HANFORD — Remember Quay Valley Ranch, that futuristic city that was proposed in 2007 to rise from the sagebrush salt flats southeast of Kettleman City?
It resurfaced last week as a Kings County jury awarded a whopping $128.6 million judgment by finding that Quay developers got shafted out of the water they needed to jump-start the $10 billion proposal.
Turns out the McCarthy Family Farms, a Westside ranch, was in the middle of a contract to sell Quay Valley Ranch developers the water rights that went along with 22,000 marginal acres.
But then McCarthy abruptly sold the water rights to Sandridge Partners, a Bay Area consortium that owns farmland in Fresno and Kings counties.
The developers sued McCarthy and Sandridge in December 2009, and the legal fun began. The upshot hit nearly four and a half years later on Friday, when the jury’s verdict came down — a staggering $73,400,000 in compensatory damages and $55,210,000 in punitive damages.
“Water is gold,” said Russell Georgeson, an attorney for some of the plaintiffs. “Water is power.”
In a sign of just how valuable the water rights are in the context of drought, the jury’s compensatory damages award was $23.4 million more than the $50.6 million that the developers were going to pay.
Plaintiffs’ attorneys said the actual amount Sandridge paid was more than $50 million, but that Sandridge also offered McCarthy a number of other perks such as leasing the land back for $1 a year, granting an ownership share in Sandridge and allowing McCarthy to keep the farm subsidies that go with the property.
The jury decided all of this was worth $73.4 million, not to mention the $55.2 million punishment tacked on as the icing on the cake.
So what might have persuaded the jury?
Well, for starters, the plaintiffs’ lawyers made full use of the fact that, earlier in 2009, John Vidovich, one of the principals in Sandridge, sold $73 million in Kings County-based water rights to the Mojave Water Agency in Southern California for urban development.
They plaintiffs’ lawyers argued that Vidovich pursued the McCarthy water to offset the $73 million sell-off, even though he knew that it was already spoken for.
“I don’t want to make any statement except that we were shocked and surprised [at the verdict],” Vidovich said in a phone interview.
McCarthy representatives couldn’t be reached for comment.
“Because of the amount of money involved ... It’s likely one side or the other will end up appealing,” said Marshall Whitney, a lawyer for Vidovich and Sandridge.
According to Phil Baker, an attorney representing some of the Quay developers, McCarthy concluded that they were out of money. In late 2009, the real estate market was in freefall, big loans were impossible to get and Quay was going nowhere in a hurry.
Whatever the reason, McCarthy made the sale, and the rest is history.
One thing the verdict doesn’t do is restore the water supply Quay was going to tap into. That would have required proving in court that the Quay developers could have fronted $50.6 million right then and there in late 2009.
So with all this new cash — and assuming the verdict is upheld by the trial court judge and survives an almost certain appeal — could Quay Valley Ranch achieve a renaissance?
Quay Hays, the originator of the concept, couldn’t immediately reached for comment. Edward Rodriguez, an independent real estate broker in Fresno, thinks it just might have a chance.
“It’s just a gut feeling,” he said. “There’s obviously a threshold that you’d need to overcome.”
The reporter can be reached at 583-2432 and at email@example.com. Follow him on Twitter @SethN_HS.