Harrah's Vicksburg Corp. v. Pennebaker, 2000-CA-00583-SCT.

• Decision Date: 31 October 2001
• Docket Number: No. 2000-CA-00583-SCT.,2000-CA-00583-SCT.
• Citation: 812 So.2d 163
• Parties: HARRAH'S VICKSBURG CORPORATION, A Nevada Corporation and Ameristar Casinos Inc., A Nevada Corporation v. E.L. PENNEBAKER, Jr., James Belisle, Multi Gaming Management, Inc., A Minnesota Corporation and Multi Gaming Management of Mississippi, Inc., A Mississippi Corporation.
• Court: Mississippi Supreme Court

812 So.2d 163

HARRAH'S VICKSBURG CORPORATION, A Nevada Corporation and Ameristar Casinos Inc., A Nevada Corporation v. E.L. PENNEBAKER, Jr., James Belisle, Multi Gaming Management, Inc., A Minnesota Corporation and Multi Gaming Management of Mississippi, Inc., A Mississippi Corporation.

No. 2000-CA-00583-SCT.

Supreme Court of Mississippi.

October 31, 2001.

Rehearing Denied February 7, 2002.

Neville H. Boschert, R. David Kaufman, Jackson, Attorneys for Appellants.

William E. Spell, Clinton, Wayne Dowdy, Attorney for Appellees.

Before McRAE, P.J., MILLS and WALLER, JJ.

MILLS, J., for the Court:

¶ 1. On February 27, 1998, E.L. Pennebaker, Jr. (Pennebaker) and James F. Belisle (Belisle), Multi Gaming Management, Inc. (MGM) and Multi Gaming Management of Mississippi, Inc. (MGM of MS) filed an amended complaint against Harrah's Vicksburg Corporation (Harrah's), Ameristar Casinos, Inc. (Ameristar), Riverboat Corporation of Mississippi Vicksburg (Isle of Capri) and Deposit Guaranty National Bank (Deposit Guaranty) alleging that they conspired to oppose and defeat a proposal by Horseshoe Gaming, Inc. (Horseshoe) seeking approval of the Mississippi Gaming Commission (MGC) to build a casino and automobile racetrack project on the Big Black River in Warren County approximately fifteen miles east of Vicksburg. Pennebaker and the others asserted that the casinos and the bank violated Mississippi gaming statutes and antitrust laws, tortiously interfered with contracts between them and Horseshoe, and illegally conspired to defeat the Horseshoe application pending before the MGC. The defendants filed motions for summary judgment which were subsequently denied. The trial court did, however, grant summary judgment for the defendants with the plaintiffs' consent on the plaintiffs' fraud claim. Prior to trial, Isle of Capri reached a settlement with the plaintiffs and was dismissed as a defendant.

¶ 2. A jury trial was held October 18, 1999, through October 27, 1999. Prior to the case going to the jury, the plaintiffs agreed that the claims of Belisle, MGM of MS, and MGM should be made as one claim with MGM as the plaintiff. The jury returned a verdict in favor of Pennebaker for $1,042,000 and for MGM in the amount of $2,950,000 for restraint of trade, conspiracy, and tortious interference with contract. Taking into account the Isle of Capri settlement, the court entered final judgment in favor of Pennebaker for $942,000 and MGM for $2,850,000. All post-trial motions for judgment notwithstanding the verdict or, in the alternative, for new trial, were denied. The defendants timely perfected this appeal. After filing the appeal, Deposit Guaranty settled with the plaintiffs, and this Court entered an order dismissing the bank as an appellant. Only Harrah's and Ameristar are appellants in this appeal.

FACTS

Background

¶ 3. In 1990, the Mississippi Legislature legalized gaming along the shores of the Gulf Coast and along the Mississippi River. See Miss.Code Ann. § 97-33-1(a), (b) (2000). "More specifically, in the river counties, the Mississippi Code authorizes gaming `[o]n a vessel as defined in § 27-109-1 whenever such vessel is on the Mississippi River or navigable waters within any county bordering on the Mississippi River, and in which the registered voters of the county in which the port is located have not voted to prohibit such betting, gaming, or wagering on vessels as provided in § 19-3-79.'" Miss. Casino Operators Ass'n v. Miss. Gaming Comm'n, 654 So.2d 892, 893-94 (Miss.1995) (quoting Miss. Code Ann. § 97-33-1(b)) (emphasis in original).

¶ 4. The legislature established the Mississippi Gaming Commission to regulate the development and operation of gaming in this state. Miss.Code Ann. § 75-76-1 to -34 (2000). "The legislature delegated broad powers to the MGC for handling the development of gaming in Mississippi." Casino Magic Corp. v. Ladner, 666 So.2d 452, 459 (Miss.1995). The Gaming Control Act has vested the MGC with the authority to determine the locations of casinos in Mississippi. See Miss. Casino Operators Ass'n,654 So.2d at 894. The MGC has the express authority to make the final decision on findings of site suitability as well as other financial and character suitability factors required for a gaming license in Mississippi. Ladner, 666 So.2d at 459.

