Lawsuit Over Lake Levels Heads to Supreme Court

By Beacon Staff

After nearly nine years of legal wrangling, a group alleging that the operation of Kerr Dam has damaged their lakefront and riverfront properties is set to bring oral arguments before the Montana Supreme Court and has settled an offshoot case that will pay about $200,000 to two local environmental groups.

The case was originally filed against the Montana Power Co. in 1999 by Rebecca Mattson, a local resident who said the utility’s operation of Kerr Dam caused severe erosion of her property at the head of Flathead Lake.

Several years later, Montana Power Co. sold its interest in the dam and, after a series of corporate changes, PP&L Montana, Touch America Holdings, Inc., and NorthWestern Corporation were also added as defendants, and the case was expanded into a class action suit that now includes about 20 other Flathead Lake property owners. Both Touch America and NorthWestern have since filed for bankruptcy.

The Mattson plaintiffs asked that the lake’s full-pool elevation be lowered earlier than normal in the fall to curb shoreline erosion.

In April 2007, though, a Flathead County District Court judge ruled against the plaintiffs, saying that easements on all the class members’ deeds allow the power company to erode and otherwise cause damage to property along the lake and river. Those same easements recently prompted Flathead County commissioners to deny a development along the north shore of Flathead Lake – a decision that is currently being challenged in local courts.

In the Mattson case, the plaintiffs appealed to the Montana Supreme Court, which recently requested an oral argument for late September – a sign, lawyers say, that the court needs more information, but may be nearing a decision.

“We’re optimistic that this will be a good thing for us,” Jamie S. Franklin, an attorney at Meites, Mulder, Mollica & Glink, a Chicago-based law firm representing the plaintiffs, said. “If the Supreme Court should reverse the state court’s decision and rule in our favor, we’ll happily proceed toward trial.”

Meanwhile, the plaintiffs have pursued claims against Touch America and NorthWestern Coporporation in bankruptcy court. Last month, they were surprised to learn that Touch America was able and willing to settle.

“When a company declares bankruptcy, any claim against them has to be brought to the court and unsecured ones likes ours go to the end of the line and rarely recover anything,” Franklin said. “It was actually quite a surprise when they got to the end of this and they still had money in their estate.”

Letters went out to landowners around the lake and river last week, informing them of the $350,000 settlement, which is set to be finalized later this month.

Because the amount isn’t enough to adequately split between all the claimants, they’ve decided to give the money to the Flathead Conservation District and the University of Montana’s Flathead Lake Biological Station – two groups they felt served area landowners through their work on both bodies of water. After attorney and administrative fees are paid, Franklin said she expected each group would receive about $100,000.

The main focus for the plaintiffs, though, remains the Supreme Court case.

“I don’t want people to think they’ve given up or settled anything in regard to the case against PP&L,” Franklin said. “We’re still fighting very hard to get our day in court.”