Finke v. State Ex Rel. McGrath

No. 01-815

IN THE SUPREME COURT OF THE STATE OF MONTANA

2003 MT 48

KAREN FINKE, ANDY J. HUDAK, SCOTT POWERS, CITY OF BILLINGS,
CITY OF BOZEMAN, CITY OF COLUMBIA FALLS, CITY OF KALISPELL,
CITY OF MISSOULA, CITY OF WHITEFISH,
Plaintiffs,
v.

STATE OF MONTANA, ex rel. MIKE McGRATH, ATTORNEY GENERAL
and WENDY KEATING, ACTING DIRECTOR, MONTANA DEPARTMENT
OF LABOR AND INDUSTRY, YELLOWSTONE COUNTY, GALLATIN
COUNTY, FLATHEAD COUNTY, and MISSOULA COUNTY,
Defendants,

RICHARD ROSSIGNOL and R. STEPHEN WHITE,
Intervenors-Defendants,
DANIEL W. "DAN" McGEE and BRUCE T. SIMON,
Amici Curiae-Defendants.

APPEAL FROM: In the Supreme Court of the State of Montana
Original Proceeding--Declaratory and Injunctive Relief
In and for the County of Yellowstone
COUNSEL OF RECORD:
For Plaintiffs:
Stanley T. Kaleczyc, Kimberly A. Beatty, Browning, Kaleczyc, Berry
& Hoven, Helena, Montana
For Defendants:
Mike McGrath, Montana Attorney General, Brian M. Morris, Solicitor,
Helena, Montana; Eric Fehlig, Montana Department of Labor, Helena,
Montana; Dennis Paxinos, Yellowstone County Attorney, Mark A.
English, Deputy Yellowstone County Attorney, Billings, Montana;
Marty Lambert, Gallatin County Attorney, Bozeman, Montana; Edward
J. Corrigan, Flathead County Attorney, Jonathan B. Smith, Deputy
Flathead County Attorney, Kalispell, Montana; Fred Van Valkenburg,
Missoula County Attorney, Missoula, Montana; Stephanie Oblander, Gregory
G. Smith, Smith & Oblander, Great Falls, Montana (Intervenors
Rossignol & White)
For Amicus:
Daniel McGee, Laurel, Montana (pro se); Bruce Simon, Billings, Montana
(pro se)

Heard: May 30, 2002
Submitted: June 6, 2002
Decided: March 18, 2003
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 This is an original proceeding in which three individual electors and six municipal

governments seek a declaratory judgment on the constitutionality of Senate Bill 242 (SB

242). We strike SB 242 in its entirety for the reasons set forth below.

ISSUES

¶2 Restated, the issues presented to this Court are:

1. Whether the election provisions of SB 242 limiting participation to "record
owners of real property" are unconstitutional;

2. Whether the unconstitutional provisions are severable from the constitutional
provisions of SB 242; and

3. Whether Plaintiffs are entitled to recover attorneys' fees and costs under the
Private Attorney General Doctrine.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Since 1966, Montana law has authorized Montana cities and towns to exercise

building code jurisdiction over contiguous areas within four and one-half miles of the city

limits. Section 69-2105, RCM (1947). This four and one-half mile area became known as

the "donut area" or "donut jurisdiction." To obtain donut jurisdiction, an interested

municipality must request, in writing, authorization from the applicable state agency,

currently the Department of Commerce. Once granted, the municipality may then impose

and enforce municipal building codes on construction that takes place in the donut area.

Section 50-60-101(11), MCA (1999).

¶4 In the 2001 Montana Legislative Session, the Legislature enacted and the Governor

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signed into law SB 242. The purpose of SB 242 was to limit municipal building code

jurisdiction to the area within the limits of an incorporated city or town, and to allow the

county or state--as opposed to the city--to exercise building code jurisdiction over all areas

outside the municipal boundaries. To effectuate this outcome, Section 2 of SB 242 redefined

"municipal jurisdictional area" to mean "the area within the limits of an incorporated

municipality." "Municipal jurisdictional area" (MJA) had formerly been defined as the area

within the limits of the incorporated municipality unless that area was extended by written

request to include, among other things, "all or part of the area within 4 ½ miles of the

corporate limits of a municipality." Section 50-60-101(11), MCA (1999). In other words,

prior to SB 242, an MJA included all the area within the city limits plus the donut area.

Section 2 of SB 242 eliminated from the definition the donut area.

