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FBT Everett Realty, LLC v. Massachusetts Gaming Commission

Superior Court of Massachusetts, Suffolk, Business Litigation Session

June 7, 2017

FBT Everett Realty, LLC
Massachusetts Gaming Commission

          Filed June 8, 2017


          Mitchell H. Kaplan, Justice.

         Plaintiff FBT Everett Realty, LLC (FBT) entered into an Option Agreement with Wynn MA, LLC (Wynn), an affiliate of Wynn Resorts, pursuant to which Wynn acquired the option to purchase a parcel of land in Everett, Massachusetts owned by FBT (the Everett Parcel), if Wynn was awarded a casino license by the defendant Massachusetts Gaming Commission (the Commission). In this action, FTP alleges that it suffered losses as result of the Commission's tortious interference with that Option Agreement. Its Complaint pleads a single count of intentional interference with contract in which it claims that, as a result of unlawful pressure exerted on Wynn by the Commission, Wynn insisted that FBT renegotiate the purchase price of the Everett Parcel, reducing that purchase price from $75 million to $35 million. The case is now before the court on the Commission's motion to dismiss FBI's complaint pursuant to Mass.R.Civ.P. 12(b)(1) and 12(b)(6). In particular, the Commission contends that it is a " public employer" under § 1 of the Massachusetts Tort Claims Act (G.L.c. 258, § § 1 et seq., the MTCA), and, therefore, under § 10(c) it is immune from suits for intentional torts, including intentional interference with contractual relations. For the reasons that follow, the motion is ALLOWED .[1]


         The following facts are drawn from the allegations in the Complaint (assumed to be true for the purposes of this motion), the Gaming Act, the regulations promulgated pursuant thereto, and the materials attached to the Complaint.

         The Gaming Act and its Regulations

         In November 2011, the Legislature enacted the Gaming Act. which is codified at G.L.c. 23K. The Gaming Act permits casino gambling in the Commonwealth and establishes a system for regulating it. The Act establishes the Commission as the agency to implement casino gambling pursuant to the Act's terms and regulate it. G.L.c. 23K, § § 3(a) and 5. Among other things, the Act empowers the Commission to award a license to operate a casino with gaming tables and slot machines (the Category 1 Licenses) in each of three regions of the Commonwealth (Regions A, B, and C). Id. at § 19.

         The Gaming Act and the regulations promulgated by the Commission pursuant to its authority establish a two-phase application process for Category 1 Licenses. Id. at § 12; 205 Code Mass. Regs. § 110.01. The first phase is known as the " Request for Application Phase 1" (RFA-1). 205 Code Mass. Regs. § 110.01(1). In this phase, an applicant submits a Phase I application to the Commission in which it is required to make a number of disclosures about itself and its personnel that pertain to an applicant's " suitability." Id. at § 111.00 et seq. The Investigations and Enforcement Bureau (IEB), a law enforcement agency established within the Commission, then conducts an investigation of the applicant and submits a written report to the Commission containing findings and recommendations pertaining to the suitability of the applicant for a gaming license. G.L.c. 23K, § 12(a); 205 Code Mass. Regs. § 115.03. After the IEB submits its report, the Commission holds either a public hearing or an adjudicatory proceeding, and then issues a written determination of " negative" or " positive" suitability. 205 Code Mass. Regs. § 115.04-05. Only applicants who have received a " positive suitability determination" may proceed to the second phase of the application process, known as the " Request for Applications Phase 2" (RFA-2). Id. at § 110.01(2). In RFA-2, the applicant submits an application that focuses on the site, design, operation and other attributes of the gaming establishment, including the mitigation of adverse impacts. In this second phase of the application process, the Commission considers the merits of the proposal.

         Wynn's Agreement with FBT

         After the Gaming Act passed, Wynn determined that it would apply for a license to build the Region A resort casino on the Everett Parcel, which was the site of a former Monsanto Chemical plant in Everett, now owned by FBT, a Massachusetts limited liability company. To that end, in December 2012, FBT and Wynn entered into the Option Agreement pursuant to which Wynn agreed to pay FBT $100, 000 per month for the right to purchase the parcel for $75 million, in the event Wynn was awarded a Category 1 license for Region A. At the time the Option Agreement was executed, FBI's members were Paul Lohnes, Anthony Gattineri, and Dustin DeNunzio.

         In January 2013, Wynn filed its RFA-1 application and the IEB began its suitability investigation. During the investigation, the IEB learned of a series of phone calls between Charles Lightbody and Darin Bufalino, then an inmate in state prison, that were recorded by state and federal law enforcement personnel who were monitoring these conversations. The IEB believed that Lightbody was a person who should not be involved in gaming because this would discredit the licensing process. According to the IEB, during these recorded conversations Lightbody made statements suggesting that he retained some manner of ownership interest in FBT and would therefore benefit from the sale of the Everett Parcel. The recordings prompted the IEB to initiate an investigation into the transaction between Wynn and FBT. The Wynn application only referenced FBT as the owner of the Everett Parcel on which it held an option to purchase, not as a party that would have any ongoing role in the proposed casino. Before these jail house conversations surfaced, no one associated with FBT had been the focus of the application.

         As part of the investigation, the IEB interviewed Lightbody, Lohnes, Gattineri, and DeNunzio. The IEB also sought to interview Gary DeCicco, another former member of FBT, but he refused to speak with the IEB. During the interviews, Lohnes, Gattineri, and DeNunzio each maintained that Lightbody no longer had any ownership interest in FBT. The IEB, however, did not believe them. It concluded, mistakenly, that Lohnes, Gattineri, and DeNunzio were attempting to conceal Lightbody's ownership interest in FBT.

         The IEB told Wynn about its conclusions and warned that the perceived untruthfulness of the FBT members regarding Lightbody's relationship to FBT created a real risk that the IEB would find Wynn unsuitable to receive a casino license. As a means of solving this potential problem, the IEB recommended that Wynn force FBT to accept a dramatically reduced price for the Everett Parcel, one that would remove any so-called " casino-related premium" from the purchase price.

         In response to the IEB's recommendation, Wynn obtained an appraisal of the Parcel that assumed the land was free of environmental contamination, but could not be used for a casino resort. The appraisal valued the parcel at $35 million. Wynn then informed FBT that the purchase price must be reduced to $35 million because otherwise the Commission would not grant Wynn a license. Wynn also told FBT that if ...

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