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HomeMy WebLinkAbout06-03-19 City Commission Packet Materials - C19. Res 5060, Settlement Agreement with HERE4 Properties v. the COB Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Andrea Surratt, City Manager Greg Sullivan, City Attorney SUBJECT: Adopt Resolution 5060, a resolution authorizing the City Manager to sign a settlement agreement in Here4 Properties, LLC v. City of Bozeman, Montana and Special Improvement District, No. 747 (Cause No. DV 19–262B, Montana Eighteenth Judicial District Court, Gallatin County) MEETING DATE: June 3, 2019 AGENDA ITEM TYPE: Consent RECOMMENDATION: After accepting public comment, adopt Resolution 5060. BACKGROUND: The City Commission (“Commission”) formed Special Improvement District 747 (“SID” or “District”) on February 11, 2019, pursuant to Resolution Nos. 4954 and 4955 for the purpose of constructing improvements to Manley Road as described in Resolution 4954. Background information on the District can be found in the City Commission packet material from Resolution 4954. Here4 Properties, LLC (“Plaintiff”) is the property owner of two lots in Gallatin Park Subdivision, which is within the District. Plaintiff protested creation of the District after receiving notice of the Commission’s passage of the resolution of intention to create the District. The property that became Gallatin Park Subdivision was annexed to the City in 1998. As a condition of the annexation agreement, the property owner at the time of annexation, Tablerock Ventures, Inc., executed a Waiver of Right to Protest Creation of Special Improvement Districts. This waiver included the improvements to Manley Road for which SID 747 was created and is binding on all subsequent owners. In March 2019, Plaintiff filed a complaint in the 18th Judicial District Court, Gallatin County (“Complaint”). The Complaint, seeking declaratory and injunctive relief, alleged, among others, the District was unlawfully formed because Plaintiff’s property was not directly benefit or the benefit to the property was disproportional to the costs to be assessed. In the Complaint’s Prayer for Relief, Plaintiff sought an injunction mandating removal of the Plaintiff’s property from the 248 District, for costs of suit and attorney’s fees, and for all other legal and equitable relief the Court deemed proper. The City filed an Answer to the Complaint, in which it brought counterclaims against Plaintiff alleging Plaintiff breached the annexation agreement by filing written protests against the creation of SID 747 and by filing a legal action challenging the District. The City also asked the Court for a declaration that under the terms of the annexation agreement, Plaintiff accepted and agreed that improvements authorized by SID 747 will directly and specially benefit Plaintiff’s property, that the SID was validly formed, and that the methodology used to estimate assessments is legally correct and that the estimated assessment is both proportionate and equitable. Shortly after serving the Answer and Counterclaims on Plaintiff, Plaintiff contacted the City regarding possible resolution of the case. TERMS OF SETTLEMENT: The settlement agreement contains several terms. These include: • Mutual release of all claims; • Stipulation for dismissal with prejudice; and • No admission of wrongdoing by the parties. The settlement agreement does not include any financial payment. Under its terms, Plaintiff reserves the right to, after assessment, challenge the amount of an assessment based on any action the City takes after the date of the settlement agreement, such as incorrect calculation of the assessment. See the second paragraph of Section 4 of the Settlement Agreement. UNRESOLVED ISSUES: None identified. If the Commission adopts the Resolution, the case will be over. ALTERNATIVES: None suggested. If the Commission does not authorize the settlement, the City will vigorously defend the lawsuit and pursue the counterclaims. FISCAL EFFECTS: The settlement of this case will allow the City to proceed with the marketing and sale of bonds to construct the Manley Road improvements as contemplated by Resolutions 4954 and 4955. Attachments: Resolution 5060 Settlement Agreement Plaintiff’s Complaint City’s Answer and Counterclaims Report compiled on: May 23, 2019 249 Page 1 of 3 RESOLUTION NO. 5060 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, AUTHORIZING THE CITY MANAGER TO SIGN A SETTLEMENT AGREEMENT IN HERE4 PROPERTIES, LLC v. CITY OF BOZEMAN, MONTANA AND