Developer Liable To Contractor For Misrepresentations Regarding Project Funding

The Eighth Circuit Court of Appeals has affirmed a jury verdict finding that a developer and its founder defrauded a contractor by misrepresenting the availability of construction funding. See Selective Ins. Co. of Am. v. Heritage Const. Cos. et al, Case No. 24-2333, 2026 WL 263591 (D. Minn. Feb. 2, 2026). The case involves construction of a new osteopathic medical school in Minnesota to be funded by the developer's issuance of bonds. The developer told the contractor that all funding necessary for the project, i.e. $7M, would be available immediately upon closing of the bonds. In reality, only about $1.2M was immediately available with the remainder contingent on the medical school obtaining accreditation. Shortly after construction began, the developer ran out of money, its accreditation application was denied, and it defaulted on its payment obligations to the contractor. The contractor sued the developer and its founder for breach of contract and fraud. Prior to