Background
West Development obtained a 2007 building permit and a Town of West Yellowstone “Will Serve Letter” stating that the Town had capacity and would provide water, sewer, and storm-drainage service for a planned 48-unit condominium project. The developer began construction but stopped in 2011. Its building permit expired, its subdivision approval later expired, and it did not obtain a new state permit or resume construction.
In 2019, the Town adopted a wastewater-connection moratorium while it addressed system capacity needs. In 2020, when West Development sought to sell the property, the Town acknowledged that fees for 48 hookups had been paid but would not guarantee immediate connections; it said hookups could occur when system capacity became available. The prospective buyer withdrew, and West Development sued for breach of contract, negligence, and declaratory relief.
The Court’s Holding
The Montana Supreme Court affirmed summary judgment for the Town. It first held that the developer’s claims were timely because they did not challenge the legality of the moratorium or allege a denial of public-participation rights. Instead, the claims asserted rights allegedly arising from the 2007 letter.
On the merits, the Court held that even if the Will Serve Letter constituted a contract, its lack of a stated performance deadline meant performance was required within a reasonable time. Thirteen years had elapsed before West Development sought to enforce the letter, including nine years after it ceased work and allowed its permits to expire. That delay exceeded a reasonable time, so the Town was not required to guarantee on-demand service for the dormant project. The same conclusion defeated the claimed vested right and negligence theories.
Key Takeaways
- A will-serve letter without a stated duration does not necessarily reserve municipal capacity indefinitely.
- A developer’s long inactivity and expired project permits can make later enforcement untimely on the merits, even when the lawsuit itself is timely filed.
- A municipal utility-capacity decision did not create a continuing special duty to the developer under these facts.
Why It Matters
The decision distinguishes a challenge to a municipal moratorium from a claim based on a preexisting development assurance. But it also warns that a developer cannot preserve a project-specific utility commitment indefinitely by leaving a project dormant.
For municipalities and developers, the case underscores the value of specifying expiration dates, extension procedures, and capacity-reservation terms in will-serve letters and related approvals.