SPECIAL IMPROVEMENT DISTRICT, NO. 747 (CAUSE NOS. DV 19-262B, MONTANA EIGHTEENTH JUDICIAL DISTRICT COURT, GALLATIN COUNTY) WHEREAS, the City created Special Improvement District No. 747 (the “District”) on February 11, 2019 pursuant to Resolutions 4954 and 4955 for the purpose of constructing improvements to Manley Road as described in Resolution 4954; and WHEREAS, in March, 2019 Here4 Properties, LLC (“Plaintiff”), a property owner of two lots within the District, filed a complaint in the Eighteenth Judicial District court alleging the District was “not lawfully created due to lack of direct benefits to the Plaintiff and its property and the inequity and disproportionality of the costs to the benefits derived to the Plaintiff and its property”; and WHEREAS, Plaintiff’s property is in Gallatin Park Subdivision, which was annexed to the City in 1998 subject to an annexation agreement which incorporated a waiver of right to protest the creation of special improvement districts for various improvements including improvements to Manley Road; and WHEREAS, the City filed counterclaims against Plaintiff alleging breach of the annexation agreement; and 250 Resolution 5060, Settlement Agreement in Here4 Properties v. City Page 2 of 3 WHEREAS, after service of the City’s Answer and Counterclaims on Plaintiff, Plaintiff contacted the City regarding possible resolution of the case; and WHEREAS, while the City is confident it would be successful on dismissing Plaintiff’s complaint and prevailing in the City’s counter-complaint, it recognizes as with all litigation that uncertainty, albeit it minimal, as to the legal outcome of this case exists; and WHEREAS, continuing with litigation will most certainly result in delay of design and construction of the Manley Road improvements due to the effect of active litigation on the City’s ability to market and sell bonds; and WHEREAS, the City Commission recognizes and affirms all aspects of the City’s formation of the District were lawful; and WHEREAS, the City Commission determines authorization of this settlement agreement is in the best interest of the City as it creates certainty for the financing, designing, and construction of the Manley Road improvements, avoids future costs of litigation, and will provide the City the best opportunity to keep the construction of the Manley Road improvements on schedule and within the costs set out in Resolution 4954. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana: Section 1 The City Commission hereby authorizes the City Manager to sign the Settlement Agreement attached as Exhibit A to this Resolution. 251 Resolution 5060, Settlement Agreement in Here4 Properties v. City Page 3 of 3 Section 2 The City Commission authorizes the City Manager and the City Attorney to take all steps necessary to implement the Settlement Agreement. PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 3rd day of June, 2019. ___________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: ____________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney 252 SETTLEMENT AGREEMENT AND RELEASE – 1 SETTLEMENT AGREEMENT AND RELEASE RELEASOR: HERE4 Properties, LLC as Plaintiff and Counterclaim Defendant in the CIVIL CAUSE set forth below. RELEASEE: The City of Bozeman, Montana and Special Improvement District, No. 747 as Defendants and Counterclaimants in the CIVIL CAUSE set forth below. The Releasor and Releasee may be referred to as the Parties or a Party herein. CIVIL CAUSE: Eighteenth Judicial District, DV-19-262B, HERE4 Properties, LLC v. The City of Bozeman, Montana and Special Improvement District, No. 747. 1. Mutual Release The undersigned Releasor and Releasee on their own behalf and on behalf of all past, present and future heirs, beneficiaries, executors, assigns, partnerships, companies, trusts or trustees, divisions, affiliates, principals, members, agents, representatives, attorneys, associates, partners, directors, board members, officers, employees, insurers, reinsurers, sureties and indemnitors, based on the consideration set forth herein, fully and forever releases and discharges the other Party, both jointly and severally, and all of a Party’s past, present and future assigns, partnerships, companies, parent companies, subsidiary companies, brother and sister companies, predecessor companies, trusts or trustees, divisions, affiliates, principals, members, shareholders, agents, representatives, attorneys, associates, partners, directors, board members, officers, employees, insurers, and successors, heirs, devisees, successors, assigns, agents, partners, employees, and attorneys, from any and all actions, claims, causes of action, demands, or expenses for damages or injuries, whether asserted or unasserted, known or unknown, foreseen or unforeseen, sounding in tort, negligence, fraud, contract or otherwise, including without limitation those arising out of the claims and counterclaims in the Civil Cause. The releases shall be perpetual, unconditional and enforceable and shall not be challenged by a Party in any court or other proceeding. 