H2. City v. R Porch Settlement AgreementKalispell City Attorney's Office
(406) 758-7709
CITY of P.O. Box 1997, 201 1st Ave. East
ALISPELL
Kalispell, Montana, 59903-1997
www.kalispell.com
REPORT TO: Doug Russell, City Manager
FROM: Johnna Preble, City Attorney
SUBJECT: City v. R. Porch Construction, et al. Settlement Agreement
MEETING DATE: May 6, 2024
BACKGROUND: In August 2022, a sublessee of the City's Airport property, Diablo
Investments, Inc. ("Diablo"), contracted with R. Porch Construction ("RPC") to construct hangars
at the Airport. A construction dispute arose between Diablo and RPC and on June 20, 2023, RPC
recorded a construction lien encumbering the real property of the City's Airport. RPC amended
the lien three times. In response to the liens, the City filed a Petition for Declaratory Judgment in
District Court requesting the Court declare the liens invalid as a matter of law and order their
immediate release.
On February 26, 2024, the Court granted the City's Motion for Summary Judgment, holding,
"The Airport Property is owned by the City, a public entity, and absent statutory language that
expressly allows such attachment the lien is invalid." On March 21, 2024, RPC served the City
with a notice of its appeal to the Montana Supreme Court.
Shortly thereafter, the parties began discussing settlement options. The attached Settlement
Agreement would allow for the dismissal of RPC's Appeal and the release of the liens against the
real property of the Airport. In exchange, the City will agree not to terminate its Master Lease
with KAA strictly because RPC files an action to foreclose on its lien against Diablo. The City
will retain its right to terminate the Master Lease for other reasons.
RECOMMENDATION: Move to approve and authorize the City Manager to execute the
Settlement Agreement.
ALTERNATIVES: Proceed with the appeal.
ATTACHMENTS: City v. R. Porch Construction, et al. Settlement Agreement
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release is hereby entered into this 25th day of
April 2024, by and between R. Porch Construction, Inc. ("RPC") and City of Kalispell, Montana
(the "City")
WHEREAS, the City filed a Petition for Declaratory Judgment on July 20, 2023, in
Flathead County District Court, DV-15-2023-0000853-DK (the "Lawsuit"), in which the City
requested a declaratory judgment finding RPC's Construction Liens (as defined in the Lawsuit
and hereinafter referred to as "Liens") on the City's Airport Property (as defined in the Lawsuit)
invalid as a matter of law and ordering the immediate release thereof,
WHEREAS, RPC denies that it acted wrongfully or has any liability to the City for the
claims asserted in the Lawsuit;
WHEREAS, the City and RPC (collectively the "Parties") intend the terms and
conditions of this Agreement to govern all issues related to the Lawsuit;
WHEREAS, the Parties now wish to resolve all differences among them and wish to
reach a final settlement and compromise of any claims that were raised or could have been raised
in the Lawsuit;
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto stipulate and agree as follows:
1. The Parties agree to file an uncontested motion to stay both the Lawsuit, and RPC's
appeal to the Montana Supreme Court ("Appeal") within 30 days of the execution of
this Agreement.
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2. RPC agrees it shall not enforce nor seek to foreclose on the Liens against the City
during the pendency of the stay of both the Lawsuit and/or the Appeal.
3. The City agrees not to terminate Kalispell Airport Association's ("KAA") lease rights
because of a lien foreclosure and/or contract dispute action between RPC and Diablo
Investments, LLC ("Diablo"). The City shall maintain its rights under the Master Lease
to terminate for other reasons.
4. The City agrees to notify RPC concurrent with its notification to KAA of any potential
termination of the Master Lease.
5. RPC represents that it intends to file a lien foreclosure and/or contract dispute action
against Diablo. RPC shall release any and all Liens against the City's interest in the
Airport Property, excluding any leasehold rights held by Diablo, upon commencement
of said action or within 90 days of the execution of this Agreement, whichever occurs
first. RPC shall retain its lien on Diablo's leasehold interest in the Airport Property and
Diablo's improvements and the City agrees it shall not interfere with said lien or any
action thereon.
6. RPC agrees that a copy of the District Court's Order Granting the City's Motion for
Summary Judgment shall be attached to, and recorded with, the release of the Liens.
7. Simultaneous to the recording of the release of the Liens, the City will file a motion to
dismiss the Lawsuit with prejudice and RPC will file a motion to dismiss the Appeal.
8. This Agreement and any negotiations or proceedings hereunder are not and shall not be
construed as or deemed to be an admission or concession by either Party of any liability
or wrongdoing whatsoever in connection with any allegations of the Lawsuit and the
liability for any such allegations is expressly denied by both Parties.
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9. RPC understands and agrees that the existence of this Agreement and the settlement
represented by it and the terms of this Agreement cannot remain confidential. This
Agreement and its contents shall be an action item of an upcoming City Council
meeting. RPC understands and agrees that it may not rely upon any prior settlement
discussions or negotiations with the City for any argument of equitable relief. RPC
understands and agrees that Council must vote to grant the City Manager the authority
to bind the City to this Agreement and the Agreement must be executed by the City
Manager before any representations or terms may be binding on the City.
10. The Parties understand and agree that the preceding sections of this Agreement recite
the sole consideration for this Agreement, that no other representation or promise has
been made by the Parties, and that all agreements and understandings between the
Parties on any subject whatsoever are embodied and expressed in this Agreement.
11. This Agreement shall be binding upon the successors and assigns of each Party hereto
and may not be amended except by a writing signed by each Party hereto stating that it
is an amendment hereto.
12. This Agreement shall be governed by the laws of the State of Montana. Any disputes
concerning the meaning, interpretation, or enforcement of this Agreement shall be
resolved in the Eleventh Judicial District, Flathead County, Montana.
13. The Effective Date of this Agreement is the date upon which the final Party executes
the Agreement.
14. None of the parties hereto shall be considered the drafter of this Agreement or any
provision hereof for the purposes of any statute, case law, or rule of interpretation or
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construction that would or might cause any provision to be construed against the drafter
thereof.
15. If any part of this Agreement is found to be void or unenforceable by a court of
competent jurisdiction, the remainder of this Agreement shall remain valid and
enforceable.
16. Notice to the City pursuant to this Agreement shall be sent by electronic mail and
standard mail delivery to:
City of Kalispell
201 1 st Ave. E.
PO Box 1997
Kalispell, Montana 59903-1997
Attention: City Manager
drussell2kalispell.com
17. Notice to RPC pursuant to this Agreement shall be sent by electronic mail and standard
mail delivery to:
Arthur Wittich
Attorney for R. Porch Construction, Inc.
Montana Law Company
280 W. Kagy Blvd., Ste. D-324
Bozeman, MT 59715
artwklaw-advisor.com
18. This Agreement may be executed in counterparts, copies of which containing the
signatures of the Parties shall constitute one instrument.
IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement and agree
to be bound by its terms.
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CITY OF KALISPELL, MONTANA
BE
Doug Russell, City Manager
R. PORCH CONSTRUCTION, INC.
Roger Porch, President
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