Roughly 15 feet of ground is what will separate traffic from the entrance to John Stokes' radio station after the expansion of Highway 93 south of Kalispell. While the price of the strip of land needed by the state has already been settled and paid, Stokes says the damage costs to his business still need to be ironed out.

KALISPELL - Settlement talks have resumed in one of the state's costliest highway project disputes, with lawyers hoping to avoid a jury trial between transportation officials and a controversial Kalispell radio host.

The legal wrangling between the Montana Department of Transportation and John P. Stokes has been ongoing for nearly three years, with the two sides arguing over how much Stokes should be paid for land the state needs to complete a highway project.

Stokes is owner and on-air personality of a 5,000-watt AM radio station, located on the brink of Highway 93 south of Kalispell.

The state wants to broaden the road there from two lanes to five, which will push the pavement nearly to the station's doorstep. Currently, Stokes said, the road is about 22 feet away. After the expansion, he said, snowplows will blow by just 15 feet from his front door.

Both sides agree that the strip of land in question is worth about $100,000, and the money and the title have already changed hands.

Still at stake, however, is the matter of damages. Putting that much construction and traffic so close to the radio station, Stokes said, will result in vibration and noise that will put him out of business. He figures he will ultimately have to move his building.

His appraiser has pegged the cost of damages at $1.1 million. Stokes is the first to admit that's a lot of money for a right-of-way condemnation, "but then," he said, "they don't condemn many radio stations in Montana, either."

Complicating the debate is the fact that Stokes and his attorney already have spent $750,000 of the state's money, none of which has gone toward moving the building. Meanwhile, his bankers are looking to foreclose on the station but are waiting to see how the dust settles in the dispute over damages.

For months, MDOT and Stokes' attorney, Wade Dahood, have been negotiating how best to reduce those damages and how much it will cost to do so.

On Dec. 3, Dahood and MDOT's chief counsel Tim Reardon met for what Reardon said was likely the final round of negotiations.

"I was asked to visit with the defendant's attorney one last time," Reardon said prior to the meeting. "If we don't settle it this time, I expect it will go to trial."

Both sides said they had hoped settlement talks Dec. 3 would put the matter to rest once and for all.

"It's just time to move on," Stokes said before the negotiations.

But moving on might take a while yet.

"Well, we talked for a couple hours," Dahood said after the talks. "But we have not settled the case. It was a productive meeting, though."

The attorneys agreed to take a new proposal back to their respective clients, and then get back together by mid-December to discuss whether to approve, reject or modify the deal. The primary issue remains damages - how extensive they might be and how much it will cost to remedy them.

"Both sides have hired experts," Reardon said, "trying to convince the other side. Not surprisingly, the experts don't agree. You've got some experts saying the sky is blue, and other experts saying the sky is black."

"Our experts," Reardon added, "are saying there won't be any problems, and, if there are, they're easily fixed."

Dahood's experts, however, beg to differ.

Dahood said radio engineers and acoustics specialists hired to review the project clearly concluded that "the new highway is going to take John Stokes' radio station out of business."

Meanwhile, the highway project will be put to bid in a couple of weeks, and crews will begin moving dirt next spring.

"We already have the property we need," Reardon said. "That was never a question. The question is, will the highway disrupt the business, and how much will it cost to mitigate any disruption. It's all about cost now."

Already, the cost to the litigants has been substantial. Dahood said he has put more than 1,000 hours into the case, as has a paralegal, and expert witnesses have consumed even more cash.

And the state, for its part, has cut checks to Dahood totaling more than $750,000, even though the case is nowhere near settled.

"It's a whole lot of money for a case that isn't resolved," Reardon said. "But that's how the law works."

The law, in this case, refers to legislation governing right-of-way condemnation. If the state Transportation Department needs to build a road through your living room, the agency can do so by condemning your land.

The agency must, however, pay you "just compensation."

