Mountain Water v. DOR, 469 P.3d 136

Background

City of Missoula filed eminent domain action against Mountain Water on April 2, 2014; Mountain Water claimed § 70-30-315 required the City to bear taxes accruing during the condemnation pendency and paid taxes under protest.
MDOR declined to reassign tax assessment before transfer of record title, citing the Realty Transfer Act and its procedures for ownership changes.
Mountain Water sued for a general property tax refund under §§ 15-1-402 and 15-1-406; lower courts split (one granted refund; Montana Supreme Court reversed in Mountain Water IV as premature).
Parties settled the condemnation in June 2017; the settlement and final order transferred title to the City and included waivers/reservations about tax claims.
Mountain Water later filed a second refund claim (~$5M). The Fourth Judicial District ruled § 70-30-315 would entitle Mountain Water to a refund but denied recovery on equitable unjust enrichment grounds (Mountain Water already passed taxes to customers).
Montana Supreme Court affirmed the denial of relief but on different grounds: unjust enrichment cannot displace the statutory proration right, § 70-30-315’s proration is adjudicated in the condemnation proceeding (not via Title 15 MDOR refund procedure), and Mountain Water waived its right to seek proration/reimbursement from the City in the settlement; its separate Title 15 refund suit did not breach the settlement.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Can equitable unjust enrichment bar Mountain Water’s § 70-30-315 claim?	Mountain Water argued unjust enrichment should not defeat its statutory proration/refund entitlement.	City/County/MDOR argued unjust enrichment bars refund because Mountain Water passed the tax costs to customers.	Court: Unjust enrichment cannot preclude a specific statutory right; District Court erred to rely on unjust enrichment to deny § 70-30-315 relief.
2. Does § 70-30-315 entitle Mountain Water to a general property tax refund via Title 15 refund procedures?	Mountain Water argued § 70-30-315 requires MDOR to reassess taxes to the condemnor and thus supports a Title 15 refund action.	MDOR argued § 70-30-315 governs proration in condemnation proceedings and does not create a separate MDOR reassessment/refund path.	Court: § 70-30-315 applies within condemnation proceedings and requires the court to prorate taxes in the final condemnation judgment; Title 15 refund procedure is not the proper remedy to enforce § 70-30-315.
3. Did Mountain Water waive its right to proration/reimbursement from the City in the 2017 settlement?	Mountain Water contended it reserved tax-related claims for pursuit under Title 15.	City argued the settlement and stipulated final judgment waived Mountain Water’s right to seek proration/reimbursement from the City under § 70-30-315.	Court: Mountain Water contractually waived any claim against the City under § 70-30-315 for proration/reimbursement in the settlement.
4. Did Mountain Water breach the settlement by filing the Title 15 refund claim?	Mountain Water argued the settlement expressly preserved its right to seek a Title 15 refund under §§ 15-1-402 and 15-1-406.	City argued the refund suit violated the settlement waivers.	Court: The settlement preserved Mountain Water’s ability to pursue a Title 15 refund claim; filing that claim did not breach the settlement.

Key Cases Cited

Mountain Water Co. v. Mont. Dep’t of Revenue, 394 P.3d 922 (Mont. 2017) (Mountain Water IV) (held § 70-30-315 claim premature at that stage; clarified timing/process issues)
N. Cheyenne Tribe v. Roman Catholic Church ex rel. Great Falls/Billings Dioceses, 296 P.3d 450 (Mont. 2013) (discusses unjust enrichment elements and equitable remedies)
Associated Mgmt. Servs., Inc. v. Ruff, 424 P.3d 571 (Mont. 2018) (sets out elements of unjust enrichment)
City of Butte Hous. Auth. v. Bjork, 98 P.2d 324 (Mont. 1940) (condemnee responsible for taxes until taking occurs; award subject to tax satisfaction)
K&R P’ship v. City of Whitefish, 189 P.3d 593 (Mont. 2008) (§ 70-30-315 applies only to condemnation proceedings)