Mohegan sun lawsuit against Northeast Realty

34
B4246006.8 COMMONWEALTH OF MASSACHUSETTS HAMPDEN, ss. SUPERIOR COURT DOCKET NO. HDCV2014-00138 NORTHEAST REALTY ASSOCIATES, LLC, Plaintiff, v. MOHEGAN RESORTS MASS, LLC, MOHEGAN SUN MASSACHUSETTS, LLC, AND MICHAEL VITO & ASSOCIATES, INC. Defendants. - and - MOHEGAN RESORTS MASS, LLC, and MOHEGAN SUN MASSACHUSETTS, LLC, Plaintiffs-in-Counterclaim, v. NORTHEAST REALTY ASSOCIATES, LLC, Defendant-in-Counterclaim, and NORTHEAST GAMING GROUP, INC., NORTHEAST RESORTS GROUP, INC., and, LEON H. DRAGONE, Third-Party Defendants. DEFENDANTS MOHEGAN RESORTS MASS, LLC AND MOHEGAN SUN MASSACHUSETTS, LLC’S AMENDED ANSWER, COUNTERCLAIMS AND THIRD-PARTY COMPLAINT

Transcript of Mohegan sun lawsuit against Northeast Realty

Page 1: Mohegan sun lawsuit against Northeast Realty

B4246006.8

COMMONWEALTH OF MASSACHUSETTS

HAMPDEN, ss. SUPERIOR COURT

DOCKET NO. HDCV2014-00138

NORTHEAST REALTY ASSOCIATES, LLC,

Plaintiff,

v.

MOHEGAN RESORTS MASS, LLC,

MOHEGAN SUN MASSACHUSETTS, LLC,

AND MICHAEL VITO & ASSOCIATES, INC.

Defendants.

- and -

MOHEGAN RESORTS MASS, LLC, and

MOHEGAN SUN MASSACHUSETTS, LLC,

Plaintiffs-in-Counterclaim,

v.

NORTHEAST REALTY ASSOCIATES, LLC,

Defendant-in-Counterclaim, and

NORTHEAST GAMING GROUP, INC.,

NORTHEAST RESORTS GROUP, INC., and,

LEON H. DRAGONE,

Third-Party Defendants.

DEFENDANTS MOHEGAN RESORTS MASS, LLC AND

MOHEGAN SUN MASSACHUSETTS, LLC’S AMENDED ANSWER,

COUNTERCLAIMS AND THIRD-PARTY COMPLAINT

Page 2: Mohegan sun lawsuit against Northeast Realty

- 2 -

B4246006.8

COUNTERCLAIMS

Pursuant to Mass. R. Civ. P. 12, 13, and 15, Defendants Mohegan Resorts Mass, LLC

(“MRM”) and Mohegan Sun Massachusetts, LLC (“MSM” and, with MRM, “Mohegan”),

hereby amend their pleading in this matter to add the within counterclaims and third-party

claims against Plaintiff and Counterclaim Defendant Northeast Realty Associates, LLC

(“Northeast Realty”), Third-Party Defendant Northeast Gaming Group, Inc. (“Northeast

Gaming”), Third-Party Defendant Northeast Resorts Group, Inc. (“Northeast Resorts”) and

Third-Party Defendant Leon Dragone (“Dragone”).1

Introduction

In late 2008, MRM entered into two agreements with the Counterclaim and Third-Party

Defendants in connection with the potential development of a destination resort and gaming

facility in Palmer, Massachusetts (the “Palmer Project”) and the pursuit of legislation and

regulatory approval for such a project. MRM also entered into a lease with Northeast Realty for

the land in Palmer on which a potential gaming facility could be sited. Despite passage of the

Expanded Gaming Act in 2011 that legalized casinos in Massachusetts, approval of MSM as a

qualified applicant by the Massachusetts Gaming Commission (the “Commission”), negotiation

of a host community agreement with the Town of Palmer and the expenditure of tens of millions

of dollars by Mohegan in support of the Palmer Project, no gaming facility can be developed in

Palmer for the simple reason that the citizens of Palmer voted against the establishment of a

casino in the ballot referendum required by the Expanded Gaming Act. About two weeks after

the referendum, because it was clear that a majority of voters in Palmer did not want gaming and

1 Mohegan has no amendments to its Answer and Jury Demand in this matter, which is incorporated herein by reference.

Page 3: Mohegan sun lawsuit against Northeast Realty

- 3 -

B4246006.8

the recount requested by Mohegan would not be successful, Mohegan terminated the two

agreements that were expressly related to the Palmer Project. Following termination of the two

agreements, Mohegan continues to lease the Palmer site, as it is entitled to do, as it investigates

other potential development options for that site.

Despite the fact that nothing in either of the terminated agreements required Mohegan to

also terminate its lease of the Palmer site, Counterclaim Defendant Northeast Realty sued

Mohegan alleging that simultaneous termination of all three contracts was required. Northeast

Realty also sued Mohegan for alleged pre-termination breaches of the two terminated

agreements. Nevertheless, it is Northeast Realty and its affiliates, particularly Dragone, who

breached those two agreements prior to termination by Mohegan. Accordingly, Mohegan now

brings claims against Counterclaim Defendant Northeast Realty and the Third-Party Defendants

Northeast Gaming, Northeast Resorts, and Dragone for breach of contract, breach of the

covenant of good faith and fair dealing, and unfair and/or deceptive trade practices under Mass.

Gen. Laws c. 93A, and seeks monetary damages and a declaratory judgment.

Parties

1. Counterclaim-Plaintiff Mohegan Resorts Mass, LLC (“MRM”) is a Delaware limited

liability company with its principal place of business at 5 Crow Hill Road, Uncasville, CT.

MRM was created to pursue the development of a destination resort and gaming facility in

Massachusetts in the event that proposed legislation permitting gaming facilities became law.

2. Counterclaim-Plaintiff Mohegan Sun Massachusetts, LLC (“MSM”) is a Delaware

limited liability company with its principal place of business at 1 Mohegan Sun Boulevard,

Uncasville, CT. MSM was created to develop and operate a destination resort and gaming

facility in Massachusetts.

Page 4: Mohegan sun lawsuit against Northeast Realty

- 4 -

B4246006.8

3. On information and belief, Counterclaim-Defendant Northeast Realty is a Massachusetts

limited liability company with its principal place of business at 270 Benton Drive, East

Longmeadow, Massachusetts, managed by Northeast Resorts Group, Inc. and Leon H. Dragone.

Paul G. Hamel (“Hamel”) is the registered agent for Northeast Realty. From 2007 to 2011, the

registered agent for Northeast Realty was Frank P. Fitzgerald, P.C., the law firm at which

Dragone’s longtime lawyer and representative Frank P. Fitzgerald (“Fitzgerald”) is the named

partner.

4. On information and belief, Third-Party Defendant Northeast Gaming is a Massachusetts

corporation with its principal place of business at 583 Shaker Road, Longmeadow,

Massachusetts, of which Dragone is President. Hamel is the registered agent for Northeast

Gaming. From 2009 to 2011, John E. Drost, another attorney at Fitzgerald’s firm, was the

registered agent for Northeast Gaming.

