$10M suit claims Patterson water rights wrongly sold

12/09/2013 5:25 PM

12/09/2013 9:36 PM

People with interest in a future business park conspired to rob a defunct food packer of its legal claim to groundwater near a 1,119-acre area approved last week for annexation, Patterson Frozen Foods shareholders claim in a $10 million-plus lawsuit.

It’s too soon to tell how the lawsuit might affect the annexation, if at all, or plans for 10,000 industrial and retail jobs in the West Patterson Business Park.

The struggle centers on an industrial well, the capacity of which apparently rivals the amount of water used by the rest of the city of Patterson. City Hall and developers Jeff Arambel and KDN Enterprises relied on the well to justify having enough water for the giant business park, between busy Interstate 5 and the successful Keystone industrial complex.

Patterson Frozen Foods has not operated for several years, but shareholders continue to own land and farming interests. They sold the well and surrounding property, east of the annexation site, in 2007 to Patterson Vegetable Co., which closed in June 2012. That closure should have triggered Patterson Frozen Foods’ right to buy back the water system under the 2007 agreement, the lawsuit says. Instead, Patterson Vegetable Co. sold to other companies the land, well and water rights for $44,000, “which is a price that was a sham and small fraction of its true value,” the lawsuit says.

The water rights are worth at least $10 million, says the lawsuit, filed in Stanislaus County Superior Court by Modesto attorney Frank Zumwalt, representing Patterson Frozen Foods and Vegetables International.

The Bee was unable to reach attorneys for the defendants.

‘The rightful owner’

Patterson Vegetable Co. and its buyers let pumps and related sewer ponds fall into disrepair, risking “environmental contamination” and enforcement action from state officials, the lawsuit says. The companies also stopped making payments on $2.8 million loaned by Patterson Frozen Food shareholders, the document says.

“PFF is the rightful owner,” the lawsuit reads.

Shareholders will seek more than $10 million in punitive damages because the conspiracy amounts to “fraud, malice and oppression,” the lawsuit says.

Zumwalt said annexation proponents were well aware of his legal challenge when they assured Stanislaus Local Agency Formation Commission members of an ample groundwater supply while seeking annexation approval last week. The commission’s staff frowned on that guarantee and found fault with other plans regarding sewage capacity, road improvements and farmland preservation, but commissioners, noting a promise of 10,000 jobs, unanimously approved the annexation Wednesday.

Zumwalt filed the lawsuit two days later.

Also listed as defendants are Woolf Vegetables Co., Coastal Green Vegetable Co., Traina Pacific LLC, Traina Pacific Water Co., Sierra Pacific Refrigerated Services, Sire Westside Investments, Eagle Valley Investments, Valley Property and Equipment Rental, Patterson Las Palmas LLC and Rabin Worldwide.

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