Sandpoint scores legal victory in street fight

SANDPOINT — The city of Sandpoint scored more victories in the legal battle with the Independent Highway District last week following decisions by the Idaho Supreme Court and First District Court.

In a July 31 ruling, the First District Court granted the city’s request for summary judgment in a dispute over withheld tax revenue. The Idaho Supreme Court also denied IHD’s appeal for a stay of proceedings in a July 29 ruling.

“We’re very pleased with (the court’s) decision,” said Sandpoint City Attorney Scot Campbell.

With decisions handed down from the First District Court, IHD officials and legal counsel have the opportunity to appeal the summary judgment. If the district pursues an appeal, it’s unclear how long the legal conflict will continue, Campbell said.

The controversy stems from about $200,000 in tax revenue IHD withheld from the city — money Sandpoint officials said was essential for snowplowing and other winter services. Last August, the city sued IHD for breach of contract. The contract in question is a 2003 joint powers agreement, which determined all taxes collected within Sandpoint boundaries would go to the city.

The city filed a motion in June for summary judgment — a court decision that does not require a full trial. IHD responded a few days later in opposition to the request, saying facts remained in dispute regarding the breach of contract claim.

In his July 31 ruling, however, Judge John T. Mitchell said “no issues of material fact remain for trial.”

He went on to detail that he found no ambiguity in the joint powers agreement that would prevent judgment. In particular question was whether the city was entitled to interest and penalties — especially since IHD has never paid those sources of revenue to the city. However, Mitchell saw no ambiguity in this fact.

“Failure to distribute exact monies owed to a city by highway districts does not in itself imply an ambiguity because such distributions have previously been subject to simple human error and oversight,” Mitchell said in the ruling.

Mitchell also determined the joint powers agreement is supported by adequate consideration in the city’s concession to not pursue the district’s dissolution. IHD argued that no statute gives the city any influence in dissolving the district, undermining its worth in a contractual agreement. However, Mitchell found no merit in that assertion.

“No statute prevents (the city) from exercising its right to participate in the process for dissolution of a highway district,” the ruling states. “Thus, valid consideration exists.”  

Other issues IHD disputed in the request for judgment included the authority of the city to vacate streets and the broad nature of the relief requested by the city. District counsel also protested the city’s request for attorney fees, claiming their defense was not frivolous. In each case, Mitchell ruled in favor of the city.

The decision follows a ruling from Mitchell in December that also was unfavorable to IHD’s legal arguments. That decision focused in particular on IHD’s claim that the joint powers agreement was unconstitutional because it constituted indebtedness beyond its annual revenue. Mitchell disagreed.

“The fact that IHD 10 years later regrets entering into that agreement is of no import,” he said in the 2013 decision.

IHD’s legal counsel could not be reached by press time for comment.