By Scott Jason
MERCED -- Central Valley Concrete won a $2.5 million settlement Thursday against a competitor, which a jury said feigned interest in buying the company so it could gain access to financial records and evaluate its potential for success in the Merced market.
American Transit Mix, now owned by Houston's Cemex, agreed to pay the Merced-based company $2.5 million in damages after a jury found it guilty on five charges. The trial in Merced County Superior Court lasted about three weeks.
"I think the jury sent a message to the community that if you engage in sharp business practices, you will be held accountable," CVC's Fresno attorney Steven Paganetti said outside the courtroom.
CVC accused ATM of duping it seven years ago to gain a competitive edge, though the company maintains that opening a Merced County plant was only coincidental.
Paganetti filed a lawsuit alleging that ATM breached a contract, offered false promises, misappropriated trade secrets and interfered with a business advantage. CVC lost about $2 million in profit when American Transit Mix entered the Merced County market, he said.
In August 2001, ATM was looking to buy CVC, and the two companies were discussing a price. As part of negotiations, CVC turned over its financial records, which show how the company operates.
Four months later, no deal was reached. Soon after, ATM opened a concrete plant less than five miles from CVC, which then filed a lawsuit.
CVC suspected that ATM never planned on negotiating in good faith and the potential purchase was only a ploy.
"They only wanted to get the confidential financial information of CVC to evaluate how it has done in the marketplace," Paganetti said.
Pat Taylor, the San Francisco attorney representing ATM, said he was disappointed by the jury's decision and maintains that his clients did nothing wrong.
"We couldn't overcome the coincidence of the timing," Taylor said. "[A jury trial] is always a bit of an adventure."
CVC's managers offered to sell the company for $15 million, a price Taylor said his clients believed was too high. They offered $12 million and could never bridge the $3 million difference.
He argued that his clients would have much rather bought CVC because it would have been an established business with an existing customer base.
"For a business," he said, "you'd like to have a virtual monopoly."
ATM, based out of Modesto, had been selling concrete since 1947 with plants from Bakersfield to Lodi, Taylor said. By 2001, managers saw Merced with a University of California on the way as a promising market.
After a deal with CVC fell through, it decided to open its own facility.
The company decided to cut its losses when the jury found it in the wrong, Taylor said. Out of court, it offered $2.5 million to settle, presumably less than what the jury could have awarded in punitive damages.
"This wasn't a very sympathetic jury," he said. "It seemed like a good idea to cut our losses."
CVC owner Scott Neal portrayed the lawsuit as the little guy standing up to bigger companies that believe they can do whatever they want.
"It was a win for the family-owned businesses," he said before leaving the courthouse.
