Flathead County commissioners agree to settle lawsuit over Whistlestop resort

Flathead County commissioners last week approved a $47,000 settlement with Friends of Lake Five that will pay for the nonprofit neighborhood group’s attorney fees.

The settlement, assistant county attorney Tara Fugina told commissioners, was a way to avoid paying the maximum amount in the case. It is not covered under the county’s insurance, Fugina said during the May 17 meeting.

Commissioners approved the settlement without discussion.

In late March, Flathead County District Court Judge Amy Eddy ruled in favor of Friends of Lake Five, who were challenging the validity of a the county’s issuance of a major land use permit for the Whistlestop Retreat on the small lake just outside of West Glacier.

The 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.

The county permit came after Dietz apparently started developing the property -- without permits -- after buying it from the estate of James Sherwood in 2018. The development was undertaken despite the fact that the access road to the property contained easement that specifically said it could not serve commercial development.

Dietz, according to court records, kept on developing the property — which was broken into two tracts — adding guest cabins, houses and docks. Friends of Lake Five, in turn, filed suit.

Eddy castigated the county and Dietz in her ruling.

“This case provides a cautionary example of the dangers of developing property without a valid permit to do so — conduct which is driving time consuming and expensive litigation before the courts,” Eddy wrote. “While Ms. Dietz testified she developed the property in good faith ignorance of the various regulations, this is not the first time Ms. Dietz has developed property — both in Canada and Montana — for this exact purpose. The court is unconvinced Ms. Deitz thought she could develop a 70-person capacity commercial resort without legal access, permits for building or septic, or in consideration of lakeshore protection."

Eddy honed in on Dietz's lack of communication with regulatory agencies and her refusal to stop even after learning she needed permission to move ahead with the project. Eddy also noted that Dietz's work exceeded what was allowable under the permit after receiving approval.

"The ‘ask for forgiveness instead of permission approach,’ which can be fostered by a regulatory review process that is primarily complaint driven, is not legally sufficient in this matter," Eddy wrote.

Eddy also ordered that several of the structures Dietz has put up over the years be removed and any new construction by halted immediately.

“All construction on the property, in or out of the lakeshore zone, shall cease immediately. G&M Trust shall restore the property to its previous unaltered condition, and, to that end, shall remove … the caboose; the fire tower, and the swim docks and restore the lakeshore by removal of the ‘fire hydrant pad’ and restoration of the walking trail,” Eddy wrote in her order in March.

Eddy also ordered that developments on what was known as tract 2 “be restored to their condition at purchase by the G&M Trust, other than repair work that does not require a permit.”

Dietz has since closed the resort down, according to an April 2 Facebook post.

Some of the docks that were installed have been removed, but the two buildings the court ordered removed are still apparently on the property.

A court hearing on the case, which is expected to result in a final order, is scheduled at 9 a.m. June 15 in front of Eddy in Flathead County District Court.