¶5 SB 242 also established a definition for "county jurisdictional area" (CJA), which

includes, "the entire county, or an area or areas within the county, designated by the board

of county commissioners as subject to the county building code, excluding any area that is

within the limits of an incorporated municipality." SB 242, § 2(6). Moreover, it established

a procedure for designating a CJA either by the board of county commissioners or by

petition. It also established an election procedure under which a CJA could be created. SB

242, §§ 4,7, and 6 respectively. According to the election procedure, elections were limited

to "record owners of real property" (RORPs) rather than to the general constituency. SB

242, § 6.

¶6 In keeping with its purpose to eliminate MJAs, SB 242 established an election

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procedure under which MJAs could be terminated. As with the election procedures to

create CJAs, this termination election was limited to RORPs also. SB 242, § 8.

¶7 The individual Plaintiffs in this case are Karen Finke, Andy Hudak, and Scott Powers,

none of whom own real property in their respective MJAs, but all of whom otherwise qualify

as eligible voters. The municipal Plaintiffs are the cities of Billings, Bozeman, Columbia

Falls, Kalispell, Missoula and Whitefish. Each of these cities previously sought and

obtained authorization to create MJAs and to exercise building code jurisdiction over their

respective donut areas. We will refer to the Plaintiffs as a group as "Finke." When

necessary, we will refer to them as Individual Plaintiffs, meaning Finke, Hudak and Powers,

or Municipal Plaintiffs, meaning the six cities listed above.

¶8 The Defendants in this action are the State of Montana, through the Attorney General,

the Department of Labor and Industry (DOLI), and Yellowstone, Gallatin, Flathead and

Missoula Counties. These County Defendants are the counties in which the Municipal

Plaintiffs are located. The State, through the Attorney General, has the duty to defend the

constitutionality of the statute. The DOLI is the state agency responsible for administering

building codes outside of MJAs. The County Defendants are responsible for conducting the

elections and other procedures mandated by SB 242 for determining whether the state,

county or municipality will have jurisdiction over building codes.

¶9 In November, 2001, Finke filed a complaint challenging SB 242 and seeking 1)

declaratory and injunctive relief; 2) a temporary restraining order; 3) a preliminary

injunction; and 4) an expedited hearing. On November 20, 2001, this Court issued an Order

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temporarily enjoining the County Defendants from passing any resolution under SB 242,

conducting elections pursuant to SB 242, or enforcing any provision of SB 242. In addition,

the DOLI was temporarily enjoined from asserting state building code jurisdiction within the

donut areas of the Municipal Plaintiffs.

¶10 On December 18, 2001, we issued a preliminary injunction in favor of Municipal

Plaintiffs, pending the outcome of the case on the merits. The previously-entered temporary

injunctions against the County Defendants and DOLI continued as preliminary injunctions

as a result of that Order. Additionally, we granted permission for Richard Rossignol and R.

Stephen White to intervene. Rossignol and White are each in the construction industry in

their respective donut areas of Missoula and Bozeman.

¶11 On February 12, 2002, we granted permission for Daniel W. McGee and Bruce T.

Simon to participate as amici curiae. McGee and Simon are registered voters and taxpayers

in Yellowstone County. Moreover, McGee was a sitting Montana representative and served

as Speaker of the House during the legislative session in which SB 242 was enacted. Simon

owns real property in the donut jurisdictional area of the City of Billings and also actively

participated in the enactment of SB 242.

¶12 This Court heard oral argument on this matter on May 30, 2002.

DISCUSSION

¶13 The first issue we address is whether the election provisions of SB 242 limiting

participation to RORPs are unconstitutional. Interestingly, not only do the Plaintiffs argue

that these provisions are unconstitutional, but Defendant Yellowstone County and Amici

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McGee and Simon also agree that these provisions are, in part or in toto, unconstitutional.

¶14 The election provisions of SB 242 are challenged on several constitutional grounds--

as violations of Article II, §§ 4, 13 and 17 and Article V, § 11(3) of the Montana

Constitution, and as violations of the Fifth and Fourteenth Amendments of the U. S.

Constitution. Article II, § 4 of the Montana Constitution guarantees equal protection of the

laws; Article II, § 13 guarantees the unencumbered right of suffrage, and Article II, § 17

guarantees due process of law. Article V, § 11(3) requires that each bill contain only one

subject that is clearly expressed in its title. The Fifth and Fourteenth Amendments of the

U.S. Constitution guarantee that no person shall be deprived of life, liberty or property

without due process of law. Additionally, the Fourteenth Amendment guarantees all persons

equal protection of the laws.

