Mountain Water proceedings

Missoula Mayor John Engen listens Friday as attorneys representing the city of Missoula and Mountain Water Co. hammer out the final details guiding the next phase of the city’s efforts to take ownership of the water system.

Last fall, the Missoula City Council approved an agreement for Mayor John Engen to work with two law firms to pursue a "bad faith" case against global equity firm The Carlyle Group.

The letter of agreement outlines the terms of engagement with Boone Karlberg of Missoula and Perkins Coie of Seattle.

The lawyers "agree to take this case on a blended contingency fee basis," the letter said, generally hourly rates reduced at 50 percent, plus a percentage of money recovered from the defendant, depending on the outcome of the case.

The letter notes the city has the right to request running totals of other expenses incurred along the way for which the city is responsible, such as travel and consultant fees. However, it does not set limits on those ongoing costs.

When the city brought its eminent domain case against Carlyle and Mountain Water Co., Engen estimated the legal bills would hit $1 million at the most, but to date, the expenses for that case and a couple of related ones add up to $6 million.

The city won the right to use its power of eminent domain to buy Mountain Water, but an appeal is pending at the Montana Supreme Court.

The city filed the "bad faith" complaint in October, although it hasn't served it yet; it intends to amend the original document first. 

So far, the city has incurred no costs in the "bad faith" case, chief administrative officer Dale Bickell said Friday in a message through an assistant. 

Chances are it will.

Councilwoman Emily Bentley said Friday she anticipates the council will revisit the matter of legal costs in the bad faith case, but likely after the eminent domain case is fully resolved.

"I'm sure we'll talk about it when the time comes, after we get through this step," Bentley said.

However, Bentley also said the reason to pursue a bad faith case against Carlyle and its managing director of infrastructure is to recover funds the city lost based on the global equity firm's unfair dealings.

"The point of that bad faith case is to capture our legal bills, to get reimbursed for that $6 million that we spent," Bentley said.

"When Robert Dove (managing director of infrastructure for Carlyle) puts his arm around the mayor and says, 'Do you want to buy a water company?' and he knows he's lying, and we're out $6 million in legal bills, we want to recoup that from the case."

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Reporter for the Missoulian