2. Future Damages Inasmuch as the injuries, damages, and losses resulting from the events described herein may not be fully known and may be more numerous or more serious than it is now understood or expected, the Releasor and Releasee agree, as a further consideration of this Agreement, that this Release applies to any and all injuries, damages and losses resulting from the claims and counterclaims in the Civil Cause, even though now unanticipated, unexpected and unknown, as well as any and all injuries, damages and losses which have already developed and which are now known or anticipated. 3. No Admission of Liability The Parties explicitly acknowledge that this Release represents a settlement of disputed claims, and that by entering into this Release, no Party admits or acknowledges the existence of any liability or wrongdoing. Accordingly, neither this Release nor any of its terms shall be offered 253 SETTLEMENT AGREEMENT AND RELEASE – 2 or received as evidence in any proceeding in any forum as an admission of liability or wrongdoing on the part of any party hereto or its agents. 4. No Additional Claims Releasor and Releasee represent that no additional claims are contemplated against the other Party for losses, damages, and injuries for which this Release is given arising from the Civil Cause. Releasor and Releasee stipulate that Releasee has duly and validly created Special Improvement District No. 747 (the “District”) and that the special assessments to be levied by Releasee in the District pursuant to the assessment methodology set forth in Resolution No. 4954, adopted by the City Council of Releasee on January 14, 2019, are valid and lawful special assessments enforceable in accordance with Title 7, Chapter 7, Parts 41 and 42, Montana Code Annotated. The Parties understand, however, that Releasor reserves the right under Section 7-12-4185, Montana Code Annotated, to protest the lawfulness of any tax that may be levied against Releasor’s lots arising out of errors or irregularities in setting the amount of the special assessments levied by Releasee pursuant to the assessment methodology. Claims reserved by Releasor under this section are limited only to those that were not brought by Releasor in the Complaint and which are based solely on facts arising subsequent to the date of this Agreement. 5. Stipulation for Dismissal with Prejudice Releasor and Releasee stipulate and agree that Releasor’s attorney of record shall prepare a Stipulation for Dismissal with Prejudice in the above-described Civil Cause, as fully settled upon the merits of all claims and counterclaims, with each party responsible for its respective costs and attorney’s fees. This Stipulation shall be executed by counsel and filed in the Civil Cause. 6. Additional Documents All Parties agree to cooperate fully and execute any and all supplementary documents and to take all additional actions which may be necessary or appropriate to give full force and effect to the basic terms and intent of this Settlement Agreement and Release. 7. Severability Should any provision of this Agreement be determined to be unenforceable, all remaining terms and clauses shall remain in force and shall be fully severable. 8. Choice of Law The laws of the State of Montana shall apply to the interpretation of this Agreement. 9. Final Agreement This written Agreement constitutes the final agreement between the Parties and shall supersede any oral agreements to the contrary. It replaces all agreements, if any, that existed previously among the Parties. There are no oral representations that have not been 254 SETTLEMENT AGREEMENT AND RELEASE – 3 incorporated herein. This Settlement Agreement may only be amended in writing signed by the Parties. 