A dispute between Utah’s smallest county and one of that county’s most prominent towns has been tossed out of federal court, with the judge finding no merit to tiny Dutch John’s complaints that Daggett County is selling off property and spending money that rightfully belongs to it.

Judge Dee Benson dismissed Dutch John’s lawsuit with prejudice — meaning the town is prohibited from pressing the same claims in a different court action.

It was welcome news for Daggett, which is in dire financial straits, in part because the state pulled dozens of inmates out of its revenue-generating jail in 2017 amid complaints of prisoner abuse that were later substantiated. Daggett also recently lost a contract to provide security for the federally owned Flaming Gorge Dam and, because of its remoteness and sparse population, it has long struggled to maintain a healthy economy and jobs.

Dutch John, a town of some 150 people, mostly fishing guides, former and current federal workers and state biologists, filed the suit last summer, alleging the county had sold off about $4 million in buildings and real estate and spent the money on unknown purposes in violation of federal law. The town also warned of a potential pending fire sale of property at below-market prices.

The town was built by the federal government in the 1950s to house construction workers erecting the nearby Flaming Gorge Dam. In 1998, it was turned over to the county lock, stock and barrel.

But town leaders asserted the federal law governing the handoff required most proceeds from the sale of property and an annual payment of $300,000 (and more in later installments) from the national treasury be used solely for the benefit of the town and its residents.

Benson, in his Feb. 14 court order, found all of the complaints without merit. He ruled that the clear language of the law imposes certain restrictions and requirements on the federal government in transferring the town to the county but “never once mentions any future requirements for the county with respect to disposition of those properties.”

Daggett County Attorney Niel Lund said he was “very pleased with the judge’s decision … and the way he wrote it. I think he covered every issue quite well.”

Lund said the dismissal lifts a cloud over the ownership of Dutch John property and clears the way for potential development that could benefit the town and the county.

“We’ve been unable to develop a lot of that property based on the actions of the town and their claims,” Lund said. “People have been unwilling to develop or come in to look to develop that property” with the legal dispute hanging over such transactions.

The county intends to seek legal fees — “it has cost the county quite a bit to defend this case,” Lund said — but hopes the relationship between the town and county can be more collaborative in the future.

“I know the commissioners still want to work with the town. The interest has always been to help the town develop and the region develop. So the hope is to put it behind and work together moving forward,” Lund said. “But we’ll see.”

Requests for comment to Dave McDonald, a Dutch John councilman, and the town’s attorney were not immediately returned.