¶15 This Court has noted that "[b]ecause voting rights cases involve a fundamental

political right, the [U. S.] Supreme Court generally evaluates state legislation apportioning

representation and regulating voter qualifications under the strict scrutiny standard."

Johnson v. Killingsworth (1995), 271 Mont. 1, 4. 894 P.2d 272, 273 (citing, among others,

Kramer v. Union School District (1969), 395 U.S. 621, 626-27, 89 S.Ct. 1886, 1889, 23

L.Ed.2d 583, 589). "Under that standard, [suspect] legislation is 'unconstitutional unless

the State can demonstrate that such laws are "necessary to promote a compelling

governmental interest".'" Johnson, 241 Mont. at 4, 894 P.2d at 273-74 (citing Dunn v.

Blumstein (1972), 405 U.S. 330, 342, 92 S.Ct. 995, 1003, 31 L.Ed.2d 274, 284) (emphasis

added).

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¶16 In Kramer, the United States Supreme Court reviewed a law limiting the right to vote

in school district elections to property owners or parents of children enrolled in the local

public schools. In Kramer, appellant neither owned property nor had children but was

otherwise qualified to vote, meeting the age, citizenship and residency requirements.

Appellant challenged the law as a violation of the Equal Protection Clause of the U.S.

Constitution. He argued that he and members of his class had a substantial interest in and

were affected by school-related decisions and that all members of the community had an

interest in the quality and structure of public education.

¶17 The U.S. Supreme Court, in its analysis, stated:

Statutes granting the franchise to residents on a selective basis always pose the
danger of denying some citizens any effective voice in the governmental
affairs which substantially affect their lives. Therefore, if a challenged statute
grants the right to vote to some [citizens] and denies the franchise to others,
the Court must determine whether the exclusions are necessary to promote a
compelling state interest.

Kramer, 365 U.S. at 626-27 (citation omitted).

¶18 The Kramer Court held that the challenged law did "not meet the exacting standard

of precision . . . require[d] of statutes which selectively distribute the franchise." Kramer,

395 U.S. at 632. It held that the law permitted the inclusion of many persons who had only

a remote and indirect interest in school affairs and excluded others who had a distinct and

direct interest, and therefore violated the Fourteenth Amendment granting equal protection

to all citizens. Kramer, 395 U.S. at 632 and 626. See also Phoenix v. Kolodziejski (1970),

399 U.S. 204, 90 S.Ct. 1990, 26 L.Ed.2d 523 (restriction allowing only property owners to

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vote for the approval of municipal general obligation bonds held unconstitutional); Hill v.

Stone (1975), 421 U.S. 289, 95 S.Ct. 1637, 44 L.Ed.2d 172 (unconstitutional to limit

franchise for bond election solely to owners of taxable property).

¶19 There are circumstances, however, under which franchise limitation is lawful and

constitutional. This Court, taking its lead from the U.S. Supreme Court, has recognized

"that, in the event of a special-purpose unit of government whose functions affect a distinct

group of citizens more than other citizens, a state might be allowed to give greater influence

to those citizens most affected." Johnson, 271 Mont. at 4, 894 P.2d at 274 (citing Avery v.

Midland County (1968), 390 U.S. 474, 88 S.Ct. 1114, 20 L.Ed.2d 45). This has been

interpreted to allow franchise limitation in "special interest" elections as opposed to "general

interest" elections. Avery, 390 U.S. 474; Sayler Land Co. v. Tulare Water District (1973),

410 U.S. 719, 93 S.Ct. 1224, 35 L.Ed.2d 659; Holt Civic Club v. Tuscaloosa (1978), 439

U.S. 60, 69, 99 S.Ct. 383, 58 L.Ed.2d 292. Intervenors Rossignol and White argue, inter

alia, that a determination of whether SB 242 elections are "special interest" or "general

interest" elections requires a factual record that does not exist in this case since this is an

original proceeding. Alternatively, they argue that SB 242 elections are "special interest"

elections justifying limiting voters to RORPs. They assert that the Building Codes Division

of the Montana DOLI is a special-purpose unit of the government and that the enforcement

of building codes disproportionately affects property owners.