5. On information and belief, Third-Party Defendant Northeast Resorts is a Massachusetts

corporation with its principal place of business at 270 Benton Drive, East Longmeadow, of

which Dragone is President. Hamel is the registered agent for Northeast Resorts. From 2009 to

2011, Fitzgerald was the registered agent for Northeast Resorts.

6. On information and belief, Third-Party Defendant Dragone is a Massachusetts resident

residing at 583 Shaker Road, Longmeadow, Massachusetts, and is manager of Northeast Realty

and president of Northeast Gaming and Northeast Resorts. (Dragone, Northeast Realty,

Northeast Gaming, and Northeast Resorts are collectively referred to as the “Northeast Entities”

or the “Counterclaim Defendants.”).

Background

7. MRM and MSM are affiliates of the Mohegan Tribal Gaming Authority (“MTGA”),

Page 5: Mohegan sun lawsuit against Northeast Realty

- 5 -

B4246006.8

which directly or indirectly owns and/or manages gaming facilities in Uncasville, Connecticut,

Towns Plainship, Pennsylvania and Atlantic City, New Jersey. As it became apparent that

Massachusetts was considering legalizing destination gaming facilities, Mohegan representatives

began exploring the prospect of operating a gaming facility in Massachusetts.

8. In or about 2007, in connection with its exploratory efforts in Massachusetts, Mohegan

representatives came to meet with Dragone regarding the possibility of developing land in either

Palmer, Massachusetts (the “Palmer Property”) or New Bedford, Massachusetts (the “New

Bedford Property”) on which a gaming facility could be built. With Dragone, Mohegan

representatives visited both sites on a number of occasions.

9. By 2008, the prospect of legalized gaming became a more likely possibility. It also

started to become apparent that Massachusetts would be divided into a number of regions for the

award of gaming licenses, and that an entity would only be permitted to obtain one license. At

around this time, Mohegan determined to focus on the western Massachusetts region, and in

particular, the Palmer Property.

10. In connection with its efforts to seek a license on which to operate a gaming facility on

the Palmer Property, MRM entered into two agreements with the Counterclaim Defendants: an

Exclusivity Agreement, executed by MRM, and Northeast Realty, Northeast Gaming, Northeast

Resorts, and Dragone on September 21, 2008 (the “Exclusivity Agreement”) and a Government

and Media Relations Agreement, executed by MRM, and Northeast Realty and Dragone on

October 21, 2008 (the “GMR Agreement”). At around the same time, MRM into a Ground

Lease, executed by MRM and Northeast Realty on October 21, 2008 (the “Ground Lease”), for

the lease of the Palmer Property on which Mohegan would build a gaming facility if it obtained a

license. True and correct copies of the Exclusivity Agreement, the GMR Agreement, and the

Page 6: Mohegan sun lawsuit against Northeast Realty

- 6 -

B4246006.8

Ground Lease (collectively, the “2008 Agreements”) are attached hereto as Exhibits A, B, and C,

respectively.

11. Dragone and the other Counterclaim Defendants were represented by counsel in

connection with the negotiation, drafting, and execution of the 2008 Agreements.

The Exclusivity Agreement

12. Because it was apparent to Mohegan that a law legalizing gaming in Massachusetts

would limit applicants to one license, and because Dragone had been promoting to Mohegan and

others both the Palmer Property and the New Bedford Property as potential sites for a gaming

facility, it was important that Dragone and the Northeast Entities be restricted in their ability to

pursue other gaming facilities in Massachusetts. Accordingly, Mohegan insisted that Dragone

enter into an agreement that both prevented him from competing against its efforts to obtain a

gaming license on the Palmer Property and required him to divest his interest in the New

Bedford Property.

13. To this end, the preamble to the Exclusivity Agreement acknowledged restrictions on

Counterclaim Defendants’ ability to develop or participate in the development of a competing

gaming facility other than on the Palmer Property:

WHEREAS, Dragone has agreed to limit his business activities so as not to

include certain activities associated with the development or operation of

prospective gaming facilities in the Commonwealth of Massachusetts, as more

particularly set forth in this Agreement.

14. Paragraph 2 of the Exclusivity Agreement contained a series of provisions effectuating

this goal and limiting Counterclaim Defendants competition against the Palmer Project.

Specifically, Counterclaims Defendants were prohibited from having any interest in land that

was being or was contemplated to be developed as a gaming facility in Massachusetts. Subject

to a limited exception in paragraph 3, Dragone was also further restricted from engaging or

Page 7: Mohegan sun lawsuit against Northeast Realty

- 7 -

B4246006.8

negotiating with anyone other than Mohegan regarding the development or operation of a

gaming facility in Massachusetts. Specifically, paragraph 2 expressly prohibited Counterclaim

Defendants from “solicit[ing], initiat[ing] or encourag[ing]” any proposals or offers concerning a

gaming facility in Massachusetts other than by Mohegan, and likewise, prohibited Counterclaim

Defendants from participating in any negotiations or in any way encouraging or assisting such

negotiations to the extent they concerned a gaming facility in Massachusetts other than the

Palmer Project. These restrictions applied not just to Dragone but to all of the Northeast Entities,

any family member of Dragone and any member, director, officer, manager, principal, partner or

shareholder of any of the Northeast Entities (collectively, the “Dragone Entities”), as well as any

employee, agent, or representative of any of the foregoing.

15. In addition to the broad prohibition on Counterclaim Defendants pursuing any gaming

interests in Massachusetts, the Exclusivity Agreement also addressed the New Bedford Property

that Dragone had previously promoted to Mohegan as a potential gaming site. Recognizing that

Dragone’s option to the New Bedford Property and his promotion of the same as a gaming

facility would constitute breach of the Exclusivity Agreement, paragraph 3 provided a means by

which the Northeast Entities could divest themselves of their interest in New Bedford within a

certain time period. To this end, the Northeast Entities could transfer their interest in or

ownership of the New Bedford Property to a third party without regard to the property’s

proposed use as a gaming facility only if the sale or transfer occurred prior to June 30, 2009 and

resulted in a complete divestiture of the rights of Dragone or any of the Dragone Entities. After

that date, however, if Dragone sold his interests in the New Bedford Property to a third party that

was pursuing that site as a potential gaming facility, such a transfer would be a breach of the

Exclusivity Agreement by Dragone.

Page 8: Mohegan sun lawsuit against Northeast Realty

- 8 -

B4246006.8

16. In paragraph 6 of the Exclusivity Agreement, the Counterclaim Defendants provided

further assurances of their cooperation, including that if any Dragone Entity acquired an interest

in other land in Massachusetts potentially suitable for development as a gaming facility,

“Dragone shall give notice to Mohegan of such acquisition and may be required to cause such

entity making such acquisition to become a signatory to this Agreement.”

