Investment Partners and Kewadin Casinos Settle After Months of Litigation

After more than a decade of protracted litigation, Kewadin Casinos Gaming Authority and its two investment partners have reached a settlement. This settlement deal, among others, cuts the original damages imposed on Kewadin Casinos by the court and puts to rest the dispute.

Representatives of both parties have since confirmed this development. However, on the other side, Kewadin Casinos has filed a new lawsuit against its former legal counsel for malpractice. The casino authority alleges that if the claim against its ex-counsel is successful, it would pay off a part of the newly agreed settlement deal.

On January 3, 2023, a court sitting in Ingham County awarded damages against Kewadin Casinos for breach of contract and fraudulent misrepresentation. In a judgment issued by Judge Joyce Draganchuk, the court ordered that Kewadin Casinos pay its investment partners the sum of $88 million for failure to set up proposed casino retail casino centers.

In later reports, counsel to Kewadin Casinos revealed that the tribal operator will file an appeal against the judgment of the county circuit court. However, in an unprecedented turn of events, Kewadin Casinos and its two investment partners, JLLJ Development LLC and Lansing Future Development LLC, have agreed to a settlement deal.

According to the terms of the settlement, Kewadin Casino will now pay the plaintiffs a sum of $25 million, a significant reduction from the original $88 million damages. The settlement sum was agreed to be paid by April 12, 2023.

Speaking after the settlement meeting, Aaron Schlehuber, the General Counsel at Kewadin Casinos explained that the deal will enable the operator to focus on supplying top-notch gaming services.

“This agreement allows Kewadin to move forward and now focus 100% of its efforts on providing the best entertainment services possible to the areas we serve,” Schlehuber said. “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.”

The settlement is approximately a 25% decrease from the original damages awarded at the trial court. High-ranking officials at Kewadin Casinos also believe that the settlement will help them avoid lengthy appeals process and associated costs.

Interestingly, the settlement does not mark the end of litigation, at least for Kewadin Casinos. The tribal operator has filed a fresh claim against its legal representation at the trial court. Kewadin Casinos is suing Patterson, Earnhart, Real Bird & Wilson LLP for malpractice.

Representatives of the casino state that if the malpractice claim is successful, they [Kewadin] will pay as much as $10 million to their former investment partners. However, if the claim fails, only $5 million will go to the two investment companies.

Explaining the reason for the suit, Schlehuber said the reputation of the operator and its parent tribe, Sault Ste. Marie Tribe of Chippewa Indians, was negatively affected by the lawsuit. As such, the legal counsel ought to indemnify them for the reputational failure.

“The default judgment caused by the Patterson firm has severely impacted the reputation of both Kewadin Casinos and Sault Tribe, and it’s important that they are held into account for the $88 million in damages against us,” Schlehuber said. 

In another far-reaching legal development involving Michigan online gambling and retail casinos, Little River Band wishes to reignite their plans for building a casino project in Fruitport Township.

Back in March, we reported that the Department of Interior refused to grant federal recognition to Grand River Bands of Ottawa. Little River Band had earlier planned to build an off-reservation casino in a choice location in Fruitport Township. This plan was approved by the DOI. However, the Governor did not grant her assent due to a pending decision about the federal recognition status of Grand River Bands.

This recognition would have meant Grand River Bands were entitled to land in the vicinity. Albeit to gain this recognition means that Little River Band could resubmit its application without hitches.

As part of plans to revive their proposal, Larry Romanelli, representative of the Little River Band, wishes to confirm that Governor Whitmer will give her green light soon enough. Despite the lack of time, the Little River Band tribe is still optimistic that they would secure executive approval.