Opinion ID: 1888053
Heading Depth: 2
Heading Rank: 1

Heading: The Rise and Decline of a Contractual Relationship

Text: Sussex County approved Reserves' application to develop a 185 home residential community. Reserves and Crystal entered into a Purchase and Sale agreement for thirty unimproved residential lots located in Phase II of the development. Pursuant to the Agreement, Crystal agreed to pay a pro rata share of the development costs. [2] Reserves assumed sole responsibility for any costs not associated with the thirty lots. Before closing, Crystal assigned its rights and obligations under the Agreement to Bella Via. [3] Bella Via secured a loan from Severn Savings Bank to cover the purchase price, closing costs, and development costs. [4] The Purchase and Sale Agreement closed on October 6, 2004. Following closing, Reserves unilaterally hired a project manager, Obrecht-Phoenix, Inc., and a site contractor, Fresh Cut. To expedite matters, Reserves posted $2.5 million in cash to obtain a line of credit from Wilmington Trust Company to satisfy Sussex County's construction bond requirement. After reviewing the construction expenses, Bella Via determined that Reserves had exclusive responsibility to pay certain costs. Bella Via discussed that determination with Reserves and asked Reserves to set aside its exclusive costs in order to assure payment. Reserves reiterated that it would pay its exclusive costs, stated its intention to continue billing Bella Via for its proportionate share of the nonexclusive costs, but refused to set aside a sum certain as its exclusive costs. Bella Via found this arrangement unacceptable and refused to contribute its share of development costs until they and Reserves reached a more acceptable arrangement. Reserves continued to pay Fresh Cut and Obrecht for their services without any contribution from Bella Via.