17. The Exclusivity Agreement also contained a provision almost identical to paragraph 2

that restrained Mohegan’s ability to pursue a gaming license or a gaming development in

Massachusetts other than on the Palmer Property. In fact, the provisions restricting Mohegan

and the Northeast Entities mirror one another: any acts Mohegan cannot do, the Northeast

Entities cannot do.

18. Despite the restrictions on Mohegan in the Exclusivity Agreement, however, Mohegan

was permitted to terminate the Exclusivity Agreement if it decided to abandon the pursuit of a

gaming license for the Palmer Property. In contrast, the Northeast Entities had no right to

terminate the Exclusivity Agreement.

The Ground Lease

19. On October 21, 2008, MRM and Northeast Realty entered into a Ground Lease, under

which Northeast Realty, as landlord, leased the Palmer Property to MRM. The leased property is

the approximately 152-acre parcel of land in Palmer defined in the Ground Lease as the

“Premises” and described in Exhibit A to the Ground Lease.

20. The Ground Lease is extremely broad in the rights granted to MRM as tenant. MRM is

entitled to “use the Premises for any lawful purpose.” The Ground Lease additionally provides

MRM with rights and privileges “as if it owned the Premises in fee simple absolute.” Moreover,

in furtherance of MRM’s rights under the Ground Lease, Northeast Realty “covenants and agrees

Page 9: Mohegan sun lawsuit against Northeast Realty

- 9 -

B4246006.8

to cooperate . . . to enable Tenant to realize the rights and privileges associated with such

ownership.” Art. 1. That is, under the Ground Lease that Northeast Realty signed, MRM has the

ability to use the Palmer Property for a variety of purposes and uses, limited only by its

obligation to pay rent and comply with any applicable law, and has the right to Northeast

Realty’s full cooperation and support for any commercial use of the Palmer Property intended by

MRM, including assisting with any required zoning approvals and permitting. Given MRM’s

satisfaction of its obligation to pay rent, landlord Northeast Realty was to cooperate fully,

regardless of the property’s use by MRM.

21. The Ground Lease commenced on October 21, 2008 and continues for an initial term of

50 years. Art. 1. MRM, in its discretion, can extend the Ground Lease for an additional 25-year

term and a subsequent additional 24-year term. Art. 23.

22. In exchange for these rights, MRM is obligated to make the following payments of rent to

Northeast Realty: (a) $1,750,000 on the day the Ground Lease was signed; (b) monthly rent

payments of $70,833; (c) additional rent payments of (i) $250,000 on October 1, 2008, (ii)

$750,000 on January 2, 2009, (iii) $750,000 on July 1, 2009, and (iv) $2 million on November 1,

2010. These payments were all made. MRM is also obligated to pay all taxes, assessments and

other government charges (“Impositions”), and obtain at its cost insurance on the Premises for no

less than $5 million.

23. MRM also made loans to Northeast Realty in the aggregate original principal amount of

$625,000 and received promissory notes in return (the “Notes”). Upon information and belief,

these loans enabled Dragone and Northeast Realty to finance certain parts of the Palmer

Property. Under the Ground Lease, MRM is entitled to credit against its monthly rent

obligations certain obligations of Northeast Realty due under the Notes. Art. 2.

Page 10: Mohegan sun lawsuit against Northeast Realty

- 10 -

B4246006.8

24. The Ground Lease contemplated the development and operation of a gaming facility on

the Palmer Property. In the event that a gaming facility was opened on the Palmer Property, the

rental payments increased. Specifically, in such event, the Ground Lease provided for payments

to Northeast Realty as follows: (a) monthly rent payments of $366,917, with an annual

adjustment for inflation, plus (b) additional rent payments of (i) $2 million on the date on which

a gaming facility is opened on the Palmer Property (the “Opening Date”), (ii) $2 million on the

first anniversary of the Opening Date, and (iii) $2 million on the second anniversary of the

Opening Date. MRM further was obligated to continue to pay all Impositions and all insurance

payments.

25. In its sole and absolute discretion, with ninety (90) days advance written notice to

Northeast Realty, MRM can terminate the Ground Lease during a defined Termination Period,

which runs from July 31, 2010, through the earlier to occur of: (i) the day after MRM would be

awarded a license to operate a gaming facility on the Palmer Property and (ii) July 31, 2017.

MRM can also terminate the Ground Lease if, after gaming enabling legislation is passed in

Massachusetts, such legislation is “later suspended, repealed, rescinded, or otherwise amended to

the detriment of” MRM, subject to the same notice provision to Northeast Realty. Art. 10. By

contrast, the Ground Lease provides Northeast Realty with no termination rights other than for

non-payment of rent.

26. As of the date hereof, MRM has paid Northeast Realty over $10 million in rent and other

charges under the Ground Lease. MRM has continued to pay Northeast Realty timely all

required payments under the Ground Lease.

The Government and Media Relations Agreement

27. At the time that the parties entered into the Exclusivity Agreement and the Ground Lease,

Page 11: Mohegan sun lawsuit against Northeast Realty

- 11 -

B4246006.8

legislation legalizing destination gaming facilities in Massachusetts had not yet been enacted.

Nevertheless, support for such legislation was sufficiently advanced that the parties could

anticipate that, if gaming was legalized, there would be an extensive regulatory structure and

process for obtaining a license, including applications to a state-level commission and other

regulatory approvals, such as state and/or federal permits and local zoning or permitting

approvals. It was also anticipated that the number of available gaming licenses would be limited

and awarded through a competitive selection process.

28. In order to ensure that Mohegan’s efforts to pursue a gaming license in Palmer were

adequately protected, the parties entered into the GMR Agreement. Moreover, because the

proposed gaming legislation had not been enacted, Mohegan insisted that the GMR Agreement

provide that Mohegan was entitled to control the efforts with respect to such proposed

legislation.

29. The GMR Agreement covered the “lobbying, publicity and other government and media

relations activities” in connection with the Palmer Project. It also “recognize[d] that failure to

organize and coordinate such activities could materially and adversely affect the Palmer Project.”

30. The GMR Agreement delegated exclusive authority for various lobbying, publicity and

other government and media relations activities to an Executive Coordination Group (“ECG”)

consisting of the manager of MRM or his designee; an individual selected by Northeast Realty;

the Chief of Staff for External Affairs of the Mohegan Tribe or his designee; and, an individual

selected by MRM, who was designated the Palmer Project Coordinator. Arts. 1.1 and 2.1(a)(i).

In other words, three of the four members of the ECG were selected by Mohegan.

31. Under the GMR Agreement, the ECG directed all government and media relations

activities. The GMR Agreement expressly forbade unauthorized independent activity by

Page 12: Mohegan sun lawsuit against Northeast Realty

- 12 -

B4246006.8

members of the ECG, except as to the Project Coordinator or an individual specifically

designated by the ECG. Art. 2.1(a)(ii). At no point was Dragone or any of his representatives so

designated.

32. The Project Coordinator was initially Paul Brody, then an employee of MTGA.

Mohegan subsequently appointed J. Gary Luderitz, another MTGA employee, as the Project

Coordinator.

