CP St. Louis Casino claims East St. Louis-based Casino Queen breached a merger agreement by engaging in conduct that caused an investigation and disciplinary action by the Illinois Gaming Board (IGB), according to a breach of contract suit filed June 20 in U.S. District Court.
CP St. Louis Casino is seeking $15 million in damages.
The suit claims that on April 20, 2006, the two companies signed a merger agreement and that on April 25, 2006, a deposit escrow agreement established the terms and conditions relative to the transfer and control of the Casino Queen to CP for an aggregate purchase price of $200 million.
CP then deposited $10 million in escrow at Wells Fargo Bank as a good faith deposit. The merger was set to take place on Dec. 31, 2006, but was eventually pushed back to Feb. 28, 2007.
CP claims that sometime prior to Nov. 9, 2006, the Casino Queen had "constructive knowledge" that the IGB was investigating conduct and activities and pursuing disciplinary actions against shareholders, Patrick, Phillip, James, John, Joan, Rose and Gerard Kenny.
CP claims that on Feb. 26, Casino Queen requested another request to delay the acquisition date and on March 7, terminated the merger agreement.
The suit claims the Casino Queen refused to return the $5,122,430.84 that was being held in escrow.
CP claims the Casino Queen breached contract when it had a legal obligation to:
CP also claims Casino Queen committed fraud, intentionally concealing information about the IGB investigation in to the Kennys.
It also claim the Casino Queen violated the Illinois Consumer Fraud and Deceptive Business Practices Act and was unjustly enriched by not returning the funds held in escrow.
CP claims it has been damaged by losing the $5,122,430.84 in funds plus interest, lost profits from the anticipated operation of the casino and attorney fees and court costs.
It is seeking the amount held in escrow and $10 million in punitive damages for consumer fraud violations.
CP is represented by John Papa of the Callis law firm in Granite City.
The case has been assigned to District Judge Phil Gilbert in Benton.