L & C County v. Wirth, 510 P.3d 1206

Background

In 2006 Philip Wirth recorded plats and Covenants for Bridge Creek Estates Major Subdivision, creating 100 residential lots and one large remainder lot he retained. He later reconfigured unsold lots and his remainder into three large lots (Lot 9A, 11A, 101A) and recorded an amended plat in 2013 marking Lot 11A and Lot 101A “FOR FUTURE DEVELOPMENT.”
Section 2.2 of the Covenants states: "Any Lot purchased from Declarant can be resold without restriction. No further subdivision of any Lot is permitted. Minor boundary adjustments . . . to which adjacent Owners agree, is permitted." The Covenants also require in §7 that "Each Lot shall be served with two water systems" (domestic and irrigation).
Wirth sought county approval to subdivide the three large lots into ~50 smaller lots in 2014–15. County staff in 2015 interpreted §2.2 to prohibit further subdivision of any lot and conditioned approval on amending §2.2; Wirth could not obtain all owner consents to amend.
County sued for declaratory judgment that §2.2 bars further subdivision of all lots; HOA cross-claimed that Wirth violated §7 by failing to provide dual water lines to eleven Powder River Court lots (Wirth had supplied dual lines to most lots but a single line to Powder River Court).
District Court granted summary judgment for the County and HOA (holding §2.2 unambiguously prohibits further subdivision of all lots; holding Wirth obligated to install dual water lines) and awarded HOA attorney fees. Montana Supreme Court reversed part, affirmed part, and remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Does §2.2 unambiguously bar further subdivision of lots Wirth retained?	County/HOA: "No further subdivision of any Lot" is plain and applies to all lots.	Wirth: §2.2 must be read as tied to "Any Lot purchased from Declarant" and is ambiguous when read with plats and parties' conduct.	Reversed: §2.2 is ambiguous when read with recorded plats and surrounding circumstances; remand for factfinding.
2. Is Wirth's counterclaim for statutory damages under §76‑3‑625(1) ripe / properly dismissed?	Wirth: County acted arbitrarily/capriciously in 2013 and 2015 approvals and caused damages; claim timely.	County: 2015 action was contingent (not final) and its interpretation was reasonable.	Reversed: material facts disputed; summary judgment inappropriate; remand to resolve whether County acted arbitrarily, capriciously, or unlawfully.
3. Does §7 obligate Wirth to install dual water systems to all lots (including Powder River Court)?	HOA: §7 promises each lot will be served by dual systems; developer must provide them.	Wirth: Performance is impossible or impracticable now; doctrine of impossibility excuses him.	Affirmed: §7 obligates Wirth; impossibility defense fails because his own initial nonperformance caused the present burden; remand to determine remedy.
4. Was awarding HOA attorney fees premature?	HOA: §17 entitles prevailing party to fees and district court found in HOA's favor on key issues.	Wirth: Fees premature until entire case concluded and affirmative final judgment.	Reversed: award was premature because case not finally resolved between parties; fees must await final judgment.

Key Cases Cited

Creveling v. Ingold, 331 Mont. 322 (interpretation of covenants like contracts; de novo review)
Rumph v. Dale Edwards, Inc., 183 Mont. 359 (courts may consider surrounding circumstances when interpreting contracts)
Mary J. Baker Revocable Tr. v. Cenex Harvest States Coops., Inc., 338 Mont. 41 (use of extrinsic evidence to detect ambiguity)
O'Keefe v. Mustang Ranches HOA, 396 Mont. 454 (scope of easements/restrictive covenants and need for instrument of conveyance/plats)
Blazer v. Wall, 343 Mont. 173 (incorporation of plats into conveyances)
Cape‑France Enters. v. Estate of Peed, 305 Mont. 513 (doctrine of impossibility/impracticability standards)
Miller v. Titeca, 192 Mont. 357 (party asserting impossibility must show virtually every action was taken to perform)