33. Pursuant to the GMR Agreement, the parties also established a State Government and

State Media Operations Team (“SGMT”) and a Western Massachusetts Media and Advocacy

Team (“WMAT”). Both operated “under the supervision” of the Project Coordinator and “under

the overall direction of the ECG.” The SGMT was tasked with building support for gaming

legislation, encouraging the creation of a western Massachusetts district that would benefit the

Palmer Project, developing support for the Palmer Project, and ensuring that the legislative and

administrative processes put in place were conducive to the Palmer Project. See GMR

Agreement, Exhibit A. The WMAT was responsible for expanding local and regional support for

the Palmer Project, developing local support for gaming enabling legislation and the Palmer

Project, coordinating a successful Palmer referendum and creating an environment for successful

local permitting. See GMR Agreement, Exhibit B.

34. In addition, the GMR Agreement expressly provided that any public relations, lobbying

or other consultants retained by Northeast Realty and Dragone would “at all times be subordinate

to the direction of the ECG,” and were prohibited from serving as spokespersons for the Palmer

Project. See Exhibits A and B. The GMR Agreement specifically identifies William Cass

(Dragone’s lobbyist at the Suffolk Group), Paul Robbins (his PR consultant at Paul Robbins

Associates, Inc.), and James St. Amand as persons whose activities were subordinate to the

Page 13: Mohegan sun lawsuit against Northeast Realty

- 13 -

B4246006.8

direction of the ECG. Id.

35. In Article III of the GMR Agreement, the parties agreed to treat information disclosed

and shared in the course of the GMR Agreement as confidential, and agreed that all such

confidential information would not be used for purposes outside the Palmer Project. These

confidentiality provisions survive any termination of the GMR Agreement.

36. As with the Exclusivity Agreement, Mohegan was permitted to terminate the GMR

Agreement if it decided to abandon the pursuit of a gaming license for the Palmer Property. In

contrast, Northeast Realty and Dragone had no right to terminate the GMR Agreement. See Art.

IV.

From the Beginning, Dragone Works against Mohegan’s Interests

37. From the outset, Dragone worked counter to Mohegan’s interests and in violation of the

2008 Agreements. For instance, after executing the GMR Agreement but before the gaming

legislation was passed, Dragone, either directly or through Cass, continued to lobby legislators

regarding potential gaming legislation. In one particularly egregious instance, Dragone, either

directly or through his consultants, lobbied legislators regarding the fee ownership provision in

House Bill 4619, resisting efforts by Mohegan to get the bill amended to have long-term leases

be the equivalent of fee ownership. If that provision had remained in its original form, MRM

would have been required to exercise its option in the Ground Lease to purchase the Palmer

Property or otherwise get Dragone to agree to amend the Ground Lease upon the award of a

license, thereby benefiting the Northeast Entities at the expense of Mohegan.

38. While the GMR Agreement contemplated coordination of Mohegan’s efforts in building

support for the Palmer Project, Dragone failed to follow the dictates of the GMR Agreement and

instead operated independently and without authorization, doing as he wished without regard for

Page 14: Mohegan sun lawsuit against Northeast Realty

- 14 -

B4246006.8

and to the detriment of the Palmer Project.

39. Mohegan expected that Dragone would leverage his network of contacts in Springfield,

Massachusetts to help build support for the Palmer Project. As the closest city to Palmer,

Springfield was the most important regional economy, and it was expected to provide crucial

early support for the Palmer Project and ultimately, serve as a key source of labor for a gaming

facility in Palmer. Ignoring Mohegan’s instructions, however, Dragone neglected his

acquaintances in Springfield and failed to engage Springfield in the Palmer Project. As a result,

some early supporters from Springfield withdrew from the Palmer Project, and in fact entered

into other gaming agreements, some in Springfield.

40. Springfield, led in part by its mayor, had initially been anti-gaming, but when Springfield

itself began to explore gaming possibilities, Dragone’s failure to secure the city’s support was

especially problematic. Moreover, when MGM moved into Springfield, Mohegan lost an

important source of urban regional support and gained a competitor for what would become the

Region B license. Notably, at around this time, Fitzgerald, Dragone’s longtime lawyer and

representative, who represented the Northeast Entities on the 2008 Agreements and the Palmer

Project, also left the Palmer Project in favor of the MGM project in Springfield, which, on

information and belief, could only occur with a waiver from the Northeast Entities.

41. In direct contravention of the restrictions placed on him in the GMR Agreement, Dragone

also sought to act as the face of the Palmer Project in the Town of Palmer, despite that he did not

have an equally large or influential network in Palmer as he did in Springfield. On information

and belief, Dragone independently engaged with members of the Town Council, including Paul

Burns, without the approval of the ECG or the Project Coordinator. What contacts Dragone

developed, however, were ultimately a hindrance to the Mohegan effort to secure a gaming

Page 15: Mohegan sun lawsuit against Northeast Realty

- 15 -

B4246006.8

license on the Palmer Property.

42. Dragone evidenced similar disregard for the Exclusivity Agreement in the period before

gaming legalization was passed. For instance, under the Exclusivity Agreement, the Northeast

Entities were obligated to divest themselves of their options to purchase the New Bedford

Property. On information and belief, after June 30, 2009, the Northeast Entities retained

ownership of those options. Moreover, on information and belief, even after selling the options,

the Northeast Entities retained an indirect interest in those properties.

43. By retaining an interest in the New Bedford Property, Dragone and the other Northeast

Entities violated the Exclusivity Agreement. Moreover, on information and belief, since June

30, 2009, Dragone or his representatives, either directly or indirectly, have promoted the New

Bedford Property in discussions with gaming companies other than Mohegan.

44. Mohegan instructed Dragone to stop promoting the New Bedford Property as a site for a

potential gaming facility, including by sending a written notice of default under the Exclusivity

Agreement for Dragone’s failure to divest himself of the New Bedford options and his choice to

continue shopping the New Bedford Property to other gaming companies. Nevertheless,

Dragone tried to use his retention of the New Bedford options as a bargaining chip in

negotiations with Mohegan concerning performance under the Ground Lease and the Exclusivity

Agreement.

45. On information and belief, Dragone or other Dragone Entities had either direct or indirect

interests in other sites being considered for gaming facilities prior to Mohegan’s termination of

the Exclusivity Agreement.

46. On information and belief, Dragone or other Dragone Entities had an indirect interest in

the MGM Springfield project prior to November 20, 2013. This explains in part Fitzgerald’s

Page 16: Mohegan sun lawsuit against Northeast Realty

- 16 -

B4246006.8

association with MGM Springfield.

47. On information and belief, Dragone or other Dragone Entities retain either a direct or

indirect interest in a possible casino development in New Bedford. The Commission may in the

future award a Region C license for southeastern Massachusetts. Hamel, the registered agent for

all the Northeast Entities, and Dragone’s attorney and advisor on a variety of matters, is an

officer and director of South Coast Casino Corp. (“South Coast”). On information and belief,

South Coast is a group of five land owners who seek to site a casino in New Bedford’s Hicks-

Logan neighborhood. In October 2013, Hamel stated he had “had contact” with potential

gaming operators, and as recently as March 2014, Hamel confirmed, “We’re still trying to get a

casino in New Bedford.”

