Upper Missouri v. DNRC

2025 MT 137
Montana Supreme Court·Decided July 1, 2025·No. DA 24-0542·Published

Opinion

07/01/2025

DA 24-0542

Case Number: DA 24-0542

IN THE SUPREME COURT OF THE STATE OF MONTANA 2025 MT 137

UPPER MISSOURI WATERKEEPER, TANYA & TOBY DUNDAS, SALLY & BRADLEY DUNDAS, CAROLE & CHARLES PLYMALE, and CODY MCDANIEL,

Plaintiffs and Appellants, v.

BROADWATER COUNTY and the MONTANA DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION,

Defendants and Appellees, and 71 RANCH, LP, Intervenor and Appellee.

APPEAL FROM: District Court of the First Judicial District, In and For the County of Broadwater, Cause No. DV-2022-38 Honorable Michael F. McMahon, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Guy Alsentzer, Upper Missouri Waterkeeper, Bozeman, Montana

David K. W. Wilson, Jr., Robert Farris-Olsen, Morrison Sherwood Wilson Deola, PLLP, Helena, Montana

Graham J. Coppes, Ferguson & Coppes, PLLC, Missoula, Montana

For Appellee Broadwater County:

Susan B. Swimley, Swimley Law, Bozeman, Montana Tara DePuy, Attorney at Law, Livingston, Montana For Appellee DNRC:

Brian C. Bramblett, Molly Kelly, Montana Department of Natural Resources and Conservation, Helena, Montana

For Intervenor and Appellee 71 Ranch, LP:

Vuko J. Voyich, Anderson and Voyich, P.L.L.C., Livingston, Montana

Submitted on Briefs: April 9, 2025 Decided: July 1, 2025

Filed:

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Clerk

Justice Beth Baker delivered the Opinion of the Court.

¶1 Upper Missouri Waterkeeper and seven Broadwater County residents appeal the First Judicial District Court’s denial of their attorney fees request after the court entered declaratory judgment that 71 Ranch’s proposed subdivision did not meet the “exempt well” exception for a water rights permit and that Broadwater County wrongly granted preliminary approval of the subdivision. The Plaintiffs sought fees on three alternative bases: the Montana Water Use Act, § 85-2-125, MCA; the Uniform Declaratory Judgments Act, § 27-8-313, MCA; and the Private Attorney General Doctrine. The District Court denied fees under all three claims.

¶2 We agree with the District Court that the Water Use Act does not authorize fees in this case. But, on the basis of the court’s findings, we reverse its denial of fees as supplemental relief for the declaratory judgment. We remand for the District Court to determine a reasonable amount of fees and their apportionment. We do not reach the private attorney general claim.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 71 Ranch submitted a preliminary plat application to Broadwater County, proposing to subdivide 442 acres on the east side of Canyon Ferry Reservoir, called the “Horse Creek Hills Subdivision.” It proposed four phases of development, which would subdivide the land into thirty-nine residential lots, two commercial lots, and one open space lot; each phase of the development would be serviced by its own exempt well, septic, and stormwater system. With the application for each phase, 71 Ranch submitted a letter from the Department of Natural Resources and Conservation (DNRC)—called a

“predetermination letter”—estimating the phase’s water usage and concluding that “the proposed appropriation does fit the current rules and laws pertaining to the filing of an exempt water right.” After several remands to the Broadwater County Planning Board, the Broadwater County Commission approved the preliminary plat application.

¶4 Upper Missouri Waterkeeper, a nonprofit organization, and seven county residents, including senior water rights holders (collectively “Upper Missouri”), filed a complaint against Broadwater County and DNRC in August 2022, alleging that Broadwater County violated §§ 76-3-603 and -608, MCA, of the Montana Subdivision and Platting Act (Counts I and II); requesting a declaration that DNRC erroneously interpreted the Montana Water Use Act’s exempt well provision and accompanying administrative rule in violation of the Montana Constitution (Count III); and requesting a declaration that Broadwater County’s reliance on DNRC’s interpretation was arbitrary and capricious (Count IV). 71 Ranch sought and was granted leave to intervene.

