North East files law­suit against de­vel­op­ers

Seeks $455K from Ch­e­sa­peake Club Fair­way Links



— The town is su­ing two de­vel­op­ers and a bond com­pany for nearly half a mil­lion dol­lars re­lated to un­fin­ished work in the Ch­e­sa­peake Club Fair­way Links de­vel­op­ment.

Last month, the town filed a com­plaint in court seek­ing a to­tal of $455,914.50 from two de­vel­op­ers, First Land De­vel­op­ment I, LLC and First Mary­land Hold­ing Co. IV, LLC as well as First In­dem­nity of Amer­ica In­sur­ance Com­pany (FIA) of Par­sip­pany, N.J., ac­cord­ing to doc­u­ments filed in Ce­cil County Cir­cuit Court.

Though Fair­way Links is lo­cated right next door, nei­ther the de­vel­op­ment nor the de­vel­op­ers is af­fil­i­ated with the Ch­e­sa­peake Bay


Golf Club.

The de­vel­op­ment is also not lo­cated within North East town lim­its, but it is within North East’s wa­ter ser­vice area.

As such, the town signed pub­lic works agree­ments with First Land and First Mary­land in 2011 and 2013 re­gard­ing wa­ter ser­vice. Un­der the agree­ments, North East agreed to al­low the de­vel­op­ment to pro­ceed as long as the com­pa­nies in- stalled the proper in­fras­truc­ture to hook up to the town’s wa­ter ser­vice. As part of the agree­ment, the two com­pa­nies put up bonds that the town could call in should the work not be com­pleted, ac­cord­ing to court doc­u­ments.

First Mary­land put up a $84,727.50 bond for phase H2 of the de­vel­op­ment, which in­cluded lots on Chip Shot Court, Bay Club Park­way and Tour­na­ment Cir­cle. First Land put up a $371,187 bond for phase H3 of the project, which in­cluded lots on Five Iron Drive and the re­main­ing lots on Tour­na­ment Cir­cle. Both bonds were put up through FIA.

But both First Mary­land and First Land failed to com­plete the work in time and were un­re­spon­sive to in­quiries from the town, ac­cord­ing to the law­suit. So, last Oc­to­ber, the town hired an en­gi­neer­ing firm to as­sess the sta­tus of the project. Then, in Novem­ber, the town sent a let­ter to FIA call­ing in the bonds, ac­cord­ing to court doc­u­ments.

FIA how­ever, has re­fused to com­plete the work or pay the town to do so, caus­ing the town to file suit in court. As of the end of June, North East has al­ready spent $2,946.01 to pay for en­gi­neer­ing and le­gal ser­vices per­tain­ing to th­ese two de­vel­op­ment phases, ac­cord­ing to court doc­u­ments.

Ac­cord­ing to an Oc­to­ber 2015 sta­tus re­port pro­vided by North East of­fi­cials, the ar­eas in ques­tion con­sist of ap­prox­i­mately 140 lots, about 50 of which have homes on them and have wa­ter mains and tap ser­vice in­stalled.

The Ch­e­sa­peake Club is one of two un­fin­ished de­vel­op­ments the town of North East has sought to col­lect bonds from over the past year. Also in Novem­ber, the town called in about $2.5 mil­lion worth of bonds re­lated to the Ridgely For­est de­vel­op­ment off of Route 7. This de­vel­op­ment, which is lo­cated in town lim­its, was orig­i­nally owned by de­vel­oper Clark Turner, who filed for bank­ruptcy last fall.

Much of the work in Ridgely For­est, in­clud­ing street re­pairs, side­walks, street­lights and land­scap­ing has not been done or is in­com­plete. It’s also not clear who cur­rently owns the de­vel­op­ment. The town plans to file a law­suit in court within the next few weeks in hopes of re­cov­er­ing money to fin­ish up the parts of the de­vel­op­ment that have al­ready been com­pleted.

Like Ridgely For­est, it’s also not clear who’s cur­rently in charge of First Mary­land, First Land or the de­vel­op­ment it­self.

Signs through­out the de­vel­op­ment ad­ver­tis­ing the homes di­rect peo­ple to Key­stone Cus­tom Homes, a cen­tral Penn­syl­va­nia home builder. Calls to Key­stone ask­ing about its in­volve­ment were not re­turned. But the de­vel­op­ment is listed on its web­site, and the com­pany an­nounced it would be sell- ing homes in the de­vel­op­ment in a post on its blog from Feb. 9, 2015.

Michael H. Rusk is listed as the res­i­dent agent for First Mary­land, which is still an ac­tive cor­po­ra­tion in Mary­land but is not in good stand­ing with the state. When reached on Wed­nes­day, Rusk, an ac­coun­tant, said First Mary­land is no longer a client and that the com­pany failed to take him off the of­fi­cial pa­per­work. He added that he didn’t know any­thing else about the cur­rent sta­tus of the com­pany.

First Land is also still listed as an ac­tive cor­po­ra­tion in Mary­land, though it is also not in good stand­ing with the state. Michael J. Palmisano is named as its res­i­dent agent.

When reached on Wed­nes­day, Palmisano said he was in­volved with First Land. But when asked about the court ac­tion, he said “I’m out of that now but thank you” and hung up.


A sign on the cor­ner of Chip Shot Court and Bay Club Park­way lists First Mary­land Hold­ing Co., IV, LLC as the de­vel­oper of Ch­e­sa­peake Club Fair­way Links.

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