Mohegan Works to Pass a Voter Referendum

48. On November 11, 2011, “An Act Establishing Expanded Gaming in the Commonwealth”

(the “Act”) became law in Massachusetts, amending Chapter 23K of the Massachusetts General

Laws. The Act established three regions in Massachusetts, within each of which up to one

gaming license can be awarded. In addition, one slots license can be awarded separately.

49. By November 2011, Mohegan had been in Palmer for about three years seeking to

generate support for gaming. Since 2009, Mohegan had maintained headquarters on Main Street,

a space that allowed it to grow its presence in Palmer in the years before passage of the gaming

legislation, meeting members of the community and building awareness of its proposed gaming

facility. During this period, Mohegan engaged in community meetings, and met with residents,

local business owners and town administrators. During this period, its government strategists,

O’Neill & Associates, tracked the progress of proposed legislation, as well as the associated

regulatory and administrative structures that would implement the legislation, so that Mohegan

Page 17: Mohegan sun lawsuit against Northeast Realty

- 17 -

B4246006.8

could react appropriately once such legislation was passed.

50. After passage of the Act, Mohegan moved to become a gaming license applicant,

including by securing a financing commitment from Brigade Capital Management for the Palmer

Project and by forming MSM, which would serve as the applicant to the Commission. The

Commission also established an application schedule, under which the first phase of a two-part

application (RFA-1) was due January 15, 2013 and the second phase (RFA-2) on December 31,

2013.

51. Under Section 15(13) of the Act, to contend for a license, an applicant for a gaming

license must sign a host community agreement and obtain a certified and binding favorable vote

on a ballot question in the host community. If the result of the vote is negative, then the

applicant cannot submit another application to the Gaming Commission again until at least 180

days after the negative vote, and only after signing a new host agreement with the community.

Accordingly, Mohegan work diligently on both fronts, working to reach and sign a host

community agreement with the Palmer Town Manager and preparing a campaign for a ballot

question on a gaming facility in Palmer.

52. On information and belief, Dragone, through his counsel, had direct contact with the

Commission during the pendency of and regarding Mohegan’s RFA-1 application, which

contacts were proscribed by the GMR Agreement and neither authorized by nor disclosed to

Mohegan.

53. The host community agreement was negotiated throughout 2012 and 2013. During that

period, Mohegan met with the Town Manager and members of the Town Council, and held

public meetings where it responded to resident and constituent concerns. Mohegan had

meetings and negotiations during this period, both with respect to negotiating a host community

Page 18: Mohegan sun lawsuit against Northeast Realty

- 18 -

B4246006.8

agreement and with regard to building public support for a gaming facility on the Palmer

Property. On August 29, 2013, Palmer and Mohegan signed the host community agreement (the

“Host Community Agreement”). Under the Host Community Agreement, Mohegan agreed to

make $15.2 million in annual mitigation payments to the Town of Palmer, as well as a $2.94

million upfront payment if Mohegan received a license for the Palmer Property. These payments

would be distributed to and appropriated by the town in its sole discretion. Having secured the

Host Community Agreement, Mohegan thereafter submitted its request for an election to the

Palmer Town Council. Its request was approved unanimously and the vote was set for

November 5, 2013.

54. While negotiation of the Host Community Agreement was ongoing, in the summer of

2013, Mohegan launched its campaign on a prospective ballot question to approve gaming in

Palmer. Mohegan hired Michael Vito of Michael Vito & Associates to direct its field operations

in preparation for the ballot question. Vito runs a successful government relations firm in

western Massachusetts and has significant experience in government, communications,

community relations and elections, including in connection with then-Senator John Kerry’s 2004

presidential campaign, where Vito ran the campaign’s successful effort in western New

Hampshire.

55. Vito engaged key area stakeholders, including local business and civic leaders, securing,

among others, the endorsement of the Palmer Chamber of Commerce and the Palmer Police

Department. Vito also formed a Mohegan campaign committee to anchor the local effort.

Comprised of respected, longstanding Palmer residents and leaders, the committee was chaired

by Elaine Boone, a former chair of the Town Council, and joined by David Whitney, a former

Palmer Public Schools teacher and current tax preparer, as treasurer.

Page 19: Mohegan sun lawsuit against Northeast Realty

- 19 -

B4246006.8

56. Vito ran a vigorous ground campaign in support of the Palmer referendum. Where, at the

outset, Vito engaged in relationship building with local and area leaders, by the summer of 2013

when it appeared that a Host Community Agreement would be formalized, he began to focus on

voter outreach. Between his campaign staff and a number of grassroots volunteers--many of

whom were identified and organized by Mohegan--Vito organized phone banks, canvassing

efforts, events at the local community and senior centers, and other meetings and meet-and-

greets designed to engage with voters, with extensive social media support from Mohegan and its

public relations and advertising teams. In the two months leading up to the election, at the point

at which voter receptivity to messaging would be at its peak, the Mohegan campaign also

engaged in a substantial television, radio and print advertising buy for the Town of Palmer and

the surrounding areas. All told, Mohegan spent roughly $12 million on its public relations

campaign and the referendum in Palmer.

Dragone Launches Counter-Productive--at Times, Directly Counter--Shadow Campaign

57. At the outset of the campaign to approve gaming in Palmer, Dragone told Vito, “I’ll do

things my way.” Dragone did things his way throughout the campaign, to the detriment of

Mohegan’s efforts to obtain a positive vote in Palmer. Refusing to follow campaign directives,

and refusing to come in line with the campaign’s strategic decisions, Dragone instead operated

independently, in violation of the GMR Agreement.

58. Dragone associated with and organized various supporters, including Jennifer Barrufaldi

and Robert Young, individuals who were under Dragone’s control and direction. These

supporters resented Vito’s selection to head the campaign, in part, because Barrufaldi had

thought she would be selected to head the campaign.

59. Dragone and his supporters refused to act in coordination with the Mohegan-led

Page 20: Mohegan sun lawsuit against Northeast Realty

- 20 -

B4246006.8

campaign. For example, Vito asked Dragone to focus on developing a volunteer campaign force

in Palmer to assist Mohegan’s campaign, who would work under Vito’s direction. Dragone did

not develop any such group. Rather, Dragone held rallies that were not approved by the ECG or

the Project Coordinator, attended by a small group of the same individuals, and not new

prospective voters or supporters that the Mohegan campaign sought to galvanize.

