The development group behind a 230-home subdivision on Golf Links Road is suing the Jamestown Sanitary District and its contracted engineering consultant, Black Water Consulting Engineers, for providing them with what it claims was a false and overstated available capacity for new residential hookups before it planned construction.
"They didn't plan for adequate capacity, that was threatening to derail the whole project," Valley Vista developer Krag Brotby said. "We invested a great deal of time and money based on that assertion."
There are currently four model homes erected at the site of the planned subdivision, which is dubbed Valley Vista Village.
“Valley Vista features charming traditional homes that bring quality and affordability to a delightful foothill community,” a website for the subdivision states. “Factory built to exacting standards, these affordable Valley Vista homes are offered at prices substantially below comparable homes in the area.”
In a third amended complaint filed on July 2, plaintiff Valley Vista Property Investments claimed that the Jamestown Sanitary District (JSD) and Black Water were negligent in 2014 when they estimated that the district would support 492 additional residential connections at the proposed development site.
After Valley Vista bought a portion of the property in 2018, it was contacted by the JSD and notified the district could only support a maximum of 83 units.
Scott Ward, of the Sonora-based law firm Young, Ward and Lothert, which is representing Valley Vista Property Investments, characterized the litigation on Wednesday as at the "very, very beginning."
They claim that a will-serve letter from the JSD, or a written commitment to provide service, was not required to prove negligence because the originally provided information was erroneous and predicated investment into the project based on false information.
Sarah Ornelas, of Borton Petrini, LLP, a law office in Modesto representing the JSD, could not be reached for comment on Wednesday.
Patricia Ingalls, manager and finance officer at JSD, said in an email to The Union Democrat that the district does not comment on ongoing litigation.
The capacity estimates were based on a new wastewater treatment plant that was not in operation at that time.
In 2019, the JSD announced that a new $13.73 million wastewater treatment facility on Karlee Lane was planned to be open by September this year.
The district broke ground on the new facility in June 2019, with Auburn Constructors, LLC, as the general contractor. The 8.6-acre facility would replace the 3.5-acre plant off Highway 108 near Woods Creek in operation since 1952, a press release on the JSD website stated.
About half of the project costs were paid by a $6 million grant from the State Water Resources Control Board’s Clean Water Revolving Fund.
John D. Broghammer, an attorney for the Roseville based law firm Sims, Lawrence & Arruti, which is representing Black Water, said he planned to file a demurrer, or an objection to the plaintiff’s filing, on the grounds that it is invalid for a suit.
Broghammer said that Black Water provided a "technical answer to a technical question" asked by the JSD, which hired them on a wide-reaching engineering contract in 2012. Whether the calculation was correct was a moot point, he said.
"Black Water owed no duty of care to anybody but the district,” he said. “It didn't have any obligation to Valley View or anyone else. And you don't want an outside consultant to have to serve two masters, we only serve one, and that's the district.”
He pointed out that Valley Vista and Black Water had no contract with each other and noted that the JSD did not have a will-serve letter, or a commitment to services, with Valley View.
The complaint states that Valley View is requesting at least $236,000 in damages related to obtaining permits, engineering studies and other costs based on the Black Water conclusion that the JSD had more than sufficient available capacity.
The plaintiffs negligence against Black Water and JSD, as well as negligent misrepresentation and breach of intended creditor beneficiary contract for only Black Water.
The court documents outline a development process at the site that was years in the making and preceded 2014. The owner of the property at the time, Ron Robinson, decided to sell it for residential development and hired David Ragland, of Ragland Engineering, to assist in the viability of that goal.
Ragland was responsible for communicating with the JSD on the initial inquiry to determine how many additional residential connections the district was capable of serving and providing that information with potential purchasers.
The plaintiffs have claimed that the JSD had a duty to provide Robinson, and by extension future owners of the property, with reliable information which could have been passed on to potential purchasers.
The plaintiffs further claim in the lawsuit that the incorrect value provided to them, from Black Water to the JSD to Robinson, constituted negligence that held them liable for damages.
