5. Declaratory Judgement - Countywide Administrative BoardCity of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758
March 29, 2001
TO: Mayor, City Council aArne
FROM: Glen Neier, City Att0
RE: CAB Dissolution - Disf Assets
Since Flathead County gave notice of withdrawal from the CAB
Interlocal Agreement, an issue concerning the disposition of assets
has arisen. This office, by a previous opinion, found that the
disposition of personal property acquired by FRDO was governed by
the waiver provision of the Fourth Amendment to the Interlocal
Agreement and not mutual agreement or sale. Since that memo, it has
been ascertained that FRDO has in excess of $200,000 in reserves.
The County Commissioners, remaining mum on the first memo, have
categorically stated that the County will not voluntarily transfer
the reserve funds to the remaining CAB member Cities after July 1,
2001.
Mr. Dale Williams, at a CAB meeting held on March 20, 2001,
indicated the County Commissioners had retained the services of
independent legal counsel to represent them in the CAB dissolution.
He stated that the three Cities represented on the CAB would be
receiving a letter from counsel concerning the Commissioners,
position. (It is doubtful that the letter promised by Mr. Williams
will give the remaining CAB members any indication of compromise.)
At the meeting he declined to discuss the reserve fund issue.
With the position of the Commissioners established, if the
remaining CAB members desire to utilize the FRDO reserve funds to
finance planning efforts the options available are limited.
Generally, under the Montana Uniform Declaratory Judgment Act, any
person, which would include a municipal corporation, interested in
a written contract may request an interpretation of the contract.
In my opinion, the Declaratory Judgment Act provides the remaining
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CAB members with the sole opportunity to resolve the dispute. The
action may be commenced either before or after an alleged breach.
In this situation, because the reserve funds maybe transferred out
after July 1, 2001, as County General Funds, it is probably
important to promptly file the suit to determine the rights of the
respective parties. Without such an action it is doubtful that the
remaining CAB members will receive any more than approximately 30%
of the reserves.
The Columbia Falls City Council, at their meeting of March 5, 2001,
passed a motion declining participation in any lawsuit aimed at
obtaining the reserve funds. The Council instructed the Manager to
meet and discuss with Flathead County some settlement to the
reserve fund issue. The Council's action has resulted in further
confusing the situation, because such an action may be construed as
withdrawing from the CAB without giving the proper notice. That
being said, it appears that if a Declaratory Judgment is initiated,
the Cities of Kalispell and Whitefish will be the moving parties.
A decision on whether to bring a Declaratory Judgment Action
against Flathead County is properly made by the City Councils of
the respective Cities in this matter. Unless both the City of
Kalispell and the City of Whitefish collectively bring the suit,
there is no chance of a successful outcome. A motion authorizing a
Declaratory Judgment Action of disposition of the FRDO reserve
funds should be voted up or down by the Council.
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