No. 88-598 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

DAVID C. MOGAN, 

Plaintiff and Appellant, 

-vsCITY OF HARLEM, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Seventeenth Judicial District, 

In and for the County of Blaine, 

The Honorable B.W. Thomas, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Thomas P. Meissner, Lewistown, Montana 

For Respondent: 

Sue Ann Love; Jardine, Stephenson, Blewett & Weaver, 

Great Falls, Montana 

Submitted on Briefs: April 27, 1989 

Decided: June 27, 1989 

Filed: 
Mr. Justice R. C. McDonough delivered the Opinion of the 

Court. 

This appeal involves the issuance of water and sewer 

permits by a city government. Plaintiff David C. Mogan 

appeals from the order of the District Court of the 

Seventeenth Judicial District, Blaine County, granting 

summary judgment in favor of the City of Harlem. We affirm. 

Mogan presents three main issues on appeal. Restated, 

they are as follows: 

1. Did the District Court err in determining that no 

genuine issue existed as to any fact deemed material in light 

of the legal principles entitling the City of Harlem to 

judgment as a matter of law? 

2. Is the City of Harlem immune from suit pursuant to 5 

2-9-111, MCA? 

3. Did the District Court err in denying Mogan's motion 

to amend his pleading? 

In 1983, Mogan made plans to build an "eight-plex" 

apartment building in Harlem, Montana. The building was to 

include apartments for low-income residents, and was financed 

through the Farmers' Home Administration. In March of 1984, 

Mogan submitted architectural plans for the eight-plex to the 

Harlem City Clerk, and was issued a building permit. 

On a later date that is not certain in the record, Mogan 

appeared at the City Clerk's Office to discuss water and 

sewer permits for the building. Ordinance No. 57, enacted in 

1978 by the Harlem City Council, required persons wishing to 

connect to Harlem's water and sewer system to purchase water 

and sewer permits and install a water meter. Until 1984, the 

ordinance did not differentiate between single-family houses 

and multi-family apartment buildings. 
ORDINANCE NO. 57 

AN ORDINANCE REGULATING CONNECTION TO CITY WATER 

AND SEWER SYSTEM 

BE IT ORDAINED BY THE CITY OF HARLEM: 

Section 1: PERMIT REQUIRED. Any persons desiring 

to connect into the City water and sewer system 

within the city limits, must first make application 

to the City Clerk for a permit for same. All 

applications for such connections shall contain the 

names and addresses of the persons desiring to so 

connect, the address of the property to be 

connected and a statement of the purpose of the 

water usage. Additionally, the application shall 

contain the name and address of the regularly 

licensed plumber who will do the connection work. 

Section 2: FEES. The Clerk shall collect a fee of 

Seventy-five Dollars ($75.00) for water and a fee 

of Fifty Dollars ($50.00) for sewer, prior to the 

issuance of a permit for connection to city sewer 

and water within the city limits. 

Section 3: WATER METER. No connection shall be 

made to the city water system until a water meter 

has been installed. 

According to deposition testimony by the City Clerk, Mogan 

was under the impression that only one meter and one set of 

permits would be required for the building. The Clerk 

explained to Mogan that he would need separate permits and 

water meters for each apartment. The Clerk also testified 

that this would conform with the City's prior application of 

the ordinance. After her conversation with Mogan, the Clerk 

brought Mogan's misunderstanding to the attention of the 

Mayor. 

In July of 1984, the Harlem City Council held a special 

meeting, at which they amended the ordinance to require 

separate permits and meters for each "household unit," which 

was defined in the amended ordinance to include an apartment. 

The amendment was to take effect on August 25, 1984. On 
August 24, 1984, the day before the amended version of the 

ordinance went into effect, Mogan returned to the City 

Clerk's Office seeking a single water permit and a single 

sewer permit for the eight-plex. He was again informed that 

he would need a separate set of permits for each apartment, 

as per previous practice. 

Mogan then met with the Mayor and a city councilman. 

According to Mogan's deposition, he was told not only that he 

would be required to purchase eight sets of permits and 

install eight water meters, but also that the Mayor and the 

councilman were opposed to the project. They did not want a 

low-income housing project in Harlem, and intended to stop 

Mogan . In addition, the Mayor allegedly showed personal 

animosity toward Mogan. Mogan then demanded to be issued a 

single set of permits for the building under construction, 

and one set of permits for each of two additional buildings 

he was planning to build sometime in the future. All of 

Mogan's permit requests were denied by the Mayor. Later that 

day, Mogan returned and gave the Mayor a letter detailing 

their previous conversation and indicating Mogan's intention 

to "look to the City of Harlem1' for any damages resulting 

from the Mayor's denial of the requested permits. 