10. Disclaimer – Advice of Counsel The Parties have carefully read the foregoing, discussed its legal effect with their counsel, understand the contents thereof, and sign the same of their own free will and accord. This Release shall be binding upon the heirs, successors, personal representatives and assigns. Each party warrants and promises that he/she/it has carefully read this Settlement Agreement and Release and has discussed or has had the opportunity to discuss its legal effect with his/her/its attorney and that he/she/it understands and agrees with the contents hereof and signs the Settlement Agreement and Release of his/her/its own free will and accord. Each party represents that he/she/it is fully authorized to execute this Settlement Agreement and Release on his/her/its own behalf. This Settlement Agreement and Release is entered into by each Party hereto freely and voluntarily. Each of the Parties has had the benefit of advice of technical consultants and legal counsel of their choice in negotiating, drafting and execution of this Settlement Agreement. The language of this Settlement Agreement and Release and language in all related and incorporated documents has been the product of efforts of all legal counsel for all Parties. Accordingly, neither the entire Settlement Agreement and Release nor any provision in it shall be deemed or considered to have been proposed or drafted by a Party or construed against any Party. The doctrine in Montana law that any ambiguity in a document shall be construed against the drafter of the document shall have no application in any proceeding regarding interpretation or enforcement of the settlement documents including this Settlement Agreement. 11. No Assignment The Parties represent and warrant that they are aware of no other person or entity, that they have not, prior to signing this Settlement Agreement and Release, assigned, transferred or purported to assign or transfer to any person or entity any liability, claim, demand, action, cause of action or right which is herein released and discharged. 12. No Confidentiality It is expressly stated herein that this Settlement Agreement and all of its terms, without limitation, are not confidential, and are subject to public dissemination under the laws and Constitution of the State of Montana. 255 256 SETTLEMENT AGREEMENT AND RELEASE – 5 STATE OF MONTANA ) : ss. County of Gallatin ) This instrument was acknowledged before me, the undersigned, this _____ day of, 201_, by__________________________, an authorized agent for the City of Bozeman, Montana and Special Improvement District No. 747. _________________________________________ Notary Public for the State of Montana (Stamp) APPROVED BY: _____________________________ ____________________________________ Attorney for Releasor Attorney for Releasee 257 258 259 260 261 262 263 Peter G. Scott, Esq. Peter G. Scott, Law Offices, PLLC 682 Ferguson, Suite 4 Bozeman, Montana 59718 406-585-3295-dir 406-585-3321 - fax peter@scott-law.com office@scott-law.com Attorneys for City ofBozeman C OALLATiKCGUKTYCLEun OFOiST-LC ".OUFM JEHGG-'g: . -'XH 2fli5HAY-3 AM 11= 27 FILED OPV BY..OEPUIY MONTANA EIGHTEENTH JUDICIAL DISTRICT COURT, GALLATIN COUNTY HERE4 PROPERTIES, LLC, Plaintiff, V. CITY OF BOZEMAN, MONTANA, SPECIAL IMPROVEMENT DISTRICT NO. 747, and DOES 1-10, Defendants. Case No. DV-2019-2628 Hon. Rienne M. McEIyea DEFENDANTS FIRST AMENDED ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS COMES NOW, Defendant, City of Bozeman, Montana, Special Improvement District No. 747, (hereinafter "City") by and through its counsel of record and for a First Amended Answer, Affirmative Defenses and Counterclaim to Plaintiffs Complaint for Declaratory and Injunctive Relief and states as follows: General Denial - City denies every allegation, matter and thing alleged in Plaintiffs Complaint that is not expressly and specifically admitted. 1. As to Paragraph 1 of Plaintiffs Complaint, City admits that Here4 Properties LLC (the "Plaintiff') is registered as a Montana limited liability company but is without sufficient knowledge to answer the remaining allegations, which are therefore denied. First Amended Answer 1 1 264 2. As to Paragraph 2 of Plaintiffs Complaint, City is without sufficient knowledge to answer the allegations, which are therefore denied. City states affirmatively that Plaintiff is identified as the record owner of Block 2, Lots 11 and 12 of the Gallatin Park Subdivision, Gallatin County MX, on Exhibits A and B to Resolution 4955 - a Resolution of the Bozeman City Commission to Create SID No. 747 for the purpose of undertaking certain street improvements to Manley Road from the intersection with Griffin Drive to the northern boundary of the Gallatin Park Subdivision and financing the costs thereof. 