Ruling in Waterside developer’s $100 million casino lawsuit delayed after appellate judge’s recusal

It’s taking longer than expected for a ruling in a $100 million lawsuit brought by Waterside District owners against the city of Norfolk over casino development rights after an appellate judge’s recusal.

The Court of Appeals of Virginia reheard arguments in the case in December following the recusal. The case was initially heard in July.

In October, an unnamed judge recused themself “from further participation in this matter due to a conflict of interest,” according to a filing in the court case. The document did not specify the conflict or when it was discovered. The Nov. 6 filing stated a new judge was tapped for the three-person panel and lawyers in the case were given options to either reargue the case in front of the panel with the new judge or provide a recording of the previous oral arguments.

Cordish Companies, the Baltimore-based developer that revamped Waterside, sued Norfolk in 2021. The company argued the city is in breach of its contract and had actively sought to exclude Waterside from being the site of a casino. Two years prior, Norfolk approved a land deal with the Pamunkey Indian Tribe that set the stage for development of the HeadWaters Resort and Casino next to Harbor Park — less than a mile from Waterside.

A Richmond judge dismissed the lawsuit in 2022 but Cordish appealed. The case was initially heard July 12 by a three-judge panel: Richard Y. AtLee, Doris Henderson Causey and James W. Haley Jr.

The case was reheard Dec. 20 by AtLee, Haley and Dominique A. Callins, indicating Causey was the judge who recused. Requests to speak with Causey were denied by Court of Appeals staff.

The session was similar to the first round of oral arguments in July, according to a recording of the hearing, though judges asked some different questions of the lawyers who also clarified some of their arguments.

Lawyers representing the city and the Cordish-owned LLC Norfolk District Associates could not be reached for comment Friday.

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The lawyer for Norfolk District Associates, John Lynch, again argued that the trial court did not take into account the scope of the Waterside lease language regarding a potential casino and changing uses as legally permitted. The company initially argued that it never would have agreed to do the expensive Waterside overhaul it completed in 2017 if the city had not also agreed to eventually support a casino bid from Cordish.

The Norfolk District Associates’ 2013 lease agreement for Waterside says “neither the City nor NRHA will subsidize or provide a performance-based grant for a restaurant and entertainment development of over 75,000 square feet similar to the project,” for 10 years.

In court filings, the city argued the lease with Waterside never allowed use as a casino, and therefore it could not be considered similar to the HeadWaters Resort and Casino project.

After the city approved the land deal for the HeadWaters casino project, city voters approved a 2020 referendum allowing gambling at the proposed location. However, as part of the deal, the plans for the casino must be formally reviewed and approved by City Council before sale of the land can take place.

Plans for the HeadWaters casino continue to be delayed. Plans have not yet been submitted for review to the city’s Architectural Review Board, Planning Commission or City Council.

A spokesperson for the project said the plans were pulled from a scheduled ARB review in January so architecture and engineering teams could “produce the additional design work necessary to address the direction provided by City Council.” It was unclear when the plans would be resubmitted.

The casino operator has until November 2025 to obtain a gaming license. Otherwise, a new referendum would be required for approval.

Ian Munro, 757-447-4097, ian.munro@virginiamedia.com