Park, Horizon trial is under way

Attorneys were in the majority on both sides of the courtroom, and file boxes filled with legal records lined the walls as Wimar Tahoe Corp., owner of Horizon Casino Resort in South Lake Tahoe, faced Park Cattle Co. in Ninth District Court for the first time Wednesday.

Park Cattle Co. is seeking to dissolve a lease with Horizon owner William Yung, charging he has put profits before a promise to Park Cattle to maintain a first-class and competitive casino. Yung heads Wimar Tahoe as well as its parent company, Columbia Sussex.

Attorneys for Yung say the casino has fallen on hard times primarily because of the sagging gaming market, not managerial neglect.

Park Cattle owns the land, and Yung owns the Horizon. The primary debate revolved around the contract Yung signed with Park Cattle in 1990 and the meaning of "first class" and "competitive," terms used by Park Cattle in the lease with respect to the Horizon and how it was to be maintained.

"Consider the leases only with respect to the meaning of those terms," Judge David Gamble told jurors Wednesday. "Not the overall intention, nor extraneous promises."

The meaning of those words lack definition in the lease, according to attorney Kirk Lenhard of the Las Vegas firm Jones Vargas, which is representing Yung.

The litigation is protracted, a string of charges and counter-charges. Lenhard called Wimar Tahoe the "nominal plaintiff" in this case.

"Park Cattle says they're unhappy with the condition of the casino, but the only communication between their board and my client was when they filed suit," he said.

The casino was at the top of its game in the 1960s and '70s when it was owned by Del Webb, but construction of Harrah's and Harveys brought more competition. Webb had some success when he rebranded the hotel to a country-western theme, calling it High Sierra, but eventually got out of the business and sold the property to Yung in 1990.

"Park was dissatisfied with the change. They thought it was a step down, but it was a step for survival," Lenhard said.

Webb eventually got out of the business, selling the hotel to Yung in 1990, but his efforts to bring back the high-roller crowd lost with the theme change failed, Lenhard said.

"In 1990, when Yung acquired the lease, the gaming market at Lake Tahoe started dropping and never recovered," Lenhard said. "My client hit the crest at the wrong time."

Yung went to Park in an effort to renegotiate another lease and possibly put some money back into the property, but the money gained in that transaction had to be repaid to Park with interest, Lenhard said.

"The property struggled, and Park will tell you, they aren't satisfied with the condition of the property," he said.

Sacramento attorney William Warne, representing Park Cattle Co., said deficiencies at the Horizon were made clear by his clients in the summer of 2005, but Yung did nothing. This case isn't just about something that went awry in South Lake Tahoe, but the byproduct of Yung's business practices here and elsewhere.

"We believe the losses we sustained and damages with respect to problems with the building were not accidental but intentional," he said. "Yung chose profits over promises and people. The repairs will be expensive, and we're asking for close to $300 million for maintenance, plus punitive damages."

Warne had numerous photos showing the hotel's sagging infrastructure, showing everything from friable, asbestos-laden insulation that has fallen off to black mold, faulty electric outlets and leaking roofs fixed with a bucket.

"We asked for more staff, but Columbia Sussex didn't want that," said Jeff Stockton, a maintenance employee from 1990 to 1997. "They just wanted people to unplug toilets and change light bulbs."

One-time casino operations manager Leonard Sniegowski said the organization was past trimming off the fat and had resorted to whacking at the bone.

The casino is not performing. This quarter, the Horizon engaged 12 percent of the South Lake Tahoe casino employees but is paying just 9 percent of the wages and 5 percent of the benefits, Warne said.

"They did not hire the best employees, and they cut staff. The casino's position in the market is a consequence of the choices he (Yung) has made," Warne said.

The case is expected to take another six to eight weeks.