California’s Federated Indians of Graton Rancheria, which operates the Graton Resort & Casino in Sonoma County, has emerged triumphant in an arbitration ruling in which a former business partner tried unsuccessfully for a judgement of $43 million.
The ruling by the three-member panel of retired judges comes at the end of a 15 year legal battle.
The former partner, Kenwood Investments, a real estate firm based in Sonoma, originally signed an agreement with the tribe in 2003, one year after the tribe achieved federal recognition. The tribe had no land and one of Kenwood’s jobs was to help it acquire some in Sonoma or Marin counties.
Kenwood’s founder Darius Anderson spelled out in the agreement that he and his company would help the tribe buy land and develop a casino, in return for 4 percent of the first seven years of revenue, later negotiated down to 2.5 percent. Kenwood decided to pull out of the deal two years later. In 2013 the tribe opened the casino and resort in Rohnert Park. The following year Anderson sued the tribe.
Anderson was suing for a share of the casino’s revenues. The tribe countered that Anderson and Kenwood never carried out the company’s obligations. Kenwood alleged that the tribe wouldn’t have been as successful as it was without the company’s initial assistance.
The tribe blamed Kenwood for much of the negative publicity that the tribe’s quest for land generated when it began looking at 1,736 acres near Sears Point, and for neglecting to reveal to the tribe that the land was part of a tidal wetlands prized by local conservationists.
The case went to an arbitration panel, which ruled for the tribe. During the course of the arbitration it was revealed that when Anderson was working with the tribe he urged them to allow Station Casinos to run the casino—without revealing his own working relationship with Station. He also didn’t provide competing bids from other interested operators, just Station’s bid.
These factors apparently played a large part in the arbitration decision for the tribe. The panel determined that Kenwood’s services for the tribe were “inadequate.” Besides not winning the $40 million it sought, Kenwood was also obliged to pay the tribe’s $725,000 legal fees. However, the tribe did agree to pay Kenwood $750,000 for its services obtaining property in Rohnert Park.
The panel’s judgement was affirmed on June 1 in San Francisco Superior Court. Neither Anderson nor the tribe have commented on the settlement because of a confidentiality agreement. The information was obtained from court documents.
