The Four Seasons at Great Notch lawsuit, a construction defect case brought in 2015 by the community’s condominium association against Hovnanian Enterprises and several affiliates, ended in a confidential settlement and was dismissed with prejudice on April 30, 2024. The association had sought roughly $119.5 million on its remaining claims. Hovnanian told the SEC the payout was “not materially different from what we had reserved,” but neither the reserve nor the settlement figure was made public.
What the Association Sued Over
The association filed in the Superior Court of New Jersey, Law Division, Passaic County, naming Hovnanian Enterprises, Inc. along with K. Hovnanian at Great Notch, LLC; K. Hovnanian Construction Management, Inc.; and K. Hovnanian Companies, LLC. Design professionals and contractors involved in the 800-plus-unit active-adult development in Woodland Park were also named.
The complaint alleged construction defects, design defects, and geotechnical problems across the community. It also included a claim under the New Jersey Consumer Fraud Act, which allows for treble damages. And it asked the court to pierce the corporate veil of K. Hovnanian at Great Notch, LLC, so that the parent company could be held directly liable for the developer subsidiary’s obligations.
How the Case Was Resolved
Resolution came in stages. In 2018, the Hovnanian-affiliated defendants reached a partial settlement that the company described in SEC filings as an “immaterial” amount. Mediation sessions followed in November 2019, with more scheduled for spring 2020 and trial set for September 2020.
The remaining claims were resolved through mediation in December 2023, and a final confidential settlement agreement was executed in February 2024. The consent order of dismissal, entered on April 30, 2024, was with prejudice as to the Hovnanian defendants, meaning those claims cannot be refiled.
Why the Veil-Piercing Claim Mattered
The attempt to reach the parent company was central to what the association could actually collect, and it fit a broader pattern of litigation over how Hovnanian structured its development subsidiaries.
A 2019 case involving a different community, Four Seasons at North Caldwell, examined nearly identical corporate arrangements. The plaintiff there alleged that Hovnanian Enterprises exercised “pervasive domination and control” over its developer subsidiary, K. Hovnanian at North Caldwell, III, LLC, and that the structure amounted to a “corporate maze” leaving the developer entity without assets to satisfy liabilities. The court dismissed several claims against the parent and sister companies for lack of specific factual allegations about each entity’s role, but allowed the veil-piercing count to survive the motion to dismiss.
A Hudson County case went further. In 2017, a jury awarded $9 million to the condominium association at Grandview at Riverwalk Port Imperial in West New York after a six-week trial. The jury found $3 million in liability, which was tripled under the Consumer Fraud Act. Lawyers said the final award could exceed $20 million once attorneys’ fees and prejudgment interest were added. That jury pierced the corporate veil to reach the parent despite Hovnanian’s use of multiple subsidiaries.
The Great Notch settlement means the veil-piercing question was never decided on the merits in that case. What the association recovered, and from which entities, remains confidential.
The Development Itself
Four Seasons at Great Notch is a gated, age-restricted community for residents 55 and older, sited in Woodland Park and Clifton, New Jersey, about 12 miles from New York City. K. Hovnanian broke ground in October 2005. It was planned for 814 townhouse and garden-home units across multiple phases, with a 26,000-square-foot clubhouse.