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Jilted Palmer landowner suing Mohegan Sun

Owners of the Western Massachusetts property where Mohegan Sun had originally proposed a casino will seek a court judgment to prevent the company from pursuing another gambling project at Suffolk Downs in Revere.

Northeast Realty Associates, which controls 152 acres in the town of Palmer, states in a lawsuit expected to be filed Friday that the casino company violated contracts with the landholder by allegedly engaging in secret talks with racetrack representatives. The lawsuit says the company then intentionally ran a lackluster referendum campaign for the Palmer project, contributing to its defeat at the polls in November.

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The lawsuit comes less than a week before Revere residents go to the polls to decide a citywide referendum on Mohegan Sun’s plans to build a $1.3 billion gambling resort on land belonging to Suffolk Downs.

Northeast Realty is asking the Superior Court for a judgment declaring that Mohegan Sun may not pursue a casino license for any property other than the Northeast site in Palmer. The lawsuit, to be filed in Hampden Superior Court, also seeks unspecified damages, costs, and reimbursement for legal fees.

In a statement, Mohegan Sun said the Connecticut-based company “devoted over five years and more than $25 million to create a world-class resort casino proposal in Palmer. But on November 5, 2013 the community made a decision, which we have respected.”

“While we do not comment on pending litigation, it has been well established that there were no discussions between Mohegan Sun and the City of Revere or Suffolk Downs prior to the defeat of our proposal in Palmer’s November 5 referendum,” Mohegan Sun said. “Any suggestion to the contrary is completely without merit.”

Mohegan Sun’s Palmer casino plans had been an early favorite for the Western Massachusetts resort casino license.

In 2008 — three years before casinos were even legalized in Massachusetts — Mohegan Sun signed several agreements with Northeast Realty to build a casino in Palmer, including a lease for the site, according to the lawsuit. The parties also signed an exclusivity agreement that prohibited either side from “engaging in discussions or negotiations concerning the opening of any gaming facility in Massachusetts” other than on the Palmer site. A third agreement committed the parties to work together to get a law passed to legalize casino gambling and to develop a casino in Palmer, according to the lawsuit.

Separately, Mohegan Sun negotiated and signed a casino host agreement with Palmer officials in late August 2013 and scheduled a town vote on the project for Nov. 5.

Meanwhile, across the state, casino investigators conducting a background check on a partnership pitching a casino at Suffolk Downs had raised red flags about one of the project’s partners, Caesars Entertainment. Suffolk Downs dropped Caesars from the partnership Oct. 18, over concerns the gambling giant would fail the state background check. Racetrack officials stated publicly at the time that they would seek a new casino operator.

Northeast Realty alleges that Mohegan Sun saw the Boston gambling market as a more lucrative opportunity than Western Massachusetts, and that “no later than the early part of October, 2013” the casino company’s representatives began talking to “Suffolk Downs and its team of executives, lobbyists, attorneys and other representatives, and/or” state and municipal officials representing Revere, in violation of the agreements with Northeast.

“Mohegan’s true interests became the pursuit of a license to operate a gaming facility on the Suffolk Downs site, not the Palmer property,” the suit states.

Northeast accuses Mohegan Sun of then failing to do its best to win the referendum in Palmer, alleging that the casino company cut back spending on radio ads, failed to address concerns of key constituents in Palmer, and “ignored Northeast’s pleas to devote more time, resources and television advertisements to the campaign in the critical weeks and days right before the Palmer referendum,” the lawsuit states.

Palmer residents defeated the casino referendum by fewer than 100 votes.

Mohegan Sun chief executive Mitchell Etess notified Northeast on Nov. 20 that the company was terminating the exclusivity agreement but not the lease on the Palmer property, the suit states. The company did not answer a question about whether its officials spoke with Suffolk Downs before Nov. 20.

A Mohegan Sun affiliate announced Thursday it will retain CBRE/Grossman Retail Advisors to study development options for the Palmer parcel.

Suffolk Downs, which straddles the East Boston-Revere city line, faced two casino referendums on Nov. 5. Revere voters approved casino plans at the track, but East Boston voters said no, killing the original proposal. Track officials quickly regrouped and launched a plan to build a gambling resort only on the Revere side of the property.

Officials for Suffolk Downs and Mohegan Sun reached an agreement in late November, under which Mohegan Sun would lease about 42 acres in Revere from the racetrack for a resort casino. Under the agreement, the track would be the casino’s landlord, not an owner.

The state gambling commission waived one of its deadlines to permit a new Revere referendum vote on the project, which is scheduled for Tuesday.

Mark Arsenault can be reached at mark.arsenault@globe.com.
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