IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

QUEST MEDIA GROUP, LLC,

Plaintiff,

v.

LAKES OHIO DEVELOPMENT, LLC,

et al.

Defendants.

Case No. 2:12-cv-521

Judge Peter C. Economus

MEMORANDUM OPINION AND ORDER

This case arises from the parties’ efforts to secure passage of a 2009 Ohio ballot initiative 

that amended Ohio’s Constitution to permit casino gaming in the state. Alleging breach of 

contract as well as other causes of action, Plaintiff Quest Media Group, LLC (“Quest”) seeks 

damages and various equitable relief against Defendants Lakes Ohio Development, LLC (“Lakes 

Ohio”), Lakes Entertainment, Inc. (“LEI”), and Lyle Berman (“Berman”). 

Having reached a partial settlement, the parties have filed a Joint Motion to Dismiss 

Some But Not All Claims. (Dkt. 47.) In this motion, the parties seek dismissal of all counts in 

the complaint, with the exception of a single claim contained in Count I. The Court hereby 

GRANTS the joint motion (Dkt. 47) and DISMISSES such claims.

The parties’ partial settlement and the resulting dismissal of claims significantly limits 

the scope of the pending dispositive motions: Defendants’ combined motions for summary 

judgment and judgment on the pleadings (Dkt. 29) and Quest’s motion for partial summary 

judgment (Dkt. 35). Quest had sought summary judgment on two issues relating to Count I, one 

of which is now moot. Defendants had sought either summary judgment or judgment on the 

pleadings on every count; their motion is now moot with the exception of the motion for 

summary judgment on the remaining claim contained in Count I.

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For the reasons that follow, Quest’s motion is DENIED as to the Cap and DENIED AS 

MOOT as to the remaining issue (the “Pokagon Payment”), and Defendants’ combined motion 

is GRANTED as to the unsettled claim contained in Count I and DENIED AS MOOT as to all 

other claims. 

I. Background

Parties. Quest, an Ohio limited liability company, provides consulting services relating 

to developing casinos in Ohio. (Compl. ¶ 6.) LEI is a Minnesota corporation that develops and 

operates casinos. (Compl. ¶ 7; Answer at ¶ 7.) Lakes Ohio is a Minnesota limited liability 

company which Quest alleges is wholly owned by LEI. (Compl. ¶ 8; Answer at ¶ 8.) Berman is 

the Chairman and Chief Executive Officer of LEI. (Compl. ¶ 9; Answer ¶ 9.) Quest alleges that 

Berman also holds those positions with Lakes Ohio. (Compl. ¶ 9.) 

Failed 2008 Casino Initiative. To provide context for the contractual dispute in this 

case, Defendants present the affidavit of Timothy Cope, President, Chief Financial Officer, and 

Director of LEI. Cope asserts the following regarding the parties’ background:

4. In April 2008, Lakes Ohio formed Blue Water Joint 

Venture, LLC (“Blue Water”) with an entity called 

Myohionow.com, LLC (“Myohionow”). To the best of my 

knowledge, Myohionow was owned by Rick Lertzman and Brad 

Pressman.1

 Mr. Pressman was its President. The purpose of Blue 

Water was to promote a referendum in the November 2008 Ohio 

election to amend the Ohio Constitution so as to permit 

development of a casino in Clinton County, Ohio. Generally, 

Myohionow’s role in Blue Water was to organize the public 

campaign in support of the referendum. Lakes Ohio’s role was 

primarily to provide financing.

5. Lakes Ohio ultimately contributed approximately $28 

million to Blue Water in connection with the 2008 referendum 

effort. Had the referendum succeeded, Blue Water would have 

 

1 It is undisputed that Bradford Pressman and Rick Lertzman are principals in Quest and were principals in 

MyOhioNow.com. (Pressman Aff. ¶¶ 2–3 (Dkt. 36-1 at 2).)

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owned the right to develop the casino it sought to authorize. The 

referendum did not pass in the November 2008 election, however.

6. The relationship between Myohionow and Lakes Ohio in 

connection with Blue Water was governed by an April 29, 2008 

Joint Venture Agreement. A true and correct copy of the Joint 

Venture Agreement, as filed with the Securities and Exchange 

Commission (“SEC”), is attached hereto as Exhibit A.

(Cope Aff. ¶¶ 4–6 (Dkt. 28).) The Court will refer to the Joint Venture Agreement between 

Myohionow and Lakes Ohio, filed as Exhibit A to the Cope Affidavit, as the “Blue Water JV

Agreement.”

2009 Casino Initiative. Following the failed 2008 casino initiative, the parties to this 

case worked with Penn Ventures, LLC (“Penn”) and Rock Ohio Ventures LLC (“Rock”), two 

other casino development companies, to promote a casino initiative in the 2009 election. This

ultimately successful referendum authorized four casinos: one each in Columbus, Cincinnati, 

Cleveland, and Toledo. (Compl. ¶¶ 16–18; Cope Aff. ¶ 7.)

