Catskill Development v. Park Place Entertainment

Page 423

217 F.Supp.2d 423

CATSKILL DEVELOPMENT, L.L.C., Mohawk Management, L.L.C., and Monticello Raceway Development Company, L.L.C., Plaintiffs, v. PARK PLACE ENTERTAINMENT CORP., Defendant.

No. 00CIV8660CMGAY.

United States District Court, S.D. New York.

August 22, 2002.

Thomas P. Puccio, Thomas P. Puccio, Esq., New York City, for Catskill Development, L.L.C., plaintiff.

John P. Gallagher, Stites & Harbison, Atlanta, GA, for Catskill Development, L.L.C., Mohawk Management, L.L.C., Monticello Raceway Development Company, L.L.C., plaintiffs.

Bethany A. Breetz, Stites & Harbison, Louisville, KY, for Catskill Development, L.L.C., Mohawk Management, L.L.C., plaintiffs.

Herbert F. Kozlov, Reed Smith LLP, New York City, for Catskill Development, L.L.C., Mohawk Management, L.L.C., Monticello Raceway Development Company, L.L.C., plaintiffs.

Herbert F. Kozlov, Parker, Duryee, Rosoff & Haft, New York City, for Mohawk Management, L.L.C., plaintiff.

William W. Hopson, J.D. Humphries, III, Stites & Harbison, PLLC, Atlanta, GA, for Mohawk Management, L.L.C., plaintiff.

J.D. Humphries, III, Stites & Harbison, PLLC, Atlanta, GA, for Monticello Raceway Development Company, L.L.C., plaintiff.

David Boies, Boies, Schiller & Flexner, L.L.P., Armonk, NY, for Park Place Entertainment Corporation, defendant.

MEMORANDUM AND DECISION GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR RECONSIDERATION AS MOOT

MCMAHON, District Judge.

Plaintiffs Catskill Development, L.L.C. ("Catskill"), Mohawk Management, L.L.C. ("Mohawk") and Monticello Raceway Development Co., L.L.C. ("Monticello") (collectively, "Plaintiffs" or the "Catskill Group"), bring this action in diversity against Park Place Entertainment Corp. ("Park Place"), claiming tortious interference with contractual relations and tortious interference with prospective business relationships.¹ Plaintiffs allege that Defendant, one of the world's largest casino companies, wrongfully induced officials of the St. Regis Mohawk Nation to terminate the Mohawks' contractual agreements and business relationships with Plaintiffs relating to the development and management of a proposed $500 million Native American casino at the Monticello Raceway in Sullivan County, New York (the "Casino Project").

The case is before me on Defendant's motion for summary judgment pursuant to Fed.R.Civ.P. 56. Defendant also moves for reconsideration of this Court's decision of July 23, 2001, pursuant to Fed.R.Civ.P. 54(b) and Local Rule 6.3. For the reasons below, I grant Defendant's motion for summary judgment. The motion for reconsideration is denied as moot.

FACTS PERTINENT TO THIS MOTION

The background to the dispute between the parties is set forth in this Court's earlier opinions. See Catskill Development, L.L.C. v. Park Place Entertainment Corp., 144 F.Supp.2d 215 (S.D.N.Y.2001) ("Catskill I"), vacated in part, 154 F.Supp.2d 696 (S.D.N.Y.2001) ("Catskill II"). Familiarity with these opinions is assumed.

To recapitulate briefly: Plaintiffs are members of a group of businessmen and developers who, beginning in 1995, sought to build and operate a casino at a site adjacent to the Monticello Racetrack in Monticello, New York. Because gambling is illegal in New York State unless on Native American lands and under certain legal conditions, the Catskill Group became partners with the St. Regis Mohawk Tribe (hereinafter the "Tribe" or the "Mohawks") on the casino project.

On June 3, 1996, Catskill (one of the Plaintiffs) acquired 230 acres of land that contained the Monticello Raceway. Of the property purchased, 29.31 acres adjacent to the Raceway were set aside for a casino. Catskill created the other two corporate Plaintiffs to provide various services for the Raceway and the casino. Catskill acted for all three entities in seeking the necessary local, state and federal approvals needed to build and operate the proposed casino.

On July 31, 1996, the Tribe (through its Tribal Council) and Plaintiffs entered into five separate agreements. One of these agreements was a Land Purchase Agreement (the "LPA") between the Regis Mohawk Gaming Authority (the "Gaming Authority") and Catskill. The LPA contemplated the transfer of the Raceway property from Catskill to the United States government to be held in trust for the Mohawks, in exchange for which the Mohawks would pay Catskill $10 million, which was the purchase price of the entire Monticello Raceway property. The other agreements were a Mortgage Agreement, a Gaming Facility Management Agreement, a Shared Facilities Agreement and a Development and Construction Agreement.