3. As to Paragraph 3 of Plaintiffs Complaint, City admits the allegations. 4. As to Paragraph 4 of Plaintiffs Complaint, City admits that the Bozeman City Commission passed Resolution of Intention No. 4954 on January 14, 2019, and Resolution 4955 on February 11, 2019. The City denies all other allegations. City states affirmatively that the referenced documents speak for themselves. 5. As to Paragraph 5 of Plaintiffs Complaint, City is without sufficient knowledge to answer the allegations, which are therefore denied. 6. As to Paragraph 6 of Plaintiffs Complaint, the allegations are legal conclusions, requiring no answer. To extent any answer is deemed necessary the allegations are denied. 7. As to Paragraph 7 of Plaintiffs Complaint, City admits that venue is proper in Gallatin County, MT. City lacks sufficient knowledge to answer the remaining allegations which are therefore denied. City affirmatively states, Block 2, Lots 11 and 12 of the Gallatin Park Subdivision, Gallatin County MT, referenced in paragraph 2 of this Answer are located in Gallatin County MT and that the owner's address is given as 340 S. Lemon Ave., ^5327, Walnut, CA 91789-2706; and City's primary place of business is located in Gallatin County, Montana. First Amended Answer [ 2 265 FACTS COMMON TO ALL COUNTS 8. As to Paragraph 8 of Plaintiffs Complaint, City admits that the Bozeman City Commission passed Resolution of Intention No. 4954 on January 14, 2019. The City denies all other allegations. City states affirmatively that the referenced document speaks for itself. 9. As to Paragraph 9 of Plaintiffs Complaint, City admits that the Bozeman City Commission passed Resolution No. 4955 on February 11, 2019. The City denies all other allegations. City states affirmatively that the referenced document speaks for itself. 10. As to Paragraph 10 of Plaintiffs Complaint, City admits that SID 747 was created pursuant to statute. The City denies all other allegations. City states affirmatively that the statute speaks for itself. 11. As to Paragraph 11 of Plaintiffs Complaint, City admits that SID 747 includes Block 2, Lots 11 and 12, described in paragraph 2 of this Answer and other property. City further admits that SID 747 is located in the City of Bozeman. 12. As to Paragraph 12 of Plaintiffs Complaint, City admits that Plaintiff submitted a timely notice of protest to the creation of SID 747 to the City. City admits that SID 747 was created. All other allegations contained within Paragraph 12 are denied. 13. As to Paragraph 13 of Plaintiffs Complaint, City denies the allegations to the extent they seek to characterize content of the referenced document which speaks for itself, 14. As to Paragraph 14 of Plaintiffs Complaint, City denies the allegations to the extent they seek to characterize content of the referenced document which speaks for itself. 15. As to Paragraph 15 of Plaintiff s Complaint, City denies the allegations to the extent they seek to characterize content of the referenced document which speaks for itself. First Amended Answer 13 266 16. As to Paragraph 16 of Plaintiffs Complaint, City denies the allegations to the extent they seek to characterize content of the referenced document which speaks for itself. CLAIMS FOR RELIEF FIRST CLAIM FOR RELIEF Declaratory Judgment 17. City re-alleges and incorporates its answers from Paragraphs 1-16. 18. As to Paragraph 18 of Plaintiffs Complaint, the allegations set forth consist of a legal conclusion, to which no response is required. To the extent a response is deemed required, the allegations are denied. 19. As to Paragraph 19 of Plaintiffs Complaint, the allegations set forth consist of a legal conclusion, to which no response is required. To the extent a response is deemed required, the allegations are denied. 20. As to Paragraph 20 of Plaintiffs Complaint, City denies the allegations. 21. As to Paragraph 21 of Plaintiffs Complaint, City denies the allegations. 22. As to Paragraph 22 of Plaintiffs Complaint, City denies the allegations. 23. As to Paragraph 23 of Plaintiffs Complaint, City denies the allegations. SECOND CLAIM FOR RELIEF Injunctive Relief 24. City re-alleges and incorporates its answers from Paragraphs 1-23. 25. As to Paragraph 25 of Plaintiffs Complaint, City denies the allegations. 26. As to Paragraph 26 of Plaintiffs Complaint, City denies the allegations. AFFIRMATIVE DEFENSES First Amended Answer 14 267 City states the following affirmative defenses in response to the allegations presented in Plaintiffs Complaint. City reserves the right to modify the stated defenses and to assert additional defenses in response to further allegations or claims or which may come to light during the course of discovery in this matter. 