Stymied by state regulators and struggling to recoup its investment, Emerald Casino was sued Monday by contractors hired to build the gaming complex in Rosemont who say they are owed $2.2 million for work already performed.
Degen & Rosato Construction Co. of Rosemont and Power Construction Co. of Schaumburg filed a mechanic’s lien against Emerald Casino and the village of Rosemont in Cook County Circuit Court.
The companies, working as a joint venture on the project, also sued Emerald for breach of contract and fraudulent misrepresentation.
Emerald’s lease with Rosemont specified that the general contracting work on the project go to Degen & Rosato and Power. Degen & Rosato has close ties to Rosemont Mayor Donald Stephens and did more than $50 million of construction work in the village from 1999 through 2000.
Emerald and the construction companies entered into a letter of intent in October 1999 and ground was broken on the casino before state regulators granted their approval of the project.
In February 2000, the Illinois Gaming Board threatened to issue a cease-and-desist order to halt construction. At that time, company officials said they had already spent $10 million on the project.
The Gaming Board rejected Emerald’s bid last year and recently its investors have been urging the state to settle the ongoing disputes over the project. Monday’s lawsuit adds one more problem to the mix.
The construction companies are asking for a judge to order an accounting to determine how much money they are owed. They claim the amount is $2.2 million. The companies also seek to have the first lien on the leasehold and to have their financial claim protected in the event the leasehold is sold.
Rosemont has leased the casino property to Emerald. To place a lien on Emerald’s interest in the lease, the construction companies have to name anyone who has an interest in the property as defendants, said Peter Rosenthal, village attorney for Rosemont.
“We’re named because it’s a technical requirement under the law,” Rosenthal said. “The village is not on the hook for the money.”
Lawyers for the Emerald and the construction companies declined to comment.
The lawsuit also alleges fraudulent misrepresentation against Emerald, saying the casino group was “significantly undercapitalized” while work progressed. The lawsuit alleges Emerald representatives devised a plan to mislead the construction companies into believing they would get paid promptly for their work.
“Emerald made these false promises, representations and statements to the joint venture as part of a plan to induce the joint venture to begin and continue working on the project,” the lawsuit says.