60. In the fall of 2013, Dragone also organized a competing campaign organization to the

campaign committee that Vito was then ready to announce. In fact, Dragone created his group

the day after his public relations consultant learned from Vito that Vito soon expected to launch a

campaign committee entitled “Yes for Palmer.” The next day, Dragone announced the creation

of a group called “Vote Yes for Palmer,” without notice to, approval from or coordination with

the Mohegan campaign. This forced Vito to come up with a different name for the Mohegan-led

committee. In addition to being a breach of his obligations under the GMR Agreement,

Dragone’s competing campaign group also defied common sense: Palmer had approximately

7600 registered voters, about 6000 of whom were considered active voters. A town of Palmer’s

size did not require and could not support two campaign committees in favor of approving

gaming in Palmer, especially two whose names were so confusingly similar. Vote Yes for

Palmer engaged in electioneering and media activity that was not coordinated with the Mohegan-

led campaign, including its own meet-and-greets and solicitation of local media attention.

61. Another Dragone-supported and underwritten group was Citizens for Jobs & Growth in

Palmer (“CJGP”), a group that undermined Mohegan throughout the campaign. Though

ostensibly pro-gaming, CJGP broadcast its differences with Mohegan’s strategic decisions,

endeavoring to force Mohegan’s disclosure of information and performance of certain actions

without regard for the effect of its demands on the Mohegan campaign. For example, CJGP

Page 21: Mohegan sun lawsuit against Northeast Realty

- 21 -

B4246006.8

demanded that Mohegan disclose its financing commitments at a point in time that was counter

to Mohegan’s wishes and that jeopardized Mohegan’s competitive standing for the Region B

license. CJGP made other such demands on Mohegan, and typically did so publicly. Not

coincidentally, many of the public demands on Mohegan followed an initial “suggestion” by

Dragone that Mohegan undertake certain actions. Further, the CJGP failed to report its last

quarter of fundraising, as required by state and federal election law, causing Vito to inform

Dragone that this failure could in fact impair Mohegan’s effort to obtain a license from the

Commission.

62. Dragone also personally issued press releases demanding certain actions by Mohegan.

Dragone ignored the advice of the professionals hired by Mohegan and expected the campaign to

conform to his expectations of proper timing, believing, as he did throughout the campaign, that

he knew best. More than just working separately from the Mohegan campaign, Dragone was a

hindrance to Mohegan’s campaign, requiring that Vito, his staff and volunteers exert significant

efforts to try to manage and control Dragone and his supporters, at the expense of their other

campaign work--namely, the development of voter support for gaming in Palmer.

63. Dragone’s counter-efforts and undermining of Mohegan’s campaign caused significant

damage to Mohegan’s efforts to obtain a positive vote for gaming in Palmer. By his actions and

attacks on Mohegan, Dragone created an undercurrent of mistrust regarding Mohegan’s

commitment to Palmer, as prospective voters saw Dragone’s pro-gaming groups sparring with

the Mohegan campaign. In fact, anti-gaming groups in Palmer actually adopted some of the anti-

Mohegan messaging of Dragone’s supporters.

64. Dragone further interfered with the Mohegan campaign’s efforts by promoting

development of another piece of property in Palmer, termed “the Triangle” at the time that the

Page 22: Mohegan sun lawsuit against Northeast Realty

- 22 -

B4246006.8

referendum was approaching. This additional development compounded residents’ traffic

concerns, at the very moment when Mohegan sought to convince voters that its traffic mitigation

plan would be successful. Moreover, by advancing another large development at the same time

as the Palmer Project was up for voter approval, Dragone exacerbated Palmer residents’ concerns

about over-development.

Palmer Voters Defeat the Referendum by a Narrow Margin

65. On November 5, 2013, the Palmer referendum failed by 93 votes, with 2,656 votes cast

against and 2,563 votes cast for the referendum.

66. Dragone was not informed as to the realities of campaigns and elections, particularly

those concerning binding votes, and he continually misapprehended key factors impacting the

referendum. From the outset, Dragone overstated voters’ support for the non-binding

referendum in 1997, claiming yes votes comprised more than 60% of the total. In fact, the yes

vote in the 1997 non-binding referendum was only 55%. Dragone also did not appreciate the

marked difference between non-binding and binding referendums, nor did he appreciate the

impact of demographic change in Palmer between 1997 and 2013. In addition, Dragone

underestimated voter turnout and the need to develop more votes, forecasting that it would not

exceed 40%. In fact, voter turnout for the binding November 5, 2013 referendum was greater

than 70%. Indeed, on the night of the election, before the count was completed, Dragone told

Mohegan that a poll conducted by one his supporters showed that the referendum passed by a

10% margin.

67. Although in his trumped up complaint Dragone alleges that Mohegan and Vito caused the

referendum to fail, in the aftermath of November 5, 2013, Dragone did not blame Mohegan or

Vito. Rather, Dragone pointed the finger elsewhere. On November 6, 2013, he told a reporter,

Page 23: Mohegan sun lawsuit against Northeast Realty

- 23 -

B4246006.8

“It's clear there was a lot of outside influence coming in.” and “I think others may ask for an

investigation.”

68. Mohegan made arrangements for a recount, and arranged for a coordinator to oversee the

recount and for poll observers to monitor the process. Mohegan was initially informed that due

to problems with the ballot box in Precinct 2, some votes may not have been counted. A few

days after the November 5, 2013 election, however, Mohegan obtained public voting records

confirming that the number of votes in the Precinct 2 ballot box equaled the numbered of voters

who had checked in at the polling place, which was strong evidence that the recount was unlikely

to change the outcome of the vote.

69. The recount was conducted on November 26, 2013, and resulted in one extra vote against

the referendum and no change in votes for the referendum. The final tally was 2,657 against to

2,563 for the referendum.

70. After the recount, Zachary Dragone, Dragone’s son, thanked Vito for his efforts, and

asked Vito if he would manage Dragone’s next campaign to get a casino in Palmer.

COUNTERCLAIM I

BREACH OF CONTRACT

(Against all Counterclaim Defendants)

71. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 70 above.

72. The Exclusivity Agreement constituted a binding contract between Mohegan and the

Counterclaim Defendants through its termination on November 20, 2013.

73. Counterclaim Defendants and the other Dragone Entities are prohibited under the

Exclusivity Agreement from having any direct or indirect interest in any land in Massachusetts

other than the Palmer Property that is being or is contemplated to be developed as a gaming

Page 24: Mohegan sun lawsuit against Northeast Realty

- 24 -

B4246006.8

facility, whether through the land itself, ownership in an entity with such an interest, or a

contractual relationship with another party.

74. Counterclaim Defendants, the other Dragone Entities and all their employees, agents, and

representatives are further prohibited under the Exclusivity Agreement from “solicit[ing],

initiat[ing] or encourag[ing] the submission of proposals or offers” from an entity other than

Mohegan for the development or operation of a gaming facility in Massachusetts, or from

participating in negotiations with another person or encouraging another person to do any of the

foregoing.

75. Under the Exclusivity Agreement, the Counterclaim Defendants are permitted to sell or

transfer any of their interests in the New Bedford Property if such sale or transfer occurred prior

to June 30, 2009 and resulted in the complete divestiture of Dragone or any Dragone Entity’s

rights in the New Bedford Property.

76. On information and belief, Counterclaim Defendants and/or other Dragone Entities

retained interests either directly or indirectly in the New Bedford Property after June 30, 2009.