Agreements Between Defendants, Penn, and Rock. Quest alleges that LEI entered into 

agreements with each of Penn and Rock, in which the parties agreed that LEI would receive a 

percentage interest in each of the Ohio casinos operated by Penn or Rock. (Compl. ¶¶ 19–21.) 

According to the evidence submitted by Defendants, LEI and Penn entered into a “Joint 

funding arrangement and development option for gaming facilities in Ohio” (the “Penn Funding 

Agreement”), and Lakes Ohio and affiliates of Rock entered into the Operating Agreement of 

Rock Ohio Ventures LLC (the “Rock Operating Agreement”). Both agreements are attached as 

exhibits to the Cope affidavit. (Cope Aff. ¶ 8, exs. B, C.) 

Following voter approval of the referendum, the Penn Funding Agreement provided Penn 

with the rights to develop casinos in Columbus and Toledo (the “Penn Casinos”), and the Rock 

Operating Agreement provided Rock with the rights to develop casinos in Cleveland and 

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Cincinnati (the “Rock Casinos”). According to the Rock Operating Agreement, Lakes Ohio had 

a 10% equity interest in Rock. (Cope Aff. ¶¶ 10–11, Ex. C.) LEI was also provided the right to 

acquire equity interests in the Penn Casinos, but its exercise of that right required negotiation of 

more specific terms (“Definitive Documentation”). (Cope Aff. ¶¶ 10–11, Ex. B.) According to 

Mr. Cope, LEI and Penn carried on negotiations attempting to agree on such specific terms until 

around June 2010.

Agreements Between Quest and Defendants. Rather than receiving an equity interest 

or an up-front payment, Quest was to be compensated for its participation in the 2009 casino 

initiative pursuant to an agreement and security agreement between Quest and Lakes Ohio, dated 

March 9, 2010 (“Agreement” and “Security Agreement,” respectively), as amended by a “First 

Amendment to Agreement” dated April 6, 2010 (“Amendment”). (Compl. ¶¶ 22, 33, 44, Exs. A, 

B, C; Cope Aff. ¶ 12, Exs. D, E, F.)

The Agreement provides that, in consideration of the services Quest performed relating to 

the 2009 casino initiative, Quest shall be paid a fee (the “Fee”) in an amount equal to 18% “of 

the Gross Distributions after payment of any Additional Capital Required Return.” (Agreement 

page 1, §§ 1, 1.1(a).) “‘Gross Distributions’ means the amount of cash received by [Lakes 

Ohio] from [the entities formed to develop and operate the Casinos] less any Prior Costs.” (Id. at 

§ 1.1(b)(i), (iv).) “Prior Costs” are defined to include the sum of the JV Loans (relating to the 

failed 2008 casino initiative), additional funds that Lakes Ohio spent to fund the 2009 casino 

initiative, and interest; all to be paid to Lakes Ohio in 20% increments annually (“Annual 

Allocations”). (Id. at § 1.1(b)(iii).) The JV Loans are defined as funds advanced by Lakes Ohio 

“necessary to fund the 2008 Initiative, the principal of which totals approximately $27,775,000.” 

(Id. at 1.)

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Beginning when Lakes Ohio receives its first distribution from the entities formed to 

develop and operate the Casinos, “[e]ach installment of the Fee shall be paid to Quest within five 

(5) days after [Lakes Ohio] receives a distribution,” until termination of the Agreement. 

(Agreement §§ 1.1(b)(iii)(a), 1.1(c).) However, § 1.1(b)(iii) of the Agreement (hereinafter 

referred to as the “Cap”) provides that, “[n]otwithstanding anything herein to the contrary, Quest 

shall receive no more than $500,000 annually until [Lakes Ohio] has been fully repaid for all 

Prior Costs.”

As security for the payment of the Fee, Lakes Ohio granted to Quest a security interest 

“in an amount of the Distribution equal to its Fee pursuant to the terms and conditions of the 

Security Agreement.” (Agreement § 1.3.) Specifically:

As security for the full and timely discharge of the Secured 

Obligations [defined as Lakes Ohio’s “obligations to make all 

required payments under the Agreement”] . . ., [Lakes Ohio] 

hereby grants [Quest] a first priority security interest under the 

UCC . . . in and to the Collateral until all Secured Obligations are 

fulfilled.

(Security Agreement §§ 1, 2.) “Collateral” is defined as “the right (whether categorized as a 

general intangible, payment intangible or otherwise) of [Quest] to receive payment under Section 

1.1(a) and 1.1(c) of the Agreement.” (Security Agreement § 1.)

