Before McMILLIN, P.j., Coleman And Hinkebein, JJ.
The opinion of the court was delivered by: McMILLIN, P.j.
LONE STAR CASINO CORPORATION, APPELLANT v. FULL HOUSE RESORTS, INC., DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, ALLEN E. PAULSON AND MY DANG, APPELLEES
THIS OPINION IS NOT DESIGNATED FOR PUBLICATION AND MAY NOT BE CITED, PURSUANT TO M.R.A.P. 35-B
DATE OF JUDGMENT: 03/15/96
TRIAL JUDGE: HON. JOHN WHITFIELD
COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT
NATURE OF THE CASE: CIVIL - CONTRACT
TRIAL COURT DISPOSITION: SUMMARY JUDGMENT GRANTED TO, APPELLEES
DISPOSITION AFFIRMED IN PART AND REVERSED AND REMANDED IN PART - 4/7/98
MOTION FOR REHEARING FILED:
This case comes to the Court on appeal from the Circuit Court of Harrison County. That court granted summary judgment against Lone Star Casino Corporation (Lone Star) on its claims against two corporations and two individuals arising out of an alleged joint venture to purchase a floating casino, move it to a new location, and operate it as a gambling enterprise licensed by the State of Mississippi. We reverse and remand in part and affirm in part.
Palace Casinos, Inc. (Palace) owned and operated a casino vessel in Harrison County that was substantially in debt and unable to generate sufficient revenues to meet its financial obligations. Lone Star owned or had options to purchase several adjoining real estate parcels that, in the aggregate, were considered (at least by Lone Star) to be a more desirable location for a casino than the area occupied by the Palace operation. Lone Star, lacking the necessary funds to acquire and relocate the Palace vessel, enlisted Full House Resorts, Inc. (Full House) as a possible participant in the anticipated enterprise. Full House and Lone Star executed a "Preliminary Letter of Intent" which gave a sparse outline of a proposed effort by these two entities to pursue the acquisition of Palace and, if successful, operate the casino as equal owners on Lone Star's site. A copy of that document is attached as Addendum A to this opinion.
Ultimately, these two parties made a written proposal to Palace. The proposal called for the relocation of Palace's casino to Lone Star's location and its operation as a joint venture with Palace being one of the venturers and the combined interest of Full House and Lone Star being the other venturer. This proposal to Palace, though not specifically contemplated in the earlier letter of intent between Lone Star and Full House, was made as a result of the joint efforts of Lone Star and Full House under the terms of the letter. Thus, according to Lone Star's theory, this case involves two separate, but interrelated, ventures--one being a combination between Lone Star and Full House to try to come to terms with Palace and the second being an enterprise to conduct the actual casino operation if the first venture succeeded.
The proposal offered by Lone Star and Full House was not acceptable to Palace. However, it did lead to a series of meetings involving representatives of all three parties to determine if some modified version of the deal could be negotiated. An individual named My Dang, an employee of Donaldson Lufkin & Jenrette (DLJ), participated in these meetings. DLJ was a consulting firm retained by Palace to advise it in exploring various options to deal with its financial woes. The negotiations were ultimately unsuccessful because, among other difficulties, the parties could not agree on a mutually acceptable means of treating the large cash infusion that Full House was proposing to make. Full House insisted that the money be treated as a loan secured by a first lien on the venture's assets; however, Palace wanted the money to be contributed in exchange for an equity interest in the venture. Palace's desire not to treat the money as a loan would have resulted in the subordination of Full House's investment to Palace's existing secured debt, a proposal Full House would not accept.
The record does not indicate that there was ever a formal end to the negotiations involving these three parties. Rather, it seems that the matter was, at some point, simply abandoned when it became apparent that a workable arrangement was not likely to result. An official for Full House also testified in his deposition that one reason his company lost interest was that, after additional analysis, company officials had decided that Lone Star's site was something less than the ideal location Lone Star had touted it to be. There is ...