MOUNTAIN WATER COMPANY, Plaintiff and Appellant, v. MONTANA DEPARTMENT OF REVENUE, Defendant and Appellee, and CITY OF MISSOULA, a Montana municipal corporation, Intervenor, Appellee and Cross-Appellant, and MISSOULA COUNTY, Intervenor, Appellee and Cross-Appellant.
DA 19-0262
IN THE SUPREME COURT OF THE STATE OF MONTANA
August 4, 2020
2020 MT 194
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV-18-47
Honorable Leslie Halligan, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Dale Schowengerdt, Michael W. Green, D. Wiley Barker, Crowley Fleck PLLP, Helena, Montana
For Appellee:
Daniel J. Whyte, David Burleigh, Special Assistant Attorneys General, Montana Department of Revenue, Legal Services Office, Helena, Montana
For Intervenor and Appellee City of Missoula:
Scott M. Stearns, Natasha Prinzing Jones, Randy J. Tanner, Boone Karlberg P.C., Missoula, Montana
For Intervenor and Appellee Missoula County:
Matt Jennings, Deputy County Attorney, Kristen H. Pabst, Missoula County Attorney, Missoula, Montana
Submitted on Briefs: March 18, 2020
Decided: August 4, 2020
Filed:
Clerk
¶1 Mountain Water Company (Mountain Water) appeals the summary judgment of the Fourth Judicial District Court, Missoula County, ruling that the equitable doctrine of unjust enrichment precludes its claim under
- Whether the District Court erroneously concluded that the equitable doctrine of unjust enrichment precluded relief on Mountain Water‘s claim for property tax proration and relief under
§ 70-30-315, MCA ? - Whether the District Court erroneously concluded as a threshold matter that
§ 70-30-315, MCA , would entitle Mountain Water to a general property tax refund under§§ 15-1-402(1) -(2), (6)(b)(i), and-406(1) -(3), MCA? - Whether Mountain Water contractually waived its right to property tax proration and reimbursement from the City pursuant to
§ 70-30-315, MCA ?
- Whether the District Court erroneously concluded that Mountain Water‘s subsequent assertion of a general property tax refund claim did not breach the parties’ 2017 condemnation action settlement agreement?
We affirm the ultimate result reached by the District Court but on different grounds.
PROCEDURAL AND FACTUAL BACKGROUND
¶2 This is the most recent in the multitude of appeals and petitions spawned by the City‘s latest attempt to take Mountain Water‘s water distribution system for public use by eminent domain.2 Eminent domain is the power to affirmatively take private property for public use upon just compensation in the manner prescribed by
¶3 Mountain Water is a private Montana corporation previously owned through various layered holding companies by Carlyle Infrastructure Partners, LP (Carlyle), a
Delaware-chartered company.3 As a regulated public water utility, Mountain Water provided drinking water to Missoula area customers from an underground aquifer in the extraordinary absence of a publicly-owned water system.4 On April 2, 2014, in the wake of Mountain Water‘s rejection of a City offer to buy the utility for $50 million,
¶4 Later that month, in a letter to the Montana Department of Revenue (MDOR) and the County, Mountain Water asserted pursuant to
preliminary adjudication of the requisite public need for the taking under
¶5 In response, MDOR asserted that the language of
¶6 On January 9, 2015, prior to a preliminary public necessity determination in the condemnation action, Mountain Water filed a separate claim for declaratory judgment and general property tax refund against MDOR in the Montana First Judicial District pursuant to
Mountain Water was thus entitled to a refund, with interest, of previously paid property taxes accruing thereafter.
¶7 On June 15, 2015, while the property tax action proceeded in the First Judicial District, the Fourth Judicial District Court issued a judgment in the condemnation action that the City had established the requisite public need for the taking pursuant to
¶8 On June 7, 2016, in the parallel-pending property tax case, the First Judicial District Court granted summary judgment that
the amount of attorney fees and condemnation
¶9 A month later, on May 16, 2017, we reversed the June 7, 2016, judgment of the First Judicial District Court in the property tax case. Mountain Water Co. v. Mont. Dep‘t of Revenue (Mountain Water IV), 2017 MT 117, 387 Mont. 394, 394 P.3d 922. We held that Mountain Water‘s claim for property tax proration under
¶10 On June 5, 2017, Mountain Water and the City executed a written settlement agreement in the condemnation case.6 As pertinent here, the settlement agreement:
- specified that the City would pay Mountain Water the net sum of $83,863,336 “for all assets and claims asserted” in the condemnation case “other than [specified] Reserved Claims“;
- “release[d] and discharge[d] the City . . . from any and all claims relating to the Condemnation Lawsuit . . . including, without limitation, any and all claims that were brought or could have been brought in [that] [l]awsuit“;
- acknowledged and “agree[d] that Mountain Water reserve[d] [certain] rights and claims” but “settled and waived” “[a]ll other claims or appeals . . . not specifically reserved” in the agreement;
- mutually “waive[d] claims against [each] other . . . related to the payment of property taxes[,]” but “reserve[d] any claim, argument, and/or defense each
may have against . . . [MDOR] regarding property tax amounts allegedly owed or refunds they claim entitlement to“; and
- further acknowledged “and agree[d] that, pursuant to . . . [Mountain Water IV], Mountain Water intends to [continue to] timely pay under protest property taxes assessed and due through the Final Order of Condemnation and thereafter intends to seek refund, reimbursement, or compensation through all available means for any property taxes paid for periods after April 2, 2014.”
