not an action on a judgment; rather, this is an assessment of whether the
District Court properly exercised discretion in fashioning an equitable order on the
continued administration of the settlement funds to bring finality to the litigation.” Relying
on similar federal cases, Bozeman urges us to adopt the federal courts’ approach. Bozeman
further argues the Consent Decree implies the District Court would oversee this matter
until the Refund Account was exhausted because the Consent Decree required Wittich to
report on the status of the refund “at the conclusion of such refund process.”
¶35 Federal courts have held a court retains traditional equity powers for litigation
administration until all funds set aside in a class action settlement agreement are
distributed. In re Agent Orange Prod. Liab. Litig., 611 F. Supp. 1396, 1402, aff’d in part,
rev’d in part, sub nom. In re Agent Orange Prod. Liab. Litig. MDL No. 381, 818 F.2d 179(2d Cir. 1987) (citation omitted). In determining the distribution of unclaimed class action
settlement funds, trial courts have broad discretionary power to shape equitable decrees.
Van Gemert v. Boeing, 739 F.2d 730, 737 (2d Cir. 1984).
¶36 Here, while the District Court contemplated a shorter timeframe in which SWMBIA
would exhaust the Refund Account, Bozeman is correct that the language of the Consent
Decree implies the District Court would continue to oversee the case so long as funds
remained in the Refund Account. The District Court’s actions were not to enforce an
expired judgment, but to continue and resolve the administration of a class action
settlement fund. To hold otherwise would mean a court could be barred from resolving
issues which arise in the administration of an existing class action settlement fund, creating
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situations where a class action settlement becomes unenforceable while distributions are
ongoing.
¶37 Therefore, since funds remain in the Refund Account, the District Court’s
December 19, 2011 Order, providing for the resolution of the residual funds, is enforceable.
¶38 3. Did the District Court err by not disposing of the remaining Refund Account
funds in accordance with M. R. Civ. P. 23(i)(3)?
¶39 SWMBIA argues the District Court erred when it ordered SWMBIA to return the
remaining funds to Bozeman because the District Court should have disposed of those
funds in accordance with M. R. Civ. P. 23(i)(3). SWMBIA argues that although M. R. Civ.
P. 23(i) became effective January 1, 2015, it should apply to the December 19, 2011 Order
because the parties did not receive and act upon that Order until January 2017.
¶40 M. R. Civ. P. 23(i)(3) specifies the distribution for residual funds remaining from
class actions certified under M. R. Civ. P. 23. However, as noted under Issue 1 above, this
Court will not address an issue raised for the first time on appeal. Larson, ¶ 28. SWMBIA
did not raise this issue below, and thus it cannot do so here.
¶41 We hold that the District Court did not err when it did not dispose of the remaining
Refund Account funds in accordance with M. R. Civ. P. 23(i)(3).
¶42 4. Did the District Court abuse its discretion when it ordered SWMBIA to provide
an accounting of the Refund Account?
¶43 SWMBIA also appeals from the District Court’s June 26, 2017 Order for
Accounting, in which the District Court ordered SWMBIA to submit a full and complete
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accounting of the Refund Account from February 2008 until the date upon which
SWMBIA transfers the funds in compliance with the December 19, 2011 Order.
¶44 SWMBIA argues an accounting on an expired judgment is prohibited by § 27-2-
201(2), MCA, and the December 19, 2011 Order is invalid and therefore cannot serve as
the grounds to order an accounting.
¶45 Bozeman responds that the order for accounting falls within the District Court’s
broad discretion to control this litigation. It further maintains SWMBIA waived its right
to contest this order because it did not object to Bozeman’s motion for accounting.
¶46 In fact, when SWMBIA filed its response to Bozeman’s motion for accounting with
the District Court, it did not object to Bozeman’s motion and contemporaneously filed a
status report “that explains the funds that SWMBIA is holding.” There, SWMBIA stated
that $227,077.79 remained in the Refund Account as of December 28, 2016.
¶47 Bozeman found SWMBIA’s statement inadequate, explaining, “How much did
SWMBIA have in 2008 and what SWMBIA spent since then are the critical questions the
accounting will answer.” The District Court agreed.
¶48 Matters of administration of the litigation are left to the broad discretion of the
District Court. Fink, ¶ 18 (citation omitted). These discretionary trial court rulings include
such things as post-trial motions and similar rulings. Fink, ¶ 18 (citation omitted). Here,
the District Court properly exercised its discretion when it ordered SWMBIA to provide
an accounting of the Refund Account when nearly nine years had passed since SWMBIA’s
last status report. While in previous status reports, SWMBIA had supplied the court with
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information regarding the amount it had paid out since the previous report, here, SWMBIA
initially provided no information as to whether any funds had come into or gone out of the
Refund Account between February 2008 and January 2017. Then, at the June 13, 2017
hearing it admitted it had spent $100,000 out of the Refund Account on “fee consultants,”
prior to receiving the District Court’s December 19, 2011 Order, although it had provided
no status reports to the District Court for years. The court is well within its discretion to
order SWMBIA to account for the activities of the Refund Account from the time of
SWMBIA’s last status report in February 2008 forward.
¶49 Therefore, we hold the District Court did not abuse its discretion when it ordered
SWMBIA to provide an accounting of the Refund Account.
¶50 5. Can SWMBIA obtain relief from the District Court’s contempt order?
¶51 Finally, SWMBIA appeals from the District Court’s June 28, 2017 Order on Show
Cause Hearing, in which the District Court held SWMBIA in contempt for its failure to
comply with the December 19, 2011 Order in turning over the remaining funds to Bozeman
within 14 days of receipt of the Order.
¶52 SWMBIA argues the contempt order is invalid because the December 19, 2011
Order is invalid, and a party cannot be held in contempt of an invalid order.
¶53 Bozeman responds that under § 3-1-523, MCA, a contempt order is a final order
and is not appealable, but can only be reviewed on a writ of certiorari. We agree.
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¶54 As set forth above, we have held the District Court’s December 19, 2011 Order is
valid, and therefore SWMBIA’s argument must fail. Moreover, Bozeman is correct that
§ 3-1-523, MCA, provides a contempt order is not appealable.
¶55 Therefore, SWMBIA cannot obtain relief from the District Court’s contempt order.
We affirm the District Court’s Order on Show Cause Hearing.
CONCLUSION
¶56 We hold the District Court acted within its authority when it ordered SWMBIA to
transfer the funds remaining in the Refund Account to Bozeman. We further hold the
District Court’s December 19, 2011 Order, providing for the resolution of the remaining
funds, is enforceable. We also conclude the District Court did not err when it did not
dispose of the remaining funds in accordance with M. R. Civ. P. 23(i)(3). We further
conclude the District Court did not abuse its discretion when it ordered SWMBIA to
provide an accounting of the Refund Account. Finally, we conclude SWMBIA cannot
obtain relief from the District Court’s contempt order because § 3-1-523, MCA, makes a
contempt order a final, non-appealable order.
¶57 Affirmed.
/S/ INGRID GUSTAFSON
We concur:
/S/ MIKE McGRATH
/S/ JIM RICE
/S/ DIRK M. SANDEFUR
/S/ BETH BAKER
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