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Keystone Redevelopment Partners, LLC v. Pennsylvania Gaming Control Board

September 16, 2010

KEYSTONE REDEVELOPMENT PARTNERS, LLC, PETITIONER
v.
PENNSYLVANIA GAMING CONTROL BOARD AND PHILADELPHIA ENTERTAINMENT AND DEVELOPMENT PARTNERS, LP., RESPONDENTS



The opinion of the court was delivered by: Judge Simpson

Argued: May 18, 2010

BEFORE: HONORABLE ROBERT SIMPSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge.

OPINION

We consider an issue of first impression: under what circumstances may a person who did not appeal the denial of its application for a gaming license become involved in subsequent administrative proceedings of a licensee. We hold that under the Pennsylvania Race Horse Development and Gaming Act (Act),*fn1 the circumstances for such a person to become involved are limited and involvement is subject to the discretion of the Pennsylvania Gaming Control Board (PGCB or Board).

In these consolidated appeals, Keystone Redevelopment Partners, LLC (Keystone), an unsuccessful applicant for one of the two Philadelphia (City) Category 2 slot machine licenses awarded in December, 2006, petitions for review from three orders of the Board. The first order granted current licensee Philadelphia Entertainment and Development Partners, LP's (Licensee) petition to extend time to make slot machines available (extension petition). The second order denied Keystone's petition to intervene in Licensee's extension proceeding. The third order denied Keystone's petition to re-open its and Licensee's initial licensing proceedings. For the reasons that follow, we quash Keystone's appeal to the extent it seeks review of the Board's extension order. Otherwise, we affirm.

I. Background

A. License Award

In December, 2005, following the enactment of the Act, the Board received five applications for the two Category 2 slot machine licenses*fn2 available in the City. Licensee sought to build Foxwoods Philadelphia, a casino complex located at 1449 South Columbus Boulevard between Reed and Tasker Streets, on the south Philadelphia waterfront. Keystone sought to build the Trump Street Casino in north Philadelphia near the intersection of Fox Street and Roberts Avenue. HSP Gaming LP (HSP), Riverwalk Casino (Riverwalk), and PNK-Pinnacle Entertainment (Pinnacle) sought licenses for riverfront casinos on North Delaware Avenue. At its December, 2006, public meeting, the Board voted to award the licenses for two riverfront locations: HSP's SugarHouse on North Delaware Avenue, and Licensee's Foxwoods on Columbus Boulevard. In February, 2007, the Board memorialized its award in a written decision. See PGCB Licensing Dec., 02/01/07; Reproduced Record (R.R.) at 61a-175a. In its decision, the Board noted, "[t]hose applicants not awarded a license have, under the mandates of the Act, been denied a license."*fn3 Id. at 7; R.R. at 69a. See also id. at 113; R.R. at 175a (same). Significant for our disposition, Keystone did not appeal the Board's denial of its application.

B. Events Following License Award

In January, 2007, following the license award, Licensee submitted the requisite zoning and use registration permit applications to the City. However, Licensee encountered numerous obstacles in its attempt to construct its facility at the Columbus Boulevard site. First, in March, 2007, Riverwalk, one of the three unsuccessful applicants, appealed the Board's licensing decision. In July, 2007, the Supreme Court denied Riverwalk's appeal and affirmed the Board's decision approving licenses for HSP and Licensee. Riverwalk Casino, L.P., v. Pa. Gaming Control Bd., 592 Pa. 505, 926 A.2d 926 (2007).

Thereafter, in response to numerous and varied delays by local and municipal entities, Licensee filed several emergency petitions for review with the Supreme Court. In April, 2008, the Supreme Court granted Licensee's emergency petition directing the City to approve the necessary zoning for the Columbus Boulevard site. In early May, 2008, Licensee submitted a zoning and use permit application to the City. However, the City took no action on Licensee's zoning application.

