UPDATED: Ruling in slot-machine tax case a windfall for Ledyard
Ledyard — A Connecticut Supreme Court decision could enable the town to recover $5 million to $6 million in attorneys' fees and interest it incurred while waging a yearslong legal battle to collect personal property taxes on slot machines the Mashantucket Pequot Tribe leased for Foxwoods Resort Casino, Mayor Fred Allyn III said Thursday.
Officially released Wednesday, the unanimous decision reverses a state Appellate Court decision that had reversed an earlier Superior Court decision.
“This is a positive outcome for the town,” Allyn said. “The decision in this longstanding case means closure for the town and closure for vendors in terms of where things stand on taxation on the reservation. It wasn’t defined before, but I think the Supreme Court defined it very clearly."
“I think it’s very important that this was a unanimous decision,” he said.
The case originated in 2008, when the town sued WMS Gaming Inc., a Chicago-based company, claiming it owed $18,251 in unpaid taxes on slot machines the company owned and leased to the tribe. Two years before, the tribe had filed a federal lawsuit claiming the town had no authority to tax slot machines the tribe leased from a different company and operated at Foxwoods, which is on sovereign land.
The tribe filed a second federal suit after the town sued WMS Gaming.
In granting the town’s appeal in state Supreme Court, Chief Justice Richard Robinson asserts that WMS Gaming is liable for the attorney fees the town incurred in both the state and federal court actions. He wrote that state law contains a provision “allowing trial courts to award to a municipality ‘reasonable attorney’s fees incurred by such municipality as a result of and directly related to such levy and sale, enforcement of lien or other collection proceedings.’”
"This statutory language is the focus of our analysis in this appeal," Robinson wrote.
Ledyard has incurred attorneys' fees of $1.8 million to $2 million, according to Lloyd Langhammer, a New London attorney who has represented the town in state court. He said a big chunk of the fees was earned by a Washington, D.C., law firm.
Langhammer said Thursday he would argue that under state statutes, the town is entitled to 18% interest on the fees, increasing the total amount the town likely will seek in reimbursement to as much as $5 million.
Allyn said he believes the amount is closer to $6 million.
This week’s decision marked the second time the state Supreme Court has reversed an Appellate Court ruling in the case. In 2018, the high court found the Appellate Court had prematurely dismissed WMS Gaming’s appeal of a 2016 Superior Court ruling that Ledyard was entitled to attorneys' fees. The Superior Court judge had directed the town to seek a hearing on the amount of the fees.
WMS filed an appeal of the ruling before such a hearing could take place, and the town sought dismissal of the appeal.
In 2012, a U.S. District Court judge ruled in favor of the tribe in its suit against the town, but the 2nd U.S. Circuit Court of Appeals reversed the decision the following year.
“Now it goes back to trial court,” Langhammer said.
The sides will have to agree on how much the town is owed, which could involve more litigation, Langhammer said. WMS Gaming could contest the 18% interest and even the “billable hours” the town charged. All the while, the town would be incurring further fees for which WMS would be liable.
“You live by the sword, you die by the sword,” Langhammer said.
WMS Gaming’s delinquent $18,000 tax bill, which grew to more than $372,000 over several years, was paid off in 2014.
Allyn said attorney Proloy Das of Murtha Cullina, a Hartford law firm, argued the town’s case before the state Supreme Court.
Aaron Bayer, an attorney for Wiggin and Dana, a New Haven firm that represented WMS Gaming, did not respond to messages seeking comment.
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