A pivotal court hearing on Thursday brought the legal battle over control of Whitefish’s two-mile planning “doughnut” area a step closer to resolution.

But regardless of how Flathead District Judge David Ortley rules in the case, it’s likely the decision will be appealed to the Montana Supreme Court. That means a final decision could be more than a year away.

Ortley heard pleadings from all four parties involved in the latest lawsuit. The case was filed more than a year ago by four Whitefish-area residents who want the court to throw out a referendum passed by voters in November 2011 that repealed a 2010 planning agreement for the two-mile area around Whitefish.

In January 2011, Whitefish sued the county, alleging the referendum was legal.

Kalispell attorney Duncan Scott represented the plaintiffs — Lyle Phillips, Anne Dee Reno, Turner Askew and Ben Whitten. Missoula attorney Alan McCormick spoke on behalf of the county; Whitefish attorney Terry Trieweiler represented the city of Whitefish and Kalispell attorney John Lacey represented intervenors Dan Weinberg, Ed McGrew, Mary Person and Marilyn Nelson.

After listening to the attorneys for more than two hours, Ortley acknowledged the far-reaching implications of how the case is decided.

“The importance of this litigation is obvious,” the judge said. “We’re not going to rush it.”

Ortley also was impressed with how well-prepared the lawyers were.

“For those watching [in the audience], this is as good as it gets,” he added.

At issue is whether the city referendum was illegal and therefore void, and whether the original 2005 interlocal agreement between Whitefish and Flathead County is still in effect.

The 2005 agreement gave Whitefish zoning and planning control of the doughnut, but in 2008 the county unilaterally rescinded the agreement based on the premise that doughnut residents have no representation since they can’t vote in city elections.

A city critical areas ordinance that imposed drainage-related regulations in the doughnut area was the proverbial straw that broke the camel’s back for the county.

Eventually a revised agreement was approved by both the city and county in 2010. That was considered a compromise between the city and county, but opponents pushed for a referendum because they contended the pact didn’t give Whitefish enough ability to manage growth in the two-mile area.

At Thursday’s hearing Scott, said the doughnut litigation, which started 1,804 days ago, has a long history “with lots of moving parts.”

Scott said his clients sued the city because they believe state law doesn’t allow referendums on legal settlements. They argue a legal settlement is an administrative act, not a legislative act, and that state law prohibits referendums on administrative acts.

The plaintiffs also want the court to rule on the current status of the 2005 and 2010 interlocal agreements. They maintained then-District Judge Kitty Curtis ruled the 2005 agreement was void as she dismissed the 2008 lawsuit. Dismissing that lawsuit was part of the deal forged for the 2010 compromise.

Either way the judge rules, the 2010 agreement is no longer in effect, Scott maintained. If the referendum is deemed legal, it threw out the 2010 pact. If it’s illegal, the county’s one-year notice of its intent to terminate the 2010 agreement already has passed.

The city of Whitefish and intervenors argue the referendum was legal and that because it threw out the 2010 agreement, the original 2005 agreement giving Whitefish full control in the doughnut area still is in effect.

“Whitefish contends the 2005 interlocal agreement is the only remaining contract between the parties,” Trieweiler said.

Trieweiler said Judge Curtis had ruled that issues in the 2008 lawsuit were moot, but he stressed that “no remarks in that case have any bearing on this case.”

No one ever asked the court to declare the 2005 agreement unenforceable, he added.

“In a backdoor way they [the plaintiffs] have resurrected the whole 2008 lawsuit,” Trieweiler said.

The crux of the matter is that the “whole substantive effect of zoning was changed by the 2010 agreement,” he said. “We already know the county didn’t like what the city was doing, and any practical control [Whitefish had] in the 2005 interlocal agreement was eliminated” by the 2010 agreement.

McCormick argued the 2005 agreement can’t be reinstated because it violates the law. He pointed to statutes such as the state zoning enabling act that give Whitefish the authority to regulate for a prescribed distance outside the city.

“The interlocal agreement is an administrative document that defines how the city and county will cooperate,” McCormick said. “It can’t enact zoning regulations within itself. No interlocal agreement has been necessary for a city to enact zoning.”

The fundamental question, he said, is does the city get permanent regulatory control of the two-mile area?

“That answer has to be no,” McCormick said, because the city’s jurisdiction exists only so long, until the county adopts its own regulations.

If the court declares the referendum invalid, it should lift the injunction now in place prohibiting the county from moving forward with its own zoning of the doughnut area.

One of Lacey’s key arguments centered around the matter of timeliness. By waiting 11 months before they sued over the referendum, the plaintiffs essentially attempted to disenfranchise Whitefish voters, he said.

Lacey agreed with Trieweiler’s contention that this lawsuit is a challenge to the ballot issue and doesn’t go back to the 2005 agreement.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.