ILNews

Justices issue ruling in casino revenue case

Back to TopCommentsE-mailPrintBookmark and Share

The Indiana Supreme Court ruled today on an ongoing appeal about how casino revenue is funneled to a for-profit organization in East Chicago, an issue that has also been raised in an ongoing federal racketeering suit in northern Indiana.

In its decision today in City of East Chicago v. East Chicago Second Century, et al., No. 49S02-0808-CV-00436, the justices went into great detail about which of the city's claims should survive dismissal, but more significantly they determined that any existing arrangements involving casino money can be altered only through administrative channels such as the Indiana Gaming Commission, which may incorporate advice from city officials and others on what it might "deem best for the future of East Chicago's residents."

The case is one of many appeals stemming from the casino operating agreements and license put in place during the 1990s, under former Mayor Robert Pastrick. At the time, the casino entered into a local development agreement with East Chicago where some of the casino revenue would flow to the city for development projects. That arrangement continued through 2005, when Pastrick was ousted and a new mayor began scrutinizing the casino revenue arrangements.

In 2005, Second Century sought a declaratory judgment that Resorts East Chicago would be required to continue the payments as required by a license from the Indiana Gaming Commission. Part of that stipulates the casino contributes 3.75 percent of its adjusted gross receipts - 1 percent to the city of East Chicago, 1 percent to the non-profit Twin City Education Foundation, 1 percent to the non-profit East Chicago Community Foundation, and 0.75 percent to the for-profit East Chicago Second Century Inc. Through June 2006, the Second Century group received about $16 million from the casino operation, according to the Indiana Supreme Court ruling.

A separate federal civil racketeering suit also raises these casino revenue issues, as they are connected to the former Pastrick administration that has been dubbed a "corrupt enterprise." Second Century and the foundations have recently asked to intervene in that five-year-old suit in federal court, but this state appellate ruling is not connected to that case.

Ruling on multiple issues, the Indiana justices found that then-Marion Superior Cale Bradford didn't err in dismissing several counts relating to breach of fiduciary duty; however, he did err in dismissing other claims. Specifically, justices ruled that the judge had erred in dismissing these claims outright: inducement of breach of fiduciary duty/participating in breach; breach of fiduciary duty; accounting; and two claims involving a declaratory judgment/return of public funds.

In deciding those issues and each claim, justices determined also that the city's argument that any fraudulent concealment of money should toll the statute of limitations.

"As respects those counts or parts of counts which we have held above should not survive Second Century's motion to dismiss, it is very difficult to see why equity ought to estop Second Century and the Foundations from asserting the statutes of limitation," Chief Justice Randall T. Shepard wrote. "The counts centered on attacking the formation and confirmation of the original agreements seek to challenge action taken ten or fifteen years ago in full glare of the public arena. It simply asks too much to embrace the idea that these were 'fraudulently concealed' from the City or anyone else."

On other counts, the Supreme Court found that the city doesn't have the authority to unilaterally terminate or alter the terms of the license issued by the Indiana Gaming Commission. That falls to the state commission and lawmakers, though the city is able to make periodic changes through the commission's administrative process.

Justice Brent Dickson concurred with several of the counts, but dissented with respect to aspects of Part III involving constructive fraud/unjust enrichment claim and how it addresses the other issues of the overall suit.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  2. If the end result is to simply record the spoke word, then perhaps some day digital recording may eventually be the status quo. However, it is a shallow view to believe the professional court reporter's function is to simply report the spoken word and nothing else. There are many aspects to being a professional court reporter, and many aspects involved in producing a professional and accurate transcript. A properly trained professional steno court reporter has achieved a skill set in a field where the average dropout rate in court reporting schools across the nation is 80% due to the difficulty of mastering the necessary skills. To name just a few "extras" that a court reporter with proper training brings into a courtroom or a deposition suite; an understanding of legal procedure, technology specific to the legal profession, and an understanding of what is being said by the attorneys and litigants (which makes a huge difference in the quality of the transcript). As to contracting, or anti-contracting the argument is simple. The court reporter as governed by our ethical standards is to be the independent, unbiased individual in a deposition or courtroom setting. When one has entered into a contract with any party, insurance carrier, etc., then that reporter is no longer unbiased. I have been a court reporter for over 30 years and I echo Mr. Richardson's remarks that I too am here to serve.

  3. A competitive bid process is ethical and appropriate especially when dealing with government agencies and large corporations, but an ethical line is crossed when court reporters in Pittsburgh start charging exorbitant fees on opposing counsel. This fee shifting isn't just financially biased, it undermines the entire justice system, giving advantages to those that can afford litigation the most. It makes no sense.

  4. "a ttention to detail is an asset for all lawyers." Well played, Indiana Lawyer. Well played.

  5. I have a appeals hearing for the renewal of my LPN licenses and I need an attorney, the ones I have spoke to so far want the money up front and I cant afford that. I was wondering if you could help me find one that takes payments or even a pro bono one. I live in Indiana just north of Indianapolis.

ADVERTISEMENT