¶5 Upper Missouri and the County filed cross-motions for summary judgment. The District Court ruled that, in violation of the Subdivision and Platting Act, the Subdivision’s environmental assessment inadequately addressed potential impacts to surface and groundwater and that the administrative record was “insufficiently clear, organized, and cohesive” to provide citizens with a “reasonable opportunity for . . . participation in the operation of the agencies.” The record showed that “the County ben[t] over backward to allow 71 Ranch repeated opportunities to rectify admitted and obvious basic errors in the application.” The approval process generated “thousands of documents and over thirty hours of meeting recordings,” which had been dissected by ten attorneys involved in this

litigation. The District Court found that, despite all this time and effort, 71 Ranch still submitted a deficient application, and the County abused its discretion in approving the Subdivision in violation of the Subdivision and Platting Act.

¶6 The court found that, in issuing the four predetermination letters, DNRC determined that “the project was entitled to a combined exempt well appropriation for each phase of the project.” DNRC’s decision, the court found, “blatantly ignore[d]” this Court’s holding in Clark Fork Coal. v. Tubbs, 2016 MT 229, ¶¶ 23-24, 384 Mont. 503, 380 P.3d 771, when it disregarded the project’s total “combined appropriation” by treating each of the Subdivision’s four phases as a separate project. The court found “no basis in law for DNRC to treat the four phases of 71 Ranch’s subdivision project separately, a conclusion which is absolutely clear from statute, administrative rule, Montana Supreme Court precedent, and even DNRC’s letters in this matter.”

¶7 The District Court granted Upper Missouri summary judgment on all but its constitutional claim against DNRC. The parties then stipulated to dismiss that claim with prejudice. Upper Missouri filed a motion for attorney fees under the Water Use Act, the Uniform Declaratory Judgments Act (UDJA), and the private attorney general doctrine. Upper Missouri appeals the District Court’s denial of its fees motion. Neither the Defendants nor the Intervenor appealed the District Court’s judgment on the merits.

STANDARD OF REVIEW

¶8 “We review de novo whether there is legal authority to award attorney fees.” Town of Kevin v. N. Cent. Mont. Reg’l Water Auth., 2024 MT 159, ¶ 6, 417 Mont. 325, 553 P.3d 392 (citation omitted). “If legal authority exists, we review a district court’s grant or denial

of attorney fees for an abuse of discretion.” Town of Kevin, ¶ 6 (citation omitted). A trial court abuses its discretion when it acts arbitrarily without employment of conscientious judgment or exceeds the bounds of reason, resulting in a substantial injustice. TCF Enters., Inc. v. Rames, Inc., 2024 MT 38, ¶ 15, 415 Mont. 306, 544 P.3d 206 (citation omitted).

DISCUSSION

¶9 “Montana follows the ‘American Rule,’ which provides that, absent statutory or contractual authority, attorney fees will not be awarded to the prevailing party in a lawsuit.” City of Helena v. Svee, 2014 MT 311, ¶ 18, 377 Mont. 158, 339 P.3d 32 (citation omitted). Upper Missouri asserts two statutory bases for an award of fees and a third basis (the private attorney general doctrine) under what we have recognized as one of the “equitable exceptions” to the general rule. Trs. of Ind. Univ. v. Buxbaum, 2003 MT 97, ¶ 19, 315 Mont. 210, 69 P.3d 663.

¶10 1. Is Upper Missouri entitled to attorney fees under § 85-2-125, MCA, of the Water Use Act?

¶11 Upper Missouri argues that it is entitled to attorney fees under § 85-2-125(1), MCA, of the Water Use Act, which provides that

[i]f a final decision of the department on an application for a permit or a change in appropriation right is appealed to the district court, the district court may award the prevailing party reasonable costs and attorney fees.

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