¶20 In a similar vein, the State argues that a franchise limitation such as that found in SB

242 does not necessarily violate equal protection principles. It maintains that under Lockport

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v. Citizens for Community Action (1977), 430 U.S. 259, 97 S.Ct. 1047, 51 L.Ed.2d 313, the

election provisions of SB 242 constitute limited referenda and, as a result, the Court must

determine the extent to which genuine differences in the relevant interests of those

enfranchised and those excluded supports the contested statutory voting classification.

Lockport, 430 U.S. at 268. As did Intervenors, the State argues that this Court lacks

sufficient facts, in the absence of a district court record, to evaluate whether the franchise

limitation of SB 242 violates equal protection.

¶21 We disagree. First, we conclude that the application and enforcement of building

codes is an issue of public safety that affects all persons living in the affected area, not only

record owners of real property. Second, the governmental entity overseeing building codes,

whether state, county or municipal, is not such a special-purpose unit that its functions and

actions exclusively or disproportionately affect record owners of real property over other

constituents living in the area but not owning property. Third, we conclude that elections

to determine who may impose and enforce building codes in a given area are general interest

rather than special interest elections. This being so, a law restricting the franchise may be

upheld only upon the State showing a compelling interest. Kramer, 395 U.S. 621. The

State has failed to make such a showing in this case.

¶22 In addition to the franchise limitations set forth in the election provisions of SB 242,

there are numerous internal inconsistencies in this law. First, Section 8 establishes

procedures pertinent to retaining and continuing municipal jurisdictional areas "as provided

by law" under the statute. Section 2, however, completely eliminates "municipal

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jurisdictional areas" by definition. It is inconsistent to provide that MJAs continue to exist

by law when in the same law they have been eliminated. Second, the term "record owners

of real property" is continuously used in SB 242 but is not defined, whereas "owner of real

property" is also used. It is defined to include assignees, lessees and corporations in control

of a building, i.e., persons who are disenfranchised under this law because they are not

record owners of property. While not unconstitutional per se, these and other inconsistencies

create a muddled, confusing law which could potentially result in the denial of other

constitutional guarantees, such as due process.

¶23 In sum, we conclude that the election provisions of SB 242 disenfranchise

constituents who are not RORPs in violation of the Montana and the U.S. Constitutions.

¶24 We next consider whether the unconstitutional provisions of SB 242 are severable

from the remainder of the Bill. If so, the constitutional portions of SB 242 survive; if not,

the entire law must be stricken.

¶25 When a law contains both constitutional and unconstitutional provisions, to determine

whether the unconstitutional provisions are severable, we examine the law itself for the

existence of a severability clause. If there is no such clause, we must determine whether the

unconstitutional provisions are necessary for the integrity of the law or were an inducement

for its enactment. Hill v. Rae (1916), 52 Mont. 378, 389-90, 158 P. 826, 831; State v. Fire

Department Relief Association, etc. (1960), 138 Mont. 172, 178, 355 P.2d 670, 673; Sheehy

v. Public Employees Retirement Div. (1993), 262 Mont. 129, 141, 864 P.2d 762, 770.

¶26 This Court has previously held that the "inclusion of a severability clause is an

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indication that the drafters desired judicial severability policy to apply." Sheehy, 269 Mont.

at 141, 864 P.2d at 770 (citation omitted). SB 242 does not contain a severability clause,

so we must determine whether the integrity of SB 242 relies upon the unconstitutional

provisions or whether the inclusion of these provisions acted as inducement to its enactment.

Moreover, the remainder of the statute, if and when the unconstitutional provisions are

severed, must be complete in itself and capable of being executed in accordance with the

apparent legislative intent. Sheehy, 262 Mont. at 141, 864 P.2d at 770 (citation omitted).

¶27 The legislative history of the statute demonstrates that SB 242 was revised and

rejected on several occasions during the 2001 legislative session, and passed only after the

final revision which added, among other sections, the election provisions at the heart of this

case. Finke argues that the inclusion of these election provisions served as the inducement

for enactment and are necessary to the integrity of the law. Defendant Yellowstone County

and the State argue that the passing of the law immediately after the inclusion of the

unlawful election provisions does not necessarily indicate a causal relation. The State

maintains that §§ 1, 6, and 8 of SB 242 can be severed and the remainder of SB 242

"remains complete and capable of being executed in accordance with the overall legislative

intent."