¶ 5. The MGC is charged with the authority and responsibility to promulgate regulations "as it may deem necessary or desirable in the public interest in carrying out the policy and provisions of [the Act]." Miss.Code Ann. § 75-76-33(1). The MGC also has the authority to make appropriate investigations both to determine whether there has been a violation of the act or of any regulations adopted under the act and "to determine any facts, conditions, practices, or matters which it may deem necessary or proper to aid in the enforcement of any such law or regulation." Id. § 75-76-103(1)(a), (b).

Gaming in Warren County

¶ 6. The City of Vicksburg is located within Warren County on the Mississippi River. The residents of Warren County have voted pursuant to Miss.Code Ann. § 19-3-79 to allow riverboat gaming in that county. The Mississippi Legislature has not authorized gaming in Hinds County which adjoins Warren County.

¶ 7. The MGC has licensed four casinos to operate in Vicksburg. These are Harrah's, Ameristar, Isle of Capri, and Rainbow. None of these casinos has ever opposed the licensing of additional casinos in Vicksburg.

¶ 8. In 1993, MGM sought to develop a casino and automobile racetrack near Redwood, Mississippi, on the Yazoo River in Warren County, ten miles north of Vicksburg. The MGC granted MGM's initial application for preliminary approval of the Redwood site. MGM defaulted on its payments for the options to buy the Redwood site, however; and the landowners sued for payment or rescission of the options. MGM settled with the landowners and set out to find another location for its proposed casino and race track.

The Big Black River Proposal

¶ 9. The Big Black River forms the boundary between Warren County and Hinds County. Warren County lies generally to the west of the river and Hinds County to the east; however, less than a mile south of the Interstate 20 intersection with the Big Black River, the river turns and runs east/west for approximately four miles, roughly parallel to the interstate with Warren County to the north and Hinds County to the south. The "Flowers" exit, or Exit 15, is the only exit on Interstate 20 along this four-mile stretch of the river.

¶ 10. In April 1996, MGM acquired options to buy a piece of property on this four-mile stretch of the Big Black, running from the river to the interstate just west of the Flowers exit. This area was known as the "Henry" property. MGM filed an application with the MGC for approval of this property as a legal and suitable site for gaming. On August 15, 1996, MGM and Horseshoe executed a letter of intent providing MGM with a 15% interest in the proposed casino project on the Henry property. Horseshoe was to retain the other 85%. MGM ultimately withdrew its application for approval due to opposition by historical preservation groups concerned that a casino and race track would jeopardize a nearby Civil War battle site. Horseshoe then acquired its own options to purchase a nearby site known as the Hooker property. In November, 1996, Horseshoe filed an application with the MGC for preliminary approval of this site. The site application stated that Horseshoe owned 100% of the project. Horseshoe never submitted any document indicating that MGM had any ownership interest in the Hooker project.

¶ 11. Pennebaker owned property near the Flowers exit south of Interstate 20. On October 19, 1996, Pennebaker entered into a written agreement with Horseshoe under which Horseshoe agreed to purchase Pennebaker's ownership interest in Flowers Development Corporation and Flowers Development, L.P., for $1,092,000 in the event the Horseshoe Big Black gaming site was approved by the MGC. Under the agreement, Pennebaker was to give Horseshoe certain right-of-way over the 22 acre property so that Horseshoe could access the site for which it had applied for a gaming license. Pennebaker was paid $50,000 in advance pursuant to the agreement and was to be paid $1,042,000 at the closing upon approval of the Big Black site.

Opposition to the Proposed Site

¶ 12. The City of Vicksburg and several businesses in the area opposed approval of this site. Their opposition is evidenced by letters written to the MGC and testimony before the MGC based upon the potentially disastrous effect the development would have on the Vicksburg economy. Local churches and other religious groups also opposed approval of gaming on this site. Historical groups opposed the Hooker site as they had opposed the previous Henry site due to its close proximity to the Civil War battlefield. Naturalists opposed the site because of the negative impact the project would have on fossils and other paleontological artifacts located in that area along the Big Black River. Environmental groups opposed the site because of the potential effect on endangered species in the area. Nearby landowners opposed the site because of traffic, pollution, and noise from operation of the proposed race track.

¶ 13. Harrah's, Ameristar, and Isle of Capri (sometimes referred to as the "Vicksburg casinos") also opposed this site as both illegal and unsuitable for gaming. They considered such an inland site fifteen miles east of the Mississippi River to have devastating effects to their economic viability. The casinos wrote the MGC directly to express their opposition to the site and also employed public relations consultants to make their views known to the MGC and the general public.

¶ 14. On July 26, 1996, Ameristar CEO Craig Neilsen sent a letter to General Paul Harvey, Executive Director of the MGC, setting forth Ameristar's opposition to the Big Black River...