Sometimes, of course, a gap exists between the amount the state offers and the amount the landowner thinks is "just compensation."

According to state law, once the landowner has established a reasonable value for the land, MDOT must put that amount into a sort of escrow account, held by the court.

That account guarantees the state will have the money on hand should the landowner prevail.

But courts are notoriously slow and roads can be built with considerable speed, and sometimes a landowner needs to clear out before the payment dispute is resolved. The law tries to anticipate that problem by allowing the landowner to tap into the escrow account, taking out as much as 75 percent of the total even as the case moves through the courts.

That cash, Reardon said, should allow a landowner to "move out and get on with things" until the case is settled. It eliminates the fight over the land in question, allowing MDOT to build and enabling landowners to move, even as the battle over reimbursement grinds through the courts.

The 25 percent cushion is built in to protect the landowner from having to pay money back to MDOT, should he receive somewhat less than requested.

In the case between MDOT and Stokes, Stokes pegged his land's value, including business damages, at $1.1 million, based on an independent appraisal.

The state then incrementally deposited about 75 percent of that amount, slightly more than $750,000, with the court.

And while Stokes hasn't moved anywhere, he has exercised his right to draw that money down.

On Nov. 14, 2001, a check was cut to Dahood for $100,500, or the agreed upon value of the strip of land the state needed. On July 22, 2002, he received a check for $250,000. Finally, on March 4, 2003, a check was issued to Dahood for $400,000, for a total of $750,500.

"All that money," Dahood said, "was dispersed," going to cover attorney's fees and expert testimony and to the mortgage company that holds the lien on Stokes' property.

Dahood figures Stokes is safe in withdrawing the money, as the final settlement, he said, should be well over $750,000.

But Reardon is not so sure, and that uncertainty reveals a danger built into the law. While the law is written to protect landowners, it could leave them in a lurch if they draw out MDOT money and then fail in their attempt to win a larger cash settlement.

In that case, Reardon said, the landowner would have to pay back the money, with interest.

John Horton, who heads MDOT's right-of-way bureau, said that the $750,000 the agency banked away for the Stokes case is a relatively large amount, and as such exposes the landowner to a relatively large risk should he choose to draw the money out of the court.

Usually, Horton said, a "normal" amount placed with the court would be in the $50,000 to $100,000 range.

According to Reardon, about 90 percent of all right-of-way purchases are settled out of court, and the $750,000 involved in the Stokes case accounts for more than half of all the money MDOT currently has placed with courts throughout the state.

"This is a healthy chunk of change," he said. "It's definitely higher than the average."

If the money stays in the court account and the landowner wins, Horton said, MDOT pays 10 percent interest on the money. If the landowner pulls the money out, the interest stops.

"Most people don't withdraw the money," Reardon said. "They realize that if they don't win, they'll have to pay it back."

"Yeah, a landowner could get into a real pickle," Horton agreed. "I can think of several cases where we've had difficulty in getting it back after someone took it out."

He can't, however, remember the particulars of anyone not finally paying the state back, "but I'm not going to say it never happened."

Which is one reason Reardon hedged his bets on the Stokes' case, naming Questa Resources as a co-defendant when he filed the condemnation papers.

Questa Resources, operating as Bigfork-based Questa Mortgage, holds the mortgage lien on Stokes' property.

"If it ever comes to the point where we need to get that money back," Reardon said, "we can get it from Questa if we have to."

That's the kind of talk that makes Christy Brandon nervous.

Brandon is attorney for Questa, and said that although the lender has received some of the money pulled from the court account, it has not received enough, adding that "we still have amounts due."

That's of particular concern because "the mortgage loan to Mr. Stokes is in default," she said, "and the lenders are preparing for foreclosure."

Full payment on the loan, she said, was due April 3, 2003, but was not received. The company has not foreclosed, Brandon said, because the lender is interested in how Stokes' battle with the state will play out. A settlement favorable to Stokes, she said, "would retire the debt."