The Amendment, dated April 6, 2010, gave Quest the options to increase the Fee to 

18.5% by making a payment of $500,000 to Lakes Ohio by April 6, 2010, and to increase the Fee 

to 20% by making an additional $500,000 payment (for a total of $1 million) by July 1, 2010. 

(Amendment §§ 1–2.) Quest alleges that it made a single payment of $500,000 to Lakes Ohio as 

agreed in April of 2010. (Compl. ¶¶ 43.)

Termination Agreement Between LEI and Penn; Payment to Quest. In June 2010, 

LEI and Penn entered into a Termination Agreement in which they terminated the Penn Funding 

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Agreement and LEI relinquished its interests in the Penn Casinos in exchange for a one-time 

payment of $25 million (the “Sale”). (Cope Aff. ¶¶ 13–14, Ex. G.) Mr. Cope states that the $25 

million payment under the Termination Agreement “is the only payment LEI or Lakes Ohio has 

ever received from Penn in connection with the Penn Casinos or the [Penn] Funding 

Agreement.” (Cope Aff. ¶ 15.) On July 19, 2010, LEI paid Quest $500,000, which was a

portion of the $25 million payment from Penn. (Cope Aff. ¶ 16; Compl. ¶¶ 63, 135.)

All four Penn Casinos and Rock Casinos are now operational. According to Mr. Cope, 

“Lakes Ohio continues to hold an interest in the Rock Casinos,” but “neither Lakes Ohio nor LEI 

has received any payments in connection with the [casinos] other than the single $25 million 

payment from Penn described above.” (Cope Aff. ¶ 17.)

In June of 2012, Quest filed this lawsuit alleging breach of contract, fraudulent 

inducement, impairment of security interest, civil theft/conversion, tortious interference with 

contract, unjust enrichment, and promissory estoppel. Quest seeks damages, equitable relief, 

appointment of a receiver, and imposition of a constructive trust.

Following the parties’ partial settlement, the only claim at issue is Quest’s:

claim under Count I to money damages that alleges that Defendant 

Lakes Ohio breached its agreement with Quest (as amended) by 

failing to pay the full contractual amount, as per the terms of the 

Agreement and First Amendment (as defined in the Complaint), of 

Fees owed to Quest in connection with the $25 million that Lakes 

received from Penn in exchange for relinquishing Lakes’ interests 

in the Penn casino projects.

(Dkt. 47 at 2.) “The sole remaining disputed issue in the case relates to that breach of contract 

Claim,” and is the “issue that Quest refers to as the ‘Payment Cap Issue.’” (Id.) Of the parties’ 

dispositive motions, then, the motions remaining are (1) Quest’s motion for summary judgment 

on the “Payment Cap Issue” and (2) Defendants’ motion for summary judgment as to the 

remaining claim under Count I.

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II. Summary Judgment Standard

Summary judgment is proper “if the movant shows that there is no genuine dispute as to 

any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 

56(a). The court must view the evidence and draw all reasonable inferences in favor of the nonmoving party, Matsushito Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986), but 

“need not make assumptions that strain credulity,” Grecewicz v. Henry Ford Macomb Hosp. 

Corp., 683 F.3d 316, 323 (6th Cir. 2012). Any direct evidence offered by the plaintiff in 

response to a summary judgment motion must be accepted as true. Muhammad v. Close, 379 

F.3d 413, 416 (6th Cir. 2004). 

The “mere existence of some alleged factual dispute between the parties will not defeat 

an otherwise properly supported motion for summary judgment; the requirement is that there be 

no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 

(1986). Where the record completely contradicts the movant’s version of the facts so that no 

reasonable jury could believe it, the district court should not adopt the movant’s version of the 

facts. Scott v. Harris, 550 U.S. 372, 380–81 (2007). Deposition testimony “alone is sufficient to 

create a jury question . . . .” Harris v. J.B. Robinson Jewelers, 627 F.3d 235, 238 (6th Cir. 2010). 

III. Quest’s Motion for Summary Judgment as to the Cap

While Defendants seek summary judgment on Quest’s contract claim, Quest originally 

sought summary judgment on two narrow aspects of this claim. (Dkt. 29 at 1; Dkt. 35 at 24–28.) 

Following the parties’ partial settlement, only the first issue remains, which relates to the Cap 

contained in § 1.1(b)(iii) of the Agreement. The Cap provides that “[n]otwithstanding anything 

herein to the contrary, Quest shall receive no more than $500,000 annually until [Lakes Ohio] 

has been fully repaid for all Prior Costs.” Quest seeks summary judgment requiring Lakes Ohio 

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to treat the Cap as a “payment cap” rather than as an “earnings cap.” (Dkt. 35 at 26.) Quest 

asserts that “[n]owhere . . . does the agreement state that Quest cannot earn a Fee in a greater 

amount, which Fee would then be paid out over multiple years in $500,000 annual installments 

until it is exhausted.” (Id. (emphasis in original))

The Court finds that the common sense reading of the Cap is that it limits the amount 

Quest can earn on a given distribution; that is, it is an “earnings cap,” as Defendants argue. 