On May 29, 2008, the Board issued Licensee its Category 2 slot machine license. Pursuant to Section 1210(a) of the Act (number of slot machines; initial complement), Licensee had one year from this date to commence operations by making a minimum of 1,500 slot machines available for play. 4 Pa. C.S. §1210(a).

In July, 2008, Licensee filed a petition with the Supreme Court seeking appointment of a Special Master and enforcement of the Court's April, 2008, order directing the City to approve the necessary zoning for the Columbus Boulevard site. In October, 2008, the Supreme Court appointed Commonwealth Court Senior Judge Joseph F. McCloskey as Special Master. The Supreme Court also granted Licensee's request for enforcement of its April, 2008, order.

Meanwhile, in August, 2008, at Governor Edward G. Rendell's request, Licensee began meeting with state and local government officials regarding the possibility of moving its facility from the Columbus Boulevard site to a Center City site.*fn4 In September, 2008, Licensee and officials initially discussed a possible relocation to the Gallery Complex at 11th and Market Streets. In early 2009, Licensee began considering relocation in the former Strawbridge Building at 801 Market Street. In April, 2009, Licensee appeared at a public meeting of the Board to provide a project update. At that time, Licensee confirmed it anticipated filing for permission to relocate to the Strawbridge site.

C. Keystone's Petition to Re-Open

In January, 2009, Keystone filed a petition to re-open both its and Licensee's initial licensing proceedings, and for related relief. Keystone alleged Licensee, by considering other locations, abandoned its Columbus Boulevard site, which was a substantial factor in the Board's grant of the license; therefore, the Board should declare Licensee's license forfeited or abandoned. Keystone further requested the Board award it the license because it is the only remaining eligible and suitable applicant. Keystone averred Pinnacle and Riverwalk both sought North Delaware Avenue locations, and the Board previously decided to award only one North Delaware Avenue license, which went to HSP's SugarHouse.

In response, the Board's Bureau of Investigations and Enforcement (BIE) filed an answer and new matter denying Keystone's allegations. In its new matter, BIE averred Keystone lacked standing to file its petition to re-open. First, Board regulations provide that "[p]etitions may be filed by BIE, parties, applicants, licensees, permittees, persons registered or certified by the Board, and other persons authorized by the Board." 58 Pa. Code §493a.4(a). Keystone does not fall within any of these categories. In addition, BIE averred Keystone lacked standing because it: failed to show it was aggrieved or in any way harmed or affected by any Board decision; failed to intervene or participate in Licensee's or any other applicant's licensing proceeding; failed to appeal the Board's licensing decision denying its application; and, has no authority to request that the Board revoke Licensee's license. BIE further averred only its Office of Enforcement Counsel (OEC) is authorized to initiate license revocation proceedings. BIE also averred Keystone's petition to re-open was premature because Licensee never petitioned for relocation.

In addition, Licensee filed preliminary motions seeking to dismiss Keystone's petition to re-open. Like BIE, Licensee averred Keystone lacked standing and legal authority to re-open the initial licensing proceedings. Licensee averred Keystone, a former unsuccessful applicant, has no greater right than any other person to seek relief from the Board.

D. Licensee's Extension Petition

On May 22, 2009, seven days before the one-year period to commence operations expired, Licensee filed its extension petition under 4 Pa. C.S. §1210(a)*fn5 seeking an additional 24 months to commence casino operations at the Columbus Boulevard site. Licensee averred it faced numerous obstacles beyond its control regarding development of the Columbus Boulevard site, including opposition from Mayor Michael A. Nutter and other City officials as to location, which made it difficult to obtain the necessary zoning permits and approvals. Licensee alleged these facts established good cause for the Board to grant Licensee additional time to open its casino.

In response, BIE filed an answer and new matter averring that Licensee failed to explain why it could not erect a temporary facility within a short period of time, and that Licensee failed to show good cause for an extension. BIE also objected to Licensee's extension request pending a full evidentiary hearing at which Licensee had to present documentation of its applications for all permits needed to begin construction, documentation of all government permits and approvals received, and documentation showing Licensee possesses all necessary funding or guarantees of funding necessary for construction of its project.

