Mountain Water seeks stay from Supreme Court in Missoula contractor fees

By Martin Kidston

Mountain Water Co. this week filed a motion asking the Montana Supreme Court to intervene with a pending lower court ruling on who will pay $22 million in contracts owed by the utility once it’s sold to the city of Missoula.

In the case’s ever-shifting landscape, a number of other briefs remain before the court, including the city’s motion to take possession of Mountain Water and what attorneys’ fees the city will pay once the case is resolved.

To date, the case has cost the city $6,405,422.72 to litigate, according to Mayor John Engen.

“There’s a number of motions that remain before Judge (Leslie) Halligan and before Judge (Karen) Townsend, not the least of which is the motion to take immediate possession,” Engen said. “We continue to march through the litigation process in an effort to acquire Mountain Water.”

Late last year, Robert Bell, an attorney representing nearly two-dozen developers who are owed roughly $22 million by Mountain Water, asked a District Court judge to ensure that his clients are paid when the utility changes ownership.

The developers have fronted the money over the years, enabling Mountain Water to extend water mains and reach new customers and commercial projects. The contracts are repaid over a 40-year period.

The city believes the debt stemming from the contracts should be included in the $88.6 million it will pay to acquire Mountain Water. That would require Liberty Utilities, which purchased Mountain Water, to deduct the $22 million from the money it will receive from the city as payment for the system.

However, Liberty contends that the debt is not part of the utility’s overall price tag. Rather, the firm believes the $22 million represents an additional cost, which the city must resolve once it takes ownership.

The issue is currently before Missoula District Judge Leslie Halligan, though Liberty has asked the Montana Supreme Court to stay the lower court’s ruling, even before it’s made.

“Without a stay, Mountain Water will be forced to defend its constitutional rights in two different district court dockets dealing with the same condemnation,” Michael Green, who is representing Mountain Water, stated in a brief filed this week. “Without a stay, Mountain Water will suffer irreparable harm.”

While Halligan prepares to rule on who will pay the contracts and from what pot of money, Missoula District Judge Karen Townsend is also expected to render decisions on a number of other issues pertaining to Mountain Water.

They include attorneys’ fees and the city’s motion to take possession, which includes the complete transfer of assets, such as customer data and bank accounts.

“It has to be a court-supervised, seamless transfer,” said Scott Stearns, one of the attorneys representing the city.

While the issues play out in court, the city continues to move forward with its pending acquisition. This week, the city met with the company that manages Mountain Water’s billing software, and it continues to meet with Mountain Water employees.

“We believe we’ve had productive conversations with the employees’ council and are moving in a positive direction,” Engen said. “We believe we remain on the 99-yard line and will keep plugging.”

Engen also urged members of the City Council to refrain from answering questions posed by Mountain Water employees.

“I would urge you to forward those to our attorneys,” Engen said. “Those folks are represented by counsel, as are you, and they need to be communicating through their attorney, unless they’d like to waive counsel. In that case, we’d be happy to talk to them all day long.”

Contact reporter Martin Kidston at info@missoulacurrent.com