Developer face lawsuit charging they reneged on contract to buy land along Gowanus Canal
Developer Toll Brothers has been hit with a multimillion- dollar lawsuit charging it reneged on a contract to buy land along the polluted Gowanus Canal after the feds moved to make the waterway a Superfund site.
Toll Brothers inked a $21.5 million contract in 2004 to buy the Bond St. property from owner Joseph Phillips, and it plans to build 460 condos and townhouses was approved by the city last March.
But when the Environmental Protection Agency proposed adding the canal to its Superfund list, the developer said it would scrap the project if the EPA cleanup went forward – contending the stigma of a Superfund site would make it impossible to sell condos.
Toll Brothers refused to close the deal – or pay the $15 million it still owed under the contract, according to the suit Phillips filed in federal court in August.
“Toll Bros. failed and refused to accept the deed or to pay the balance of the purchase price and, accordingly, is in breach of its obligations under the Contract,” the suit states.
Phillips is asking a judge to force Toll Brothers to go through with the sale and fork over the $15 million, plus unspecified damages.
Phillips lives in Florida and inherited the land from his father, David Phillips, who ran a paper goods warehouse there. Joseph Phillips could not be reached for comment, and his attorney declined to comment.
Toll Brothers shot back with a countersuit asking the judge to throw out the contract altogether and force Phillips to return their $5.75 million down payment.
In court papers, Toll Brothers’ lawyers argued they shouldn’t have to pay up because the Superfund listing was “unforeseeable” and made it impossible to build housing. And they said the EPA’s involvement means there’s a lien against the property – which, they contend, invalidates the contract.
But an EPA spokeswoman said no lien had been filed.
A Toll Brothers spokesman declined to comment on the litigation but said the developer’s vow to scrap the housing plans if Superfund goes through still stands.
The EPA still hasn’t made a final decision on the controversial Superfund plan, which Mayor Bloomberg has fiercely opposed.
Critics who have long charged the canal is too toxic to have housing on its banks said the developers had their heads in the sand if they didn’t foresee the risks.
“It was never going to work,” said Marlene Donnelly of Friends and Residents of the Greater Gowanus. “The data was out there…It’s hard to believe that they didn’t know.”
BY Erin Durkin