City of Gary v. Majestic Star Casino, 49A02-0807-CV-625.

• Decision Date: 14 May 2009
• Docket Number: No. 49A02-0807-CV-625.,49A02-0807-CV-625.
• Citation: 905 N.E.2d 1076
• Parties: CITY OF GARY, INDIANA, Appellant-Defendant, v. The MAJESTIC STAR CASINO, LLC, the Majestic Star Casino II, Inc. f/k/a Trump Indiana, Inc., Gary New Century, LLC, Appellees-Plaintiffs, and The Indiana Gaming Commission, Appellee-Defendant.
• Court: Indiana Appellate Court

905 N.E.2d 1076

CITY OF GARY, INDIANA, Appellant-Defendant, v. The MAJESTIC STAR CASINO, LLC, the Majestic Star Casino II, Inc. f/k/a Trump Indiana, Inc., Gary New Century, LLC, Appellees-Plaintiffs, and The Indiana Gaming Commission, Appellee-Defendant.

No. 49A02-0807-CV-625.

Court of Appeals of Indiana.

May 14, 2009.

Hamilton Lonnie Carmouche, Merrillville, IN, Attorney for Appellant.

Susan M. Severtson, Carl C. Jones, Gary, IN, Attorney for Appellant, City of Gary, Indiana.

Gregory F. Zoeller, Attorney General of Indiana, David L. Steiner, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee, Indiana Gaming Commission.

Peter J. Rusthoven, Paul L. Jefferson, E. Timothy Delaney, Barnes & Thornburg, Indianapolis, IN, Attorneys for Appellee, Majestic Companies.

OPINION

BROWN, Judge.

In this interlocutory appeal, the City of Gary appeals an order denying the City's motion to transfer venue and an order denying the City's motion for a preliminary injunction to compel Majestic Star Casino, LLC ("Majestic Star I") and the Majestic Star Casino II, Inc. ("Majestic Star II") (collectively "Majestic Star") to make payments from adjusted gross receipts to the City. The City raises two issues, which we revise and restate as:

I. Whether the trial court erred by denying the City's motion for change of venue from Marion County to Lake County where the Indiana Gaming Commission (the "Commission") was named as a defendant in the declaratory judgment action; and

II. Whether the trial court abused its discretion by denying the City's motion for a preliminary injunction.

We affirm.

The relevant facts follow. In 1996, the City and Majestic Star I entered into a development agreement ("Majestic Development Agreement"). That same year, the City and Trump Indiana, Inc., entered into a development agreement ("Trump Development Agreement"). Both of the agreements provided that the developer shall pay the City an amount equal to three percent of adjusted gross receipts for each month in which the developer conducts riverboat gaming operations.

In 1999, the City and Gary New Century, LLC ("GNC") entered into an agreement entitled Assignment of Purchase Agreement and Development Agreement ("GNC Agreement"). The City agreed to purchase property from the Lehigh Portland Cement Company for $25 million and assigned its rights to GNC. The City agreed to perform demolition and environmental remediation work on the Lehigh property and agreed to build certain infrastructure adjacent to the Lehigh property. GNC agreed to invest fifty million dollars to undertake certain development projects on the Lehigh property.

In 2000, an addendum to the GNC Contract was executed by the City and GNC. In 2004, GNC and Majestic Star I entered into an agreement in which GNC's rights to a portion of the Lehigh property were assigned to Majestic Star I.

In 2005, Majestic Star I purchased the riverboat casino from Trump Indiana, Inc., which casino is now known as Majestic Star II. That same year, a representative of Majestic Star I, a representative of Trump Indiana, Inc., and the City's mayor signed an agreement entitled Amendment Number One to Development Agreement ("the 2005 Amendment"). The 2005 Amendment stated that "the parties to this Amendment desire to make certain modifications related to the Majestic Development Agreement, the Trump Development Agreement and the GNC Development Agreement in light of the passage of time and change in circumstances since the execution of the original Agreements." Appellant's Appendix at 99-100. The 2005 Amendment provided that it amended various portions of the Majestic Development Agreement, the Trump Development Agreement, and the GNC Agreement.

The parties disagree as to the validity and meaning of the 2005 Amendment. The City contests the validity of this agreement because it was never approved by the Board of Public Works. The City also argues that, even if the 2005 Amendment was valid, "it does not make the [adjusted gross receipts payments] conditional upon the City's separate obligations regarding the development of the Lehigh Property set forth in the GNC [Agreement]." Appellant's Brief at 8. Majestic Star argues that the City has accepted "millions without protest, for years" under the 2005 Amendment, which is interrelated with the development agreements. Majestic Star's Brief at 15.

