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Filipelli v. Iowa Racing & Gaming Commission

Court of Appeals of Iowa

March 22, 2017

JOHN JOSEPH FILIPELLI, Petitioner-Appellant,
v.
IOWA RACING AND GAMING COMMISSION, Respondent-Appellee, and IOWA GREYHOUND ASSOCIATION, Intervenor.

         Appeal from the Iowa District Court for Pottawattamie County, James S. Heckerman, Judge.

         John Filipelli appeals the district court's finding he lacked standing to challenge the Iowa Racing and Gaming Commission's action regarding the distribution of an escrow account created by an arbitration agreement. AFFIRMED.

          Kyle J. McGinn of McGinn, Springer & Noethe, P.L.C., Council Bluffs, for appellant.

          Thomas J. Miller, Attorney General, and David M. Ranscht and Jeffrey C. Peterzalek, Assistant Attorneys General, for appellee.

          Nicholas J. Mauro of Crawford & Mauro Law Firm, Des Moines, for intervenor.

          Considered by Vogel, P.J., and Tabor and Mullins, JJ.

          MULLINS, Judge.

         John Filipelli appeals the district court's grant of the Iowa Racing and Gaming Commission (IRGC) and Intervenor Iowa Greyhound Association's (IGA) joint motion to dismiss. Filipelli argues the court erred in determining he lacked standing to challenge the IRGC's action concerning the distribution of an escrow fund created by an arbitration agreement. We affirm.

         I. Background Facts and Proceedings

         The Iowa Legislature created the IRGC to have regulatory jurisdiction over all gambling operations governed by Iowa Code chapters 99D (2015) (pari-mutuel racing) and 99F (gambling structures). The Iowa West Racing Association (IWRA) is a nonprofit organization that held a pari-mutuel license to conduct gambling at the Horseshoe/Bluffs Run Casino in Council Bluffs. Prior to 2014, Iowa law required the casino to conduct live greyhound racing and to contribute to the purses for these races from its slot machine revenue. The IWRA and the IGA, a nonprofit corporation organized to promote the breeding and racing of greyhounds in Iowa for sport, were required by law to reach an agreement as to the amount of slot machine revenues that should be used to supplement purses at the racetrack each year. The IWRA and the IGA frequently failed to reach an agreement, and as a result, they often submitted the matter to binding arbitration.

         In 1995, the IWRA and the IGA failed to reach an agreement regarding the amount the casino would contribute to supplement purses at Bluffs Run in 1996 and submitted the matter to an arbitration panel. The panel issued a decision and award setting the 1996 purse supplement at four million dollars. The panel also established an escrow account comprised of an additional four million dollars contributed from slot machine revenue at the casino to be used to supplement purses in future years as a result of the casino's underpayment of purses in previous years due to underestimated adjusted gross receipts as projected by the IWRA. The escrow fund was held in the name of the IGA and the IWRA, and the IGA maintained exclusive control regarding its investment. In 1998, an arbitration panel suspended contributions to the escrow account after the IWRA and the IGA failed to develop a specific plan for the funds in the account.

         In 2014, the Iowa Legislature discontinued live greyhound racing at the casino, effective in December 2015. See Iowa Code § 99D.9A. The legislature provided the IGA the opportunity to obtain a pari-mutuel license and operate its own live greyhound racing in Dubuque. See Iowa Code §§ 99D.9B, .9C. The IGA subsequently applied for and received such a license and began racing.

         The IGA and the IWRA attempted to negotiate an agreement for the disbursement of the funds in the escrow account. They were unable to agree on how to distribute the funds and submitted the matter to the IRGC for consideration. On March 5, 2015, the IRGC moved to distribute the escrow fund: "[O]ne-half [(roughly 2.6 million dollars)] for purses at Bluffs Run based upon the past five years, 2011-2015, and one-half . . . to the [IGA] to be used for purses in the operation of the Dubuque track." The IRGC approved the motion with four "yes" votes and one "no" vote. Neither the IWRA nor the IGA challenged the IRGC's decision.

          On October 27, 2015, Filipelli, a licensed dog breeder and kennel owner-operator who began participating in racing at Bluffs Run in 2010, filed a petition for judicial review of the IRGC's March 5 action, pursuant to Iowa Code chapter 17A.19, claiming the decision was contrary to Iowa law and the prior arbitration awards. In his petition, Filipelli alleged he had standing to challenge the IRGC's action because (1) "[h]e ha[d] a personal interest in the illegal transfer of funds out of the Purse Escrow account, " (2) "[t]he illegal transfer of 2.6 million dollars has a direct adverse effect on [him] in the loss of funds in excess of $60, 000.00, " (3) "[t]he actions of the [IRGC] in allowing the transfer of the funds contrary to statute directly caused the injury to [him], " and (4) "this issue is more likely than not to be redressed by a favorable decision for [him]." ...


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