By ROBIN SHEPARD
Times Correspondent
A local builder and construction company owner is suing the City of Atwater and several city employees for damages and relief related to the development of the Five Corners digital billboard and other projects.
The Times first reported on Brad Kessler’s digital billboard project on Oct. 31, 2024.
Kessler, owner of BK Industries and AG-K Properties, is alleging a conspiracy to defraud and defame him was organized and conducted within the city’s Building Department by Community Development Director Greg Thompson, chief building official Mark Pereida, city engineer Michael Hayes, Mayor Mike Nelson, and two administrative staff members.
At the time of the allegations contained in an amended complaint filed on Jan. 23, Nelson was a member of the Atwater Planning Commission and had not yet been elected mayor.
Two businesses owned by Thompson and Hayes are also named in the lawsuit. These are Thompson’s Rhyolite Development & Construction, Inc., and Hayes’ VH Design Group, Inc./VVH Consulting Engineers. The suit alleges that Thompson was also employed by VH Design Group while working as a city employee and “directed and encouraged citizens to hire VVH to facilitate their projects.”
Kessler is suing the defendants for over 29 separate causes, including defamation, slander, contractual breaches, intentional and negligent interference in business operations, and denial of rights and due processes.
Prior to filing the original suit in Superior Court last September, Kessler had filed two claims for payment obligations. The first, in the amount of $3.9 million was denied by the city and the suit alleges the city never acknowledged the second in the amount of $4.4 million.
The suit describes a web of relationships within the city’s building department, extending into the mayor’s office, in which “each of the Defendants . . . aided and abetted the others and was a co-conspirator of each other.”
According to the suit, the city approved and signed an “advertising display lease agreement” with Kessler in August 2021 for the Five Corners digital billboard project. Design and elevation plans were approved by Thompson and Pereida in June 2022, who, Kessler alleges, told him to “get started immediately as the project would be streamlined and expedited through the application and building process.”
Kessler moved forward on the project, estimating that the completion date would be mid-March 2023. With much of the planning, engineering, equipment, and materials costs already incurred, he alleges Thompson then tried to convince him to abandon the project and sell it to another person “for his own pecuniary benefit.”
In an earlier interview, Kessler told the Times that other person was a client of Rhyolite Development & Construction.
Kessler stated he refused to sell the project and alleges that Thompson and his co-defendants worked to stall the project, forcing it through “multiple procedural hoops.”
Kessler was informed later that the project would have to be reviewed by the city Planning Commission, which occurred in November 2022. During two votes on the project, then-Commissioner Nelson abstained, deadlocking the commission vote and denying approval of the project, essentially stopping it in its tracks and resulting in “substantial delays” and “causing substantial economic harm” to the plaintiffs.
The suit further alleges that Hays and VVH, which was serving as the city’s engineering firm, had already reversed previous project approvals and “imposed a multitude and excessive conditions effectively stopping and substantially delaying any progress. “
In December 2022, after Kessler filed an appeal of the Planning Commission’s actions, the City Council unanimously approved Kessler’s appeal and the digital billboard project proceeded until completion in early November 2024. The billboard is located near the convergence of First Street, Shaffer Road and Bellevue Road in central Atwater.
Kessler believes, according to the lawsuit, the defendants have an ill will toward him and that they “were incentivized by garnering personal benefits” at his expense.
He alleges that other projects within the city that he is involved in have also been stalled, including the Merced Union High School District’s $10 million Career Technical Education Center, which is planned for development on a 6-acre parcel of District-owned land off of SP Avenue near the Teasdale processing plant. A groundbreaking ceremony was originally planned for this spring.
The City Council discussed the litigation in closed session during Monday’s Council meeting. According to City Manager Chris Hoem, “the City doesn’t comment on pending litigation.”