Philadelphia Entertainment & Development Partners, L.P. v. Pennsylvania Gaming Control Board

34 A.3d 261, 2011 Pa. Commw. LEXIS 576, 2011 WL 5438575
CourtCommonwealth Court of Pennsylvania
DecidedNovember 10, 2011
Docket49 C.D. 2011
StatusPublished
Cited by12 cases

This text of 34 A.3d 261 (Philadelphia Entertainment & Development Partners, L.P. v. Pennsylvania Gaming Control Board) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Philadelphia Entertainment & Development Partners, L.P. v. Pennsylvania Gaming Control Board, 34 A.3d 261, 2011 Pa. Commw. LEXIS 576, 2011 WL 5438575 (Pa. Ct. App. 2011).

Opinions

OPINION BY

Judge BUTLER.

Philadelphia Entertainment and Development Partners, L.P., d/b/a Foxwoods Casino Philadelphia (PEDP) petitions this Court for review of the December 23, 2010 final order of the Pennsylvania Gaming Control Board (Board) granting summary judgment in favor of the Board’s Bureau of Investigation and Enforcement (BIE) and revoking PEDP’s Category 2 Slot Machine License (License). The issues before this Court are: (1) whether the Board committed reversible error by applying an incorrect legal test to determine that PEDP violated conditions of its License; (2) whether the Board committed reversible error by applying an unconstitutionally vague standard of financial fitness and suitability as the basis for revoking PEDP’s License; and, (3) whether the Board violated PEDP’s due process rights by revoking its License via summary judgment without conducting an evidentiary hearing and without providing more discovery. For the reasons that follow, we affirm the Board’s December 23, 2010 final order.

PEDP was formed in January of 2005 for the exclusive purpose of acquiring Delaware riverfront property in South Philadelphia and obtaining a gaming license with Foxwoods Development Company, L.L.C. (Foxwoods) and its affiliated entities to operate a slot machine facility known as Foxwoods Casino Philadelphia.1 On December 28, 2005, PEDP applied to the Board for a Category 2 License.2 On November 9, 2009, the Board issued a [264]*264Category 2 Background Investigation and Suitability Report for PEDP (Suitability Report) which deemed PEDP financially suitable, based upon: the Mashantucket Pequot Gaming Enterprise’s low risk financial profile, a proposed $30 million in equity from Foxwoods, and a commitment letter from Merrill Lynch for sufficient funds to develop the $560 million project. A licensing hearing was held on November 14, 2006. On December 20, 2006, the Board awarded PEDP one of two Category 2 slot machine licenses available for the operation of a gaming facility in the City of Philadelphia. The Board issued the License to PEDP on May 29, 2008, subject to the condition that PEDP open its casino and begin operation of 1,500 slot machines within one year.

On May 22, 2009, however, PEDP sought an extension in which to build and open its casino, due to factors beyond its control.3 Following a hearing, the Board determined that PEDP had good cause for an extension and, by order issued September 1, 2009, granted PEDP an extension until May 29, 2011 to open its casino, which was then the maximum extension allowable under Section 1210 of the Pennsylvania Race Horse Development and Gaming Act (Gaming Act).4 The September 1, 2009 order imposed nine extension conditions upon PEDP. Pursuant to Conditions 5 and 6 of the order, architectural and other construction plans, and a development timeline were due by December 1, 2009. The order also required PEDP to submit monthly status reports to the Board, and made clear that PEDP could not- change the location of its casino facility.5 PEDP did not seek reconsideration of, or appeal, the Board’s September 1, 2009 order.

On November 30, 2009, because it could not meet the Board’s December 1, 2009 deadline, PEDP filed a motion with the Board for another extension, this time until at least March 1, 2010, to submit its architectural plans and development time-line as required by the September 1, 2009 order. The Board’s Office of Enforcement Counsel (OEC) for BIE opposed the motion and sought imposition of a sanction against PEDP due to its lack of compliance with the Board’s conditions. The Board conducted a hearing on January 27, 2010, at which PEDP’s counsel stated that PEDP had been working with investment advisors to obtain financing and funding for its casino since October of 2009, at which time it realized that it would need substantial funds not then available to it. PEDP said it had distributed packets to 15 potential investors.

PEDP’s counsel stated at the hearing that the delay for PEDP was due to the state of the U.S. economy, and the wait for pending table gaming legislation. PEDP’s counsel represented that, as of the day of [265]*265the hearing, PEDP was discussing a potential agreement with a large international investor with gaming experience, and that entity had entered into a relationship with a construction manager for the proposed project. He further stated that the design agreed upon with the potential investor will be “vastly different” from its proposed design, making another public hearing necessary. Reproduced Record (R.R.) at 1407a-1408a, 1425a, 1434a. He also stated that he did not have a date certain for the agreement in principle to be reached and, when it was reached, PEDP will likely have to return to the Board for an extension of its operation date. Finally, he stated that, if the deal with the potential investor falls through, PEDP would be back on March 1st proposing a temporary, interim, slots-only facility.

On February 10, 2010, the Board issued an order: (1) denying PEDP’s motion for extension; (2) imposing a $2,000.00 per diem sanction beginning December 1, 2009 and continuing until PEDP complied with the conditions of the Board’s September 1, 2009 order; and, (3) issuing a rule to show cause at a hearing on March 3, 2010 why the Board should not impose additional sanctions, including revocation, for failure to comply with the order. On February 18, 2010, PEDP agreed to a non-binding Term Sheet with Wynn Resorts Limited (Wynn) that contemplated Wynn and PEDP entering into a purchase agreement which would result in Wynn becoming a controlling owner of PEDP.

At the March 3, 2010 cause hearing, PEDP acknowledged that it had not literally complied with Conditions 5 and 6, but offered testimony and documentary evidence of its proposed deal with Wynn. PEDP’s counsel explained that PEDP was not capable of developing its proposed project, and it did not have an alternate plan in place in the event Wynn backed out of the deal. Despite testimony that Wynn did not require outside financing, and that only permits and the Board’s approval of Wynn as the licensee stood in its way of finalizing the deal, the Board found that PEDP had not complied with Conditions 5 and 6 of the Board’s September 1, 2009 order. In addition, the Board found that PEDP’s progress reports had been vague, its purported delays were no longer due to opposition to PEDP’s development of the casino, and that the economic downturn could not be a new cause of delay, when the same circumstances were evident before the September 1, 2009 order was issued. Accordingly, the Board ordered that: the per diem sanctions would continue, that PEDP was to submit definitive Wynn financing documents by March 31, 2010, that PEDP was to submit architectural and other construction plans and a development timeline by April 26, 2010, and that PEDP was to report at the Board’s April 29, 2010 meeting as to the need for further Board action for PEDP to achieve compliance with the Board’s orders.

On March 31, 2010, copies of a partnership interest purchase agreement with Wynn were submitted to BIE, but they were unsigned. On April 2, 2010, Wynn and PEDP entered into an agreement and, on April 5, 2010, fully-signed, definitive financial documents of the transaction with Wynn were submitted to BIE. On April 6, 2010, PEDP also submitted to BIE documents in compliance with Conditions 5 and 6 of the September 1, 2009 order.

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Cite This Page — Counsel Stack

Bluebook (online)
34 A.3d 261, 2011 Pa. Commw. LEXIS 576, 2011 WL 5438575, Counsel Stack Legal Research, https://law.counselstack.com/opinion/philadelphia-entertainment-development-partners-lp-v-pennsylvania-pacommwct-2011.