Gattineri v. Wynn Ma, LLC
| Docket Number | SJC-13416 |
| Decision Date | 03 November 2023 |
| Parties | ANTHONY GATTINERI v. WYNN MA, LLC, & another.[1] |
| Court | United States State Supreme Judicial Court of Massachusetts |
Heard September 13, 2023.
Gaming. License. Contract, Option, Performance and breach. Real Property, Option. Public Policy. Statute, Construction. Constitutional Law, Taking of property. Supreme Judicial Court, Certification of questions of law.
Certification of questions of law to the Supreme Judicial Court by the United States Court of Appeals for the First Circuit.
Kelley A. Jordan-Price (Michael J. Connolly & John A. LeBlanc also present) for the plaintiff.
Emily Kanstroom Musgrave (Samuel M. Starr & Catherine S Lombardo also present) for the defendants.
Howard M. Cooper, Ian J. Pinta, & Christian G. Kiely, for FBT Everett Realty, LLC, amicus curiae, submitted a brief.
David S. Mackey, Melissa C. Allison, & Sean M. Grammel, Special Assistant Attorneys General, for Massachusetts Gaming Commission, amicus curiae, submitted a brief.
Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.
As part of their bid to win a casino license in Massachusetts, defendants Wynn MA, LLC, and Wynn Resorts, Limited (collectively, Wynn),[2]entered into an option contract with FBT Everett Realty, LLC (FBT), to purchase a parcel of land in Everett and Boston (FBT parcel) for $75 million. As Wynn's casino license application proceeded, the Massachusetts Gaming Commission (commission) discovered the possibility of concealed ownership interests in FBT by a convicted felon with connections to organized crime. Extensive investigation by the commission of FBT, however, did not resolve those concerns. In response to the commission's lingering concerns, and after further negotiations, FBT and Wynn amended their option agreement and lowered the purchase price for the FBT parcel to $35 million, a figure that reflected the fair market value of the parcel if it were not used as a casino. The amended option agreement was submitted to the commission, and as a condition of its approval of the amendment, the commission imposed a price cap of $35 million on the sale of the FBT parcel. The commission also required that the three publicly known members of FBT certify that they would be the "exclusive recipients" of the FBT parcel sale proceeds.
Plaintiff Anthony Gattineri, a minority owner of FBT, opposed the price reduction and refused to sign the certificate as required by the commission, arguing that he deserved to be paid his percentage of the price reduction. Gattineri alleges that at a meeting with Wynn vice-president Robert DeSalvio in San Diego, California, the two men agreed that in exchange for Gattineri signing the certificate, Wynn would "make Anthony Gattineri whole" by paying him an additional nearly $19 million, calculated as Gattineri's proportional share of the $40 million price reduction on the FBT parcel. This agreement was neither committed to writing nor communicated to the commission. Gattineri was also a person of particular interest to the commission, as he not only was one of the three principals of FBT but had also bought out the convicted felon's ownership interest in FBT and still owed him money at the time of the investigation.
Gattineri eventually signed the certificate. The commission then later awarded Wynn a casino license. However, Wynn never paid Gattineri the additional $19 million he alleges he was owed, so he sued Wynn in the United States District Court for the District of Massachusetts. Gattineri argues that Wynn has committed a breach of the contract (San Diego agreement) formed between Gattineri and Wynn that induced Gattineri to sign the certificate.
A Federal District Court judge granted summary judgment for the defendants on all counts, and Gattineri appealed to the United States Court of Appeals for the First Circuit. The First Circuit, reasoning that the enforceability of the San Diego agreement under Massachusetts law was potentially dispositive of the case, certified the following questions to this court:
Gattineri v. Wynn MA, LLC, 63 F.4th 71, 95 (1st Cir. 2023). See S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981) (requirements for certification).