(Emphasis added.) Pursuant to
¶11 On June 22, 2017, the parties appeared before the Fourth Judicial District Court at which time the City tendered full payment of the final judgment to Mountain Water and the court issued the stipulated Final Order of Condemnation. As pertinent here, the Final Order specified that:
fee simple interest . . . [in the condemned property] shall vest in the City, free and clear of any rights, liens, or encumbrances . . . immediately upon the City filing . . . [of the Final Order] in the office of the Missoula County Clerk and Recorder . . . [and]
[a]ll interests and claims of [the] Condemnation Defendants in or relating to the [condemned property] is terminated, and title . . . and possession . . . shall not be subject to, or encumbered by, any existing or future rights, liens, claims or other encumbrances including . . . taxes[] and assessments upon or against the [property]
while owned or possessed by the Condemnation Defendants.
(Emphasis added.) Upon subsequent filing of the Final Order and a related realty transfer certificate in the office of the Missoula County Clerk and Recorder pursuant to
¶12 On August 14, 2017, Mountain Water filed a second claim for a general property tax refund against MDOR in the Montana First Judicial District Court pursuant to
STANDARDS OF REVIEW
¶13 We review grants or denials of summary judgment de novo for conformance to
DISCUSSION
¶14 1. Whether the District Court erroneously concluded that the equitable doctrine of unjust enrichment precluded relief on Mountain Water‘s claim for property tax proration and relief under
¶15 Under the modern view of equity, unjust enrichment is a predicate claim for equitable relief upon which courts may fashion corresponding equitable remedies, such as restitution or a constructive trust, to prevent the subject from unjustifiably gaining or retaining something of value, regardless of whether the claimant suffered a corresponding loss. N. Cheyenne Tribe v. Roman Catholic Church ex rel. Great Falls/Billings Dioceses, 2013 MT 24, ¶¶ 36-39, 368 Mont. 330, 296 P.3d 450; Lawrence v. Clepper, 263 Mont. 45, 53-54, 865 P.2d 1150, 1156 (1993) (citing 66 Am. Jur. 2d Restitution and Implied Contracts §§ 3-4 (1973)). See also Volk v. Goeser, 2016 MT 61, ¶ 53, 382 Mont. 382, 367 P.3d 378 (“court[s] sitting in equity [are] empowered to determine all questions involved in [a] case[] and to fashion an equitable result that will accomplish complete justice“); Restatement (Third) of Restitution and Unjust Enrichment § 1 cmt. a-e (Am. Law Inst.
2011) (characterizing unjust enrichment as unjustified enrichment and distinguishing restitution as a remedy for unjust enrichment rather than an independent theory of liability/recovery). The essential elements of an unjust enrichment claim are: (1) a benefit conferred by one on another; (2) the other‘s knowing acceptance of the benefit; and (3) circumstances rendering it inequitable for the recipient to retain the benefit. Associated Mgmt. Servs., Inc. v. Ruff, 2018 MT 182, ¶ 65, 392 Mont. 139, 424 P.3d 571; N. Cheyenne Tribe, ¶¶ 33 and 36. Unjust enrichment does not necessarily require proof of a wrongful act or conduct by the party unjustly enriched, only that the subject unjustifiably gained something of value to which that party is not equitably entitled under the circumstances. Ruff, ¶ 65; Volk, ¶¶ 45 and 50; N. Cheyenne Tribe, ¶ 37; Lawrence, 263 Mont. at 53, 865 P.2d at 1156.
private school foundation potentially unjustly enriched from otherwise lawful third-party fundraising focused on the plight of the Tribe); Volk, ¶¶ 47-48 (sister unjustly enriched from brother‘s otherwise lawful change of life insurance beneficiary to detriment of former spouse where policy was unreferenced in their marital settlement agreement and the change occurred in violation of statutory order restraining marital estate transactions).
