Settlement lowers damages bill for failed casino near Detroit Metro Airport
A tribal gaming authority has reached a settlement with investors over failed plans to build an off-reservation casino near Detroit Metro Airport and another in downtown Lansing that is significantly less than the $90 million judgement it was ordered to pay earlier this year.
Under the settlement reached Monday, the Kewadin Casinos Gaming Authority is to pay $25 million this week to the investors and later between $5 million and $10 million in additional payments, depending on the outcome of Kewadin's anticipated legal malpractice lawsuit against its former attorneys in the case.
Kewadin belongs to the Sault Ste. Marie Tribe of Chippewa Indians, which is the largest tribe within Michigan by membership and currently operates five small Kewadin casinos in the Upper Peninsula. It is the same tribe that opened Detroit's Greektown Casino as a non-tribal venture before losing it to bankruptcy in 2008.
In January, an Ingham County Circuit Court judge found Kewadin liable for not only repaying, with interest, $9 million in loans from two groups of investors, but also the investors' loss of potential future profits from the unbuilt casinos.
Andrew Broder, an attorney for the investors, said they agreed to the settlement to put the episode behind them.
“My clients wanted to get this over with," he said. "They’ve been fighting with Kewadin for years and years and the appellate process could have taken several years more."
The earlier $90 million judgement against Kewadin had yet to be appealed to the Michigan Court of Appeals. The specific damages were $61.2 million for the unbuilt casino in Huron Township near Metro Airport and $29.5 million for the unbuilt casino in Lansing, court documents says.
More: Damages for failed casino near Detroit Metro Airport top $60M
Kewadin blames its former law firm — Patterson, Earnhart, Real Bird & Wilson — for the $90 million judgement.
Under the settlement, Kewadin is to pay the investors up to $10 million from any proceeds of its future malpractice claim again the law firm. If Kewadin's malpractice claim is unsuccessful, Kewadin is to then pay the investors $5 million.
A representative for the law firm could not immediately be reached for comment Monday afternoon.
“Casino revenues contribute significantly toward the services the Sault Tribe provides to its members, including health care and cultural programs, so this settlement ensures that the casino will continue to have the resources to maximize our operations and continue serving the community," Kewadin Casinos General Counsel Aaron Schlehuber said in a statement.
In both casino plans, the Sault tribe was unsuccessful in getting the U.S. Department of the Interior to put the land for the sites into trust, a necessary step for building off-reservation casinos.
The Huron Township casino would have operated in a vacant 71,000-square-foot megachurch building in the woods off Interstate 275 that was to be redeveloped.
The investor groups claimed in their lawsuit that the tribe made false representations that it could easily acquire the lands for the casinos and have them put into trust.
The Department of Interior ultimately declined the tribe's request for the Huron Township site, saying the Sault failed to prove how the plan would satisfy a legal requirement that new land put into trust improve or enhance tribal lands, particularly because Wayne County is far from the Sault's existing lands in the U.P.
The investor groups that sued Kewadin are JLLJ Development, which was financing the Huron Township casino and has 38 members, and Lansing Future Development II, which has 18 members.
Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on Twitter @jcreindl.
This article originally appeared on Detroit Free Press: Settlement lowers damages for failed casino near Detroit Metro Airport
