An attorney for a local developer who sued Fresno County said local officials shirked a deal for a “made-up reason” that wasn’t allowed to be used in court, costing taxpayers $2.5 million in a court judgment.
A Fresno County Superior Court jury awarded Fresno-based CMG Construction Management Group Inc. the judgment after a two-week trial in Judge Kristi Culver Kapetan’s courtroom over a failed deal for the University Medical Center campus, according to the judgment.
The county released a brief statement.
“The county disagrees with the ruling and intends to file a motion to challenge the verdict,” spokesperson Sonja Dosti said in a statement on Monday. “The board will discuss and consider options during its closed session in the Aug. 25 meeting.”
Dosti said the county could not immediately say how much was spent on attorneys fees to defend the case.
CMG was the buyer of the University Medical Center campus on Kings Canyon Road and Cedar Avenue in a 2019 deal for $4 million. The developer had plans to turn the site into a mixed-use development with affordable housing, a pharmacy, a grocery store and other retail.
The deal fell through in 2021 after former Supervisor Sal Quintero’s staffer Steve Rapada was accused of a conflict of interest over the agreement. Rapada was later sentenced for a conflict of interest violation.
But CMG’s attorney, Butch Wagner, said the conflict of interest case had no bearing on the court’s judgment.
“The judge thought that was nonsense,” Wagner said. “Didn’t even allow it as evidence. So that Rapada thing was an excuse, a baseless excuse for the county and the city to back out of the deal, and it cost them a lot of money.”
Wagner said weeks after the county backed out of the deal with CMG, the county put up the land for sale with a $6 million selling price, which was $2 million more than the contract with CMG.
“They found that they undervalued the property, and then wanted more money, so that’s why they breached the contract,” Wagner said. “It was devious.”
The latest on UMC campus plans
The city of Fresno in 2022 entertained buying the property to make it into affordable housing, but the county’s Board of Supervisors ultimately approved a sale in January 2025 with developer Sevak Khatchadourian. The deal took $700,000 off of the $6 million asking price as a credit in lieu of extensive repairs of flooding and electrical damage caused by copper thieves in December 2023.
The grounds have had a hospital on site for nearly 140 years. A 75-bed hospital was built there in 1889, but was destroyed by fire in 1900 before a new building went up four years later, according to Bee archives. What was originally known as Fresno County General Hospital was renamed Valley Medical Center in 1970.
Fresno County ran the hospital until a 1996 merger transferred the building to Community Hospitals of Central California, and the name was changed to University Medical Center. The facility closed as a hospital in 2007.
Khatchadourian owns a number of buildings in Fresno’s downtown, including the Pacific Southwest Building and the Helm Building, both on Fulton Street, and the former Radisson Hotel on Van Ness Avenue.