Are these new homes? From your first post, it sounds like both you and your neighbor recently bought your houses. If this is a new subdivision, you and your neighbor might be able to force the contractor to remedy this situation. Win win for both of you.
They are older lake cottage properties. Nowadays, they couldn't have put that driveway in the way they did. To muddy the situation further, they are long married couple that doesn't seem to get along too well. They live 1500 miles away and only come up for a few weeks in the summer. One problem is that they have talked to multiple contractors and I'm sure their heads are swimming with prices, ideas and whose responsibility is who's. When they got the property line surveyed, they discovered that all the dying trees were on their land; which screwed up their plans to make me pay to get rid of them.
My biggest thing is I'm only willing to pay to rebuild my wall up to the root flares on the trees. I'm figuring that the root flares(collars) prove where the original grade is. I'm not paying for anything above that.
To make matters worse, they change their minds every time I talk to them. I'm getting pretty fed up with the situation. I finally did talk them into forgetting about for this year and to deal with it next year. When next year comes, I'm going to get all assertive with them and tell them what I'm willing to do and if they don't like, they'll have to sue me.
Haven't you gone to your lawyer yet? That's where to start with this as laws vary all over the place- literally- and they don't follow common sense. In the meantime make no offers and say nothing or you may incur liability.
Where I live, if a tree limb on my property falls on your property it is my problem if it is still attached to the tree. If it has separated completely I am responsible for the part on my property and you're responsible for the part on your property, even if the limb caused you other damage! And neither of us can legally touch the part on the other property without incurring liability for the whole limb and any damages it caused to either or both properties so I have to cut the limb at the property line and leave you with the rest unless you sign a hold-harmless damage waiver.
Again here and not necessarily there, if your tree roots damage my property you're responsible to repair the damage. The same goes for a tree that dies or falls for any other reason. It does not matter if I built something which could have been predictably damaged by those roots or the falling, and if I want to cut the roots on my property you cannot stop me even if it will surely kill the tree. If the tree dies and falls on my property you are liable if any of it is still on your property. If a windstorm dumps it wholly on my property, then you're in the clear.
Maybe now you will see that asking us is not going to be the best way to handle this. Let us know the outcome of the legalities and then we are all glad to help you deal with building or repairing your walls and your property, that's our job here and we like doing it just as much as we dislike legal problems!