Mays v. Trump Indiana Incorp., s. 00-1083

• Citation: 255 F.3d 351
• Decision Date: 18 June 2001
• Docket Number: Nos. 00-1083,s. 00-1083
• Parties: (7th Cir. 2001) WILLIAM MAYS, LOUIS BUDDY YOSHA, Trustee of the charitable remainder unitrust, CYNTHIA ANN YOSHA SNYDER, Trustee of the irrevocable trust agreement, et al., Plaintiffs-Appellants/Cross-Appellees, v. TRUMP INDIANA, INCORPORATED, Defendant-Appellee/Cross-Appellant, and Donald J. Trump, Defendant-Appellee. & 00-1138
• Court: U.S. Court of Appeals — Seventh Circuit

Page 351

255 F.3d 351 (7th Cir. 2001)

WILLIAM MAYS, LOUIS BUDDY YOSHA, Trustee of the charitable remainder unitrust, CYNTHIA ANN YOSHA SNYDER, Trustee of the irrevocable trust agreement, et al., Plaintiffs-Appellants/Cross-Appellees, v. TRUMP INDIANA, INCORPORATED, Defendant-Appellee/Cross-Appellant, and Donald J. Trump, Defendant-Appellee.

Nos. 00-1083 & 00-1138

In the United States Court of Appeals For the Seventh Circuit

Argued September 29, 2000

Decided June 18, 2001

Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 96 C 425--Richard L. Young, Judge.

Before EASTERBROOK, RIPPLE, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

It was extremely controversial, and it passed over the veto of then-Governor Evan Bayh, but Indiana enacted legislation in 1993 permitting, for the first time, riverboat gambling in several Hoosier counties contiguous to Lake Michigan, the Ohio River, and Patoka Lake. Two of several possible gambling licenses were earmarked for Gary, a troubled city in the shadow of a megatropolis--Chicago.

Promoters of gambling argued that it would bring loads of cash into communities like Gary and spark an economic renaissance. This was welcome news for a smokestack-shrouded, rust-belt city like Gary, a city devastated by the loss of thousands of steel industry jobs and left with block after block of decaying houses and empty storefronts. Things had gotten so bad in Gary that in 1993, when the gambling measure passed, its homicide rate (91 slayings per 100,000 residents) left it with the nasty moniker of "Murder Capitol" of the United States.

This case is a saga about the gambling- license-snaring process and its fallout. The cast of characters includes two folks from Indianapolis: William Mays and Louis Buddy Yosha. Mays is a successful businessman, the owner (with his wife) of the Mays Chemical Company and two radio stations (KISS 106.7 and WIRED 100.9 FM), an investor in many other enterprises, a philanthropist, and a multimillionaire. Yosha is a very successful plaintiff's personal injury attorney. In the other corner is Donald Trump, known to some as The Donald and to others as the former husband of Ivana. Trump's activities here were through several of his companies, particularly a new one called Trump Indi ana, but we'll refer to all of them simply as "Trump" (and we'll use "he" and "it" interchangeably) as we slug our way through this opinion.

In a nutshell, Mays and Yosha (and several trusts Yosha created for the benefit of his children, another detail we can ignore) claim Trump breached a contract (1) to make them minority (1 percent each) partners in his Indianagambling enterprise and (2) to create a foundation--with the two of them on its board of directors and little control from Trump--to benefit various charitable causes in Indiana. A jury found for Mays and Yosha and awarded them $1.4 million in damages. After a court trial, the district judge denied Mays and Yosha's request for specific performance, finding that a different charitable organization--the Trump Indiana Foundation--was an acceptable novation- inspired substitute for what Mays and Yosha wanted. The judge did, however, order that Mays and Yosha get seats on the board of the new foundation. Mays and Yosha appeal on the specific performance question and Trump cross-appeals, saying no contract was ever formed and Mays and Yosha are entitled to nothing.

To best understand this case, and to support why we resolve it as we do, a lengthy review of the facts, sprinkled with several observations as we go along, is necessary.

Normally, when someone wants to start a business, one simply starts it. But everything's different in a regulated industry, and it's even more different in a super-regulated, explosively charged business like legal gambling. There's a lot of politics involved in this sort of undertaking and a lot of minefields to traverse before the prize--a license toengage in legal gambling--is won. And under the 1993 law, the Indiana Gaming Commission decided who would win that prize.

