A group of 77 residents of the Watling Street area of Motherwell, North Lanarkshire, started legal proceedings with a view to securing remediation of the land on which their homes are built.
A total of 48 homes are included in the action raised by legal firm Collins Solicitors against North Lanarkshire Council, Lanarkshire Housing Association, Clyde Valley Housing Association, City Link and Scott Wilson (Scotland) Ltd.
Following a hearing at the Scottish Court of Session in Edinburgh, North Lanarkshire Council is no longer being pursued, although it has been left with a bill of £325,000 for air and ground tests it carried out and a legal bill of around £35,000.
Proceedings against the additional four defenders will continue, with the case due back before the court later this year.
Des Collins, senior partner at Collins Solicitors, said: "North Lanarkshire Council definitely has a case to answer in this matter, and ongoing responsibilities towards those living in the affected area, but we believe the case against other parties will deliver a quicker positive outcome for our clients."
A spokesman for North Lanarkshire Council said: "We are pleased the 77 residents, acting on the advice of their legal representatives, have agreed to drop us from the action."