Assistant County Administrator Scott Johnson and Commissioner Scott Dean said they received notice from Chris Driver, the county's defense attorney, that at least part of the lawsuit had been dropped by the plaintiffs, whose $57.5 million lawsuit claimed county officials had restricted development of Marshall Square.
The 57-acre, mixed-use development was approved by the county in 2004.
On Wednesday, Superior Court Chief Judge J. Carlisle Overstreet made no decision in a hearing related to the lawsuit. Arguments for punitive damages were to be heard in a later hearing.
"My understanding is that the Marshalls have dismissed the punitive damages," Johnson said. "Our attorney filed a motion to dismiss the punitive damages, so I'm not sure if they felt they needed to withdraw because of our motion."
The lawsuit stems from a decision commissioners made in May to limit the number of apartments in the development to 189, down from 338. Reducing the residential density made the project unfeasible and halted work, according to the developers.
Beyond the initial claim for $40 million in punitive damages, the developers also sought $10.3 million to cover infrastructure, engineering and other development costs. More than $7 million was spent to clear and grade the property to make improvements, according to the lawsuit.
Dean said he has not been informed of any changes in the lawsuit beyond the punitive damages.
"I know that a portion of the Marshall lawsuit has changed," he said. "The $40 million has been waived or withdrawn."
Bill Trotter, the attorney for the Marshall family, could not be reached Monday night.