Developer of delayed SLO Public Market project accuses partner of fraud, mismanagement
A ballooning legal feud between a handful of San Luis Obispo County developers and investors escalated Monday when a partner in the long-delayed San Luis Obispo Public Market at Bonetti Ranch project filed legal paperwork to have another partner ejected from their company due to bank fraud.
The lawsuit was filed in San Luis Obispo Superior Court on Monday by developer and attorney John Belsher against Bakersfield-based developer Taylor Judkins.
In the lawsuit, Belsher blames Judkins for the languishing project at the corner of South Higuera Street and Tank Farm Road, and accuses him of falsifying bank documents to secure a loan to benefit himself, among other allegations of mismanagement.
In addition to the SLO Public Market project, Judkins is behind San Luis Square, as well as a mixed-use project at the former home of The Tribune on South Higuera Street.
SLO Public Market was expected to open its first business spaces in November or December 2019, according to past company projections, but the project has long been delayed.
Belsher has long been an attorney in San Luis Obispo. In recent years, he’s gotten into development, which has led to several lawsuits previously brought by Judkins and other project investors that settled out of court.
P.B. Companies’ lawsuit does not name Belsher or his former partner in the enterprise — Ryan Wright, formerly known as Petetit — but only refers to P.B. Companies as the plaintiff, filing the action derivatively on behalf of Tank Farm Center LLC, the entity co-owned by Judkins and Belsher that is managing the SLO Public Market project.
P.B. Companies’ business license is currently suspended, according to the California Secretary of State’s website, which lists Belsher as Tank Farm Center’s manager.
Wright changed his name in April 2019 following his conviction of five felonies related to domestic violence. He now lives in Los Angeles County, and Belsher has said he has stepped down from his role with P.B. Companies.
The company’s lawsuit is just the latest in a wave of civil litigation containing serious allegations against Judkins, Belsher, Wright and other parties who still are or used to be involved together in various development projects in San Luis Obispo County.
In late April, Judkins filed a lawsuit against Belsher and Wright that accuses them of fraud, misrepresentation, and of engaging in a “double-escrow” scheme related to a downtown property containing office space that formerly housed Coast National Bank, as well as settlements from past lawsuits that have allegedly gone unpaid.
Judkins has a history of filing lawsuits against business partners.
In March, he and his family filed a lawsuit against SLO Brew Rock and The Carissa developer Hamish Marshall, accusing Marshall of misappropriating more than $3 million from the coffers of a recently completed housing project.
In response to that action, Marshall’s attorney, Roy Ogden — who is also representing Belsher and P.B. Companies — turned around and accused Judkins of failing to pay roughly $700,000 in construction costs for the project. Ogden said at the time that Marshall will be filing a cross-complaint against Judkins over the project, which had not been filed as of Tuesday.
SLO developer alleges fraud and mismanagement
In his lawsuit Monday, Belsher says P.B. Companies and Judkins were 50-50 partners in Tank Farm Center, LLC, a company they formed to acquire the property on South Higuera and Tank Farm Road and develop the multi-tenant commercial retail center now known as SLO Public Market.
Under their operating agreement, P.B. Companies secured entitlements for the project while Judkins acted as manager, the lawsuit states.
Between 2012 and 2016, Belsher alleges, P.B. Companies secured allowing for the current Tractor Supply building and other plans and permits for the project’s first phase.
In 2016, Belsher alleges the company secured approvals for the construction of the overall commercial center and the restoration of the Long Bonetti Barn, granary building, water tower and several new buildings.
According to the lawsuit, in 2014, after P.B. Companies secured the permit for the Tractor Supply building, Judkins hired a construction company that they exclusively used on their construction projects and awarded it a contract which was “substantially more favorable” to the construction company than Tank Farm Center LLC, resulting in a doubling of the cost of the project.
Because Judkins mismanaged the project, the 3,200-square-foot Tractor Supply building took nearly two years to complete, the lawsuit states.
