Y'know--there are always two sides to the story....

What WAS your agreement with them? How serious an impact did it actually have on their house? Did your builder exceed your agreement with them? Was cleanup and repair done in timely fashion?

Sounds like the impact on their yard was FAR more than they expected and they reacted emotionally rather than logically.

They may be nuttier than a squirrel's stash, but they, too, have a legit beef. It sounds like they handled it badly, though.

Neighbors' construction can have quite a lousy impact on your quality of life. After years of a development going in behind us, with lots of blasting, the new house behind us was occupied. They then IMMEDIATELY had the trees between us taken down and we looked at dirt and construction for then next 13 months. The drainage "solution" their landscaper put in has been causing pooling in MY back yard....Am I a rotten neighbor for being upset? Then the guy next to him is doing construction now, up hill from us. I did speak to his architect and they are ensuring that the OTHER source of flooding in our backyard will be fixed too...

All by careful back-fence diplomacy--and a wife smart enough to tell me to use that first...