¶17 While often available to ameliorate the harsh effects of law and to provide a remedy where a legal remedy is non-existent or inadequate, equity is not formless or boundless—it generally applies only in accordance with “its own fixed precedents and principles,” which are “scarcely more elastic than those of law.” Nelson, 81 Mont. at 572, 264 P. at 683. Moreover, “where rights are clearly established and defined by [affirmative] statut[ory provision], equity [generally] has no power to change or upset such rights.” Cloeter v. Superior Court, 347 P.2d 33, 34-35 (Ariz. 1959). Accord
preserve/allow supplemental equitable remedies where not inconsistent with Uniform Fraudulent Transfer Act provisions); Terry L. Bell Generations Tr. v. Flathead Bank of Bigfork, 2013 MT 152, ¶¶ 23-25, 370 Mont. 342, 302 P.3d 390 (noting limited application of equitable estoppel to defeat/ameliorate statutorily specified non-judicial foreclosure sale procedure); Kalfell Ranch, Inc. v. Prairie Cty. Coop. State Grazing Dist., 2000 MT 317, ¶¶ 22-24, 302 Mont. 492, 15 P.3d 888 (holding that money damages not available as alternative equitable remedy to specifically applicable statutory remedy); Eagle Watch Invs., Inc. v. Smith, 278 Mont. 187, 192-93, 924 P.2d 257, 260 (1996) (holding that alternative equitable remedy not available in contravention or in lieu of express landlord-tenant act provision); Erickson v. Croft, 233 Mont. 146, 150, 760 P.2d 706, 708 (1988) (noting limited application of equitable tolling to statutes of limitation); LaForest v. Texaco, Inc., 179 Mont. 42, 48, 585 P.2d 1318, 1321 (1978) (noting limited application of equitable estoppel to statute of limitations); Larson v. State, 166 Mont. 449, 458, 534 P.2d 854, 859 (1975) (noting legislative intent to retain equitable injunction as available remedy within statutory property tax relief scheme); Malvaney v. Yager, 101 Mont. 331, 344-45, 54 P.2d 135, 141 (1936) (noting limited application of equitable estoppel to statutory mortgage foreclosure redemption deadline).
¶18 Here,
accruing” thereafter prior to
¶19 2. Whether the District Court erroneously concluded as a threshold matter that
¶20 Based on the property tax proration required by
General Property Tax Scheme Under Title 15, MCA.
¶21 MDOR “has general supervision over the administration of the assessment and tax laws of the state . . . to the end that all assessments of property are made relatively just and
equal, at true value, and in substantial compliance with law.”
¶22 Upon timely paying the subject taxes under protest pursuant to
or one of its subdivisions was illegally or unlawfully imposed or exceeded the taxing authority of” the taxing entity.
If the action is finally determined adversely to the governmental entity levying the tax, then the treasurer of the municipality, county, or state entity levying the tax shall . . . refund to the person in whose favor the judgment is rendered the amount of the protested portions of the property tax or fee that the person holding the judgment is entitled to recover, together with
interest from the date of payment under protest.
Property Tax Allocation In Condemnation Proceedings Title 70, Chapter 30, MCA
¶23 Prior to 1981, Montana‘s eminent domain statutes did not expressly address the allocation of property taxes accruing on condemned properties during the pendency of the condemnation action prior to transfer of record title. Similar to the customary pro rata apportionment of previously assessed property taxes as of the date of title transfer in real estate sale transactions (i.e. payment by seller of previously assessed taxes through date of closing and satisfaction by purchaser of previously assessed taxes from the date of closing), apportionment of previously assessed property taxes occurred, without involvement of MDOR, as an incident of the final judgment, order, and transfer of title on condemnation under
until taking actually occurs); City of Butte Hous. Auth. v. Bjork, 109 Mont. 552, 555-56, 98 P.2d 324, 325-26 (1940) (government taking by eminent domain extinguishes outstanding property tax liability but condemnee‘s award subject to reduction for satisfaction of previously assessed tax liability through date of title transfer); Helena Valley Irrigation Dist. v. State Highway Comm‘n, 150 Mont. 192, 199, 433 P.2d 791, 795 (1967) (statute preserving lien for previously assessed irrigation district taxes and assessments despite ownership transfer not applicable to transfer of ownership to state via condemnation); Rutsen Estates, Inc. v. Hudson County, 131 A. 637, 638 (N.J. 1926) (analogizing eminent domain treatment of property taxes to the “usual mode” of allocation of property taxes between parties in real estate sale transactions).8 Thus, prior to 1981, the property tax proration date in condemnation proceedings was the date of record title transfer—previously assessed taxes accrued as of the date of title transfer were the sole responsibility of the property owner-condemnee and thus deductible for satisfaction of that portion of the tax debt from the final award in the condemnation proceeding. See Bjork,
109 Mont. at 555-56, 98 P.2d at 325-26; Helena Valley Irrigation Dist., 150 Mont. at 199, 433 P.2d at 795. Upon notice of the transfer of record title, MDOR would then separately update the property tax record and prospectively assess any future property taxes to the new record owner if not exempt. See
¶24 However, in 1981, the Legislature enacted a new rule for proration of previously-assessed property taxes that accrued on the condemned property during the condemnation proceeding:
Proration of taxes. The condemnor must be assessed the condemnor‘s pro rata share of taxes for the land being taken as of the date of possession or summons, whichever occurs first. The condemnor must be assessed for all taxes accruing after the date of possession or summons, whichever occurs first.