Quest focuses on the distinction between the words “receive” and “earn,” but the Agreement 

makes no such distinction, and “receive” can be used as a synonym to “earn.” See THE POCKET 

OXFORD AMERICAN THESAURUS OF CURRENT ENGLISH, 214 (Christine A. Lindberg ed., 2002).

Quest argues that Defendants are attempting to read an “annual cap” as a “perdistribution” cap. (Dkt. 46 at 3.) When there is no more than one distribution per year, however, 

such a reading makes sense, considering that Quest’s fee is calculated as a percentage of a

distribution received by Lakes Ohio, and is paid out of that distribution. (Agreement 

§ 1.1(b)(iii)(providing for distributions to be applied to Quest’s fee).)

Another provision supports interpreting the Cap as an earnings cap. In § 1.1(e) and (f), 

the Agreement provides Quest with two options to pay down the Prior Costs ahead of schedule. 

First, Quest had the “option of deferring one or more Fee payments in order to apply the Fee 

payment proceeds to the pre-payment of the Prior Costs and/or any Additional Capital Required 

Return (e.g., thereby reducing the principal balance of the Prior Costs earlier than as 

contemplated . . .).” Second, Quest had “the option to pay additional funds” to Lakes Ohio in 

order to “pay off the principal balance of the Prior Costs and any accrued Interest thereon.” 

(Agreement § 1.1(e), (f).) 

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As soon as Prior Costs are reduced to zero, the Cap disappears. By exercising an option 

to pay down Prior Costs, Quest could eliminate the Cap ahead of schedule. The value of early 

elimination of the Cap depends on whether the Cap is interpreted as an earnings cap or a 

payment cap. As a payment cap, it affects only the timing of Quest’s receipts, not the total 

amount that Quest eventually should receive (ignoring interest). As an earnings cap, it could 

substantially affect the total amount eventually received by Quest.

The first option to pay down Prior Costs has potential value to Quest under either reading 

of the Cap because deferring the payment of a fee would change subsequent fee calculations: For 

any given distribution received by Lakes Ohio, a lower calculated amount of Prior Costs would 

increase the remaining distribution on which Quest’s 18.5% is calculated. It is possible that the 

interest cost of exercising the first option, under which a fee payment is merely deferred, would 

be worth the subsequent increase in Quest’s fee calculation.

It is unclear what possible advantage Quest could gain by the second option, however, 

under Quest’s interpretation of the Cap. Under the second option, Quest would simply pay 

additional funds to Lakes Ohio to reduce Prior Costs ahead of schedule, with no provision for 

those funds’ repayment to Quest. This option could make financial sense for Quest only under 

the earnings reading of the Cap, under which early elimination of the Cap could substantially 

increase Quest’s earnings.

The Court finds that, under Quest’s argued interpretation of the Cap, there is no reason 

for the parties to have included the option contained in § 1.1(f), as it has no potential value under 

that interpretation. Such a result supports the common sense reading of the Cap as an earnings 

cap, rather than a payment cap.

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Therefore, the Court finds that Quest has not demonstrated that it is entitled to judgment 

as a matter of law and DENIES its motion for partial summary judgment as to the interpretation 

of the Cap.

IV. Defendants’ Motion for Summary Judgment

Defendants seek summary judgment on Count 1, in which Quest asserts a breach of 

contract claim against Lakes Ohio. As to the sole claim remaining following the parties’ partial 

settlement, Quest asserts that there is a genuine question of material fact as to whether Lakes 

Ohio breached the Agreement by paying only $500,000 to Quest in connection with the Sale.

As discussed above, the Cap limited Quest’s first-year earnings to $500,000. Because the 

Cap limited Quest’s first-year earnings to $500,000, the Court finds that there is no genuine 

dispute as to whether Quest was entitled to receive a greater share of the Sale proceeds and 

GRANTS Defendants’ motion as to this claim.

V. Conclusion

For the reasons discussed above, the Joint Motion to Dismiss Some But Not All Claims 

(Dkt. 47) is GRANTED, Quest’s motion (Dkt. 35) is DENIED as to the Cap and DENIED AS 

MOOT as to the Pokagon Payment, and Defendants’ combined motion (Dkt. 29) is GRANTED

as to the unsettled claim contained in Count I and DENIED AS MOOT as to all other claims. 

This case is hereby DISMISSED, and the Court directs the Clerk to enter judgment.

IT IS SO ORDERED.

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