Kiely Const., LLC v. City of Red Lodge

• Decision Date: 01 November 2002
• Docket Number: No. 01-200.,01-200.
• Citation: 57 P.3d 836,312 Mont. 52,2002 MT 241
• Parties: KIELY CONSTRUCTION, L.L.C., Plaintiff/Respondent/Cross-Appellant, v. CITY OF RED LODGE, acting through the Red Lodge City Council and its past and present council members, Smokey Owen, Hugo Golfi, Al Swanson, Phillip Jaquith, Barbara Beck, Mary Fitzgerald, Anne Rood, Glory Mahan, Richard Gessling, Pete Critelli, and Craig Beam, Defendants/Appellants/Cross-Respondents.
• Court: Montana Supreme Court

57 P.3d 836

2002 MT 241

312 Mont. 52

KIELY CONSTRUCTION, L.L.C., Plaintiff/Respondent/Cross-Appellant, v. CITY OF RED LODGE, acting through the Red Lodge City Council and its past and present council members, Smokey Owen, Hugo Golfi, Al Swanson, Phillip Jaquith, Barbara Beck, Mary Fitzgerald, Anne Rood, Glory Mahan, Richard Gessling, Pete Critelli, and Craig Beam, Defendants/Appellants/Cross-Respondents.

No. 01-200.

Supreme Court of Montana.

Submitted on Briefs September 20, 2001.

Decided November 1, 2002.

Michael B. Anderson, Christopher N. Rork, Anderson & Liechty, Billings, Montana; Gary Thomas, Red Lodge City Attorney, Red Lodge, Montana, For Appellant.

Bruce Fredrickson, Kristin Omvig, Crowley, Haughey, Hanson, Toole & Dietrich, Billings, Montana, For Respondent.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 This appeal arises from decisions by the Red Lodge City Council and rulings by the Twenty-Second Judicial District Court concerning an application for a subdivision, its conditioned approval, and ultimate denial, as well as from special and advisory jury verdicts. We affirm in part and reverse in part.

¶ 2 After receiving a preliminary plat application for a proposed subdivision from Kiely Construction (Kiely), the Carbon County Planning Board recommended approval of the proposed subdivision, subject to eighteen conditions, to the City of Red Lodge (Red Lodge). Red Lodge received the application in the Summer of 1996, but failed to act upon it within sixty days. Kiely obtained a Writ of Mandamus in August of 1997, compelling Red Lodge to act upon the application, and Red Lodge conditionally approved Kiely's application, subject to twenty-six conditions. On October 14, 1997, Kiely filed a complaint, alleging that Red Lodge failed to act within the mandatory sixty-day time frame, that imposition of some conditions were an abuse of discretion, and that its due process rights were violated.

¶ 3 Following mediation in the Fall of 1998, the parties negotiated a subdivision improvements agreement, which Red Lodge conditionally accepted, but Kiely then rejected. On March 20, 1999, the District Court entered partial summary judgment, ordering Red Lodge to review and "approve, conditionally approve or deny," Kiely's application within thirty days. Following a public hearing, Red Lodge City Council unanimously denied Kiely's application without written findings. Kiely then filed an amended complaint, alleging constitutional violations and requesting damages and approval of its application. Prior to trial, the District Court entered partial summary judgment, dismissing Kiely's claims against the individually named defendants.

¶ 4 At trial, Kiely sought damages for the alleged arbitrary or capricious denial of its application. The jury's special verdict awarded Kiely $292,170.00 in damages for Red Lodge's arbitrary and capricious actions pursuant to state law, and also found for Kiely on its constitutional claims under 42 U.S.C. § 1983, but awarded damages in the sum of only $1.00. Kiely had also appealed to the District Court from Red Lodge's denial of its preliminary plat application. The District Court accepted the jury's advisory verdict on this issue, and concluded that Red Lodge acted arbitrarily, capriciously and unlawfully, and ordered Red Lodge to conditionally approve Kiely's preliminary plat application, subject to the original eighteen conditions. The District Court awarded Kiely $250,243.50 in attorney's fees pursuant to 42 U.S.C. § 1988, and also awarded costs. Red Lodge appeals several of the District Court's pre-trial, trial, and post-trial rulings, while Kiely cross-appeals two of the court's summary judgment rulings. ¶ 5 We restate the issues as follows:

1. Whether the District Court erred in submitting Kiely's 42 U.S.C. § 1983 claims to the jury;

2. Whether the District Court erred in awarding Kiely attorney's fees pursuant to 42 U.S.C. § 1988;

3. Whether the District Court abused its discretion when instructing the jury on Kiely's state law claims;

4. What relief Kiely is entitled to under its state law claims;

5. Whether the District Court erred in dismissing the individual defendants by order of summary judgment;

6. Whether the District Court abused its discretion regarding admission of evidence; and

7. Whether the District Court erred by not modifying the damage award.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 6 In the Spring of 1996, Kiely initiated the approval process for its proposed subdivision, referred to as Kiely Island at Rock Creek, and located within the City of Red Lodge, Carbon County, Montana. On May 16, 1996, Kiely submitted a preliminary subdivision plat application to the Carbon County Planning Board, because at the time, Red Lodge did not have a city planning board in place. Following a public hearing on June 18, 1996, the County Planning Board recommended approval of the proposed subdivision to the City of Red Lodge, subject to eighteen conditions. The recommendation was transmitted to the Red Lodge City Council (City Council) on July 2, 1996. Although § 76-3-604, MCA, requires the city to act upon such an application within sixty days, Red Lodge let the time pass without action. After the City of Red Lodge Planning Board was in place, it issued a staff report on July 15, 1997, wherein it recommended the City Council approve Kiely's preliminary plat application with the same eighteen conditions proposed by the County Planning Board.

¶ 7 On August 26, 1997, upon Kiely's request, the Thirteenth Judicial District Court¹ issued a Writ of Mandamus, compelling Red Lodge to act upon Kiely's preliminary plat application within ten days by approving, conditionally approving, or denying the application. Following a public hearing on September 10, 1997, Kiely's application was conditionally approved, subject to twenty-six conditions. Apparently, Red Lodge reviewed Kiely's application under the City of Red Lodge Development Code (1997 Development Code), which was adopted in April of 1997, and effective May 22, 1997.

¶ 8 On October 14, 1997, Kiely commenced this action appealing the twenty-six final conditions adopted by Red Lodge on September 10, 1997. Kiely brought the action under §§ 76-3-625(1) and (2), MCA, and 42 U.S.C. § 1983 (§ 1983), maintaining that Red Lodge acted arbitrarily and capriciously in imposing the conditions. Kiely sought the following relief: (1) an order requiring Red Lodge to apply the regulations in effect at the time the application was submitted, and revise the "final conditions" to comply with such regulations; and (2) damages incurred as a result of the delay (caused by Red Lodge's violation of sixty-day requirement), and the final twenty-six conditions imposed, and also damages for Kiely's deprivation of property rights under § 1983. Red Lodge responded that the adoption of interim zoning ordinances on April 8, 1997, allowed it to prohibit any uses in conflict with the ordinances, and that the individual council members were entitled to qualified immunity.

¶ 9 In a motion for partial summary judgment filed on August 18, 1998, Kiely requested the District Court deem its preliminary plat application approved, subject to the original eighteen conditions recommended by the County Planning Board, because Red Lodge failed to act within the mandatory sixty days.

¶ 10 The parties commenced mediation in the Fall of 1998. Following negotiations on September 14, 1998, the parties entered into a subdivision improvements agreement (SIA), which Red Lodge conditionally accepted on January 12, 1999, by adding seven conditions that were not considered in the original agreement. Kiely rejected this conditional SIA, and pursued relief in the District Court, seeking either (a) a "deemed approval" of the County Planning Board's eighteen conditions, or (b) an order requiring the city to revise its twenty-six condition approval to comply with the 1995 Subdivision Regulations for Carbon County, City of Red Lodge, and Towns of Bridger, Joliet, Fromberg, and Bearcreek (1995 Subdivision Regulations).

¶ 11 On March 20, 1999, the District Court entered partial summary judgment, finding that as a matter of law, Red Lodge violated § 76-3-604, MCA, by failing to act on Kiely's application for plat approval within sixty days. The court declined to grant relief in the form of a "deemed approval" of Kiely's application, and instead ordered Red Lodge to review and "approve, conditionally approve or deny," the application within thirty days, adding that any conditions based on regulations other than the 1995 Subdivision Regulations in effect at the time of preliminary application, were unlawful and void.

¶ 12 Following a public hearing on April 15, 1999, the City Council unanimously denied Kiely's preliminary plat application. However, it failed to provide Kiely with either written findings as required by § 76-3-608(2), MCA, or a written statement as mandated by § 76-3-620, MCA. Kiely then filed an amended complaint, seeking reversal of Red Lodge's denial of its application and an order requiring Red Lodge to apply the subdivision regulations in effect at the time the application was submitted. Kiely also sought compensatory damages and attorney's fees pursuant to its original complaint.

¶ 13 In May of 2000, Red Lodge filed a motion for summary judgment, alleging the acts by Red Lodge and the City Council were legislative acts, thus qualifying Red Lodge and the City Council for statutory immunity under § 2-9-111, MCA. Red Lodge further asserted that it had not acted arbitrarily or capriciously. On June 13, 2000, Kiely filed a motion for partial summary judgment, seeking a finding that Red Lodge acted arbitrarily and capriciously in denying its applications and that the City Council's failure to enter a written statement at the April 15, 1999, meeting was arbitrary and capricious per se.

¶ 14 On July 3, 2000, the District Court entered an order,...