She said the company recognizes Stokes has been forced to plug money into defending himself against the state, and so Questa is waiting to see how that investment pays off.

If Stokes loses, however, she said he could be in the unenviable position of owing not only to his lender, but also to the state for cash already withdrawn.

But Dahood remains confident and unconcerned, and says he is certain he and his client have put forward "a good, solid claim for compensation. We have a solid foundation for that $1.1 million" claim.

In other words, he predicts his client will ultimately win more than the $750,000 already at stake.

And he should know; Dahood's been practicing law for nearly half a century, and chaired the Bill of Rights Committee at the 1972 Montana Constitutional Convention. He specializes in condemnation law, "and I've never lost a condemnation suit."

He might not get everything he's asking for, he said, but he'll get enough.

For Reardon, it would have been enough to simply not have this legal battle at all. It could have been avoided, he believes, with a bit of foresight.

"He knew, when he bought the place, that this highway project was coming down the road," Reardon said of Stokes.

Stokes agrees he was aware of the pending project, but the fact is, the only radio station for sale in the Flathead Valley was the one he bought. That it came with a potential highway liability is not his fault. And the law agrees with Stokes when he says he doesn't believe that his foreknowledge should change his constitutional right to just compensation for the land he purchased.

Stokes bought the property fewer than four years ago, long after the Transportation Department released its Oct. 9, 1991, resolution of intent to improve Highway 93 between Somers and Kalispell.

In that resolution, state highway officials said they would buy rights of way and rights of access along the 8-mile project for "facilitating the flow of traffic and to promote the public safety." Some 235 landowners would be affected.

The project was slow in starting, however, and it wasn't until Feb. 28, 2000, that MDOT authorized its legal division to begin condemnation proceedings against Stokes and others along the route.

A year later, on Jan. 18, 2001, MDOT filed for condemnation against John P. Stokes and two businesses, Skyline Broadcasters Inc. and Z-600 Inc. Stokes is listed in court papers as president of both companies.

The state's filing also named Questa, the mortgage lender.

The condemnation order intends "to acquire, by purchase or any other lawful manner ... real property for state highway purposes."

The fight over that purchase, however, began almost immediately, and inside of a month the two sides were clashing over whether and when to depose certain expert witnesses.

Nevertheless, the process appeared to be moving swiftly, and by May 11, 2001, the two sides seemed to be nearing the end of the discovery phase of the suit. District Court Judge Katherine Curtis ordered the first settlement conference be held before the end of November, and set a tentative trial date for Jan. 7, 2002.

In the meantime, Curtis signed the grant of possession papers, giving the state the slice of property it wanted to purchase for $100,500. On Nov. 14, 2001 the check was cut to Stokes' attorney.

But even as Curtis approved the land transfer, she also allowed Stokes to ask for more money, including damages, during the upcoming negotiations.

Prior to those first settlement talks, Stokes made his case for what he believed to be just compensation. Court documents filed Sept. 12, 2001, indicate "Stokes has claimed that the highway reconstruction project will result in a total take of the radio station property, which he values at $2.5 million."

The $2.5 million, Stokes' attorney argued, was the estimated cost associated with disrupting the business and relocating and replacing the business farther from the roadway.

The document goes on to say, "In addition, Stokes claims that his radio transmitter and computer equipment have been damaged and will in the future be damaged by construction noise and vibration."

During sound and vibration testing in 2001, Stokes said his transmitter and computer equipment were damaged, and he was knocked off the air for six hours. Dahood later wrote that the increased traffic and construction associated with the project "is going to cause so much vibration and noise that the radio station will not be able to function."

Former employees who worked at the station prior to Stokes' purchase said passing trucks rattle the station's control room, even with the current highway configuration.

Dahood also has alleged that the project would interfere with the station's ability to maintain its radio towers, a matter that remains before the court.

