Supreme Court issues ruling in so-called doughnut case
By RICHARD HANNERS
Whitefish Pilot
The Montana Supreme Court on Tuesday reversed a lower court ruling in Whitefish’s lawsuit against the county over the so-called “doughnut” area and ordered that a preliminary injunction be entered.
The ruling would maintain the status quo in Whitefish’s two-mile planning and zoning jurisdiction pending a final ruling on the merits of the case.
The Flathead County Commissioners adopted a resolution on March 13 unilaterally terminating the 2005 Interlocal Agreement between the city and county that created the planning and zoning jurisdiction.
Soon after, the city filed a lawsuit in district court claiming the Interlocal Agreement could not be unilaterally terminated. The city’s goal has been to retain planning and zoning authority over the “doughnut” until the case is fully resolved.
Flathead County District Court Judge Katherine Curtis initially agreed to a temporary restraining order to preserve the status quo, but in her May 1 order, she denied the city’s petition for a preliminary injunction and dissolved the temporary restraining order.
On July 29, the Supreme Court denied Whitefish’s motion for an injunction pending appeal, but in its latest ruling, delivered by Justice Patricia Cotter, the court found that Curtis had erred by prematurely judging the merits of the case.
“Quite simply, by chronologically resolving the merits of the case first and the resulting propriety of the requested preliminary injunction second, the District Court put the cart before the horse,” the Supreme Court said. “We have consistently held that a district court should not resolve the ultimate merits of the case when initially analyzing the propriety of a preliminary injunction.”
Curtis had determined that Whitefish was unlikely to prevail at a trial, and she determined that the city had not established it would suffer irreparable harm or great injury. But she made these determinations by deciding the merits of the case, the Supreme Court said.
Once the substantive grounds are eliminated from consideration, the court can look at whether a preliminary injunction should have been granted to Whitefish, the Supreme Court reasoned.
“Our review of the record reveals that the city argued vehemently that irreparable harm would follow if the county was allowed to unilaterally rescind the agreement,” the Supreme Court said. “The city claimed that it had ‘no plain, speedy and adequate remedy’ other than those set forth in the March 2008 complaint.”
In its briefs, Whitefish stated that “no amount of money can rectify the harm that will be done to the city of Whitefish and its lawful planning, zoning and subdivision operations by the county’s attempted withdrawal from the Interlocal Agreement.”
The Supreme Court pointed out that Flathead County had “conceded it is formulating a plan to re-zone the land in the extraterritorial area.”
In fact, the Flathead County Planning Board held a public hearing on Dec. 17 on the creation of the Whitefish Area Zoning District, in which land in the “doughnut” with city zoning would be rezoned with county designations.
Citing precedents, the Supreme Court ruled that “the city of Whitefish was required at a minimum to make a prima facie showing of the existence of a duly executed contract between itself and the county, and a violation of its rights under that contract by virtue of the county’s unilateral decision to breach the agreement by withdrawing from it. This, the city has done.”
Supreme Court Justice Jim Rice issued a concurring opinion intended to clarify the court’s ruling.
“Here, we do not reverse the District Court’s interpretation of any statutes (or the constitutional provisions) related to the substance of the dispute,” Rice wrote. “We explain that the District Court’s error was in going too far.”
Supreme Court Justice John Warner took another view in a dissenting opinion. The Supreme Court had expedited the appeal and “has literally outdone itself to render a decision in a timely manner,” he wrote. But the Supreme Court “allows itself to be sidetracked into dodging the real issue,” and he wanted the Supreme Court to ”consider the matter now.”
The case involves “a purely legal issue,” Warner wrote — “whether the county may, under the law, unilaterally rescind the interlocal agreement.” No trial will be held on the merits, he wrote.
“There is nothing to try,” he wrote. “There being no reason to conduct a trial, the District Court was required to consider whether the law allows a city and a county to enter into an interlocal agreement for zoning, which neither can get out of without the consent of the other, until the end of time.”
Warner said the Supreme Court was dodging its responsibility by refusing to consider the legal question presented.
Furthermore, “the denial of a preliminary injunction does no harm to the applicant — the municipal corporation of Whitefish,” he wrote. “Only property owners in the doughnut area, which is in Flathead County, are in danger of some future, unspecified injury.”
Warner also wrote that he disagreed with Curtis about whether the interlocal agreement can be specifically enforced.
“Any rezoning in the doughnut can and will be undone if it is held that the county breached an enforceable agreement not to rezone without the city’s consent,” he wrote. “If the ultimate decision is in favor of the city, the county cannot rezone the doughnut.”
The city of Whitefish was represented by city attorney John Phelps and former Montana Supreme Court justice Terry Trieweiler, of Whitefish. The county was represented by Alan McCormick, of Missoula.
Phelps told the Pilot the city will now ask for a permanent injunction, putting the Interlocal Agreement back in force. He estimated it could take four to six months before Curtis would rule on the merits of the case.
If Curtis grants Whitefish attorney Sean Frampton intervenor status, the case could grow more complicated, Phelps said. If Curtis rules against Whitefish on the merits, an appeal to the Montana Supreme Court could take 1 1/2 years to decide, he said.