We conclude that the San Diego agreement is unenforceable for reasons of public policy. By its express terms, the paramount public policy of the Expanded Gaming Act (gaming act), G. L. c. 23K, is to protect the integrity and public confidence in the casino gambling licensure process. This public policy, reflecting both the risks presented by large-scale gambling operations and the recognized need for their strict regulation, has been consistently emphasized in our gambling statutes and our case law. Consequently, an agreement, concealed from the commission empowered to review and approve casino licenses and inconsistent with the terms presented to, and approved by, the commission to address its concerns about the possibility of involvement of organized crime, is therefore unenforceable as a violation of public policy. Because we hold that the San Diego agreement is unenforceable for reasons of public policy, we need not reach the question whether it is separately unenforceable under § 21 of the gaming act.[4]
We recite the facts as stated by the certifying court, supplemented by undisputed facts in the parties' appendices. Because this case was decided on a motion for summary judgment, we recite the facts "in the light most favorable to the nonmoving party," here Gattineri. See Dorchester Mut. Ins. Co. v. Miville, 491 Mass. 489, 492 (2023), quoting Dorchester Mut. Ins. Co. v. Krusell, 485 Mass. 431, 435 (2020).
Gattineri is a 46.69 percent minority nonmanaging member of FBT. The other principals of FBT are Paul Lohnes and Dustin DeNunzio. In 2009, FBT purchased the FBT parcel, located in Everett and Boston, where the Encore Boston Harbor resort and casino now stands. In December 2012, Wynn entered into an option agreement with FBT to purchase the parcel for $75 million. The option agreement required FBT to remediate some of the environmental contamination on the parcel. FBT also agreed that it and its members would "reasonably cooperate with [Wynn] with respect to any information it reasonably requires to complete the Casino Application and respond to any such inquiries throughout the licensing process." In January 2013, Wynn filed an application with the commission for a Region A Category 1 gaming license to operate a resort and casino in Massachusetts. As a part of the application process, the commission's investigations and enforcement bureau (IEB) began investigating Wynn and FBT to determine Wynn's suitability for a gaming license.
During the investigation, the IEB became concerned by the possibility that Charles Lightbody, a convicted felon with ties to organized crime, had hidden ownership interests in FBT. The basis for these suspicions were telephone calls recorded in December of 2012 between Lightbody and an inmate in State prison wherein Lightbody referenced ownership or control of the FBT parcel and the need to conceal it from the commission. Gattineri stated that he obtained Lightbody's 12.05 percent membership interest in FBT via a memorandum of transfer and promissory note for $1.7 million. FBT manager Dustin DeNunzio admitted to the IEB that he had altered the memorandum of transfer and promissory note to create the impression that Lightbody divested his interest in FBT in August 2012, prior to the December 2012 option agreement with Wynn. Those documents, however, were actually executed in July 2013, heightening the IEB's concerns.
The IEB concluded that Lightbody had held an ownership interest in FBT for longer than had been disclosed by FBT, and thus the IEB was concerned that he continued to be involved without the commission's knowledge. There was also evidence that Gattineri had not fully paid the promissory note and satisfied the terms of the memorandum of transfer, raising questions about whether Lightbody retained some reversionary interest.[5] When the IEB investigation was near completion, IEB director Karen Wells informed Wynn of the IEB's findings and concerns regarding the FBT parcel sale. Wells told Wynn that how it proceeded regarding FBT "receiving a financial windfall as a result of the gaming facility was something the IEB would report on regarding [Wynn's] suitability [to hold a casino license]."
In response to the concerns expressed by the IEB, Wynn hired an appraiser to study the FBT parcel and determined that the fair market value for the FBT parcel if it were not used for a casino was approximately $35 million. As the IEB investigation was ongoing, Wynn and FBT were negotiating environmental liabilities associated with the FBT parcel. Following these negotiations, Wynn and FBT agreed to the ninth amendment to the option agreement (ninth amendment), whereby the purchase price for the FBT parcel would be reduced to $35 million and FBT's environmental liabilities would be capped at $10 million. Gattineri opposed the purchase price reduction, but as minority owner of FBT, he was unable to stop the ninth amendment's ratification.
Wynn submitted the ninth amendment to the commission for its review and approval, describing the agreement as the "proposed resolution to concerns raised by the [IEB] . about undisclosed interests in FBT." In testimony...
To continue reading
Request your trial