E. Keystone's Petition to Intervene

In June, 2009, Keystone petitioned to intervene in Licensee's extension proceeding and averred as follows. Keystone meets the Board's requirements for intervention set forth in 58 Pa. Code §493a.12(c) because it has a substantial, direct and immediate interest in Licensee's extension proceeding. Further, no current party to the proceeding will adequately represent Keystone's "unique interests" as one of five original applicants for a Category 2 license in the City. In addition, Keystone remains the only person*fn6 with the current intent and capability to develop a gaming facility in the City, and it appeared before the Board seeking to re-open its licensing proceeding. Further, Keystone is the only person asserting Licensee abandoned or forfeited its license.

Keystone also claimed it may be bound by the Board's decision in the extension proceeding because the Board may expressly or implicitly rule on the issue of whether Licensee abandoned or forfeited its license. In addition, the Board may address factual and legal issues related to Licensee's attempted "bait and switch," which may impact Keystone's interest in securing a Category 2 license in Philadelphia.

In response, both Licensee and BIE filed answers and new matter denying Keystone's material allegations. Additionally, both Licensee and BIE objected to Keystone's petition to intervene on the basis that Keystone failed to allege any facts that would form the basis for the Board to determine that Keystone has a substantial, direct and immediate interest in the extension proceeding.

F. August, 2009 Hearing

In late August, 2009, the Board held a public hearing on Licensee's extension petition. Licensee's attorneys and corporate officers explained that Licensee remained committed to developing the Columbus Boulevard site and no longer contemplated a move to the Strawbridge site or anywhere else. Licensee further explained it only considered relocation after being repeatedly urged to do so by the Governor and City officials. Id. Ultimately, the Board voted to grant Licensee's extension request subject to certain conditions.

Following discussion of Licensee's extension request, the Board considered Keystone's petition to intervene. At oral argument, Keystone asserted it had a substantial, direct and immediate interest in obtaining a Category 2 license in Philadelphia and that the licensing proceedings should be reopened in order for Keystone's proposed Trump Street casino and Licensee's newly proposed "Strawbridge" casino to fairly compete against each other. The Board, however, voted to deny Keystone's intervention request.*fn7

G. Intervention Order

Shortly thereafter, the Board filed a written adjudication and order denying Keystone's petition to intervene in the extension proceeding. The Board determined Keystone failed to establish a substantial, direct and immediate interest in Licensee's extension petition. In particular, the Board rejected Keystone's assertion that if the Board denied Licensee's extension petition, Keystone, as the only other non-North Delaware Avenue applicant found eligible and suitable in December, 2006, would therefore be entitled to a Category 2 license. The Board noted Keystone's assumption of how the Board would act if it denied Licensee's extension request was speculative and far outside the narrow issue of whether Licensee demonstrated "good cause" for an extension.

H. Extension Order

The same day, the Board also entered an adjudication and order granting Licensee's extension petition. The Board concluded Licensee established good cause under 4 Pa. C.S. §1210(a) for a 24-month extension, to run from May 29, 2009, to May 29, 2011, to commence operations.*fn8 The Board's order specified that the extension is limited to the Columbus Boulevard site and that Licensee must develop a facility substantially similar to the one presented in its application materials.*fn9 The Board emphasized Licensee's license is valid only for the Columbus Boulevard site, absent further relief from the Board. Although the prior version of 4 Pa. C.S. §1329 (nonportability of slot machine license), effective at all relevant times here, provided for physical relocation of the licensed facility with Board approval for good cause shown, the Board stressed it would not be inclined to approve a material change in site location here because of the competitive nature of the licensing proceedings and the fact it picked the Columbus Boulevard project as one of the two best projects presented.

I. Denial of Keystone's Petition to Re-Open

Thereafter, in October, 2009, the Board entered an adjudication and order denying Keystone's petition to re-open. The Board concluded Keystone had no substantial, direct and immediate interest in Licensee's license. Nearly three years passed since the Board denied Keystone's application. Therefore, the Board could not find that Keystone or any other 2006 applicant remained eligible and suitable for licensure.