The Mayor later wrote a letter to Mogan instructing him 

to obtain a set of permits and connect a water meter for each 

apartment in the eight-plex. Mogan did so, and incurred 

expenses attendant to obtaining the additional permits and 

altering the plumbing in the building after construction had 

begun. 

In October of 1985, Mogan filed suit against the City of 

Harlem. He alleged breach of contract, as well as statutory 

and constitutional violations. The complaint was dismissed 

for failure to state a claim upon which relief could be 

granted. On appeal, this Court reversed and remanded, 
holding that the complaint was sufficient to state a claim. 

On remand, Mogan filed his First Amended Complaint, alleging 

violation of state constitutional guarantees of equal 

protection and due process, and federal constitutional 

guarantees of equal protection, due process and compensation 

for the "taking" of property. The City of Harlem filed an 

answer, and discovery proceeded. After discovery, Mogan 

moved to file a Second Amended Complaint, and the City filed 

a Motion for Summary Judgment. The District Court granted 

summary judgment to the City, and denied Mogan's motion as 

being moot. This appeal followed. 

Mogan first asserts that the District Court erred in 

granting summary judgment in favor of the City. Mogan cites 

the standard for summary judgment from our decision in Morrow 

v. FBS Insurance Montana (Mont. 1988), 749 P.2d 1073, 

1074-75, 45 St.Rep. 188, 190: 

According to this Court's interpretations of Rule 

56(c), M.R.Civ.P., "[tlhe party moving for summary 

judgment has the initial burden of showing that 

there is no genuine issue as to any fact deemed 

material in light of the substantive principles 

that entitled the movant to judgment as a matter of 

law. " [citation] 

According to Mogan, the City did not meet its burden in the 

District Court, which should be reversed for two reasons: (a) 

genuine issues of material fact exist concerning the City's 

prior application of the ordinance in question, and (b) the 

court erred in refusing to consider two FmHA memoranda 

offered as evidence of City officials ' improper motives. 

Mogan takes issue with the City's position that its 

application of the ordinance in his case was consistent with 

the City's treatment of other owners of multiple-unit 

buildings. He cites instances brought out in discovery where 
the City applied the ordinance inconsistently. Mogan also 

cites notes taken by himself and others in meetings with the 

Mayor and city councilmen showing that the inconsistent 

treatment he received was motivated by the intention of city 

officials to impede his project. Mogan asserts that the 

ordinance was amended specifically to accomplish that end. 

The City concedes that inconsistencies in the 

application of the ordinance exist, but argues that they were 

the result of inadvertence or mistake. While the notes 

presented by Mogan show some animosity exhibited toward him 

by the Mayor, they are not of consequence. First, as pointed 

out by the City below, the decision to require Mogan to 

obtain eight permits and install eight meters was made under 

the version of the ordinance existing prior to the amendment 

complained of by Mogan. Second, and also shown below by the 

City, the allegedly offensive amendment merely reflected the 

City's prior practice. 

The "inconsistencies" in the application of the 

ordinance pointed out by Mogan are just that; they are the 

exception rather than the rule. The record shows that with 

only three exceptions, all multiple-unit buildings in Harlem 

were required to obtain a separate set of permits and connect 

a separate water meter for each unit. A District Court 

ruling in Mogan's favor would have resulted in disparate 

treatment of Mogan's project, not consistent treatment. The 

City sustained its burden of showing that there was no issue 

as to any material fact on Mogan's equal protection claims. 

Mogan simply was not singled out for different treatment, nor 

was he placed in a class that was treated differently. 

Mogan also alleged state and federal due process 

violations based on the City's alleged failure to give him 

adequate notice of the meeting at which the ordinance was 

amended. Given the fact that the City's decision on Mogan's 
project was made before the amended ordinance became 

effective and the fact that the amendment did not change the 

requirements of the ordinance as previously enforced by the 

City, these claims are moot. Were we to find that Mogan had 

not been notified properly, the result at best would be 

harmless error. 