1. Plaintiffs Complaint is barred in whole or in part because SID 747 was duly created in accordance with Title 7, Chapter 12, Parts 41 and 42. 2. Plaintiffs Complaint is barred in whole or in part by reason of Plaintiffs failure to state a claim for which relief may be granted. 3. Plaintiffs Complaint is barred in whole or in part by statutory limitation or repose. 4. Plaintiffs Complaint is barred in whole or in part by reason of Plaintiffs lack of standing. 5. Plaintiffs Complaint is barred in whole or in part for lack ofjusticiability. 6. Plaintiffs Complaint is barred in whole or in part by reason of express waiver. 7. Plaintiffs Complaint is barred in whole or in part by reason of waiver, estoppel, and/or laches. 8. Plaintiffs Complaint is barred in whole or in part by reason of unclean hands. Plaintiff cannot take advantage of its own wrong. To the extent Plaintiff is attempting to take advantage of its own wrong, its claims are barred by MCA § 1-3-208. 9. Plaintiffs Complaint is barred in whole or in part by acquiescence or consent. 10. Plaintiff has failed to join necessary parties. Certain affirmative defenses are pleaded to avoid waiver at this stage in this case. To the extent that facts discovered through further investigation or discovery indicate that one or more of First Amended Answer 15 268 the pleaded affirmative defenses are unsupported, they will be withdrawn. City further reserves the right to move to add additional affirmative defenses not known at this time in the event facts disclosed through further investigation and discovery indicate the viability of additional affirmative defenses not currently pleaded. COUNTERCLAIM AGAINST HERE4 PROPERTIES, INC. Pursuant to Rule 15(a)(1)(A) and Rule 15(c)(1)(B), Defendant City alleges as follows: FACTS COMMON TO ALL COUNTER CLAIMS 1. On or about March 30, 1998, Tablerock Ventures, Inc.executed an Armexation Agreement with the City (hereinafter "Tablerock Annexation Agreement"). 2. The Tablerock Annexation Agreement was recorded with the Gallatin County Clerk and Recorder on July 10,1998, Doc. No. 369058. 3. Under paragraph 24, the terms of the Tablerock Annexation Agreement, are binding upon and may be enforced against heirs, successors and assigns of the original parties, including Plaintiff. 4. Under paragraph 25, the terms of the Tablerock Annexation Agreement are covenants that run with the land and do not expire upon death or transfer. 5. Under paragraph 19, a party may recover reasonable attorney fees, including salary and costs of in-house counsel including City Attorney for any action to enforce terms of Tablerock Annexation Agreement. 6. Under paragraph 9 of the Tablerock Annexation Agreement, Plaintiff as successor in interest agreed to waive its right to protest the creation of Special Improvement Districts. That term states in part: First Amended answer 16 269 Having recognized City's concern of long term maintenance costs and the impact of development of The Tablerock Ventures, Inc., Annexation Tract may have on area streets and surrounding parks, Landowners have executed a Waiver of Right-to-Protest Creation of Special Improvement Districts for maintenance of any parks within the annexed area and/or a City-wide Park Maintenance district, which would provide a mechanism for the fair and equitable assessment of maintenance costs for such parks, and for street improvements, including paving, curb/gutter, sidewalk, and storm drainage for Griffin Drive and its intersections with: a) North Rouse Avenue; b) Manley Road; and c) North 7th Avenue; and have further executed a Waiver of Right to Protest Creation of Rural Improvement Districts for Manley Road. Said Waivers are attached hereto as Exhibits A and B, and are hereby incorporated in and made a part of this Agreement. 7. Plaintiff s property, that is the subject matter of this law suit, is further burdened by Exhibit A to the Tablerock Annexation Agreement, the recorded Waiver of Right to Protest Creation of Special Improvement Districts, which constitutes a covenant running with plaintiffs property to implement the agreed waiver. It states in part: We further waive our right to make any written protest against the proposed work or against the extent or creation of the districts to be assessed in response to a duly passed resolution of intention to create one or more special improvement districts which would include the above-described property. 8. In said waiver Plaintiff expressly agreed to participate in financing the cost of improvements in the event those improvements were not financed by creation of a SID. 9. On January 14, 2019, the Bozeman City Commission passed "Resolution No. 4954 - Resolution Relating to Special Improvement District 747 for Local Improvements Manley Road; Declaring it to be the Intention of the City Commission to Create the District for the Purpose of Undertaking Certain Local Improvements and Financing the Costs Thereof and Incidental Thereto Through Issuance of Special Improvement District Bonds Secured by the City's Special Improvement District Revolving Fund." First Amended Answer 17 270 10. On January 29,2019, Plaintiff filed two written protests to the creation of SID 747 based upon ownership of property that is the subject matter of this action. 11. On February 11, 2019, the Bozeman City Commission passed "Resolution No. 4955 - A Resolution of the City Commission of the City of Bozeman, Montana, Relating to Special Improvement District 747; Creating the District for for the Purpose of Undertaking Certain Local Improvements in and About Manley Road Between the Intersection with Griffin Drive and the Northern Boundary of the Gallatin Park Subdivision and Financing the Costs Thereof and Incidental Thereto Through Issuance of Special Improvement District Bonds Secured by the City's Special Improvement District Revolving Fund." 12. Plaintiffs' property that is the subject matter of this action, described in the SID documents as Block 2, Lots 11 and 12 of the Gallatin Park Subdivision, Gallatin County, MT, is located within SID 747. 13. By law, the City of Bozeman must issue or sell bonds or warrants in order to assess benefitted property for recovery of costs authorized by creation of a SID. See §7-12-4201. MCA. See also Tocci v. Citv of Three Forks. 216 Mont. 159, 163, 700 P.2d 171,174 (1985). 14. The existence of this litigation challenging the validity of SID 747 is a material fact that must be disclosed by the City in the City's disclosure document that is provided to the market in connection with offering the bonds to the public (i.e., the preliminary official statement). Disclosure of such litigation will make it extremely difficult and likely impossible to market the bonds to prospective bond purchasers in a commercially reasonable manner. COUNTERCLAIM I - BREACH 15. The City realleges paragraphs 1-14. First Amended Answer 18 271 16. The City of Bozeman performed under the Tablerock Annexation Agreement by annexing the properties described therein, including Plaintiffs property, and by providing City services, including water, sewer, and transportation infrastructure used by Plaintiff. 17. Plaintiff accepted the terms and obligations of the Tablerock Annexation Agreement when Plaintiff acquired title to real property described as Block 2, Lots 11 and 12 of the Gallatin Park Subdivision, Gallatin County MT. 18. Plaintiffs actions in breach of express and implied terms and covenants of the Tablerock Annexation Agreement include but are not limited to: a. Filing written protests against the creation of SID 747. b. Filing a legal action challenging whether improvements agreed to in the Tablerock Annexation Agreement and authorized for construction under SID 747 benefit Plaintiffs property. c. Filing a legal action challenging the obligation to pay costs for improvements agreed to in the Tablerock Annexation Agreement. d. Filing a legal action to materially interfere with the City's legal right to market bonds pursuant to a duly created SID. 19. Plaintiff acted with dishonesty and bad faith in breaching express and implied terms and covenants of the Tablerock Annexation Agreement after accepting the benefit of the City's performance. 20. Plaintiffs breach has materially impaired the City's ability to market bonds authorized by the creation of SID 747. First Amended Answer 19 272 21. As a direct and proximate cause of Plaintiffs breach the City has been forced to stop all work on SID 747. 22. Damages caused directly and as a consequence of Plaintiffs breach of the Tablerock Annexation Agreement and covenants include but is not limited to increased construction and administration costs for completing improvements agreed to in the Annexation Agreement and authorized by creation of SID 747. 23. The City is entitled to and award of damages caused directly and in consequence of Plaintiffs breach of the Tablerock Annexation Agreement and covenants in an amount to be proven at trial. 24. City is entitled to recover reasonable attorney fees and costs, including the salary of in-house counsel and the City Attorney, expended to enforce terms of the Tablerock Annexation Agreement and associated covenants. COUNTERCLAIM II - DECLARATORY JUDGMENT 25. City of Bozeman realleges paragraphs 1 -24. 26. The City of Bozeman duly formed SID 747 pursuant to Title 7, Ch. 12, parts 41 and 42. 27. The formation of SID 747 establishes the City's right and authority to proceed with marketing bonds and constructing improvements in accordance with the SID statutes and Resolutions 4954 and 4955. 28. Plaintiffs' action taken to delay the City's ability to proceed with the financing and constructions of improvements agreed to in the Tablerock Annexation Agreement and authorized under SID 747 interferes with the City's ability to exercise its contractual and statutory rights. First amended Answer 1 10 273 29. Under Section 27-8-202 of the Uniform Declaratory Judgments Act, the City is entitled to judgment declaring the City's rights, status and other legal relations under the SID statutes and the Tablerock Annexation Agreement and to other relief including supplemental relief, as provided for in code. 30. The City of Bozeman is entitled to a declaration that under the terms of the Tablerock Annexation Agreement Plaintiff accepted and agreed that improvements authorized for construction under SID 747 will directly and specially benefit Plaintiffs property. 31. The City is entitled to a declaration that SID 747 was correctly created and that the City's determination that Plaintiffs property will be directly and specially benefitted by the improvements authorized for construction under SID 747 is conclusive as a matter of law. 32. The City of Bozeman is entitled to a declaration that the methodology used to estimate assessments to be levied against Plaintiffs property is legally correct and that the estimated assessment is both proportionate and equitable. 33. The equities of this case support and the City is therefore entitled to supplemental relief under Section 27-8-313, including but not necessarily limited to its attorney fees and costs, including the salary of in-house counsel and the City Attorney, necessary to obtain judgment so that the City may proceed with the marketing of bonds needed to finance construction of improvements and other costs incidental to formation of SID 747. Prayer For Relief Having denied liability for the actions stated in Plaintiffs Complaint, City also denies each and every assertion contained in Plaintiffs prayer for relief. WHEREFORE, Defendant prays for relief as follows: First Amended Answer 1 11 274 1. Plaintiffs Complaint against City be dismissed with prejudice; 2. Plaintiff shall take no relief from City; 3. City be awarded damages in an amount to be awarded at trial; 4. City be awarded its reasonable attorney fees and costs pursuant to paragraph 19, page 8, of Tablerock Ventures, Inc.'s Annexation Agreement dated March 30, 1998, and recorded at Official Records Book 186 at Page 4602, Gallatin County; 5. City be awarded judgment declaring that the City correctly created SID 747; that Plaintiffs property is directly and specially benefitted by SID 747; that City has the right to proceed with the marketing of bonds authorized therein without interference from Plaintiffs; and that the methodology used to estimate assessments is legally correct and resulted in assessment estimates that are both proportional and equitable. 6. City be awarded supplemental relief under Section 27-8-313, including attorney fees and costs, including in-house attomey salary and expenses incurred in defense of this action. 7. City be awarded such other and further relief as this Court deems just and equitable. DATED this 3rd day of May, 2019. Peter G. Scott, Law Offices, PLLC r *eter G^ocott, Attorneyfor City of Bozeman First Amended Answer 1 12 275 CERTIFICATE OF SERVICE 1 hereby certify that on the 3rd day of May, 2019,1 served a true and correct copy of the foregoing by email to those indicated to the email addresses listed below: Christopher B. Gray Via Regular Mail □ GRAY LAW OFFICE Via Electronic Mail 5 West Mendenhall St., 2d Floor (59715) Via Certified Mail Q PO Box 1065 Hand Delivered | | Bozeman, MT 59771-1065 Via Facsimile Q (406)551-4511 Via Federal Express | | cgrav@curavlaw.com Attorneys for Plaintiff h•a Scott I Law First Amended Answer! 13 276