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FBT Everett Realty, LLC v. Massachusetts Gaming Commission

Superior Court of Massachusetts, Suffolk, Business Litigation Session

November 7, 2017



          Edward P. Leibensperger, Justice

         This is a claim for damages by plaintiff, FBT Everett Realty, LLC (" FBT"), arising from an alleged taking of property by the Massachusetts Gaming Commission (" Commission"). FBT’s amended complaint asserts three counts: Count II (" Per Se Taking"), Count III (" Regulatory Taking"), Count IV (" Impairment of a Contract Right").[1] All three counts claim that as a result of conduct by the Commission, FBT is entitled to compensation under either the Massachusetts Declaration of Rights or the United States Constitution, or both. The Commission moves to dismiss pursuant to Mass.R.Civ.P. 12(b)(1) and 12(b)(6).


         The amended complaint alleges the following facts, accepted for this motion as true.

         FBT was the owner of a parcel of land (the " parcel") in Everett, Massachusetts. On December 19, 2012, FBT entered into an Option Agreement with Wynn MA, LLC concerning the possible sale of the parcel to Wynn. Wynn anticipated applying for approval from the Commission to build and operate a casino gambling facility on the parcel.

         Under the Option Agreement, Wynn agreed to pay FBT $100, 000 per month for the right to purchase the parcel for $75 million in the event that Wynn was awarded the Category 1 destination resort casino license. The Option Agreement granted to Wynn " the option, but not the obligation, to purchase [the parcel]" from FBT. Amended Complaint, Ex. A. In connection with Wynn’s application to the Commission, FBT agreed to " reasonably cooperate with [Wynn] with respect to any information it reasonably requires to complete the Casino Application and respond to any such inquiries throughout the licensing process." Id.

         In November 2011, the Legislature enacted the Massachusetts Gaming Act, which is codified at G.L.c. 23K. The Act establishes the Commission as the agency to implement and regulate casino gambling. The Act, and the regulations promulgated thereunder, establish a two-phase application process for a Category 1 license. The first phase is known as the " Request for Application Phase 1." In this phase, the applicant is required to make disclosures regarding itself and affiliates. The Investigations and Enforcement Bureau (" IEB") of the Commission then conducts an investigation of the applicant and provides findings and recommendations to the Commission regarding the suitability of the applicant and its affiliates and business associates. Only those applicants found suitable to receive a license may proceed to the second phase of the process, known as Request for Application Phase 2, during which the Commission reviews the merits of suitable applicants.

         In January 2013, Wynn filed an application with the Commission for a license to operate a Category 1 destination casino resort on the parcel. The IEB began its investigation of the Wynn application. According to the amended complaint, the Commission did not identify FBT as a party subject to investigation and did not request information from FBT. Nevertheless, the IEB became aware of a recorded telephone conversation between an inmate in state prison (Darin Bufalino) and Charles Lightbody, a convicted felon. The recording suggested to IEB that Lightbody had an ownership interest in FBT. The principals of FBT told IEB that Lightbody was only a former owner of FBT. The investigators at IEB concluded that the principals of FBT were lying. At that point, the amended complaint alleges, IEB and the Commission decided to impose a financial penalty on FBT.

         The IEB " intentionally embarked on a course of conduct designed to prevent FBT from receiving any casino-related profit from its contract with Wynn Resorts." Amended Complaint ¶ 36. In October 2013, the IEB told Wynn that it needed to find a " solution" to the FBT issue or risk a finding that Wynn would be deemed unsuitable to proceed to the next phase of the application process. The " solution" suggested by IEB was that Wynn force FBT to accept a dramatic reduction in the purchase price of the parcel so as to remove the " casino premium" reflected in the $75 million price. Wynn then contracted for an appraisal of the parcel assuming that it could not be used as a casino resort. The appraisal concluded that the parcel was worth $35 million, on that assumption.

         Wynn informed FBT that the purchase price of the parcel had to be reduced to $35 million. Wynn told FBT that it must agree to the price reduction or it would sue FBT on the theory that it would be FBT’s fault if Wynn were to be found unsuitable.

         On November 26, 2013, FBT formally agreed with Wynn to lower the price of the parcel to $35 million. A Ninth Amendment to the Option Agreement was executed to effect the new price. On January 2, 2015, FBT and Wynn closed on the sale of the parcel for $34 million in accordance with the Ninth Amendment.[2]

         On November 14, 2016, FBT commenced this action. FBT’s original complaint asserted a single count against the Commission for intentional interference with contract. On June 7, 2017, this court (Kaplan, J.) dismissed that count on the ground that the Commission is immune from suit under the Massachusetts Tort Claims Act because the claim alleged an intentional tort by the Commission’s employees. FBT then filed, as a matter of right, the amended complaint that is the subject of this motion. Count I of the amended complaint re-asserts the tortious interference claim that had been dismissed. Pursuant to the June 7, 2017, order of the court, Count I remains dismissed for failure to state a claim.


         A motion to dismiss for failure to state a claim upon which relief may be granted under Mass.R.Civ.P. 12(b)(6) permits " prompt resolution of a case where the allegations in the complaint clearly demonstrate that the plaintiff’s claim is legally insufficient." Harvard Crimson, Inc. v. President & Fellows of Harvard Coll., 445 Mass. 745, 748 (2006). To survive a motion to dismiss, a complaint must set forth the basis for the plaintiff’s entitlement to relief with " more than labels and conclusions." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636, quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 555 (2007). At the pleading stage, Mass.R.Civ.P. 12(b)(6) requires that the complaint set forth " factual ‘allegations plausibly suggesting (not merely consistent with)’ an entitlement to relief ..." Id., quoting Bell A. Corp., 550 U.S. at 557. The court must, however, accept as true the allegations of the complaint and draw every reasonable inference in favor of the plaintiff. Curtis v. HerbChambers I-95, Inc.,458 Mass. 674, 676 (2011). With respect to a ...

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