Mogan's "taking" claim alleged that the City's denial of 

the permits he requested deprived him of his property 

interest in those permits without compensation, in violation 

of the Fifth Amendment to the U.S. Constitution as applied 

through the Fourteenth Amendment. This claim is without 

merit, as Mogan had no property interest in the permits that 

could be afforded constitutional protection. Property 

interests are not created by the Constitution. They come 

from independent sources, such as state law. McCracken v. 

City of Chinook (D. Mont. 1987), 652 F.Supp. 1300. Mogan has 

cited no authority upon which he bases his claimed property 

right in the permits, and our research has uncovered none. 

Mogan's second argument, that the District Court erred 

in refusing to consider proffered memoranda in making its 

decision, is likewise without merit. The memoranda at issue 

were alleged by Mogan to have been written by an FmHA 

official in the course of monitoring Mogan's project. They 

contain statements made by the Mayor to the FmHA official 

concerning his dislike for Mogan and his project. The 

memoranda were excluded on grounds that they constituted 

hearsay and lacked proper foundation. However, their content 

does not change the result in this case. Mogan was not 

prejudiced by the actions complained of here. While the 

behavior of the Mayor and others may not have been 

particularly polite, neither was it actionable. 
11. 

Mogan's second and third issues are intertwined. Mogan 

asserts that the District Court erred by refusing to allow 

him to file a second amended complaint. Mogan cites Rule 

15(a), M.R.Civ.P., which states that a pleading may be 

amended by leave of court, and that such leave shall be 

freely given when justice so requires. Mogan's Proposed 

Second Amended Complaint differed from his previous complaint 

by adding factual allegations concerning the Mayor's refusal 

to issue the permits Mogan demanded for the two contemplated 

buildings, adding " lost prospective income" from the two 

contemplated buildings to his claim for damages, and adding a 

separate cause of action alleging negligence on the part of 

the City Clerk's Office in issuing a building permit for the 

eight-plex without ensuring that the plans he submitted 

conformed to the City's ordinances. 

The City cites Prentice Lumber Co. v. Hukill (1972), 161 

Mont. 8, 17, 504 P.2d 277, 282, where this Court set out the 

approach to be used in considering requests to amend: 

"In the absence of any apparent or declared 

reason--such as undue delay, bad faith or dilatory 

motive on the part of the movant, repeated failure 

to cure deficiencies by amendments previously 

allowed, undue prejudice to the opposing party by 

virtue of allowance of the amendment, futility of 

amendment, etc.--the leave sought should, as the 

rule requires, be 'freely given.'" 

(quoting Foman v. Davis (1962), 371 U.S. 178, 182, 83 S.Ct. 

227, 230). The quoted language is directly applicable to 

this case, because the proposed amendment would be futile for 

two reasons. First, our discussion above shows that Mogan 

had no property interest in the permits he requested for the 

contemplated buildings and thus could not assert 

constitutional protection. Second, the only new cause of 
action alleged--negligence--would have been barred by the 

immunity afforded the City of Harlem by S 2-9-111, MCA. 

Section 2-9-111, MCA, states in relevant part: 

(3) A member, officer, or agent of a legislative 

body is immune from suit for damages arising from 

the lawful discharge of an official duty associated 

with the introduction or consideration of 

legislation or action by the legislative body. 

In this case, the ordinances at issue were enacted by the 

Harlem City Council. As shown by the portion of Ordinance 57 

quoted above, the Council through its legislative action in 

enacting these ordinances charged the City Clerk with 

official duties concerning the issuance of permits. The 

Clerk was thus acting as an agent of the Council. Mogan's 

proposed amendment alleged negligence on the part of the 

Council's agent in the performance of official duties 

associated with an action of a legislative body. This Court 

has very recently held a school board immune from suit under 

this statute for the actions of its agent in performance of 

an official duty associated with the board's action. 

Peterson v. Great Falls Public School District No. 1 and A 

(Mont. 1989), - P.2d - , 46 St.Rep. 880. The same 

immunity would apply in this case. 

We have found that no genuine issue of material fact 

exists as to the City's entitlement to summary judgment on 

Mogan's constitutional claims. We have also found that the 

District Court's refusal to grant Mogan leave to amend his 

complaint was correct, because the proposed amendment would 

have been futile. Therefore, we affirm the decision of the 

District Court. 

We Concur: