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CGI-NIT, LLC v. Narragansett Indian Tribe

Superior Court of Rhode Island

January 20, 2015

CGI-NIT, LLC, Plaintiff
v.
NARRAGANSETT INDIAN TRIBE, Defendant

Washington County Superior Court

For Plaintiff: Matthew P. Horvitz, Esq. Paul F. Beckwith, Esq.

For Defendant: William P. Devereaux, Esq. James W. Ryan, Esq. Matthew C. Reeber, Esq.

DECISION

THUNBERG, J.

This matter is before the Court for decision, after a trial without the intervention of a jury, upon the construction of certain provisions in a promissory note (Note) executed by the litigants on April 2, 2001. The parties have stipulated to both the factual background and material attendant exhibits, which the Court fully incorporates by reference herein. (See Attachment A.)

The Note, in the principal sum of ten million dollars ($10, 000, 000), specifies the terms under which the Defendant/obligor, Narragansett Indian Tribe (Tribe), must commence payments on the principal to Plaintiff/payee, CGI-NIT, LLC (CGI). The initial portion of the language in controversy, contained in Paragraph 1.1 of the Note, provides, in pertinent part, that payments shall commence "after the opening of any gaming, casino or similar facility, project or enterprise, whether on Tribal land, Settlement Act land, trust land or commercial land, and/or any such substituted facility, project, or enterprise, and any expansion thereof, wholly or partially within the State of Rhode Island ("Casino Project") as to which the Tribe . . . is owner, controller, sponsor or is otherwise involved, directly or indirectly . . ." (Ex. 3.) Paragraph 1.4 of the Note specifies that "the obligation to pay such debt shall be limited as source to revenues, dividends, or other payments payable or due to the Tribe . . . arising from or in connection with any Casino Project."

CGI avers that the enactment by the Rhode Island legislature of a law which resulted in the receipt by the Tribe of gaming proceeds from video lottery terminals (VLT) at Twin River Casino in Lincoln triggered the Tribe's payment obligations under the Note. CGI additionally complains that the Tribe breached the Note by "its failure to keep CGI informed of key events" regarding "any casino related developments [and] legislation." (Pl.'s Closing Mem. 2.) The Tribe counters that "the Narragansetts have never owned, opened or operated a casino or other gaming facility either directly or indirectly. Under the Promissory Note, there is actually no affirmative duty or obligation that the Tribe even make any effort to open a casino or other gaming facility." (Def.'s Post Trial Mem. 8.)

The funds at issue represent a sum in excess of $5.7 million, which the Tribe received from Rhode Island Lottery revenue pursuant to G.L. 1956 § 42-61.2-7 for the purposes stated within § 42-61.2-7(a)(5), which specifies, in relevant part, that the Tribe is to receive:

"0.17% of net terminal income of authorized machines at Lincoln Park, up to a maximum of ten million dollars ($10, 000, 000) per year, that shall be paid to the Narragansett Indian Tribe for the account of a Tribal Development Fund to be used for the purpose of encouraging and promoting: home ownership and improvement; elderly housing; adult vocational training; health and social services; childcare; natural resource protection; and economic development consistent with state law. Provided, however, such distribution shall terminate upon the opening of any gaming facility in which the Narragansett Indians are entitled to any payments or other incentives; and provided further, any monies distributed hereunder shall not be used for, or spent on, previously contracted debts…" Sec. 42-61.2-7(5)(Emphasis supplied.)

The Director of the Rhode Island Lottery, Gerald S. Aubin, testified compellingly, credibly and clearly that the Tribe does not participate in the operation of the state lottery in any fashion, he does not know Chief Sachem Thomas personally, the Tribe has no management role at all, nor has any advisory role. (Tr. 23-24.) As Mr. Aubin succinctly observed, "[t]here is no relationship whatsoever." Id. at 24. Chief Sachem Thomas's completely credible testimony reinforced this conclusion.

The relevant, material and believable testimonies of Mr. Aubin and Chief Sachem Thomas compel the conclusion that the conferral of the benefit of VLT revenue upon the Tribe was the unilateral act of our State's legislature. The record is bereft of any evidence that any tribal member or representative initiated the discussion with the then-Governor for same, or lobbied for, or testified in support of such an enactment.

In no way, in this Court's conclusion, is the enactment and resultant receipt of revenue by the Tribe tantamount to the Tribe's "involvement, " "directly or indirectly, " in a casino project. Moreover, this point is eclipsed by the preceding language of Paragraph 1.1 of the Note, which states that payment obligations are triggered after the "opening" of a casino facility. This Court is guided by its Supreme Court's declaration that there is no need to "stretch [one's] imagination to read ambiguity into a contract where none exists." Sturbridge Home Builders, Inc. v. Downing Seaport, Inc., 890 A.2d 58, 63 (R.I. 2005). Similarly, "[w]hen the language of a statute is unambiguous and expresses a clear and sensible meaning, there is no room for statutory construction or extension, and we must give the words of the statute their plain and obvious meaning." Wayne Distrib. Co. v. R.I. Comm'n for Human Rights, 673 A.2d 457, 460 (R.I. 1996).

The VLT enactment clearly provides that (1) the revenue payments to the Tribe would terminate "upon the opening of any gaming facility in which the Narragansett Indians [would be] entitled to any payments or other incentives"; and (2) no "monies distributed [pursuant to the act could be] used for, or spent on, previously contracted debts." Sec. 42-61.2-7(5) (emphasis supplied). Accordingly, the legislature's intent was to provide funds for the welfare and advancement of the tribal community until, if ever, the Tribe had the lawful ability to "open" its own facility.

CGI's additional allegation is that "[t]he Tribe breached paragraph 2.3 of the Note by failing to provide any information to CGI about developments concerning Casino Projects (proposed or actual), about related legislation, or about the Tribe's role and financial prospects in connection with any such Casino Projects and related legislation." (Pl.'s Closing Mem. 17, ¶ 21.) CGI maintains that even if such alleged breach was not material, it remains entitled to nominal damages. (Pl.'s Closing Mem. 18, ¶ 24.) CGI emphasizes, in its reply memorandum, [1] that its precise argument is that "the Tribe failed to inform CGI of the Tribe's involvement with Harrah's – to develop a casino in West Warwick." (Pl.'s Reply Mem. 2.)

The Tribe responds that "the Promissory Note is devoid of any affirmative obligation on the part of the Tribe to use any efforts to secure a casino in the State of Rhode Island or elsewhere [noting that] the Tribe and its previous partners, went through extraordinary, public efforts and expended millions of dollars to develop a Narragansett Casino in West Warwick, R.I." (Def.'s Post-Trial Mem. 24.) The Court recognizes CGI's perspective that the publicity of certain events pertaining to a contract party's obligations do not alter or extinguish said party's obligations under the agreement. However, under the circumstances, particular and unique to this controversy, the Court concludes that even if there was a material breach of Paragraph 2.3 (which this Court finds unsupported by the evidentiary record), nominal damages, as requested by CGI, are not in order.

Conclusion

The Court, after considering all of the evidence and respective arguments and assessing the credibility of the witnesses, hereby enters judgment on the causes of action in favor of the Tribe. The Court, specifically addressing the request for damages as articulated in CGI's closing memorandum, declines to award to CGI: (1) "accelerated payments and interest in accordance with Paragraphs 1.1, 1.3, 1.4 and 1.6 of the Note"; (2) nominal damages pursuant to Paragraph 2.3 of the Note; and (3) reimbursement to CGI for its costs, expenses and ...


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