Beztak Land Company v. The City of Detroit

298 F.3d 559, 2002 U.S. App. LEXIS 12821, 2002 WL 1393654
CourtCourt of Appeals for the Sixth Circuit
DecidedJune 28, 2002
Docket00-1937
StatusPublished
Cited by11 cases

This text of 298 F.3d 559 (Beztak Land Company v. The City of Detroit) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beztak Land Company v. The City of Detroit, 298 F.3d 559, 2002 U.S. App. LEXIS 12821, 2002 WL 1393654 (6th Cir. 2002).

Opinion

OPINION

GILMAN, Circuit Judge.

Beztak Land Company (Beztak) asserts a number of federal and state constitutional claims against three sets of defendants: (1) those connected with Atwater Entertainment Associates, L.L.C. (AEA), a group of individuals and business entities involved in efforts to develop casinos in the City of Detroit (the Atwater defendants), (2) those associated with the City itself (the City defendants), and (3) those affiliated with Detroit Plaza Limited Partnership (the DPLP defendants). According to Beztak, which is a minority partner of DPLP, the defendants conspired to prevent anyone from operating a riverboat casino at a site that DPLP owned. The Atwater defendants filed a motion to dismiss for failure to state a claim or, in the alternative, for summary judgment. A motion for summary judgment was also filed on behalf of the City defendants. After concluding that Beztak lacked standing to assert some of its claims, that it failed to state a claim for its remaining allegations against the Atwater defendants, and that the City defendants were entitled to judgment as a matter of law, the district court granted the Atwater defendants’ motion to dismiss and the City defendants’ motion for summary judgment. The district court then dismissed Beztak’s claims against the DPLP defendants after both of these parties stipulated to the dismissal. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. Factual background

Beztak, a Michigan corporation, is one of three general and limited partners of DPLP. Defendants James D. Blain and J & J Slavik, Inc. (JJ Slavik), a Michigan corporation owned and operated by defendant J. Ronald Slavik, are DPLP’s other partners. Harold Beznos and Jerry D. Luptak are the principals of Beztak. At all times relevant to the present case, DPLP owned a 6.3 acre parcel of undeveloped real estate in Detroit located at 1350 Atwa-ter Street, a site that borders the Detroit River. The City of Detroit, however, ac *562 quired thé property by eminent domain during the pendency of this appeal.

In the spring of 1994, Luptak, acting on behalf of DPLP, entered into negotiations with defendant Herbert Strather to explore the idea of developing a casino at 1350 Atwater Street. Strather, a local realtor with political connections to many of the City defendants, had been working to have riverboat gambling approved in Detroit. According to Beztak, the DPLP partners unanimously agreed that the likelihood of establishing a riverboat casino at 1350 Atwater would be enhanced if DPLP sold or leased the property to Strather. No final deal, however, was ever reached between DPLP and Strather.

On July 23, 1994, defendants Blain, J.R. Slavik & Associates II (an entity also owned by J. Ronald Slavik), Strather, and Nellie Varner entered into an agreement to form Atwater Entertainment Associates, Inc. (AEA, Inc.) for the purpose of developing a riverboat casino at 1350 At-water. Strather’s responsibilities included campaigning for passage of a voter initiative that would allow riverboat gambling at 1350 Atwater, promoting AEA, Inc.’s venture to the general public, and financing any associated lobbying efforts. Blain and Slavik agreed to “use their best effort to deliver” 1350 Atwater to AEA, Inc.

Detroit voters approved two initiatives the following month that related to the operation of casinos in the City. The City then enacted Ordinances 15-94 and 16-94, both of which repealed an existing ordinance that had prohibited casino gambling. Ordinance 15-94 also permitted the City to enter into a contract for the establishment of an Indian Tribal Casino in the Greek-town area of Detroit, whereas Ordinance 16-94 enabled the City to enter a contract for the development of a riverboat casino to be docked at 1350 Atwater, a site that was designated the “Atwater Recreation and Entertainment District.” The ability to develop the sites was subject to gaining the approval of Michigan’s legislature and governor.

In November of 1996, Michigan voters approved Proposal E, a state initiative that resulted in the Michigan legislature enacting the Michigan Gaming Control and Revenue Act. Mich. Comp. Laws § 432.201-226. This Act legalized casino gambling in Detroit and allowed for the establishment of three casinos within the city limits. As a prerequisite to gaining approval to operate a casino, an applicant had to first enter into a certified development agreement with the City. According to Beztak, the Atwater defendants played a crucial role in drafting Proposal E and placing it on the ballot.

'Dissension between Beztak and its DPLP partners was apparent by June of 1997. On June 4, 1997, Luptak, acting on behalf of Beztak, sent a letter to the Detroit City Planning Commission advising the Commission that Blain had no authority to speak on behalf of DPLP. Attorneys representing Blain and JJ Slavik responded by faxing a letter to the Commission on June 25, 1997 that explained that because Blain and JJ Slavik constituted a majority of DPLP’s partners, those partners, rather than Beztak, had the authority to represent DPLP and act on its behalf.

On June 18, 1997, the City enacted Ordinance 17-97, which amended the Detroit City Code by adding Article XIII, titled “Casino Development Competitive Selection Process” (the Selection Ordinance). The Selection Ordinance permitted the City to enter into three development agreements with casino operators, and it established a competitive selection process for the City to use in choosing the most qualified casino developers. Detroit City Code §§ 18-13-1, 18-13-5. In addition to setting forth the relevant criteria for eval *563 uating the applicants, the Selection Ordinance provided a preference for developers who (1) submitted a proposal that met the City’s criteria, (2) generated the voter initiative that resulted in either Ordinance 15-94 or Ordinance 16-94, and (3) actively promoted and supported Proposal E. Id. § 18-13-6. Two of the three casino operators ultimately selected by the City qualified for these preferences, although the mayor averred that the preference benefit-ted only the Greektown casino developer.

Shortly after enacting the Selection Ordinance, the City issued a Request for Proposals/Qualifications (RFP/Q). The RFP/Q described the process for applying to become one of the three casino developers. Applicants had to pay nonrefundable fees of $50,000 for Phase One and $250,000 for Phase Two of the selection process.

In July of 1997, Blain and JJ Slavik entered into a “Settlement Agreement and Release” (Settlement Agreement) with all of the Atwater defendants. The Settlement Agreement enabled Blain and JJ Slavik to become members of AEA (the successor in interest to AEA, Inc.). All named defendants other than the City defendants signed a “Full and Unconditional Mutual Release” in connection with the Settlement Agreement. This release abandoned any claims that the signatories might have had relating to numerous transactions, including any attempts (1) to sell 1350 Atwater to AEA or Strather, and (2) to develop a casino at 1350 Atwater or elsewhere.

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Bluebook (online)
298 F.3d 559, 2002 U.S. App. LEXIS 12821, 2002 WL 1393654, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beztak-land-company-v-the-city-of-detroit-ca6-2002.