Whitefish, County Brace for Lengthy Legal Battle

By Beacon Staff

There is no shortage of litigation conversation in Whitefish these days, with plenty of indication that the city’s decision to sue Flathead County is only the first of what could be a series of lawsuits involving the “planning doughnut” and the critical areas ordinance.

City Attorney John Phelps has publicly acknowledged he expects the city to be sued. But until that happens, both the city and county will have their hands full with Whitefish’s current litigation.

On March 13, Flathead County commissioners voted 2-1 to rescind a 2005 interlocal agreement that gave Whitefish final land-use power in a jurisdiction outside of city limits – the doughnut area. Then on March 17 the Whitefish City Council voted to sue the county and Phelps subsequently asked the Flathead County District Court for a temporary restraining order to prevent commissioners from acting outside of the interlocal agreement until the city gets a hearing. Phelps had previously warned in a letter to commissioners: “Do not underestimate our resolve.”

“An effective working relationship between the city and the county depends on forthrightness, honor, and fair dealing between their elected officials,” Phelps wrote to commissioners. “If the Flathead County commissioners cannot be relied upon to honor an agreement of this stature, what credibility do they retain?”

Other parties are already getting involved too.

Sean Frampton, who has been the attorney in the only two major lawsuits Whitefish has lost since Phelps came to office, said he plans to file a motion to intervene in Whitefish’s lawsuit against the county. Frampton is arguing that the interlocal agreement was invalid from its inception for a variety of reasons. One of his main arguments is that, based on his readings of interlocal statutes, an interlocal agreement can provide Whitefish with planning privileges in an extraterritorial jurisdiction, but not zoning power.

“There are many, many reasons why I see this agreement isn’t valid,” Frampton said.

At recent city council meetings, members of the public have expressed concern that the city is being cavalier in its approach to the perceived inevitability of litigation. At one meeting Councilor Nick Palmer said he wasn’t too worried about lawsuits after passing the critical areas ordinance because the city has the “legal equivalent of Joe DiMaggio” in Phelps.

George Culpepper Jr., government affairs director for the Northwest Montana Association of Realtors (NMAR), warned that the city should be more cautious. Culpepper said NMAR is discussing litigation against Whitefish, though nothing has been hammered out.

“While one particular member thinks (Phelps is) Joe DiMaggio,” Culpepper said, “the Joe DiMaggio I know struck out on several occasions. So if that’s the name the council wants to give John Phelps, then let’s go to bat.”

If the city is sued, Phelps said the Montana Municipal Insurance Authority could cover most of the costs, though that’s not certain. The MMIA looks at each individual case of its members, like Whitefish, and then determines if it will apply its coverage and send a lawyer. Whitefish’s insurance, a combination of MMIA’s coverage and a larger umbrella program, covers $12.5 million per occurrence after the city pays a $2,500 deductible.

Bob Worthington, chief executive officer of MMIA, said he has spoken with Phelps about the litigation potential of the critical areas ordinance and what MMIA would do in the case of a lawsuit. He said MMIA could opt not to help Whitefish.

“It will absolutely depend on how anything is pled and what the allegations are in that pleading, regarding if we would need to act,” Worthington said.

Phelps said he is confident in the city’s position after talking with MMIA on multiple occasions, noting that Whitefish won an award several years ago for its excellent MMIA rating. But Whitefish has already lost a case regarding storm water management. District Court Judge Ted Lympus ruled last year that the city administered a temporary storm water law unfairly. Lympus ordered Whitefish to pay $300,000 in fees to the plaintiffs, William and Theodora Walton, but the city hasn’t done so because it plans to appeal, Phelps said.

“We just have to be very thorough and even-handed with how we apply (the critical areas ordinance),” Phelps said.

The other time the city lost a lawsuit was when the District Court decided that Whitefish owed the Best Bet Casino more than $300,000 for mismanaging the casino’s land. The city appealed that ruling and hasn’t paid those fees either, Phelps said. Frampton was the lead attorney in both cases.

Whitefish has sued the county only once before since Phelps has been city attorney. In 2002 after the Flathead Regional Development Office disbanded, there was money left over. Whitefish sued the county on the grounds that the county claimed stake to money that was actually the city’s. Phelps said, ironically, it was Hall who came in after freshly being elected county commissioner and played the role of mediator, helping the matter to be solved outside of the courtroom. Phelps said Hall’s tone is much different today, though Hall said it is Whitefish’s city council that has changed.

“I think that was a different makeup of a council,” Hall said. “We were just committed to working together then.”