In 1996, Plaintiffs and the Tribe began to seek the approvals necessary to begin developing the casino. By April of 2000, Plaintiffs had not yet received all the proper approvals necessary to move forward with the casino project with the Tribe. They had, however, expended millions of dollars toward their goal.

At the same time, extensive internal warfare over tribal governance fractured the Tribe. Historically, the St. Regis Mohawk Tribe was governed by a Three Chiefs system, under which the Three Chiefs, elected by Tribe Members, acted as the Tribe's governing body. In 1995, the Tribe commenced a referendum election to determine whether it would adopt a Tribal Constitution, creating three branches of tribal government, including a Tribal Court. The terms of the Constitution provided for its own adoption upon certification if 51% of the present and voting tribal members voted in favor of its adoption. See Park Place Entm't v. Arquette, 113 F.Supp.2d 322 (N.D.N.Y.2000). The Tribal Clerk allegedly certified that 50.935093% of those voting were in favor of adopting the Constitution, yet certified that the Constitution was adopted by the requisite vote. Id. at 322-23. In June 1996 the Tribal Council rescinded certification of the Constitution following a second referendum. At the end of June, in a third referendum, the Tribe allegedly voted to elect Alma Ransom, Hilda Smoke and Paul Thompson in a "clean slate" of Chiefs, rather than retain the current Tribal Council officials. However, not all of the Tribe accepted the results of this referendum.

Sometime after mid-1999, Park Place principals were introduced to members of the Tribe. On April 14, 2000, the Tribe, through the Three "clean slate" Chiefs, entered into a written agreement with Park Place that made Park Place the exclusive developer and manager of any Mohawk casinos in New York State. Catskill I, 144 F.Supp.2d at 227.

This catapulted the intra-tribal dispute into court. On April 26, 2000, independent representatives of the Mohawk Tribe (including prior chiefs), filed a class action complaint in the St. Regis Mohawk Tribal Court against Park Place, Arthur Goldberg and Clive Cummis (principals of Park Place), and the Three Chiefs who had signed the April 2000 agreement. They asked the Court to nullify the agreement and sought billions of dollars in damages. In response, the Three Chiefs declared the Tribal Court invalid, raided the Court facilities, and removed the Court's computers and files. (Compl. at 116.)

On June 2, 2000, Park Place brought suit in the Northern District of New York seeking: (1) an injunction against the Tribal Court proceeding and (2) a declaration that the Tribal Court was invalid and without authority to adjudicate the claims asserted. On September 18, 2000, Judge McAvoy dismissed Park Place's action for lack of subject matter jurisdiction. Park Place Entm't Corp., 113 F.Supp.2d at 323 (noting that "significantly, the dispute does not involve a question of the limits of the Tribal Court's jurisdiction, but rather a question of whether the Tribal Court is a valid Tribal authority.") Park Place's appeal to the Second Circuit has been sub judice throughout the life of this proceeding.

On March 20, 2001, the Mohawk Tribal Court entered a default judgment against Park Place and the other defendants in the case filed before it, awarding plaintiffs $1.782 billion in actual damages and $5 million in punitive damages. The Tribal Court's opinion contains findings of fact and conclusions of law regarding the validity of various contracts and the actions of Park Place and Catskill. See Arquette v. Park Place Entm't Corp., Case No. 00C10133GN, Mar. 20, 2001 (St. Regis Mohawk Tribal Court, Hogansberg, NY). Park Place has advised the Court that it views this judgment as a nullity. For reasons discussed in Catskill I, Defendant is not collaterally estopped from arguing the validity of these contracts because of the findings of the Tribal Court. Catskill I, 144 F.Supp.2d at 230-31.

THE CASE AT BAR

Whatever the situation among the various tribal factions, the signing of the April 2000 agreement with Park Place effectively terminated the Tribe's partnership with plaintiffs. They seek damages from Park Place for interfering with their relationship with the St. Regis Mohawks.

Plaintiffs claim that the reason their casino project was never approved is because they were "sabotaged by defendant's efforts to scuttle the ... casino project." Catskill I, 144 F.Supp.2d at 226. Defendant claims that the Tribe signed with Park Place because it offered the Tribe a better deal than Plaintiffs did at a time when there was no enforceable (i.e., fully approved) contract between plaintiffs and the Tribe. Defendant also alleges that no Park Place principals ever attempted to wrongfully sabotage Plaintiffs' partnership with the Tribe. Furthermore, Defendant claims that the relationship between the three Chiefs of the Tribe — Alma Ransom, Hilda Smoke and Paul Thompson — and Plaintiffs was so strained by April 2000 that the Tribe, through the Chiefs, would have signed a deal with Park Place in the absence of any of the alleged wrongful conduct by Park Place.

In Catskill I, this Court dismissed Plaintiffs' First Cause of Action (alleging tortious interference with contractual relations) and their...