Woolford Kanfer Law recently represented a prominent central Pennsylvania homebuilder in a breach of contract lawsuit against the developer of a well-known subdivision in Lancaster County. The written contract between the developer and the homebuilder required the developer to pay the costs to grade the site, install streets and utilities and other subdivision improvements up to $8.6 million which was the estimated costs of the subdivision improvements. If the costs exceeded $8.6 million, the developer and homebuilder would each be responsible for half the additional costs. In other words, they would split the overrun.

Before all the subdivision improvements were finished, the developer told the homebuilder that it had already spent $8.6 million and there was still a lot more work to be done. The developer claimed it was experiencing cash flow problems and asked the homebuilder to advance 100% of the additional costs (instead of 50% as contemplated in their contract) and orally promised to reimburse the homebuilder for its 50% share of the additional costs when the housing market rebounded. Several years later when the economy picked back up, the homebuilder requested reimbursement of the additional costs. The developer made promises to pay, but ultimately reneged and dared the homebuilder to sue him.

The homebuilder filed a lawsuit and discovered that the developer had never spent $8.6 million in the first place. The homebuilder therefore argued it should not have paid for any of subdivision work and sued to get its money back. In March 2018, following a multi-day bench trial, the judge sided with the homebuilder and entered a verdict of $1,050,000. The developer appealed to the Superior Court, but the Superior Court rejected the appeal and determined that the trial judge’s rulings were correct. The developer finally paid the judgment at that point, but by the time it paid, $70,000 in post-judgment interest had accrued and was tacked onto the judgment. The victory was particularly satisfying because of the complexity of the accounting and construction issues that were involved.