The opinion of the court was delivered by: Mcmahon, District Judge.
MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFF CATSKILL DEVELOPMENTS
MOTION FOR RECONSIDERATION
Plaintiff Catskill Development, LLC ("Catskill Development") asks that
the Court reconsider its May 14, 2001 Memorandum Decision and Order
granting in part and denying in part defendant Park Place's motion to
dismiss. Specifically, plaintiff requests reconsideration of that portion
of the May 14 decision in which I held that plaintiffs had failed to
state a claim for tortious interference with one of the contracts at
issue in the lawsuit, the Land Purchase Agreement.
For the reasons stated below, Catskill Development's motion to
reconsider is granted, and upon reconsideration, the motion to dismiss
the claim for tortious interference with the Land Purchase Agreement is
Catskill Development and the other plaintiffs in this suit —
Mohawk Management LLC ("Mohawk Management") and Monticello Raceway
Development Co. LLC ("Monticello") — are members of a group of
businessmen and developers (hereinafter the "Catskill Group") 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 except on Native American lands and
under certain conditions, the Catskill Group partnered with the St. Regis
Mohawk Tribe on the project.
The full history of the relationship between the developers and the
Tribe is outlined in the May 14 decision. Catskill Development LLC v.
Park Place Ent. Corp., 144 F. Supp.2d 215 (S.D.N.Y. 2001) (no page refs
avail.). Catskill Development contends that I did not accurately describe
plaintiffs' deal with the Tribe in that opinion, and that, once the
inaccuracies are corrected, my conclusion that the Land Purchase
Agreement is a voidable collateral agreement is demonstrably erroneous.
It appears that the Court was laboring under certain misapprehensions
about the particulars of the various transactions. Plaintiffs are partly
responsible for the Court's failure to understand fully the details of
the project, since they submitted precious little background information
and I had to glean what I could from project documents provided by the
defendant Plaintiffs have used this motion to fill in the gaps in their
earlier papers. It now appears that the deal was structured as follows:
The Catskill Group created a separate entity, plaintiff Monticello
Raceway Development Co. LLC ("Monticello") to develop and build the
casino and the real property surrounding the casino site. Plaintiff
represents that Monticello is owned "by a minority of Catskill
Development members." (See Pl. Brief in Supp. of Mot. for Reconsid. at
7.) The terms of Monticello's involvement were set out in another
agreement, the Development and Construction Agreement, under which
Monticello would receive a "development fee" of 5% of the costs of the
development and construction. Monticello agreed to use commercially
reasonable efforts to assist the Tribe in obtaining financing for the
development, construction, and start-up of the casino.
The Catskill Group also created a third entity, plaintiff Mohawk
Management, to manage, opecate and maintain the casino for seven years.
Plaintiff Catskill Development has a 50% voting interest in plaintiff
Mohawk (the other 50% is controlled by Alpha Hospitality Corp.
("Alpha"), a publicly traded corporation). Under the Gaming Facility
Management Agreement ("Management Agreement"), plaintiff Mohawk was to
receive 35% of annual profits (net of debt service). Mohawk also agreed
to help the Tribe obtaining financing to build and operate the casino.
As plaintiff now makes clear, the activities of Mohawk Management under
the Management Agreement were limited to those gaming activities defined
under the Indian Gaming Regulatory Act (IGRA) as "Class III," which
include (but are not limited to): table games (such as baccarat and
blackjack), casino games (such as roulette and craps), slot machines, and
electronic gaming terminals. See 25 U.S.C. § 2703 (7)(A);
25 C.F.R. § 502.4. The Management Agreement did not cover Class II
games (bingo, lotto, and games similar to bingo or lotto), which were to
be managed by the Tribe. 25 U.S.C. § 2703 (7); 25 C.F.R. § 502.4.
While the Tribe and plaintiff Mohawk were to operate the casino,
plaintiff Catskill Development was to operate the adjoining racetrack
facility separately. The Tribe was not to have any role in the operation
of the racetrack. Thus, Catskill Development and the Gaming Authority
also executed a Shared Facilities Agreement, to ensure that the racetrack
and the casino would be properly maintained and repaired, and to allocate
responsibility for the upkeep and repair of common areas.
Catskill Development argues that, in determining the validity of the
separate agreements between the Tribe and the plaintiffs, the Court
erroneously viewed the plaintiffs as a single entity and "commingled" the
distinct rights and obligations of each of these the three plaintiffs,
whom Catskill Development argues are "related but independently own and
controlled." (Br. in Supp. of Mot. for Reconsid. at 6.) In their response
to the motion to dismiss, plaintiffs did not bother to refer to the
individual plaintiffs in discussing the separate agreements.*fn1
However, as the complaint contains separate allegations of tortious
interference with each of the four agreements, with the appropriate
entity named as the party plaintiff, I agree that it was confusing to
adopt plaintiffs' use of the amalgamated term "Catskill" and in this
opinion I will take care to differentiate among the three plaintiffs. I
note, however, that the individual plaintiffs do not operate as
independently as Catskill Development now claims in the motion foe
reconsideration. In particular, I find disingenuous plaintiffs attempt to
characterize the land transfer as a separate transaction by an
indepentent entity (Catskill Development) whose post-closing involvement
in the casino would be tangential or non-existent.
The casino project was subject to extensive federal and state
regulatory oversight under the Indian Gaming Regulatory Act (IGRA),
codified at 25 U.S.C. § 2701 et seq. First, before a Tribe can
operate a gaming establishment on newly-acquired trust lands, the
Secretary of the Bureau of Indian Affairs (BIA) has to determine that "a
gaming establishment on the newly acquired trust lands would not in the
test interest of the Indian tribe and its members, and would not be
detrimental to the surrounding community," but only after obtaining ...