In October 2017, Judkins secured a $18.6 million construction loan from a bank on behalf of Tank Farm Center, LLC, to cover work on the second phase of SLO Public Market, the complaint says. But Belsher alleges that Judkins submitted a “false and doctored” operating agreement to the bank that didn’t disclose that P.B. Companies was a 50% stakeholder in the company.
The lawsuit accuses Judkins of a host of other financial misdealings, including taking out a $3 million loan from one of the Judkins’ family’s other businesses and lying to Belsher about the interest rate when confronted about the deal.
Belsher also accuses Judkins of writing checks to himself from the Tank Farm Center bank account, and using company funds to pay for the Judkins’ San Luis Obispo rental property and private charter jets.
Finally, after the Tractor Supply building was victim to an arson that caused $200,000 in damage, Belsher subsequently learned that Judkins had never obtained any fire or general liability insurance for Tank Farm Center LLC, forcing the company to pay out of pocket for repairs, the lawsuit states.
“Judkins’ gross negligence and willful disregard has delayed the completion of the project, causing the need to require capital contributions of the members,” the complaint reads, “and Judkins is abusing this situation hoping to dilute (P.B. Companies’) member interest, with the direct result of causing (P.B. Companies) to lose money and potentially lose the project.”
The lawsuit seeks unspecified monetary damages and asks the court to expel Judkins from his interest in Tank Farm Center, LLC, due to alleged violations of the state’s corporations code, and appoint a third party to take control of the SLO Public Market project.
Ogden wrote in an email Monday that Belsher has given Judkins “ample opportunity to find a business solution that would have allowed the parties to separate their business relationships going forward.”
He said Judkins’ “double escrow” lawsuit against Belsher was filed only after Belsher requested bank records from Judkins in connection with the SLO Public Market project.
“The plaintiff was hoping not to have to file this latest lawsuit. These projects have great potential if they can be finished correctly and timely,” Ogden wrote. “John Belsher would have preferred to operate his businesses in peace rather than engage in more litigation with Judkins.”
In response, Jay Raftery, attorney for the Judkins family, wrote in an email Monday that “This lawsuit is nothing more than an unfounded and petty effort by Mr. Belsher, Mr. Petetit (Wright), and PB Companies to retaliate against my client for filing that lawsuit.”
“Moreover, we recently contacted the Secretary of State who informed us that the Franchise Tax Board has suspended P.B. Companies from conducting any business whatsoever — including filing or defending litigation,” Raferty wrote.
Ogden responded, saying that “Tank Farm Center, LLC is the victim and true plaintiff here.”
“Technically, Jay is correct that the FTB temporarily suspended the company for not filing a tax return, but I have been told that this technicality will be resolved any day now when the return is filed,” Ogden wrote.
P.B. Companies’ lawsuit is scheduled to have its first hearing in San Luis Obispo Superior Court on Sept. 21.
SLO Public Market project delayed
The San Luis Obispo Public Market at Bonetti Ranch project was delayed multiple times even before the coronavirus pandemic hit.
A representative told The Tribune the project was scheduled to open in fall 2019, with projected openings of its eight slated buildings in the fall — the first seven that September and additional facilities in November and December.
Several businesses have signed on as commercial tenants of the project. Those include Central Coast Creamery, High Street Market & Deli, Kraken Coffee Co., Negranti Creamery, Orangetheory Fitness, The Neighborhood Acai and Juice Bar and Stafford’s Chocolates.
Figueroa Mountain Brewing Co. had also previously signed on to become a SLO Public Market tenant, but Belsher’s lawsuit says the company has now “lost interest due to business squabbles it had with the Judkins family.”
None of the businesses have yet moved into the buildings as construction continues.
In January, a project representative said “we don’t have an official date yet unfortunately” for the opening of SLO Public Market.
This story was originally published May 20, 2020 at 11:40 AM.