The two Gary licenses were to be issued first, and applicants were required "to provide assurances that economic development will occur in [Gary] and that adequate infrastructure and site preparation will be provided to theriverboat operation." Ind. Code sec. 4-33-6-7(b). Consequently, Gary applicants had to build an "approved hotel" or "cause economic development that [would] have an economic impact on the city [exceeding] the economic impact that the construction of an approved hotel would have." Ind. Code sec. 4-33-6- 7(b).

This was a State of Indiana operation, yet the City of Gary was, quite understandably, very interested in the license-awarding process. It wanted a voice, and one can easily understand why. So Gary requested proposals from potential applicants even before they made contact with the state commission. Gary's request outlined several demands to be met before the city would endorse (though its endorsement wasn't legally required) an application to the commission. One of Gary's requirements was that an applicant have 15 percent local ownership.

Most people can smell money when they hear the phrase "riverboat gambling." That was especially true when it was "riverboat gambling" within sight of a place like Chicago. Trump--and Mays and Yosha, for that matter--had nothing wrong with their noses. They could sniff the smell of money. Trump, as most everyone knows (judicial notice is usually confined to undisputable facts like Greenwich mean time, but we feel safe here), controls an empire that includes a gambling casino in Atlantic City, New Jersey. Mays was active in politics and a member of the Indiana State Lottery Commission. He testified during the trial that "gaming was a really profitable activity" and a "printing press for money." As things were playing out, it looked like the road to that money ran through Gary, and Trump--along with his competitors--took steps to secure a favorable nod from the city.

As the process unfolded it became apparent that, as far as Gary was concerned, there were four horses in this race but only two would finish in the winner's circle. Trump was one of the four, and it was trying hard to enhance its standing with the city as 1993 came to a close.

Fifteen percent local ownership in the riverboat casino came to be seen as a nonnegotiable demand for winning Gary's endorsement. Trump did not need nor want local investment, yet it gave in. According to a Trump executive:

It [15% local ownership] was not something that we wanted to do. As indicated on that first line in the first page [of Exhibit 200, a December 30, 1993, letter to Trump from the Gary mayor's office], we were at this time negotiating with the City to get their endorsement of [Trump Indiana's] application when we did go before the Gaming Commission. And the City had indicated that they were not under any circumstance going to give us that endorsement absent our agreement to do this. So we did agree to make 15% of the equity available to Gary residents essentially in exchange for the City's endorsement.

The city memorialized its understanding of Trump's commitment (the same December 30, 1993, letter just mentioned) to be: (1) spending at least $153.35 million on the riverboat and accompanying facilities; (2) creating 1,675 new permanent jobs; (3) filling 67 percent of those jobs with Gary residents and 90 percent with Lake County residents; (4) using best efforts to maintain 70 percent racial minority and 52% female employment; and (5) making at least 15 percent of the equity in the company available to Gary residents. If Trump was selected by the state gaming commission, a binding development agreement was required to memorialize these commitments. Trump was not alone here, as all other applicants for licenses made similar commitments to the city. Competition for Gary's endorsement, and a license from the state, was obviously fierce.

Trump then turned his attention to identifying local investors before February 14, 1994, the date another step in the application process was due before the state commission. But bad news arrived when Trump learned Gary would not endorse its application, but would instead endorse two other applicants. Undaunted, Trump continued its efforts to identify local investors because it believed a third license might be awarded to Gary, and if the commission gave it to Trump, a development agreement with the city, which would require local ownership, would still be necessary. As a Trump executive put it, "We wanted to be sure that on a going-forward basis if we were fortunate enough to be awarded the license that our relationship with the City of Gary was on very amicable terms."

By early 1994, seven individuals from the Gary area and two from Indianapolis-- Mays and Yosha--were tapped to be Trump's "local investors." The entree to Mays was through a Trump attorney (Greg Hahn), Mays' friend since the days when both were living and apparently going to school in Evansville, Indiana. Mays (and Yosha, for that matter) had no connection with Gary, but because this was still a State of Indiana license, it was thought that someone of statewide prominence would gussy up Trump's application.

At this point it is helpful to step back and view the lawsuit claims of these parties. Mays and Yosha claim they entered into a binding contract with Trump and that they held up their part of the bargain, while Trump did nothing he was contractually obligated to do. Mays and Yosha find "the contract" by cobbling together several documents, notably letters of February 26, 1994 (trial exhibit 5), April 6, 1994 (trial exhibit 10), and September 16, 1994 (trial exhibit 35).¹ Trump says no binding deal was reached: there were negotiations, there were ideas, there were proposals, and there were plans, but there was no finished contract upon which Mays and...