77. On information and belief, after June 30, 2009, at a time when Counterclaim Defendants

or other Dragone Entities retained, either directly or indirectly an interest in the New Bedford

Property, they, either directly or indirectly, promoted and sought to sell the New Bedford

Property to other gaming companies.

78. On information and belief, during the time that the Exclusivity Agreement was in effect,

Counterclaim Defendants or other Dragone Entities, or their employees, agents or representatives

had either a direct or indirect interest in the MGM Springfield project.

79. Counterclaim Defendants have breached the Exclusivity Agreement through their acts

and/or omissions described above.

Page 25: Mohegan sun lawsuit against Northeast Realty

- 25 -

B4246006.8

80. Counterclaim Defendants’ breaches of contract have caused Mohegan to suffer damages

for which it is entitled to recover as a matter of law.

COUNTERCLAIM II

BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING

(Against all Counterclaim Defendants)

81. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 80 above.

82. As an agreement governed by Massachusetts law, the Exclusivity Agreement contained a

covenant of good faith and fair dealing, which included, among other things, the obligation to

refrain from doing anything that would have the effect of destroying or injuring the right of the

other party to receive the fruits of the contract.

83. Counterclaim Defendants have breached the covenant of good faith and fair dealing

implied in the Exclusivity Agreement through their acts and/or omissions described above,

including without limitation, retaining a direct or indirect interest in the New Bedford Property,

having a direct or indirect interest in the success of the MGM Springfield project, alienating key

supporters, permitting attorneys and other investors to participate in the MGM Springfield

project, and failing to cooperate with Mohegan in connection with the Palmer Project and the

Palmer referendum.

84. Counterclaim Defendants’ breaches of the covenant of good faith and fair dealing have

caused Mohegan to suffer damages for which it is entitled to recover as a matter of law.

COUNTERCLAIM III

BREACH OF CONTRACT

(Against Northeast Realty and Dragone)

85. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 84 above.

Page 26: Mohegan sun lawsuit against Northeast Realty

- 26 -

B4246006.8

86. The GMR Agreement constituted a binding contract between Mohegan and Northeast

Realty and Dragone through November 20, 2013.

87. Under Article 1.1 of the GMR Agreement, the ECG, which was controlled by Mohegan,

and the Palmer Project Coordinator, who was appointed by Mohegan, had the right to direct all

lobbying, publicity, and other government and media relations activity in connection with the

Palmer Project.

88. Under Article 2.1(a)(ii), only the Palmer Project Coordinator or an individual designated

by the ECG was permitted to engage in independent lobbying, publicity, and other government

and media relations activity.

89. Under the GMR Agreement, Dragone and Northeast Realty were permitted to engage

specified consultants to work on the Palmer Project on the express condition that they “[would]

at all times be subordinate to the direction of ECG.”

90. Counterclaim Defendants have breached the GMR Agreement through their acts and/or

omissions described above, including, without limitation, lobbying the Massachusetts Legislature

to reject or modify amendments to gaming legislation reasonably requested by Mohegan,

requesting language inimical to Mohegan’s interests, contacting the Commission directly without

disclosing such contacts to Mohegan, engaging in independent and unauthorized media and

public relations activities in connection with the Palmer Project and the Palmer referendum,

forming pro-gaming groups in Palmer without coordination or authorization from the ECG or the

Palmer Project Coordinator, misappropriating the name of Mohegan’s pro-gaming organization

in Palmer, refusing to coordinate with the ECG or Mohegan media and public relations activities

in Palmer, funding and encouraging ostensibly pro-gaming organizations in Palmer that attacked

Mohegan and otherwise undermining Mohegan’s efforts to build support for the Palmer Project

Page 27: Mohegan sun lawsuit against Northeast Realty

- 27 -

B4246006.8

and obtain a positive vote on the Palmer referendum.

91. As a result of Counterclaim Defendants’ breaches of the GMR Agreement, the Palmer

referendum did not pass.

92. Mohegan expended over $22 million under the Ground Lease and in connection with the

Palmer Project and the Palmer referendum.

93. Counterclaim Defendants’ breaches of contract have caused Mohegan to suffer damages

for which it is entitled to recover as a matter of law of no less than $22 million.

COUNTERCLAIM IV

BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING

(Against Northeast Realty and Dragone)

94. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 93 above.

95. As an agreement governed by Massachusetts law, the GMR Agreement contained a

covenant of good faith and fair dealing, which included, among other things, the obligation to

refrain from doing anything that would have the effect of destroying or injuring the right of the

other party to receive the fruits of the contract.

96. Counterclaim Defendants have breached the covenant of good faith and fair dealing

implied in the GMR Agreement through their acts and/or omissions described above, including,

without limitation, lobbying the Massachusetts Legislature to reject or modify amendments to

gaming legislation reasonably requested by Mohegan, requesting language inimical to

Mohegan’s interests, contacting the Commission directly without disclosing such contacts to

Mohegan, engaging in independent and unauthorized media and public relations activities in

connection with the Palmer Project and the Palmer referendum, forming pro-gaming groups in

Palmer without coordination or authorization from the ECG or the Palmer Project Coordinator,

Page 28: Mohegan sun lawsuit against Northeast Realty

- 28 -

B4246006.8

misappropriating the name of Mohegan’s pro-gaming organization in Palmer, refusing to

coordinate with the ECG or Mohegan media and public relations activities in Palmer, funding

and encouraging ostensibly pro-gaming organizations in Palmer that attacked Mohegan,

proposing another development project in Palmer that compounded residents’ traffic and

development concerns and otherwise undermining Mohegan’s efforts to build support for the

Palmer Project and obtain a positive vote on the Palmer referendum.

97. As a result of Counterclaim Defendants’ breaches of the covenant of good faith and fair

dealing implied in the GMR Agreement, the Palmer referendum did not pass.

98. Mohegan expended over $22 million under the Ground Lease and in connection with the

Palmer Project and the Palmer referendum.

99. Counterclaim Defendants’ breaches of the covenant of good faith and fair dealing have

caused Mohegan to suffer damages for which it is entitled to recover as a matter of law of no less

than $22 million.

COUNTERCLAIM V

VIOLATION OF M.G.L. c. 93A

(Against all Counterclaim Defendants)

100. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 99 above.

101. Counterclaim Defendants committed unfair and/or deceptive acts and practices in

the conduct of trade or commerce through their acts and/or omissions described above, including

without limitation, retaining direct or indirect interests in other potential gaming developments in

Massachusetts, lobbying the Massachusetts Legislature to pass gaming legislation inimical to

Mohegan’s interests, engaging in independent and unauthorized media and public relations

activities in connection with the Palmer Project and the Palmer referendum, forming pro-gaming

Page 29: Mohegan sun lawsuit against Northeast Realty

- 29 -

B4246006.8

groups in Palmer without coordination or authorization from the ECG or the Palmer Project

Coordinator, misappropriating the name of Mohegan’s pro-gaming organization in Palmer,

refusing to coordinate with the ECG or Mohegan media and public relations activities in Palmer,

funding, encouraging ostensibly pro-gaming organizations in Palmer that attacked Mohegan on

the eve of the referendum, proposing another development project in Palmer that compounded

residents’ traffic and development concerns and otherwise undermining Mohegan’s efforts to

build support for the Palmer Project and obtain a positive vote on the Palmer referendum.