¶28 We find it significant that the revisions to SB 242 that we have held are

unconstitutional were added just prior to legislative acceptance of the bill. Moreover, and

contrary to the State's argument that only §§ 1, 6 and 8 of SB 242 (the election provisions)

would require severing, we conclude that §§ 1, 2, 4, 6, 7 and 8 all contribute to constitutional

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violations of equal protection. Section 2 redefines "municipal jurisdictional area" in a

manner that effectively eliminates MJAs. Section 4 establishes the procedure for designating

a CJA and states that upon receipt of written protests by ten percent of the "owners of real

property," elections under Section 6 must take place. Section 6, however, requires elections

to take place if ten percent of "record owners of real property" have submitted written

protests to the proposed CJA. Section 7 allows for the adoption of a CJA by petition

circulated among RORPs only. Therefore, we are compelled to conclude that §§ 1, 2, 4, 6,

7, and 8 are clearly interrelated and essential to the integrity of SB 242, and that §§ 6, 7, and

8 contributed as the inducement for the enactment of SB 242. Therefore, we conclude these

provisions are not severable. As a result, SB 242 must be stricken in its entirety.

¶29 Lastly, Finke argues that Plaintiffs are entitled to recover attorneys' fees and costs

under the private attorney general doctrine (Doctrine).

¶30 The State of Montana "adheres to the 'American Rule' regarding attorneys' fees.

Under the American Rule, a party in a civil action is generally not entitled to fees absent a

specific contractual or statutory provision." Matter of Dearborn Drainage Area (1989), 240

Mont. 39, 42, 782 P.2d 898, 899 (citation omitted). We have noted equitable exceptions to

this Rule, however, including the exception argued by Finke--the private attorney general

exception. School Trust v. State ex rel. Bd. Of Com'rs, 1999 MT 263, 296 Mont. 402, 989

P.2d 800.

¶31 There are three basic factors to be considered in awarding attorneys' fees under this

Doctrine: 1) the strength or societal importance of the public policy vindicated by the

12
litigation; 2) the necessity for private enforcement and the magnitude of the resultant burden

on the plaintiff; and 3) the number of people standing to benefit from the decision. School

Trust, ¶ 66. We have stated previously that this Doctrine is primarily used "when the

government, for some reason, fails to properly enforce interests which are significant to its

citizens." Dearborn, 240 Mont. at 43, 782 P.2d at 900.

¶32 In arguing that the private attorney general doctrine applies in this case, Finke

maintains that this Court in assuming original jurisdiction of this matter recognized in its

Order that "constitutional issues of state-wide importance are . . . involved." Finke further

argues that unless the disenfranchised electors and the affected municipalities brought this

challenge, the unconstitutional elections would have been held and SB 242 would have stood

unchallenged. Lastly, Finke argues that because the issues in this case involve the electorate

at large, the citizens of Montana stand to benefit from the decision in this case.

¶33 Defendant Yellowstone County advances several arguments against the award of

attorneys' fees in this case, but the one we find most persuasive is that it would be unjust to

force the Counties to pay for the unconstitutional actions of the Legislature. The award of

attorneys' fees, when not statutorily mandated, is within the discreet and inherent equitable

powers of the judiciary. School Trust, ¶¶ 64 and 68 (citations omitted). While under the

private attorney general doctrine, it may be considered equitable to award attorneys' fees to

Finke, we conclude that the inequity of imposing those fees against the Defendant Counties

who neither fashioned nor passed the unconstitutional law is overriding.

¶34 The only entity remaining against whom fees could be assessed is the State of

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Montana. The claim against the State in the case at bar is for injunctive relief against

enforcement of SB 242. The Plaintiffs did not specifically seek attorneys' fees from the

State, and the claim for injunctive relief simply does not provide a basis for the imposition

of attorneys' fees against the State. In fact, the only potential liability of the State for fees

would lie for the actions of the Legislature in enacting an unconstitutional bill, as it is the

enactment of SB 242 that prompted the filing of this action. However, § 2-9-111, MCA,

provides that the Legislature, as a governmental entity, is immune from suit for any

legislative act or omission by its legislative body. There is, therefore, no avenue whereby

attorneys' fees could be imposed against the State in this matter.

¶35 Finke's request for attorneys' fees is therefore denied.

/S/ PATRICIA COTTER

We Concur:

/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ JIM REGNIER
/S/ TERRY N. TRIEWEILER
/S/ W. WILLIAM LEAPHART

/S/ JEFFREY M. SHERLOCK
District Court Judge Jeffrey M. Sherlock
sitting for Justice Jim Rice

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