Montana Supreme Court upholds closing down of Whistlestop Retreat

The Montana Supreme Court has largely upheld a lower court’s decision that effectively shut down a resort on the shores of Lake Five in West Glacier.

In 2022 Flathead County District Court Judge Amy Eddy issued an order voiding  a major land use permit for the Whistlestop Retreat on the small lake a few miles from Glacier National Park.

Flathead County granted Whistlestop Retreat owner Dr. Susie Dietz and the G&M Trust a major land use permit on Feb. 28, 2020 to turn a sleepy piece of property at the west end of Lake Five into a resort, much to the consternation of neighbors, who claimed the permit went against deed restrictions already placed on the property by previous landowners, including a restriction on commercial development of the land.

The county bestowed the permits after Dietz started developing the property and was actively inviting guests to stay there in its vacation rentals.

A group of concerned neighbors called Friends of Lake Five subsequently filed suit against Dietz and the county and prevailed in district court.

After Eddy’s ruling Dietz and her associates appealed to the Montana Supreme Court.

The court recently upheld most of Eddy’s findings in the case, but reversed one part of her ruling where she ordered Dietz to restore the property back to its condition prior to development.

The higher court found that the county abused its discretion when it issued Dietz the permit. Land use in that area is dictated by the Canyon Area Land Use Regulatory System.

The regulatory system, the court found, was clear in its language when it came to the precedence of existing deed restrictions.

“Whenever the provisions of this regulatory system are in variance with other lawfully adopted rules, regulations, deed restrictions or covenants, the provision setting the greater restriction or higher standard shall apply,” the Canyon Area Land Use Regulatory System states.

“The County Commission abused its discretion by failing to consider the easement restrictions which are expressly incorporated into [the regulatory system],” the court ruled.

Because the regulatory system defines short-term rentals as residential use, Dietz argued, her resort should have been allowed.

But justices disagreed on that point as well.

“G&M provides no evidence or argument that would indicate that the drafters of the 1997 easement agreements understood the term ‘residential’ to include short-term rentals. Moreover, the plain language of the … easement not only limited the easement use for ‘residential purposes,’ it expressly noted that it could not be used ‘for any commercial purposes,’” the court found.

The county also abused its discretion when failed to consider deed restrictions on the Grizzly Spur Road, which serves not only the retreat, but other neighboring properties. The deed on the road also restricted commercial use.

“The county abused its discretion by failing to consider the restrictive easements on Grizzly Spur Road as required by [the Canyon Area Land Use Regulatory System],” the Supreme Court found. “The district court correctly interpreted the ambiguity in the easement language to discern the intention of the parties in 1997 as preventing the type of short-term rental use that the application proposed. While the district court did not use the correct standard of review, it correctly held that the county abused its discretion in approving the use permit. The district court did not err by voiding the use permit.”

The Supreme Court did not uphold the Whistlestop property “restoration” ordered by Eddy.

“Although the district court was correct in its determination that the G&M property may not be used for commercial purposes, the authority upon which the district court relied for ordering restoration of the property to its original condition is not readily apparent, and the appellees have not offered any analysis or argument in support of this portion of the district court’s order,” the Supreme Court ruled.

The county had previously settled with Friends of Lake Five over attorneys' fees, paying the group $47,000 in May 2022, conceding defeat after it lost the district court case.