Court Rejects Harrah's Motion to Dismiss

LAS VEGAS-The US District Court for the Northern District of New York this week denied a motion by Harrah’s Operating Co. Inc. to dismiss a $1.78-billion judgment enforcement action commenced by the Catskill Litigation Trust against Harrah’s in June 2007 on behalf of the St. Regis Mohawk Tribe. With interest and other costs, the amount owed stands at nearly $3 billion, according to the Tribal Court, which issued the original judgment. In its most recent quarterly report Harrah’s states that the lawsuit is “without merit.”

The lawsuit by the Catskill Litigation Trust seeks to collect the money under class action judgments of the St. Regis Mohawk Tribal Court issued in March 2001 for $1.78 billion against Caesars Entertainment, which Harrah’s acquired in 2005. In 2003, US District Court for the Northern District of New York dismissed litigation concerning the validity of the judgment because a settlement was in the works but retained jurisdiction to reopen the litigation if the settlement didn’t occur.

In June 2007, on behalf of the St. Regis Mohawk Tribe, the Catskill Litigation Trust filed a lawsuit to have the judgment enforced with interest, which the Tribal Court says amounts to $1 billion as of July 2007, bringing the total amount it says is owed to nearly $3 billion. Harrah’s filed the motion to dismiss the case on Aug. 13.

“Prior to our acquisition of Caesars in June 2005, it was believed that this matter was settled pending execution of final documents and mutual releases,” Harrah’s states in its third quarter report filed last month. “The company believes this matter to be without merit and will vigorously contest any attempt to enforce the judgment.”

The lawsuit followed the Tribe’s failed effort to develop a Native American casino at the Monticello Raceway in the Catskills region of New York from 1994-2000, which involved an agreement with Park Place Entertainment, subsequently acquired by Caesars. The Tribal Court issued its default judgment against Caesars following the company’s “failure to appear [before the court] and answer the claims within the complaint,” according to the court’s 2001 judgment.

In its August 2007 motion to dismiss the lawsuit seeking to reinstate the enforcement action, Harrah’s argues that (a) the named Plaintiffs are improper parties because they obtained their interest in the Judgment pursuant to an assignment prohibited by New York Judiciary Law § 489(1); and (b) the issue raised in this action was previously settled.

While the court dismissed Harrah’s motion to dismiss the lawsuit seeking to reinstate the enforcement action, it seems to invite Harrah’s to file a new motion for summary judgment. The court implies that dismissal now (as opposed to after a summary judgment motion) would be premature: “Despite the authority to convert a Rule 12 motion to one for summary judgment, the court is concerned that such a procedure will offer neither finality nor be the most economical method to resolve the instant dispute. If converted on the present record, the resulting decision may be subject to challenge on the ground that the losing party was not afforded proper notice or was not sufficiently prepared to proceed under the rubric of a summary judgment motion.”

Meantime, the St. Regis Mowhawk Tribe continues to try to develop the casino, last month filing another lawsuit in US District Court in Washington, DC. The suit is intended to compel US Secretary of the Interior Dirk Kempthorne to make a ruling on its pending land into trust application. For that story, click here.