Published February 20. 2014 6:00PM Updated February 20. 2014 11:45PM
Owners of the Palmer, Mass., land where Mohegan Sun once hoped to develop a $1 billion resort casino expect to file a lawsuit today alleging Mohegan Sun shifted its attention to the more lucrative Greater Boston market prior to a Nov. 5 referendum in Palmer, breaching an "exclusivity agreement."
Voters in Palmer, in western Massachusetts, rejected the Mohegan Sun proposal by a mere 93 votes with more than 5,000 votes cast.
Northeast Realty Associates, in the suit to be filed in Hampden Superior Court in Springfield, claims Mohegan Sun broke an agreement that prohibited it from operating or pursuing a license to operate a gaming facility anywhere in Massachusetts other than on the Palmer site, a 152-acre tract off Exit 8 of the Massachusetts Turnpike.
The suit comes just days before a referendum Tuesday in the Greater Boston city of Revere, where Mohegan Sun is now proposing a $1.3 billion casino project on land owned by the Suffolk Downs thoroughbred track.
In a statement Thursday night, Mohegan Sun addressed the suit's allegation that Mohegan Sun officials began talks with Suffolk Downs prior to the Palmer referendum.
"Mohegan Sun devoted over five years and more than $25 million to create a world-class resort casino proposal in Palmer," the statement said. "But on Nov. 5, 2013 the community made a decision, which we have respected. While we do not comment on pending litigation, it has been well established that there were no discussions between Mohegan Sun and the City of Revere or Suffolk Downs prior to the defeat of our proposal in Palmer's Nov. 5 referendum. Any suggestion to the contrary is completely without merit."
Earlier in the day, Mohegan Sun announced it has retained a retail estate advisory firm, CBRE/Grossman Retail Advisors LLC, to study development options for the Palmer property, on which Mohegan Sun maintains a long-term lease.
A Northeast Realty spokesman said the firm would not comment on the suit.
In addition to Mohegan Sun entities, the legal action names as a defendant Michael Vito & Associates Inc., a Florence, Mass., consulting firm hired to direct Mohegan Sun's referendum campaign in Palmer.
The suit alleges that Mohegan Sun's interest in the Greater Boston casino license can be traced to September and October, when it became known that Caesars Entertainment, a partner in Suffolk Downs' original casino project, was having difficulty winning a "suitability" determination from the Massachusetts Gaming Commission.
Caesars withdrew from the project in October, and talks between Mohegan Sun and Suffolk Downs began "no later than the early part of October," the suit claims.
"The plaintiff believes that Mohegan would have considered Suffolk Downs to be a more financially advantageous site for casino development than the Palmer property because Suffolk Downs is located in the more lucrative Greater Boston market," the suit says. "At this point, a decision by Mohegan not to exercise its best efforts to secure a license to operate a casino on the Palmer property still would realize for Mohegan the substantial benefit of tying up the Palmer property for a long enough time to prevent a competitor from building a destination resort casino on that site that could expose Mohegan's flagship casino in Connecticut to significant competition."
The suit notes that under Massachusetts' 2011 expanded-gambling law, a casino-license applicant that loses a referendum can seek a second referendum in the same municipality as soon as 180 days later.
Northeast disputes Mohegan Sun's assertion that it effectively terminated the exclusivity agreement in a letter emailed to Northeast officials Nov. 20, six days before a recount of the referendum vote. Northeast contends that Mohegan Sun cannot terminate the exclusivity agreement without also terminating its lease of the property.
Mohegan Sun publicly announced that it had reached an agreement with Suffolk Downs on Nov. 27.
Northeast's suit seeks unspecified damages and an order that Mohegan Sun may not pursue a license for, or operate, a Massachusetts gaming facility on land other than the Palmer property.