Published Wednesday, March 30, 2011 | 12:52 p.m.
Updated Wednesday, March 30, 2011 | 2:56 p.m.
Map of Sunset Station Hotel Casino
1301 W. Sunset Road, Henderson
Station Casinos Inc. and the city of Henderson are headed toward a court showdown over charges by Station that City Council members violated state law in meeting secretly to decide an issue about a potential competitor -- and that the city has been trying to cover up this alleged violation.
The dispute arose in November when Station's Sunset Station hotel-casino in Henderson sued the city in Clark County District Court, charging it wrongly approved plans for unrestricted gaming without a hotel at the now-closed Roadhouse casino on Boulder Highway.
Station's position is that if the Roadhouse wants unrestricted gaming, with 15 or more slot machines, it needs to comply with state law by investing in a hotel of at least 200 rooms -- as Station has done at its nearby Sunset Station, Boulder Station and Fiesta Henderson properties.
The city and the Roadhouse insist the Roadhouse is exempt from this requirement. Renovation and the reopening of the Roadhouse have been put on hold because of the lawsuit.
Station amended its lawsuit in January, charging that on Nov. 17 it had appealed the approval of the Roadhouse casino plan and that thereafter "the city council and the director (of community development) undertook a series of private discussions concerning Sunset's appeal."
"These meetings were conducted for the purposes of circumventing Nevada's Open Meeting Law," the amended complaint alleged.
Station alleges that at one of the meetings, on or about Jan. 5, "a quorum of City Council members met in private to consider and take action regarding Sunset's appeal. At the closed meeting, a majority of the City Council members instructed the director to deny Sunset's appeal."
"Pursuant to Nevada's Open Meeting Law, all meetings of a public body must be open and public and all persons must be permitted to attend meetings of a public body unless otherwise specified pursuant to the statute," the suit charges. "There is no exception which would authorize the city to meet in closed-door sessions to discuss and take action concerning Sunset's protest and appeal of the application."
This prompted the city to file a motion last month to strike the allegations from the lawsuit about the Open Meetings Law.
The city's response said a "non-meeting" pursuant to state law was held between the City Council and the City Attorney's office to discuss the situation. This "non-meeting" was an exception to the Open Meetings Law since it involved a discussion about litigation, the city said.
"The council is allowed under statute to hear from its attorneys, strategize with its attorneys and offer their opinions and guidance to their attorneys," the city's filing said. "No action was taken at the meeting."
The city wants what it calls the "scandalous" Open Meetings Law claims struck from Station's lawsuit because "such allegations, if taken as true, could form the basis for personal criminal liability" against council members, the city said.
"As elected officials, with two of the members currently running for re-election, such baseless allegations have the potential to harm their reputations," the city's filing by Senior Assistant City Attorney Christine Guerci-Nyhus said.
Attorneys for Station Casinos fired back last week, saying they've developed evidence that in fact a decision was made at the meeting to deny its appeal and that two key city staff members opposed denial of Station's appeal.
The Roadhouse, owned by Robert McMackin, "along with the city now seek dismissal of the legal challenge, hoping to cover up the backroom deal that was contrived to try and circumvent the law," Station charged in its latest filing.
L. Tracy Foutz, assistant director of community development, sent a letter rejecting Station's appeal the day after the closed-door meeting and that's no coincidence, Station charged.
"Both Foutz and the mayor (Andy Hafen) admit that they were in communication with each other regarding the letter prior to it being sent," Station's filing said.
"Neither Foutz nor the mayor explained whey they would need to be in contact with each other concerning what purports to have been an administrative rejection of Sunset's appeal," the filing said. "Apparently, the city expects this court to just simply accept is as a coincidence that the City Council held a closed-door meeting to discuss the item and then the assistant community development director conveniently decided on his own to reject the appeal. While there are sometimes coincidences in life, this is not one of them."
Station's filing said that after its appeal was rejected, some of the personnel in the Community Development Office developed a "guilty conscience" and that Foutz's attorney met with Station's attorneys and revealed that Foutz's boss, Community Development Director Stephanie Garcia-Vause, did not agree with the letter rejecting Sunset Station's appeal.
"It became clear that Foutz had been intimidated into signing that letter. It is believed that, upon cross-examination, Foutz will be forced to concede that the true reason for his conversation with the mayor was to confirm that a majority of the City Council members were in agreement to send the letter," said Station's filing by attorney Todd Bice.
After meeting with Station's attorneys, however, Foutz's counsel Norman Kirshman announced Foutz was unwilling to voluntarily come forward and demand a retraction over his role in the controversy, Station's filing said.
"Obviously, Sunset believes that Foutz is reticent to reveal all of the facts voluntarily out of fear for his job," Station's filing said.
(Kirshman is no stranger to the city - he recently successfully sued the city for $1.3 million over the firing of Mary Kay Peck as city manager).
Bud Cranor, a spokesman for the city, on Wednesday called Station's new allegations "salacious and untrue."
"It's an attempt to divert from the matters of law at issue," Cranor said.
An April 15 hearing is set on the city's motion that the case be dismissed or that the Open Meeting Law violations allegations be struck from Station's lawsuit.