102. Counterclaim Defendants’ unfair and/or deceptive acts and practices occurred

primarily and substantially in Massachusetts.

103. As a result of Counterclaim Defendants’ unfair and/or deceptive act, Mohegan’s

efforts to obtain a positive vote on the Palmer referendum were thwarted and Mohegan was

denied the opportunity to continue to pursue the Palmer Project.

104. Mohegan expended over $12 million on the Palmer Project and the Palmer Project

and paid to Northeast Realty over $10 million under the Ground Lease, all in anticipation of a

successful referendum and a possible gaming license. Through their unfair and/or deceptive

acts, Counterclaim Defendants denied Mohegan the opportunity to reap the potential benefits of

their investment.

105. The aforementioned actions by Counterclaim Defendants violated Chapter 93A of

the Massachusetts General Laws.

106. Counterclaim Defendants’ actions described above were willing and/or knowing

violations of Chapter 93A of the General Laws.

107. Counterclaim Defendants’ unfair and deceptive acts and practices caused

Mohegan to suffer damages of no less than $22 million, plus multiple damages and attorneys’

Page 30: Mohegan sun lawsuit against Northeast Realty

- 30 -

B4246006.8

fees.

COUNTERCLAIM VI

DECLARATORY JUDGMENT PURSUANT TO M.G.L. c. 231A § 1

(Against all Counterclaim Defendants)

108. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 107 above .

109. MRM effectively and validly terminated the Exclusivity Agreement when, on

November 20, 2013, it sent Dragone via fax and email a letter terminating the Exclusivity

Agreement and the GMR Agreement (the “Termination Letter”). In the Termination Letter,

MRM referenced the applicable provision of the Exclusivity Agreement that provides that MRM

can terminate that agreement upon “written notice from [MRM] of its determination to abandon

the Palmer Project in compliance with the terms and conditions of the [Ground] Lease.” Nothing

in the Exclusivity Agreement required MRM to terminate the Ground Lease in order to exercise

its right to terminate the Exclusivity Agreement under section 5 of the Exclusivity Agreement.

Nothing in the Exclusivity Agreement required MRM to expressly state in the Termination

Letter that it had determined “to abandon the Palmer Project.”

110. Counterclaim Defendants contend that MRM did not validly terminate the

Exclusivity Agreement and that it remains in effect. Accordingly, an actual controversy exists

between MRM and the Counterclaim Defendants as to whether the Exclusivity Agreement

remains in effect.

111. The Court should declare that the Exclusivity Agreement was terminated when

MRM sent the Termination Letter, and that MRM has no further obligations and duties under the

Exclusivity Agreement.

COUNTERCLAIM VII

Page 31: Mohegan sun lawsuit against Northeast Realty

- 31 -

B4246006.8

DECLARATORY JUDGMENT PURSUANT TO M.G.L. c. 231A § 1

(Against Northeast Realty and Dragone)

112. Mohegan incorporates herein by reference each and every allegation contained in

paragraphs 1 through 111 above .

113. MRM effectively and validly terminated the GMR Agreement when, on

November 20, 2013, it sent Dragone via fax and email a letter terminating the Exclusivity

Agreement and the GMR Agreement (the “Termination Letter”). In the Termination Letter,

MRM referenced the applicable provision of the GMR Agreement that provides that MRM can

terminate that agreement upon “written notice from [MRM] of its determination to abandon the

Palmer Project in compliance with the terms and conditions of the [Ground] Lease.” Nothing in

the GMR Agreement required MRM to terminate the Ground Lease in order to exercise its right

to terminate the GMR Agreement under Article 4 of the GMR Agreement. Nothing in the GMR

Agreement required MRM to expressly state in the Termination Letter that it had determined “to

abandon the Palmer Project.”

114. Counterclaim Defendants contend that MRM did not validly terminate the GMR

Agreement and that it remains in effect. Accordingly, an actual controversy exists between

MRM and the Counterclaim Defendants as to whether the GMR Agreement remains in effect.

115. The Court should declare that the GMR Agreement was terminated when MRM

sent the Termination Letter, and that MRM has no further obligations and duties under the GMR

Agreement.

WHEREFORE, Mohegan respectfully requests that this Court enter judgment in its favor

and grant the following relief:

1. Award actual and compensatory damages in an amount to be determined at

trial of no less than $22 million, plus pre-judgment and post-judgment interest

Page 32: Mohegan sun lawsuit against Northeast Realty

- 32 -

B4246006.8

on such damages;

2. Award multiple damages pursuant to General Laws Chapter 93A, plus costs,

attorneys’ fees and such other expenses to which Mohegan would be entitled

by statute;

3. Award Mohegan the costs of this action and its expenses, including reasonable

attorneys’ fees as permitted by the Exclusivity Agreement and the GMR

Agreement, and as otherwise permitted by law;

4. Enter a declaration that:

i. the Exclusivity Agreement was terminated when MRM sent the

Termination Letter;

ii. MRM has no further obligations and duties under the Exclusivity

Agreement;

iii. the GMR Agreement was terminated when MRM sent the Termination

Letter;

iv. MRM has no further obligations and duties under the GMR

Agreement, other than the confidentiality provisions of Article III and

the indemnification provisions of Article V; and,

5. Grant to Mohegan such other and further relief as is just and proper.

JURY DEMAND

Mohegan hereby demands a trial by jury as to all issues so triable.

MOHEGAN RESORTS MASS, LLC,

MOHEGAN SUN MASSACHUSETTS, LLC,

By their attorneys,

Page 33: Mohegan sun lawsuit against Northeast Realty

- 33 -

B4246006.8

_________________________________

Kenneth S. Leonetti (BBO #629515)

Christopher E. Hart (BBO #625031)

Caroline S. Donovan (BBO #683274)

FOLEY HOAG LLP

Seaport World Trade Center West

155 Seaport Boulevard

Boston, Massachusetts 02210

(617) 832-1000

[email protected]

[email protected]

[email protected]

Dated: April 22, 2014

Page 34: Mohegan sun lawsuit against Northeast Realty

- 34 -

B4246006.8

CERTIFICATE OF SERVICE

I, Caroline S. Donovan, hereby certify that on the 22nd day of April 2014, I caused true

and accurate copies of the foregoing document to be served by first-class United States mail

upon James F. Kavanaugh, Jr. and Andrew R. Dennington, at Conn Kavanaugh Rosenthal Peisch

& Ford, LLP, Ten Post Office Square, Boston, MA 02109, and Francis D. Dibble, Jr. and Jodi K.

Miller, at Bulkley, Richardson and Gelinas, LLP, 1500 Main Street, Suite 2700, P.O. Box 15507,

Springfield, MA 01115.

Dated: April 22, 2014 _____________________________

Caroline S. Donovan