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City of Duluth Takes Hotel, Contract Dispute to Federal Court

Updated: 04/02/2014 3:44 PM
Created: 04/02/2014 3:21 PM WDIO.com

Several weeks after the Minnesota Supreme Court ruled that state courts don't have jurisdiction in the matter, the City of Duluth has taken its case regarding a former hotel property to federal court and also alleged breach of contract.

The city is suing the Fond du Lac Band of Lake Superior Chippewa over its efforts to have the Carter Hotel building, which is adjacent to the Fond du Luth Casino, placed into federal trust.  The city contends a 1986 agreement with the band requires city consent for the creation of any additional "Indian Country" in Duluth.

The state's high court threw out the city's original lawsuit, saying a 1994 agreement between the city and the band required any disputes to be resolved in the federal court system.

In an email to councilors, City Attorney Gunnar Johnson said the city will ask the court for an injunction to prevent the property from being put into trust before the legal case is resolved.

The city's lawsuit also alleges that the band breached its contract by asking the National Indian Gaming Commission to reverse its earlier approval of the casino contract between the city and the band.  The NIGC ruled in 2011 that the lease calling for payments violated federal law.  The city had been receiving about $6 million per year from the band.

Fond du Lac Chairwoman Karen Diver said the city has rejected efforts to discuss a global settlement and called that action regretful.  "We will continue to defend ourselves, and would rather encourage the city to focus its efforts and resources on repairing its relationship with the Fond du Lac Band," Diver said in a statement.  "The band continues to have interest in making economic investments in Duluth, but the continued legal actions of the city are an obstacle to pursuing those initiatives."

Last year, a federal judge ordered the band to pay nearly $10.4 million in rent owed for 2009, 2010, and 2011, but ruled the band would not have to make any further payments under its current agreement with the city, which runs until 2036.

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