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Partners in the $382 million French Lick Springs Resort & Casino
 and the West Baden Springs Resort To Go Before an Arbitrator;
Judge Claims Current Organizational Structure a Total Failure

By J.K. Wall, The Indianapolis StarMcClatchy-Tribune Business News

Sep. 6, 2006 - FRENCH LICK, Ind. -- If residents here could serve as jury in the legal battle between the partners in a local casino-resort project, they say their verdict would be swift and sure.

Cook Group, the Bloomington-based medical device company led by billionaire Bill Cook, would win hands down. And they would kick Indianapolis-based Lauth Property Group, led by Bob Lauth, off the $382 million project.

"Sympathies definitely lie with Cook," said Harold Morris, standing in the leatherworks and antique shop he owns a few blocks south of the casino. "They don't like the way Lauth was bad-mouthing Cook. Cook has done nothing but good in the valley."

But a jury or judge won't settle this fight. Cook and Lauth will go before an arbitrator -- possibly in New York or Washington -- who will decide their case. That's what Orange Circuit Judge Larry Blanton ruled Friday, noting a "total failure and inability of the parties to co-exist within the current organizational structure."

Cook and Lauth began feuding in April, with Lauth charging Cook with careless spending and Cook saying Lauth treats the area's historic hotels like a strip mall.

Cook and Lauth joined forces last year to win the license for the state's 11th casino. It is scheduled to open Nov. 1, flanked by the hotels, multiple golf courses and a tennis center.

The folks in Orange County say they know Bill Cook, trust him and agree with his vision to spend whatever it takes to restore the architectural glory and vibrancy of French Lick and nearby West Baden.

Long before a casino was approved, Cook took an interest in the area, which in its Jazz Age heyday was home to more than 30 hotels and casinos. Since 1996, Cook -- the state's wealthiest man, according to Forbes magazine -- has spent $37 million to rescue the decaying West Baden Springs Hotel.

"I just want him to own it all, because he's been here all along," said Geneva Street, 71, a beautician in West Baden.

Asked whether they mistrust or dislike Bob Lauth, residents said no. They said they just don't know him or his company.

"He just hasn't been out in the community," said Donna Asbell, 51, as she drank a beer at the bar of the American Legion in French Lick.

But Lauth wants an injunction against Bill Cook to keep him off the project site. Attorneys for the developer say Bill Cook has ordered unapproved changes to the project. And because he has no ownership stake in the casino-resort project, Cook has no legal responsibility to pay for cost overruns.

Lauth attorneys declined to comment for this story.

Bill Cook is connected to the project indirectly through subsidiaries of Cook Group. One, CFC Construction, is a general contractor on the project. Another, CFC Inc., stands to be paid $62 million plus interest for the hotels it gave to the casino project -- if the project produces enough profits, according to documents filed in the companies' court dispute.

Cook Group Chairman Steve Ferguson and Bill Cook's son, Carl, are part owners in the casino-resort project.

Lauth, one of the 15 largest real estate developers in the country, also works as a general contractor on the project. It helped win the casino license and secured $270 million in bond financing for the project.

But most folks in French Lick don't keep up with those details.

A petition that some Orange County residents tried to give to Judge Blanton took a form that avoided the nitty-gritty of the companies' legal arguments.

Signed by 850 people so far, the petition reads, "The Cook Group and all of their people are working hard to make Orange County a better place to work and live. Only in fairy tales do things happen as they have in Orange County."

Blanton declined to accept the petition.

Gene Breedlove, 59, said he doesn't know the ins and outs of the dispute. But he does know this: "Cook's got so much money," he said, "he can do whatever he wants."

JUDGE ORDERS ARBITRATION

Orange County Judge Larry Blanton last week ordered Cook Group and Lauth Property Group to take their dispute to an arbitrator before returning to court.

Arbitration entails both companies submitting their cases to an arbitrator -- a retired judge, a respected lawyer, a panel of experts -- that then issues a ruling.

The hope is that each side will get a clearer picture of the dispute, leading to acceptance of the arbitrator's decision.

If the decision is rejected, the dispute typically heads to court.

Source: "The People's Law Dictionary" by Gerald and Kathleen Hill.

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To see more of The Indianapolis Star, or to subscribe to the newspaper, go to http://www.IndyStar.com.

Copyright (c) 2006, The Indianapolis Star

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