269, 47th Sess. (Feb. 9, 1981) [hereinafter 1981 Senate Taxation Committee Hearing on Senate Bill 269]. The stated purposes of the bill were to revise the methods of payment of compensation in eminent domain proceedings, to ensure that private property owners were compensated at current market value, and to deal with weed control concerns. 1981 Mont. Laws ch. 531 (SB 269 Title). Due to the primary focus on other aspects of the legislation, the available history indicates that nothing was said about the new property tax proration provision except:
The . . . new . . . [rule] simply prevents taxes from being assessed on the condemned land twice and makes the plaintiff [(condemnor)] responsible for all taxes assessed on the land after the date of possession.
1981 Senate Taxation Committee Hearing on Senate Bill 269, 47th Sess. at 3 (Introductory Statements of Sen. Max Conover, Sponsor). We have since held that the purpose of
¶25 However, in Mountain Water IV, Mountain Water attempted to interject MDOR into the condemnation process by asserting, inter alia, that
procedure specified by
¶26 Due to the limited nature of our holdings in Mountain Water IV, we must now clarify and limit some potentially confusing language in our analysis before squarely addressing for the first time the proper form or forum for obtaining the property tax proration required by
¶27 The dispositive issue here as to the appropriate form or forum for obtaining relief under
¶28 In pertinent part,
However, the apparent ambiguity quickly disappears upon reading
¶29 As enacted and by express reference to the terms condemnor, condemnee, the land being taken, and the date of possession or summons, the property tax proration required by
Clyne, 345 P.2d at 477; Moffat Tunnel Improvement Dist., 125 P.2d at 140. As of 1981,
¶30 Contrary to the presumption of all in Mountain Water IV, the use of the word “assessed” in
¶31 As we have previously recognized, nothing in the language or legislative history of
¶32 A procedural walk-through the pertinent Title 70 and Title 15 statutes manifests the presumptively intended, smoothly meshed manner in which
¶33 Upon satisfaction of the final judgment of condemnation entered under
judgment and order of condemnation otherwise required by
¶34 Upon timely paying disputed taxes under protest pursuant to
If the action is finally determined adversely to the governmental entity levying the tax, then the treasurer of the municipality, county, or state entity levying the tax shall . . . refund to the person in whose favor the judgment is rendered the amount of the protested portions of the property tax or fee that the person holding the judgment is entitled to recover, together with interest from the date of payment under protest.
¶35 Here, on the asserted ground that
3. Whether Mountain Water contractually waived its right to property tax proration and reimbursement from the City pursuant to § 70-30-315, MCA ?
