PrintApr. 21--ALBANY -- Delaware North took confidential information and used it against former partners in its bid to develop a major casino at a downstate racetrack, its former partner alleges in a new lawsuit.
The court action comes as Gov. David A. Paterson has asked Delaware North and others to again submit bids to operate the casino at Aqueduct racetrack. It accuses the privately-held Buffalo company of breach of contract and other misdeeds that derailed the attempt of other firms interested in the lucrative deal.
The suit in state Supreme Court in Manhattan was filed by SL Green Realty Corp., a major real estate development firm that once partnered with Delaware North in a group called Empire Racing Associates.
SL Green said Delaware North "turned on its partners" and used confidential information involving development plans and financing to then submit its own separate bid for the casino deal. The suit says Delaware North's participation in Empire Racing was "vital" to its chances for success.
Delaware North did not immediately respond to a reguest from The Buffalo News for comment on the lawsuit.
The casino project has seen numerous starts and stops over the years. Delaware North first joined Empire Racing in March 2006, making an initial membership payment of $250,000. SL Green was also one of the original partners. The group submitted a bid to run Aqueduct, Belmont and Saratoga racetracks, but that effort was halted with the change of administrations to former Gov. Eliot L. Spitzer.
Spitzer then gave the racetrack contract to its longtime holder, the New York Racing Association, and asked companies to submit a separate bid to run the Aqueduct casino, which would have been the only legally operating casino in New York City. For Delaware North, which already runs racetrack casinos -- including the one at the Hamburg fairgrounds -- it would have been a major prize.
The suit alleges Delaware North "actively dissuaded" Empire Racing from submitting a separate bid to run just the Aqueduct casino. After NYRA was awarded another franchise to run the tracks, Delaware North then bowed out of Empire Racing -- even though it had assured Empire Racing officials that during the summer of 2007 rumors were false that it was discussing with state officials the possibility of submitting its own bid apart from the Empire group, the suit alleges. In October 2007, it formed a new partnership with the owners of a Saratoga harness track to go for the Aqueduct casino project.
By February of 2008, SL Green said new partnership talks were under way between the Manhattan real estate firm and Delaware North. It said it shared information with the Buffalo company, including confidential financial details. It said Delaware North then used that information to submit its own separate bid.
Delaware North was then tapped by Paterson last fall, having submitted a $370 million offer to the state to run the casino. But the Paterson administration last month pulled the plug on the deal after Delaware North said it could not come up with the full $370 million by March 31. Last week, Paterson asked interested bidders to submit new offers to the state for the project first authorized in 2001.
Delaware North "sabotaged the efforts" of Empire and SL Green, the suit alleges.
"Had (Delaware North) lived up to its contractual and fiduciary responsibilities to Empire and SL Green, enormous costs to Empire, SL Green and, ultimately, the people of New York State could have been avoided," the suit claims.
The suit seeks unspecified compensation.
tprecious@buffnews.com
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