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Court reverses $73.4 million verdict in Kings County land and water sale

The 5th District Court of Appeal in Fresno has overturned a $73.4 million verdict against McCarthy Family Farms and Bay Area developer John Vidovich and Sandridge Partners involving a land and water sale in Kings County.

The ruling said the defendants are still liable and sent the case back to Kings County Superior Court for further proceedings. That means they could still be ordered to pay millions of dollars in damages.

The appellate court opinion was made public Monday and becomes final in 30 days.

The land and water sale to Kings County Ventures and GROW Land and Water LLC was to benefit Quay Valley, a proposed planned community in Kings County along Interstate 5.

Reached in Los Altos, Vidovich, a player in southern San Joaquin Valley land and water deals, said he is still digesting the ruling.

“There’s some relief in the opinion, that is obvious,” he said. “I’m just not sure what it means.”

Quay Valley is a proposed planned community in Kings County along Interstate 5.

Fresno attorney Scott Reddie, who is representing Vidovich and Sandridge Partners, said he would not comment until the opinion becomes final. He said it’s possible the opinion could be modified if there’s a petition for a rehearing.

Russell Georgeson of Fresno, an attorney representing Kings County Ventures, said he would seek a rehearing and also submit an appeal of the appellate court ruling to the California Supreme Court.

“We believe it to be in error,” he said.

The dispute involves land and water rights for Quay Valley, proposed to house 150,000 residents in a sustainable and environmentally responsible community but needing a reliable source of water.

There’s some relief in the opinion, that is obvious. I’m just not sure what it means.

John Vidovich, defendant

(The project has been revived on a smaller scale in a different location.)

Quay Hays of Los Angeles, the developer behind the Quay Valley project, said Tuesday that he had yet to read the appellate ruling and could not comment.

The developer, working under the names Kings County Ventures and GROW Land and Water, sued McCarthy Family Farms, Vidovich and Sandridge Partners seven years ago after a land purchase and water deal fell through. Hays said the collapse of the deal caused Quay Valley to be suspended.

Lawyers for Kings County Ventures and GROW Land and Water said McCarthy agreed to sell 34 square miles of fallow land known as Liberty Ranch, a deal that would have included 25,000 acre-feet of water per year in perpetuity.

But, the lawsuit said, McCarthy breached the contract by selling the parcels to Vidovich and Sandridge Partners while the sale to Kings County Ventures and Grow Land and Water was already in escrow.

Two years ago, after a three-month civil trial in Kings County, the jury ruled against McCarthy Farms, saying it breached the contract.

We believe it to be in error.

Russell Georgeson, attorney

It also ruled against Vidovich and Sandridge Partners, saying both intentionally interfered in two contracts involving water.

The jury said they owed $73.4 million in compensatory damages – reportedly the largest award in Kings County history – and $55.2 million in punitive damages. A Kings County judge later reduced the punitive damages to $3 million.

The appellate opinion said the $73.4 million compensatory damages award is not supported by the record.

“Although proof of the precise amount of damages is not required, some reasonable basis of computation must be used,” the opinion states.

Only one expert witness testified about the value of the property in question, the ruling states.

The value of the water that came with the property was never established by expert opinion, or the owner’s opinion, as required by the evidence code, so the jury lacked the evidence to reach a value for compensatory damages, the opinion said.

Kings County Ventures and GROW Land and Water are entitled to a limited new trial on damages, the ruling said.

Additionally, “the record supports the jury’s findings of oppression, fraud or malice” by Vidovich and Sandridge in interfering with the Liberty Ranch option to sell agreements between McCarthy and Kings County Ventures and GROW Land and Water, the court said.

Although proof of the precise amount of damages is not required, some reasonable basis of computation must be used.

5th District Court of Appeal

Sandridge Partners is a farming operation controlled by Vidovich. In 2009, it sold thousands of acre-feet of State Water Project contract water to the Mojave Water Agency for about $73.5 million.

Two year ago, in another South Valley water case involving Sandridge, a Tulare County judge told Sandridge to stop pumping groundwater that was being piped 25 miles to an almond orchard in Kings County.

Lewis Griswold: 559-441-6104, @fb_LewGriswold

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