¶37 As it did below, the City asserts pursuant to the parties’ 2017 condemnation action settlement agreement that Mountain Water waived any right to seek property tax proration and reimbursement from the City under
¶38 Based on its failure to address the City‘s waiver claim on cross-appeal and its accompanying careful focus and characterization of its claim as a preserved claim for property tax relief under
¶40 While Mountain Water waived any claim against the City under
CONCLUSION
¶41 In summary, we hold that the District Court erroneously concluded that the equitable doctrine of unjust enrichment in any event precluded or defeated relief on Mountain Water‘s claim for property tax proration and related relief under
¶42 We will affirm a lower court decision that reaches the correct result even if for the wrong reason. Hudson v. Irwin, 2018 MT 8, ¶ 12, 390 Mont. 138, 408 P.3d 1283; Talbot v. WMK-Davis, LLC, 2016 MT 247, ¶ 6, 385 Mont. 109, 380 P.3d 823; Estate of Willson v. Addison, 2011 MT 179, ¶ 29, 361 Mont. 269, 258 P.3d 410; Cheff v. BNSF Ry. Co., 2010 MT 235, ¶ 37, 358 Mont. 144, 243 P.3d 1115; Wells Fargo Bank v. Talmage, 2007 MT 45, ¶ 23, 336 Mont. 125, 152 P.3d 1275; Jerome v. Pardis, 240 Mont. 187, 192, 783 P.2d 919, 922 (1989). Accordingly, for the foregoing reasons, we affirm the District Court‘s ultimate denials of Mountain Water‘s request for declaratory judgment pursuant to
/S/ DIRK M. SANDEFUR
We concur:
/S/ MIKE McGRATH
/S/ JAMES JEREMIAH SHEA
/S/ INGRID GUSTAFSON
Justice Jim Rice, concurring in part and dissenting in part.
¶43 I concur with the Court‘s conclusion in Issue 1 that “the property tax proration required by
¶44 Under Issue 2, the Court provides an expansive analysis of the relief that a condemnee may obtain under
¶45 To briefly review, Mountain Water and the MDOR came before the courts in Mountain Water IV in agreement about the nature of the relief available to Mountain Water under
The Department concurs with Mountain Water‘s interpretation of
§ 70-30-315, MCA . The Department agrees that if the city ultimately proves successful in its condemnation action, Mountain Water would be entitled to a refund of taxes paid under protest as of the date of summons. [(Emphasis added.)]
Thus, it was not merely that “Mountain Water attempted to interject MDOR into the condemnation process,” Opinion, ¶ 26, but that MDOR had concurred with that statutory interpretation before the court. While the parties’ positions developed further as the litigation continued and the City joined the litigation as amicus curiae, see Mountain Water IV, ¶¶ 9-10, this Court‘s opinion was premised upon this basic posture of the case, which, as the Court here acknowledges, formed the “presumptive” foundation of our analysis. Opinion, ¶ 27.
¶46 Consequently, in Mountain Water IV we resolved the issue in dispute—the timing of the relief—and stated in conclusion that Mountain Water “was not entitled to a refund at this time“—a clear implication that the refund remedy, to which the parties had acknowledged, would occur upon the closure of the condemnation case. Mountain Water IV, ¶ 18. Further, we decided the timing issue upon an interpretation of the statute the Court acknowledges today was a viable rendering of the wording of the statute. Opinion, ¶ 29. It was upon this decision that Mountain Water, just weeks later, expressly reserved its claim to a refund in the condemnation settlement agreement.
¶47 “[A] prior decision of this Court resolving a particular issue between the same parties in the same case is binding and cannot be relitigated.” State v. Gilder, 2001 MT 121, ¶ 9, 305 Mont. 362, 28 P.3d 488. We decided Mountain Water IV upon an interpretation of
¶48 The Court‘s new analysis of the statute‘s application is well supported, and I may well have joined it upon a fresh review. However, we are not presented here with a fresh review, but with a contrary decision in Mountain Water IV. At a minimum, given the history of this case and the law applied therein, the new statutory interpretation should be applied prospectively. The Court‘s decision qualifies under the narrow exception for prospective application, first, because it has established “a new principle of law either by overruling precedent or by deciding an issue of first impression whose result was not clearly foreshadowed.” Ereth v. Cascade County, 2003 MT 328, ¶ 29, 318 Mont. 355, 81 P.3d 463 (overruled on other grounds in Labair v. Carey, 2012 MT 312, ¶ 23, 367 Mont. 453, 291 P.3d 1160); Dempsey v. Allstate Ins. Co., 2004 MT 391, ¶¶ 29-30, 325 Mont. 207, 104 P.3d 483. Far from the result here being clearly foreshadowed, the Court in Mountain Water IV actually signaled the opposite result. For that reason, the next consideration, “equity of retroactive application,” also weighs heavily in favor of prospective application, because Mountain Water clearly relied upon our earlier decision to its detriment. Ereth, ¶¶ 29-30; Dempsey, ¶¶ 21, 30.
¶49 I would reverse the District Court to permit Mountain Water to seek the refund, consistent with our decision in Mountain Water IV.
/S/ JIM RICE
Justices Beth Baker and Laurie McKinnon join in the dissenting Opinion of Justice Rice.
/S/ BETH BAKER
/S/ LAURIE McKINNON