EAST BRUNSWICK — Round one may have gone to Toll Brothers, but according to Mayor David Stahl, the legal battle is just getting started.
A state Superior Court judge recently refused a motion by East Brunswick to dismiss Toll Brothers’ lawsuit. In the suit, the developer claims the township breached its contract for the sale and redevelopment of the Route 18 property known as the Golden Triangle because it did not approve changes requested by the developer in response to changing market conditions.
Toll Brothers and the township both filed breach-of-contract lawsuits against each other earlier this year, four years after the developer agreed to buy the land for $35 million. Toll Brothers had approval to build 402 residential units and more than 180,000 square feet of retail space, replacing the existing retail uses on the site near Tices Lane.
Stahl was quick to downplay the judge’s decision, saying it is not a grave setback for the township. The township is considering an appeal of the decision.
At issue during the recent court hearings was a section of the contract stating that Toll Brothers may remove itself from the contract should “other conditions” make the project economically unfeasible. East Brunswick had argued that the term applied solely to government agencies such as the township, but the judge disagreed.
“The judge defined the term in one section in a manner that differs from our definition,” Stahl said.
“I don’t think that either side felt, based on these motions, that the case was over. This was the beginning of a long, drawn-out process. We’re just getting started,” he said.
Last November, Toll Brothers sent a letter to the township stating that the housing market had dried up and the project as approved was no longer economically viable. The builder said it would likely cost more to build the residential units than the price at which they could be sold. It asked township officials to consider changes such as eliminating the residential component and increasing the commercial uses.
East Brunswick officials said they intended to negotiate with Toll Brothers, but as a precaution adopted a $25 million bond ordinance that could be used to buy back the Golden Triangle, if necessary.
Stahl said he and the council had planned to consider the changes that Toll Brothers mentioned in its November letter. However, the builder demanded that the township make all the concessions it sought by the end of December, he said. The township sought additional details from the developer regarding its proposed changes, and though the information was provided in December, the Township Council had little time to discuss the matter, Stahl said.
“In addition, the details [provided] were totally unacceptable,” Stahl said.
Toll Brothers, which had paid the township $22 million of the purchase price, sought to hold off on paying the remaining $13 million until the project is built out and its profitability known, Stahl has said.
The mayor said he would not term Toll Brothers’ stance as negotiating, because the company gave the town an ultimatum to take it or leave it.
In early January, the company issued a notice of termination. The township, meanwhile, issued a notice that the developer was in default of the contract. The lawsuits soon followed.
Stahl said he was disappointed with the judge’s interpretation of the phrase “other conditions” in the contract terms, and noted that there is other language in the contract that makes it clear what the phrase means.
He said representatives of the township and the builder recently had some discussions aimed at settling the matter out of court, “but unfortunately we could not find any kind of agreement.”