Further, noting the Act vests OEC with the sole legal authority to petition for revocation of a license, 4 Pa. C.S. §1517(a.2), the Board concluded Keystone lacked standing to seek revocation of Licensee's license. Moreover, the Board recognized Keystone did not appeal the Board's licensing decision awarding Licensee a license; therefore, Keystone waived its right to challenge the license award.

In addition, the Board concluded Keystone's petition to re-open was moot. More specifically, in view of the Board's extension order, Licensee had until May, 2011, to commence operations at the Columbus Boulevard site, and Licensee remained committed to developing that site. Thus, the Board determined no actual case or controversy existed.

J. Keystone's Appeals

Keystone appeals the Board's September, 2009, orders granting Licensee's extension petition and denying Keystone's petition to intervene in the extension proceeding. Keystone also appeals the Board's October, 2009, order denying its petition to re-open the licensing proceedings.*fn10

II. Issues

A. Intervention Petition

Keystone first contends the Board erred in denying its petition to intervene in Licensee's extension proceeding. Keystone also contends the Board failed to render a valid adjudication addressing Keystone's standing to intervene in Licensee's extension proceeding.

B. Extension Petition

Keystone also raises four issues regarding the Board's grant of Licensee's extension petition. First, Keystone contends the Board erred in granting an extension of time to construct its casino because Licensee lacks good cause for an extension under 4 Pa. C.S. §1210(a). Second, Keystone contends the Board erred, abused its discretion and denied it due process in granting Licensee an extension of time to construct a casino without first adjudicating whether Licensee, by its deliberate failure to develop the licensed site, and by its affirmative steps to develop a casino at an unapproved site, abandoned its slot machine license. Third, Keystone contends that substantial evidence does not support the Board's decision to grant an extension and that the Board's decision is actually contrary to the evidence. Fourth, Keystone contends the Board erred in granting an extension because it is no longer qualified and suitable to hold a slot machine license.

C. Petition to Re-Open

Keystone also raises three issues regarding the Board's denial of its petition to re-open its and Licensee's licensing proceedings. First, Keystone contends the Board erred and abused its discretion in determining that Keystone lacked standing to petition to re-open the licensing proceedings. Second, Keystone contends the Board erred, abused its discretion and denied Keystone due process by failing to conduct a valid adjudication to accept evidence of Licensee's post-licensing actions to resolve disputed issues of fact. Third, Keystone contends the Board erred and denied it due process in its order denying Keystone's petition to re-open by making factual findings in the absence of a valid adjudication.

III. Discussion

A. Keystone's Petition to Intervene

Keystone first contends the Board erred and abused its discretion in denying its petition to intervene in Licensee's extension proceeding. It also contends the Board erred and abused its discretion by denying Keystone's intervention request on the basis of standing without a fact-finding process.

1. Requirements for Intervention

Citing Board regulations at 58 Pa. Code §493a.12 (Intervention), Keystone argues it meets the requirements for intervention in Licensee's extension proceeding. Initially, we note 58 Pa. Code §493a.12 pertinently provides:

(a) The decision to grant a petition to intervene in a proceeding before the Board or a presiding officer is within the sole discretion of the Board.

..

(c) The Board may grant a petition to intervene if it determines:

(1) The person has an interest in the proceeding which is substantial, direct and immediate.

(2) The interest is not adequately represented by a party to the proceeding.

(3) The person may be bound by the action of the Board in the proceeding.

..

(e) Petitions to intervene must be in writing and set out clearly and concisely the facts demonstrating the nature of the alleged right or interest of the petitioner, the grounds of the proposed intervention, and the position of the petitioner in the proceeding. The petitioner shall fully advise the parties and the Board of the specific issues of fact or law to be raised or controverted, by admitting, denying or otherwise answering, specifically and in detail, each material allegation of fact or law asserted ...


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