Newark, NJ — A small township in northeastern Pennsylvania has reached a $6 million settlement — about six times its annual budget — in a lawsuit filed by a New Jersey real estate developer who had claimed harassment and threats after trying to build up property there.
Attorneys for Westfall Township, Pa., and developer David Katz, formerly of Sparta, N.J., filed papers Friday in federal court in Scranton; U.S. Magistrate Thomas M. Blewitt signed a final order this week.
The agreement signals the end of an acrimonious dispute that began in the late 1980s, moved into court in the mid-’90s and by last year had left Westfall on the hook for $20.8 million.
Westfall filed for federal bankruptcy protection this spring, the first time a Pennsylvania town had done so, according to attorneys.
Under terms of the settlement, taxpayers in the township of about 2,500 people will be assessed a special tax to pay Katz four payments of $75,000 per year for the next 20 years. The settlement calls for no interest to accrue.
Westfall Township’s attorney did not return a message seeking comment, and it was not immediately clear what the tax burden would be for individual residents.
J. Gregg Miller, a Philadelphia-based attorney also representing Westfall, called the settlement “fair and reasonable.”
The township also will be required to provide and maintain a sewage pumping station to serve part of Katz’s properties.
Katz did not immediately return a message left at his home in Florida.
The dispute began in the mid-1980s after Katz bought about 730 acres in a mountainous area straddling Interstate 84 where Pennsylvania, New Jersey and New York meet at the Delaware River.
According to a lawsuit filed in 1994, some Westfall residents tried to prevent Katz from developing the property, first with threats and then by gaining seats on the township’s board of supervisors and changing zoning laws in closed-door meetings, a violation of state law.
Some of the harassment turned ugly, according to court papers; machinery and property were vandalized, and Katz was subject to anti-Semitic slurs and threatened with a gun at least once.
A federal jury found Westfall guilty of violating Katz’s civil rights and awarded the developer about $10 million in 1999. He later settled with some of the individual board members — none of whom still serves on the board — and agreed to forgive the judgment against the town in return for the town providing water and sewer lines to the planned development.
But he later sued for breach of contract, and a federal appeals court upheld a $14 million judgment in 2005. With interest, that figure reached more than $20 million by this year.