US: Court rules in favor of casino developer EPT Concord

Cappelli owns a small slice of the old Concord, where EPR and Empire Resorts are building the 1,700-acre Montreign Resort Casino at Adelaar.

The court also ruled that Acting Supreme Court Justice Frank LaBuda should have removed himself from the case because of public statements made by county Legislator Kathy LaBuda – his wife.

In 1999, Cappelli's Concord Associates bought 1,600 acres of property to develop as a resort and casino. In 2007, they needed capital and borrowed $162 million from EPT, using most of the property as collateral to secure the loan. Concord Associates defaulted. As part of the settlement, Concord Associates could continue its casino plans on a small slice of the property it still owned, but had to finance the project via a master credit agreement that stipulated to a traditional construction loan personally guaranteed by Cappelli.

Concord Associates failed to do that, proposing instead in 2011 to issue a $395 million high-yield bond. When it appeared EPT would refuse, Concord Associates went to court, claiming the proposal was in line with the contract. Meanwhile, EPT floated its own resort plan with Empire Resorts, which will run Montreign.

Kathy LaBuda publicly supported EPT’s project. Concord Associates asked Judge LaBuda to recuse himself. He did not, and ultimately ruled in favor of EPT, writing that a decision for Concord Associates would have been “against public policy” and the state’s casino gaming law.

The Appellate Division, Third Department of state Supreme Court ruled that LaBuda’s failure to recuse “constituted a clear abuse of discretion” in light of Kathy LaBuda’s public comments. Judge LaBuda should have realized people could reasonably question his impartiality, the appellate court ruled, and should have stepped aside.

However, the appeals court also ruled in favor of EPT, saying the terms of the contract were clear and unambiguous, and Concord Associates failed to meet them.