Schweitzer v. City of Whitefish

Schweitzer v. City of Whitefish, 2016 MT 254 (Oct. 11, 2016) (Rice, J.) (5-0, aff’d)

Issue: Whether the district court erred by granting summary judgment on the basis of claim preclusion.

Short Answer: No.

Affirmed

Facts: Warren Schweitzer and Ingela Schnittger (Owners) own two lots in a Whitefish subdivision adjacent to Whitefish Lake, which the city of Whitefish has annexed. Owners have owned the property for several years. In 2005, Owners decided to tear their home down and build a new house. Their plans called for replacing the existing septic tank and drain field. Owners were advised they could hook up to the city water and sewer if their property was annexed into Whitefish. Owners successfully petitioned to be annexed in 2005. Later, they learned they would have to pay for the extension of sewer and water lines onto their property. Finding the cost prohibitive, they abandoned the idea.

In 2010, Owners petitioned to be de-annexed, and their petition was denied. Owners filed suit for declaratory judgment, but did not serve their complaint within three years. The district court dismissed the complaint based on lack of service and the fact that the statute of limitations would bar any refiling of the action. The dismissal was entered in 2014, with prejudice, and Owners did not appeal.

A month later, Owners filed another petition with the city for de-annexation, citing two reasons it had not cited in the first petition – a purported lack of contiguous city property, and the termination of an interlocal agreement between the city and Flathead county. The city council denied Owners’ second petition, and Owners filed another declaratory judgment action in district court. Owners served their complaint on the city, who raised claim preclusion as a defense.

Procedural Posture & Holding:  The district court entered summary judgment for the city on the basis of claim preclusion, finding the facts were substantially the same. Owners appeal and the Supreme Court affirms.

Reasoning: Claim preclusion is established under a four-part test: 1) the parties or their privies are the same; 2) the subject matter of the present and past actions is the same; 3) the issues are the same and relate to the same subject matter; and 4) the capacities of the persons are the same in reference to the subject matter and to the issues between them. The third element extends to an issue that could have been raised in the first action even if it was not. The first element implicitly requires that the previous action ended with a final judgment on the merits.

Neither party contests elements one and four. Additionally, the previous action ended with a final judgment on the merits, as an order of dismissal with prejudice is a final judgment on the merits.

Owners claim the subject matter of the second action is different than the first because the second action arose from a change in the zoning jurisdiction of the city over the surrounding properties. The issue is whether the two cases arose from the same set of materials facts. Here, they did, and the second element is satisfied.

Regarding the third element, the gravamen of the first and second complaints was that the city failed to follow statutory procedures for excluding land from a city. The Owners’ addition of the interlocal agreement claim to the second complaint did not materially change the issue before the district court. Thus, all four elements are met and summary judgment for the city was proper.