Rep. Valadao’s family farm sued over $9 million in unpaid debts
A Central Valley congressman in a competitive district is facing lawsuits accusing his family farm of defaulting on more than $9 million in debts.
Rep. David Valadao, RHanford, is named as a defendant in two suits against Triple V Dairy, a Tulare dairy farm that he owns in partnership with other familymembers. The three-term congressman is also a partner in a separate Hanford dairy farm run by his family, Valadao Dairy, which is not named in the lawsuits.
California agricultural bank Rabobank sued Triple V in November for breaking its contract, alleging the farm defaulted on $8.3 million in loans for heifers and feed. And Stockton cattle farm supply company Lawley’s said in a lawsuit filed last month that Triple V had failed to pay for an additional $1 million in animal nutrition and immu- nizer products that the farm bought on credit.
A Valadao spokeswoman said the congressman, whose seat is being targeted by Democrats hoping to win back control of Congress, is not a managing partner in Triple V and is not involved in the farm’s day-to-day operations.
But Valadao’s record as a dairy farmer and small business owner has been a key element in the political image that’s helped him get reelected in a district where Democrats outnumber Republicans by more than 17 percentage points. His father, an immigrant from Portugal, started the family’s first Central Valley farm in 1973. The 21st district, which stretches from Fresno to Bakersfield, is largely agricultural.
Valadao has been a partner in Triple V since he was first elected to Congress in 2012, financial disclosure forms from the House of Representatives show. In 2016, the most recent year available, he listed his portion of Triple V as valued between $1 million and $5 million and reported more than $5 million in income fromthe farm. The financial disclosures also list several other lines of credit that Triple V owes, including one that’s between $5 million and $25 million.
Those farm debts have led Valadao to be named the poorest member of Congress every year since he was elected.
Democrats are hoping to make the district one of the 24 Republican-held seats they need to flip towin back control of the House of Representatives. In this year’s election, Valadao is facing entrepreneur T. J. Cox, a Democrat who has had his own legal trouble with a business he runs. In 2012, an arbitrator ordered Cox’s real estate company to pay $1.3 million for breach of con- tractual warranty, the Bay Area News Group reported last week.
The Rabobank lawsuit, filed in Fresno County, concerns a series of loans that were first made in 2012 and came due in September 2017 after several extensions. As of October, Triple V owed an additional $90,000 in interest that accumulates at a rate of about $2,000 a day, the lawsuit states.
Rabobank is aiming to take over “all accounts, inventory, farm products, including livestock born or unborn, supplies and crops” of Triple V, and asking a judge to put the farm’s assets into receivership. The lawsuit also accuses several of Valadao’s relatives of defaulting on separate loans for their own farms.
An initial case management conference was held in the Rabobank lawsuit on Monday, according to court records. A lawyer for Rabobank did not respond to a request for comment.
The Lawley’s lawsuit filed in San Joaquin County ac- cuses Triple V of breaking an oral agreement to pay for nutrition and immunization products it bought on credit between March 2017 and January 2018. The farm’s owners failed to disclose the business was in “dire financial circumstances” due to its defaulted loans, according to the lawsuit. The supplies were sent to Triple V locations in California, New Mexico and Washington State.
Casey Lawley, the owner and general manager of Lawley’s, said in an interview that it was common practice in the Valley dairy industry for suppliers to make handshake sales agreements and trust they’ll be paid back.
“If it was $20,000, I wouldn’t even worry about it, but it’s a fair amount of money,” Lawley said. “I regret not making sure that we cut them off at a certain point.”
Eddie Valadao, the congressman’s brother and one of themanaging partners in the farm, attributed the fi- nancial problems to an industry-wide downturn.
“As the price of raw milk continues to decline, dairy operations throughout the nation, including Triple V Dairy, are struggling,” he said in an email. “We will review our operations as we continue working to outlast this market downturn.”
It’s true that the dairy business as a whole is facing tough times, said Dave Kurzawski, a Chicago commodity broker who specializes in the industry. There’s been a jump in milk production in Europe and a decrease in demand from several big international buyers, which has led to drop in the price of milk. Meanwhile, increasing labor costs havemade dairy farms more difficult to operate.
“Dairy has become, from an economic standpoint, probably among the toughest businesses in California,” Kurzawski said. “It’s a steep hill to climb.”