A California State University trustee had a conflict of interest when, as CEO of a movie-theater company, he made a deal to build a multiplex on Fresno State land, a judge has ruled.

Moctesuma Esparza stepped out of line when he signed the lease in 2006 as chief executive officer of Maya Cinemas North America Inc., Fresno County Superior Court Judge Jeffrey Y. Hamilton Jr. concluded.

Maya was going to operate a multiscreen theater at Campus Pointe, a mixed-use development being built near the Save Mart Center. But Hamilton voided the lease.

The ruling is the latest twist in the debate over whether the $200 million Campus Pointe development is a proper way to use university land.

The idea of a commercial enterprise on 45 acres at Fresno State has drawn flak for years, especially in the business community. Several controversies, mainly involving fees for road improvements, had to be settled with Fresno, Clovis and Caltrans before work could begin.

Now some of it is already finished. The first apartments are open. Eventually, Campus Pointe is envisioned as having apartments for working families, students and senior citizens, as well as a hotel and shops.

Fresno State officials have said the project would generate $1 million in annual rent to help pay off debt on the Save Mart Center, and to support campus agriculture programs.

But the movie theater is in doubt. Esparza had signed the Maya deal with developer Ed Kashian. It was technically a sublease from Kashian, who is leasing land from a Fresno State auxiliary for Campus Pointe.

The sublease violated a state government code that prohibits CSU board members from having a financial interest in any contract they approve, Hamilton said in his July 1 ruling.

Esparza resigned as a CSU trustee in May 2007 after the owner of Sierra Vista Mall sued over the deal.

The Clovis mall's lawsuit cited the potential conflict of interest as well as issues with an environmental analysis for the development.

The mall's lawsuit named CSU trustees, Kashian Enterprises, Maya Cinemas and the California State University, Fresno Association, the nonprofit corporation that runs commercial operations at the university.

In response, the CSU trustees and Kashian argued that the deal was between Kashian and the CSU Fresno Association, which they said is a private entity. Maya's participation -- and Esparza's involvement in it -- was therefore part of a private contract, not a deal with the university, they argued.

"They are mistaken," Hamilton replied.

Citing case law, the judge said that in determining whether a conflict of interest exists, courts will "disregard the technical relationship of the parties and look behind the veil which enshrouds their activities in order to discern the vital facts."

He noted that Esparza was a member of the committee on finance and participated in a Nov. 8, 2006, meeting on Campus Pointe -- a meeting held more than two months after he signed the sublease.

"The winding trail here leads to the conclusion that Esparza was involved in the planning of the project, negotiated the contract with Kashian and executed the contract on Maya's behalf," the judge wrote.

Esparza couldn't be reached Tuesday to comment. His attorney referred questions to CSU officials.

In his ruling, Hamilton also found that the environmental analysis of certain traffic, water and air-quality issues for the project was inadequate. He ordered the developer and trustees to make revisions.

CSU attorney Christine Helwick said the environmental analysis complied with the California Environmental Quality Act, except for some additional study on the traffic, water and air-quality issues.

"CSU expects to be able to provide the necessary additional analysis in the near future," Helwick said.

The ruling can be appealed, but attorneys for Kashian and the CSU system said they haven't decided what to do next.

If Hamilton's ruling stands, Campus Pointe would have to find another theater operator, said David Doyle, the Fresno attorney who represented the mall owner, LandValue 77.

"Whether you can find another operator in today's economy remains to be seen," Doyle said.

Kashian responded: "If necessary, I can find another theater operator.

"I will comply with the law, and I know I will finish the project," he said. "I have $90 million in it."