419 P.3d 685
Mont.2018Background
- City of Missoula initiated condemnation of Mountain Water Co.'s system; City offered $50M, which owners rejected; Commissioners later awarded $88.6M to Mountain Water.
- Mountain Water and Carlyle (parent) defended using out-of-state counsel and experts; litigation was large and compressed (≈450,000 pages of discovery, 47 depositions).
- Property Owners sought reimbursement of "necessary expenses of litigation" under § 70-30-305–306, MCA; statute caps attorney/expert rates at the "customary" county rate where trial is held.
- District Court found both Mountain Water and Carlyle prevailing, applied Missoula customary rates to cap reimbursements, reduced claimed fees for duplication/poor billing, and denied discovery into City’s legal bills.
- Property Owners appealed constitutionality of the statutory caps (facial and as-applied) and other fee rulings; City cross-appealed on Carlyle prevailing status and recoverability of out-of-state counsel fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Are § 70-30-306(2)–(3) caps ("customary county" rates) facially unconstitutional under Art. II §29? | Caps prevent full recovery of actual litigation expenses; Framers intended reimbursement of actual costs; provision is a fundamental right. | Statute is a permissible legislative implementation; Article II §29 is not read to guarantee reimbursement of all actual expenses; facial challenge unlikely to succeed. | Rejected facial challenge; provision is self-executing but "necessary" limits recovery; statute can be constitutionally applied in many cases. |
| 2) Are the statutory caps unconstitutional as-applied given this case's complexity and City's use of out-of-state counsel? | Unique facts (complex asset, tight schedule, City hiring high‑rate OOS counsel) made higher-than‑county rates necessary; caps here violate Article II §29. | Caps reasonably tie awards to local customary rates; Property Owners did not meet burden to show necessity beyond county rates; District Court properly assessed reasonableness. | Reversed and remanded on as-applied claim: Property Owners entitled to limited discovery of City’s litigation approach and fees to support necessity showing; Forrester factors may inform "necessary." |
| 3) Is Carlyle a "prevailing" condemnee entitled to litigation expenses despite receiving no direct award from Commissioners? | Carlyle contends it is a prevailing owner because the award exceeded City's final offer and Carlyle was litigated as an owner. | City argues Carlyle cannot prevail because Commissioners awarded it no damages. | Affirmed: District Court did not abuse discretion; Carlyle is a prevailing party for fee entitlement. |
| 4) May out-of-state (pro hac vice) counsel recover attorney fees under Montana law? | Property Owners sought fees for out-of-state counsel who represented them. | City argued § 37-61-215(1) bars fee awards to non‑Montana‑admitted attorneys. | Affirmed: Court followed Winer precedent allowing fees for out‑of‑state counsel when pro hac vice standards and disclosures are met. |
Key Cases Cited
- Columbia Falls Elem. Sch. Dist. No. 6 v. State, 326 Mont. 304, 109 P.3d 257 (Mont. 2005) (test for whether a constitutional provision is self‑executing)
- Mont. Cannabis Indus. Ass'n v. State, 382 Mont. 256, 368 P.3d 1131 (Mont. 2016) (standards for facial vs. as‑applied challenges)
- State v. Am. Bank of Mont., 346 Mont. 405, 195 P.3d 844 (Mont. 2008) (interpretation of "customary hourly rates" under §70‑30‑306)
- K & R P'ship v. City of Whitefish, 344 Mont. 336, 189 P.3d 593 (Mont. 2008) (award of litigation expenses when condemnee prevails)
- Winer v. Jonal Corp., 169 Mont. 247, 545 P.2d 1094 (Mont. 1976) (permitting fee recovery for out‑of‑state counsel under certain conditions)