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Montana Supreme Court Justice James Rice shakes hands with attorney John Crengeyer after the court heard oral arguments in a case at the Dennison Theatre at the University of Montana on Friday. The case before the court during its annual visit to UM involved whether Montana travel taxes apply to online travel companies like Priceline.

The city of Missoula used "abusive" and "diabolical" tactics in its quest to own the local water company – and Missoula County District Court allowed the practices, depriving defendants of their constitutional right to due process because the court was "apparently hell-bent on condemnation."

So said Montana Supreme Court Justice Jim Rice in a dissenting opinion in the city of Missoula's eminent domain case against Mountain Water Co. and global equity firm The Carlyle Group.

"Missoula's discovery tactics were Machiavellian, to put it politely," Rice said in his dissent. "If I condoned winning at all costs, and was not concerned about the rule of law, I might even be impressed."

The result of the city's "mischief" and the court's "predisposition" to condemn was an unfair trial and a ruling in favor of the private property taking, the justice said.

As an example of abusive tactics, he said the city provided documents requested by defendants at the last minute, and the court didn't grant an extension to allow lawyers enough time to review the evidence before trial.

"Whether the 26,581 documents Missoula dumped on Mountain Water three weeks before trial contained a smoking gun can only be ascertained after the 26,581 documents are reviewed by Mountain Water," Rice wrote.

This week in a 5-2 decision, the state high court affirmed the lower court's order that the city has the right to use its power of eminent domain to buy the water system.

In his scathing dissent citing the city's "gamesmanship," Rice said he would reverse.

"Missoula may well have proved its case in a fair trial, but here, there wasn't one," the justice wrote.

"I have no sympathies for the corporate entities involved in this case; my sympathies are for all Montanans who expect that their judicial system will not fail to enforce constitutional guarantees."

Justice Laurie McKinnon also dissented.


At a news conference Wednesday morning in the mayor's office, Natasha Prinzing Jones said the lower court's ruling focused on the evidence in the case, as did the decision from five other justices.

She said the majority of the Montana Supreme Court judges evaluated the same arguments Rice did, and District Court Judge Karen Townsend reviewed the same arguments as well, and all came to a different conclusion.

"Obviously, we disagree with Justice Rice in his dissent," said Jones, of Boone Karlberg.

She also said the city is pleased with the order because the majority of the court focused on the proof the city presented in court.

The city disputes the allegations it made a last-minute "document dump" on defendants, she said. During an earlier court hearing about attorneys' fees, Jones said the defendants never identified the format in which they wanted to receive files until after the city had spent much time fulfilling their request for documents.

Had they made their wishes known in advance, the city would have provided the files in preferred format the first time around, Jones said at the time.

Wednesday, she said the city focused its time in the briefing on relevant issues, and the majority's opinion shows the justices reviewed the entirety of the record to reach their conclusion that proof weighed in favor of the city.

"So five out of seven judges rejected the same arguments that Justice Rice is making now," Jones said.


In his dissenting opinion, Justice Rice found fault with Judge Townsend, writing that "the District Court exhibited a judicial preference for condemnation." Yet he said Montanans hold private property rights in the highest regard.

"In Montana, the right to possess property is considered so fundamental that our constitution deems it 'inalienable,' " the dissent said.

Mountain Water had the right in court for "a meaningful opportunity to be heard" before the city took its property, he said. But when the defendants requested extra time to review material the city provided after "foot dragging," the judge didn't grant the request despite the plaintiff's "flagrant discovery abuses."

Rice said the lower court's order showed a bias toward finding public ownership is "more necessary" than private ownership. He quoted this passage from the district court's ruling: "Important public policy objectives are promoted by municipal ownership, including predictability and stability in rates, ability to obtain low cost financing not available in the private sector, lack of a profit motive, coordination with city services ... " and more.

The justice objected to the analysis: "The District Court's broad statement is a mandatory presumption that municipal ownership is always a 'more necessary public use."

So instead of the city having to prove its ownership was "more necessary," Mountain Water had to rebut the court's presumption – "to the extent that such a task would even have been possible."

"This unconstitutional presumption is not harmless," Rice said.

Judge Townsend could not be reached Wednesday afternoon through a voicemail left with her assistant.


Justice McKinnon also would reverse, although for different reasons.

In her dissent, McKinnon concluded the court used an incorrect legal standard to determine whether condemnation was warranted, and the discussion was marred by debates around public versus private ownership, "which have no place in a judicial proceeding."

She said since the use of the property was going to remain the same after condemnation, the property shouldn't be taken by the city "unless the intention of the Legislature that it be taken has been manifested in express terms or by necessary implication."

In her dissent, she said the mistake originated in the state high court's "incorrect analysis" in the earlier eminent domain case against Mountain Water, which took place in the 1980s. 

"We have an obligation to litigants, the trial courts, and the citizens of Montana to 'get it right,' and make sure a statute has been correctly applied," McKinnon wrote. "When we have been wrong in a previous statutory interpretation, we have a similar obligation to own our mistake and provide guidance and leadership.

"The litigants and the District Court were misled by our decision in Mountain Water I and our decision today reflects a strained and distorted analysis premised upon the virtues of private and public ownership when the public use will not change.

"We should not perpetuate and magnify the problem we created in Mountain Water I."

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