A settlement was reached Tuesday between owners of the Thistledown at Seger House and its neighbors.

The boutique inn, just blocks from the historic Diamond in Ligonier Borough, will continue to host events in its adjoining designer pavilion. Attorneys for the nine-room hotel on West Main Street, neighbors, the borough and the zoning appeals board signed an agreement during a hearing before Westmoreland County Common Pleas Court Judge Harry Smail Jr. The settlement ends a lawsuit filed last year that sought to halt the inn from using the 2,100-square-foot wood-carved pavilion; its owners said the structure is only the third of its kind built in the United States.

Thistledown’s neighbors claimed the event space, which can hold about 120 guests, was a nuisance because of traffic and noise concerns, violated borough zoning codes, and that permits for its installation and occupancy were erroneously issued. Ligonier officials backed that claim when the town’s zoning hearing board last year rescinded its authorization for the structure months after it was installed and had hosted a series of events.

In a separate court filing, Thistledown owner Adam Gardner argued the permits obtained in 2024 were legal and that borough officials improperly acted last year to revoke them. The pavilion has continued to host events during the legal actions.

Tuesday’s settlement calls for the Thistledown owners to install landscaping between the hotel property and its next-door neighbor. It also limits excessive noise from events hosted at the pavilion to 6 p.m. during fall and winter months and 7 p.m. in the late spring and summer.

Thistledown lawyer Dwight Ferguson said hotel owners paid for a study to assess decibel levels attributed to events hosted on the property; the study concluded noise from the pavilion was not excessive.

“It’s been a frustrating process,” Gardner said. “We tried to do something nice for the town. We’re glad to be able to proceed and start booking events.”

Attorneys for the hotel and neighbors initially told the judge settlement talks had stalled. Smail pushed the lawyers to continue talks after he indicated the framework of a potential deal included what he called substantial concessions agreed to by the Thistledown owners.

Gary Falatovich, the lawyer for three neighbors, told the judge his clients were receptive to making a deal to avoid litigation that could take years to resolve but had yet to agree to a final settlement.

“I am very confident we will prevail, but I am getting a vibe here, so let me talk to them,” Falatovich said.

After a short recess, the lawyers returned to the courtroom and told the judge a deal was reached. Lawyers for the borough and the zoning hearing board said they backed the settlement reached by the hotel owners and their neighbors.

“A compromise is beneficial for all of us,” said Ligonier solicitor Mark Sorice.

Gardner and his wife, Michelle, have owned and operated the inn for more than a decade. The historic mansion was built early last century to serve as a home for coal baron John Seger and his family. The property was converted to a hospital in the mid-1940s and served as a surgery center until the Gardners bought and restored the building and opened a hotel on the property.

Work to install the wooden-frame structure imported from Germany was undertaken in September 2024. The European-style pavilion that adjoins the mansion features wood trim and a canvas shell that can be enclosed in the winter and exposed to the elements in the summer to host weddings, bridal showers, graduation parties and other gatherings.

Gardner said the litigation had limited bookings at the event space over the last year.

“People can now have confidence in a booking now that it’s official our business can continue,” he said.