Trinitas Partners, which helped launch a tidal wave of almond orchards east of Oakdale, is paying $4 million to settle a lawsuit in a case tinged with timely issues such as drought and speculation farming.
It’s the first known legal dispute among former partners involved in east Stanislaus County’s latest gold rush of nuts, lauded by some as a prime example of smart free-market opportunism and decried by others as a serious threat to dwindling groundwater.
Trinitas and a land flipper sued each other in 2011, accusing each other of trickery in deals that transformed low-value rangeland into lush orchards. After a nine-week trial, jurors in mid-December sided with middleman Ben Hardister, awarding him $2.8 million and saying that Trinitas should pay additional punitive damages.
That would have meant another trial phase to assess the wealth of Trinitas partners William Hooper, Ryon Paton and David Dias, who have additional investment partners in a few companies owning several other orchards. Rather than risk another judgment potentially worth several times the initial award, and more years in appellate court, Trinitas opted to cut losses, pay Hardister $4 million and walk away.
Hooper made verbal promises during land transactions but sneakily changed terms to favor Trinitas, contended Hardister, who has homes in Modesto and the Bay Area.
“(Trinitas) breached the contract, booted him out and then litigated him to death,” said Hardister’s Stockton attorney, Michael Dyer, a 1972 graduate of Modesto’s Downey High School. “He’s a stubborn guy, and he believed he was right.”
Hardister, who has ministered to San Quentin State Prison inmates, met the others at a Christian men’s conference, and Trinitas, based in Menlo Park, references the Holy Trinity. But religious references were not allowed in the trial to avoid unduly influencing jurors.
Witnesses described how Trinitas used a local grower to establish orchards before edging that grower out and hiring away his employees, Dyer said.
“The overall theme was big Bay Area money coming into the Valley and basically taking advantage of local farmers and businesses,” Dyer said.
Attorney Robert Riggs, representing Trinitas, noted that his clients admitted no wrongdoing in the $4 million settlement, which essentially overrides the jury’s verdict.
“In my view, Hardister is a slickster who got away with murder on this,” Riggs said. “Obviously, the jury didn’t agree with me.”
The case provides a real-world peek at motivating factors behind the startling conversion of often rocky land, previously considered good only for grazing cattle, into seemingly endless rows of almond trees taking over the Valley’s east side.
Hardister more than doubled his money by buying 900 acres north of the Stanislaus River for $2,800 an acre in 2007 and selling it to Trinitas for $6,000 an acre. The next year, he bought 369 acres south of the river for $3,300 an acre and sold it to Trinitas for $6,000.
Trinitas purchased about a dozen properties for a total of 7,200 acres between those two areas. Last year, the Oakdale Irrigation District agreed to deliver canal water to Trinitas and annexed that land, raising its value to an estimated $10,000 per acre.
Trinitas paid OID $25 million and spent $24 million to develop just the two orchards comprising 1,269 acres figuring in the lawsuit, suggesting that for its 7,200 acres, the company has invested far more than $100 million. Others have joined the surge, boosting almond orchards throughout the county from 8,738 acres in 1982 to 155,000 mature acres as of last year, not counting saplings that aren’t yet producing.
“My personal view is I’m glad I’m not in that business, with the rain we haven’t had,” Riggs said. “There is a huge amount of risk with any ag, otherwise everyone would be doing it, right?
“So these businessmen have taken enormous risks,” Riggs said, “and it’s unfortunate that this went to trial when everyone has taken the attitude that, ‘Well, you must be doing well, so you could afford it.’ ”
Almond growers in the Northern San Joaquin Valley grossed about $1.2 billion in 2011.
Trinitas’ deal has drawn praise for keeping precious irrigation water in the area, rather than water providers seeking high bids from elsewhere. Also, irrigation seeps into soil and replenishes aquifers rather than growers draining them with wells, a huge environmental concern that has entered both political and legal realms.
Hardly anyone noticed when Trinitas began planting saplings a few years ago. But hundreds of industrial-size wells have been drilled since throughout the county to keep alive millions of new trees – 100 huge wells in 2013 alone, a twentyfold increase over recent years. Many of those wells are expected to work overtime to make up for the water that irrigation districts won’t deliver this summer because of the drought.
With various reports of private wells going dry, some people and the Turlock City Council have called for a moratorium on well drilling. Last week environmental lawyers sued, seeking much the same thing and saying Stanislaus County should start requiring environmental review for well applications.
Meanwhile, some people are livid with OID for embracing Trinitas while rebuffing annexation requests from longtime local growers. Others were enraged to learn that the district was arranging to pay farmers to fallow land, freeing up water to sell for a huge profit to Fresno-area buyers while harboring plans to pump five times as much groundwater this year as normal. Forced out from closed-door negotiations by public pressure, OID leaders on Tuesday voted 4-1 to nix that deal despite having reaped $51 million from various water-selling deals in recent years.
Outcry likewise killed a 2012 proposal for the Modesto Irrigation District to sell water to San Francisco. OID last year agreed to sell water to that city, but needs MID’s cooperation and MID so far has said “no.”
County leaders are expected Tuesday to create a 21-member committee charged with suggesting ways of addressing the groundwater crisis.