Not long after receiving Stokes' damage estimate, MDOT hatched a plan to reroute the highway slightly, hoping the new design would put more distance between the roadway and the radio station. The intent, state attorneys said, was to reduce the $2.5 million value Stokes had placed on his property and business.

Dahood fought the highway design change, arguing Stokes had already spent considerable time and money negotiating with the state based on parameters set by the state. Now, Dahood said, as the state faced paying more than it wanted for the land, MDOT was changing the game midway through, leaving Stokes to absorb the wasted costs and headaches of all the previous months' negotiations.

Dahood charged that in doing so the state was negotiating in "bad faith," part of an effort to "punish Stokes" with "coercive tactics."

In a five-page response, longtime MDOT preconstruction management specialist Ben Juvan concluded that "it would be impossible to construct or reconstruct roads if the construction plans had to be finalized before commencement of right-of-way negations."

Despite the fact that Stokes had invested considerable money into a negotiation process that the highway changes would make moot, on Dec. 18, 2001, Curtis ruled in support of the state, granting the amendment to the highway plan.

Dahood, however, persisted in his effort to scuttle the changes, writing to the state's attorneys in spring 2002 that the change of plans was "part of a coercive tactic to beat down the land owner and compel him to accept the valuation offered by the state."

Nevertheless, on March 26, 2002, Curtis upheld her earlier decision, authorizing MDOT's changes.

Dahood's opposition and charges of harassment, she wrote, were "not supported by any affidavits or any other factual showing."

"At no time," Curtis wrote, "have defendants presented any factual support whatsoever for their contention that the motion to amend is a coercive tactic by the state, although they have had over six months to develop such factual support."

The law, she later noted, states that if the agency can change a project to minimize impacts to a landowner, then MDOT not only should do that, but also must do that.

On June 17, 2002, Dahood filed papers reflecting the highway route changes, adjusting the request for $2.5 million down to $1.1 million, "based upon the final report of the landowners' appraiser."

Reardon, for one, figures he can build Stokes a whole new building and install all the necessary equipment for considerably less than $1.1 million, and so MDOT continues to balk at Dahood's offer.

A jury trial, however, would add considerably to the state's costs, Reardon acknowledged, saying MDOT could end up paying upward of a half-million dollars for the defendant's litigation costs.

So even though Reardon says a judgment of $750,000 is something he is "fairly certain we can beat at trial," he worries that the courtroom expenses could push his bills over the requested $1.1 million should the case go to trial.

"It would be like winning the battle and losing the war," he said.

(Nearly 90 percent of the state's costs, however, eventually will be picked up by the federal government, which is backing the project.)

There are nevertheless, Reardon said, "factors to be considered other than merely taking a position of what we believe the value is for the case. I feel fairly confident that we have good, persuasive evidence, but at the same time, the defendants also have evidence that a jury could accept."

Stokes agreed, saying, "Who knows what a jury's going to do?"

Later, he added that a bad settlement is still better than a bad jury decision. Even if he won the full $1.1 million, Dahood said, that would only cover the estimated cost of relocating the station; it would not touch the cost of litigation.

"If you put it all together," Dahood said, "a million and a half would not be just compensation."

Like Reardon, Stokes has no interest in spending a dime more than necessary; nevertheless, he sticks to his position that "it's not about saving the state money; it's about fair and just compensation."

And on that point also, the law agrees with Stokes. Determining what is fair and just, however, could take some time.

"We're trying to find that compromise point that doesn't please either side," Dahood said. "That's the hallmark of a good settlement."

That compromise point remains elusive, although Dahood said "we're not that far apart."

With the talks in temporary limbo, about the only thing anyone knows for certain is that, should the case go to trial, one of the state's costliest highway project disputes will doubtless become even costlier.

How much the continuing battle will add to the $15 million project is anybody's guess, Reardon said, "but one way or another, we're going to build a new road come next spring."

Reporter Michael Jamison can be reached at 1-800-366-7186 or at mjamison@missoulian.com