Harbor Village Builder Wins $31 Million : Trial: A jury rules that the Ventura Port District breached its lease with Ocean Services Corp., which constructed and operated the development. The firm went into bankruptcy in 1987.

The firm that built and ran Ventura Harbor Village until the firm went bankrupt in 1987 won a $31.35-million judgment Friday in Ventura County Superior Court after a jury ruled that the Ventura Port District had breached its lease agreement.

Ocean Services Corp. sued the port district in 1984, accusing the district of violating its lease by failing to dredge the harbor, raising the rent and failing to disclose previous agreements with other landowners that forbade it to build the harbor in the manner it had planned.

Looking slightly weary at the close of the six-week trial, the jury trooped into the courtroom and announced its verdict: Ocean Services is entitled to damages totaling $31,352,595 for loss of rental income, increased construction cost and interest fees paid to banks while the project was stalled.

Port district attorney William Chertok declined to comment on the award until final details are worked out by the attorneys and approved by the judge.

“We’re still in trial,” Chertok said. “The court has suggested that counsel not make any comments on the case, and I think I’ve got to comply with that.”

But DeWitt (Red) Blase, attorney for Ocean Services, said, “I think maybe the City Council of Ventura will finally get rid of the inept management of the port district and hire somebody who knows what the hell is going on, and I’m absolutely thrilled with the prospect that this city will get something down there they deserve.”

Ocean Services built the Ventura Harbor Village between 1981 and 1983, financing the construction by selling municipal bonds in the port district’s name.

The bonds held the district liable in case Ocean Services defaulted on the project.

The project included a commercial boatyard, a 200-space pleasure boat marina, a fish-receiving depot and a 100,000-square-foot outdoor mall containing nearly 40 of the 100 restaurants and shops that were finally built.

But by 1987, Ocean Services went into bankruptcy with $5 million in debts and the original investors--including individuals, pension funds, mutual funds and investment groups--became creditors.

The largest creditor, Bank of America, foreclosed on some of the buildings, and Great Western Bank did the same.

Now the banks own the buildings that house some of the restaurants and stores while the port district owns the rest, said Ocean Services attorney John Johnson.

The jury’s ruling Friday meant that it agreed at least in part with Ocean Services’ account of the events that drove the firm into bankruptcy.

Ocean Services had already signed a $1.5-million option to develop part of the site in 1980 when it learned that the port district had signed a 1976 covenant with another developer, Saffran and Hertel, involving another shopping village nearby, Johnson said in an interview.

That covenant prohibited the port district from building another restaurant or store for 10 years.

In 1981, Saffran and Hertel obtained an injunction from Los Angeles County Superior Court to enforce the covenant and prevent Ocean Services from building such structures on the Harbor Village parcel.

The injunction was finally lifted in 1983 and Ocean Services finished building the Ventura Harbor Village in mid-1985, by which time it had spent $5.1 million in interest on a project that had brought it no profits to that date, Blase said.

Ocean Services’ suit also accused the port district of failing to keep the harbor entrance free of silt.

The district reneged on its promise to install a continuous dredging system at the harbor entrance, which still silts up and blocks traffic for three to four months a year until the U.S. Army Corps of Engineers can clear the channel, Blase said.

With the harbor entrance blocked, commercial and pleasure boats can’t enter the harbor to tie up, and Ocean Services lost thousands of dollars in rental fees, the suit said.

When the port district finally dredged the entrance, it left the silt in a huge pile on its property, blocking the harbor view of some of Ocean Services’ prime office space, the suit said.

During the trial, witnesses testified that there is enough sand piled next to Spinnaker Drive to fill every room in the county government complex on Victoria Avenue, including the jail.

The port district also required Ocean Services to remove a fishing boat called the Aloha from the marina because it was too large, but then allowed the boat to return after the firm went bankrupt.

The firm lost $2,000 a month in marina fees while the Aloha was gone, Blase said.

And the suit complained that the port district continually raised the rent that Ocean Services had to pay on the land, which topped out at close to $400,000 when the firm finally went bankrupt in 1987, Johnson said.