In 2008, the Majestic Star I, the Majestic Star II, and GNC filed a complaint in Marion County against the City and the Commission. The complaint alleged that "[b]ecause the City has failed to fulfill its obligations under the GNC Agreement, both as initially entered and as thereafter amended by the 2005 Amendment, and has repudiated the 2005 Amendment, Majestic I and Majestic II are depositing into a segregated, interest-bearing bank account the amounts that would otherwise be paid to the City under the 2005 Amendment (and which the City has previously accepted under the Amendment that it now repudiates), with such segregated amounts to be disbursed thereafter in accordance with a confirmation arbitration award." Appellant's Appendix at 52. The complaint alleged that the City "has refused to comply with and has failed to fulfill its contractual obligations under the GNC Agreement, both as initially entered and as amended by the 2005 Amendment." Id. at 54. The complaint requested the trial court to issue a declaratory judgment stating that the Commission will be bound by the results of arbitration. The complaint also requested, "if and to the extent it may be determined in the Arbitration that the issue of whether the City has breached its obligations under the GNC Agreement and the 2005 Amendment is not subject to arbitration, the Majestic Companies request that the Court issue a declaratory judgment that the City has breached such obligations, and award the Majestic Companies all appropriate declaratory and other relief to which they are entitled as a consequence of such breach." Id. at 55.

On March 3, 2008, the City filed a motion to transfer for incorrect venue.¹ At the hearing on its motion,² the City argued that proper venue was in Lake County because the contract dispute did not inherently involve the Commission and Majestic Star had "no standing over the [] Commission." Transcript at 13. On April 11, 2008, the trial court denied the City's motion to transfer.

On March 24, 2008, the City filed a motion for preliminary injunction that apparently sought to compel Majestic Star to resume making the payments from the adjusted gross receipts to the City under the development agreements and to cease depositing those amounts into a segregated account.³ At a hearing, Mary Celita Green, the Controller for the City, testified that the payments from the adjusted gross receipts average about $600,000 a month. Green testified that the actions of Majestic Star prevented the City from paying overtime for police officers and firefighters and that garbage pickup and medical insurance claims would be affected. Green testified that the City has the capacity to issue general obligation bonds, that the Council approved revenue bonds in the amount of $25 million, and that the City used only $4.8 million.

After the hearing, the trial court denied the City's motion for a preliminary injunction. The trial court concluded that the potential harm identified by the City was purely economic and an adequate remedy existed at law. The trial court also noted that the City has "unused bond-issuance authority of some $20.2 million," which is an alternative means by which to obtain money to cover any budgetary shortfalls. Appellant's Appendix at 37. The trial court also concluded that the City did not show that it has a likelihood of success on the merits, that the balance of harms favors the denial of a mandatory preliminary injunction, and that the public interest would not be served by the grant of a mandatory injunction.

I.

The first issue is whether the trial court erred by denying the City's motion for change of venue. This court may dismiss appeals upon its own motion when it discovers it does not have jurisdiction. Moser v. Moser, 838 N.E.2d 532, 534 (Ind.Ct.App.2005), trans. denied. An appeal from an interlocutory order is not allowed unless specific authority is granted by the Indiana Constitution, statutes, or the rules of court. Id. Moreover, any such express authorization for an interlocutory appeal is "strictly construed." Id.; Schwedland v. Bachman, 512 N.E.2d 445, 449 (Ind.Ct.App.1987) ("Appeals from interlocutory orders are allowed only when expressly authorized, with such authorization being strictly construed.").

Ind. Trial Rule 75 governs venue requirements and provides in part that "[a]n order transferring or refusing to transfer a case under this rule shall be an interlocutory order appealable pursuant to Appellate Rule 14(A)(8); provided, however, that the appeal of an interlocutory order under this rule shall not stay proceedings in the trial court unless the trial court or the Court of Appeals so orders." Indiana Appellate Rule 5(B) provides authority for the Court of Appeals to obtain "jurisdiction over appeals of interlocutory orders under Rule 14." The City states that this court has jurisdiction over the appeal of the venue issue under Appellate Rule 14(A)(8). Appellate Rule 14(A) provides, in relevant part:

Appeals from the following interlocutory orders are taken as a matter of right by filing a Notice of Appeal with the trial court clerk within thirty (30) days of the entry of the interlocutory order:

* * * * *

(8) Transferring or refusing to transfer a case under Trial Rule 75;

The order denying the City's motion to transfer venue is dated April 11, 2008. The City did not file its notice of appeal until June 2, 2008, fifty-two days after the trial court's order. The Indiana Supreme Court has "considered perfecting a timely appeal a jurisdictional matter." Claywell v. Review Bd. of...