"In fact, Robinson and his successors in interest were actually and logically indifferent to the precise figure, as long as it was accurate,” the lawsuit states. “There can be no conflict of loyalty if all parties expect nothing aside from accuracy.”
Black Water, an engineering consulting service based in Modesto, was tasked with calculating the precise residential capacity of the JSD as its district engineer, for which they had a contract dating back to 2012.
The plaintiffs argue that they bought a portion of the property in July 2018 under the pretense that the JSD had sufficient capacity to provide sanitation services for the 230 units they planned to build there.
In 2019, Valley View and its engineering consultant, Mid-Valley Engineering, began working with Black Water to plan the connection.
The "plaintiff spent hundreds of thousands of dollars over the next eight months in detrimental reliance on the accuracy of Black Water's calculation," the complaint said.
A document dated June 17 this year assigns the rights of Robinson and his wife in any claims to Valley Vista.
On Sept. 25, 2019, the JSD contacted Valley View and explained that it had available capacity for just 83 new residential units, explaining the reduced capacity resulted from its commitment to provide service for existing customers and maintain a 10% reserve.
The value is ascertained based on the capacity of the new wastewater treatment plant that was at that time, and remains, under construction. The capacity was identified as 230,000 gallons per day, with an average daily water flow of 187,000 gallons. After limits of the 10% reserve and subtracting other reserved capacity, only 9,500 gallons per day remained.
"Since available capacity is merely the difference between total capacity and the current commitments, current commitments [are] half of the crux calculation,” the complaint states. “Failing to consider that would be patently negligent.”
The plaintiffs claim that the failure to provide accurate information was due to a failure by the JSD to provide Black Water with accurate or complete information on customers or capacity, or that Black Water failed to consider JSD's current commitments when making its calculation, or both.
The complaint includes scans of apparently original documentation regarding the agreement, including the contract between JSD and Black Water; a report letter from Black Water to JSD regarding the 492 additional connections that the district was estimated to be able to support; the assignment of legal rights to Valley Vista Property Investments from Ron and Lesley Robinson; and a letter from the JSD to Valley Vista on the limited capacity.
Brotby said Valley Vista was waiting on final permits to begin the grading process at the residential site, which he expected to be issued within 30 to 60 days.
Quincy Yaley, county community development director, said the project was approved in 2010 by the Board of Supervisors, but proposed changes under new ownership will require a public hearing and consideration by the board.
Yaley said the Valley View application at this time is incomplete and on hold. Once the necessary materials were submitted, the public review process would be initiated to consider the project changes, she said.
Brotby indicated the changes were on the plan to connect the subdivision to Tuolumne Utilities District’s sewer system and for modifications to its oak tree mitigation plan.
Lisa Westbrook, spokeswoman for TUD, confirmed Valley Vista is paying to construct a new sewer lift station that will pump to the district’s Mill Villa sewer lift station and ultimately be transferred to its treatment plant.
The TUD board has approved developer agreements to provide water and sewer service to the project, with the developer paying for the infrastructure.
"Once the facilities are completed and accepted by TUD, we will maintain them," she said in an email. "The monthly utility charges from the new connections at the development will cover our costs to maintain the new facilities."
Valley Vista will pay capacity fees on a lot-by-lot basis to TUD and will also construct a water storage tank at the project site.
"Having a second tank gives the district storage redundancy, which would be useful when tanks need to be rehabbed, decreases chances or impact of system wide outages, and improves fire flow," Westbrook said.
Brotby said the project is a "much longer run" than the one originally planned with the JSD, and will cost about $500,000 more than planned.
In 2019, Brotby told The Union Democrat that 45 people have bought into the community. The homes will be prefabricated and are expected to be sent 95% complete from Portland, Oregon, with interior work like carpeting and electrical being finished on site.
The homes at Valley Vista are planned to each range from 1,300 to 3,000 square feet, with buyers able to choose from six models and nine floor plans.
Contact Giuseppe Ricapito at firstname.lastname@example.org or (209) 588-4526.