In the
United States Court of Appeals
For the Seventh Circuit

Nos. 00-1083 & 00-1138

WILLIAM MAYS, LOUIS BUDDY YOSHA,
Trustee of the charitable remainder unitrust,
CYNTHIA ANN YOSHA SNYDER, Trustee
of the irrevocable trust agreement, et al.,

Plaintiffs-Appellants/
Cross-Appellees,

v.

TRUMP INDIANA, INCORPORATED,

Defendant-Appellee/
Cross-Appellant,

and

Donald J. Trump,

Defendant-Appellee.

Appeals from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 96 C 425--Richard L. Young, Judge.

Argued September 29, 2000--Decided June 18, 2001



  Before EASTERBROOK, RIPPLE, and EVANS,
Circuit Judges.

  EVANS, Circuit Judge. It was extremely
controversial, and it passed over the
veto of then-Governor Evan Bayh, but
Indiana enacted legislation in 1993
permitting, for the first time, riverboat
gambling in several Hoosier counties
contiguous to Lake Michigan, the Ohio
River, and Patoka Lake. Two of several
possible gambling licenses were earmarked
for Gary, a troubled city in the shadow
of a megatropolis--Chicago.

  Promoters of gambling argued that it
would bring loads of cash into
communities like Gary and spark an
economic renaissance. This was welcome
news for a smokestack-shrouded, rust-belt
city like Gary, a city devastated by the
loss of thousands of steel industry jobs
and left with block after block of
decaying houses and empty storefronts.
Things had gotten so bad in Gary that in
1993, when the gambling measure passed,
its homicide rate (91 slayings per
100,000 residents) left it with the nasty
moniker of "Murder Capitol" of the United
States.

  This case is a saga about the gambling-
license-snaring process and its fallout.
The cast of characters includes two folks
from Indianapolis: William Mays and Louis
Buddy Yosha. Mays is a successful
businessman, the owner (with his wife) of
the Mays Chemical Company and two radio
stations (KISS 106.7 and WIRED 100.9 FM),
an investor in many other enterprises, a
philanthropist, and a multimillionaire.
Yosha is a very successful plaintiff’s
personal injury attorney. In the other
corner is Donald Trump, known to some as
The Donald and to others as the former
husband of Ivana. Trump’s activities here
were through several of his companies,
particularly a new one called Trump Indi
ana, but we’ll refer to all of them
simply as "Trump" (and we’ll use "he" and
"it" interchangeably) as we slug our way
through this opinion.

  In a nutshell, Mays and Yosha (and
several trusts Yosha created for the
benefit of his children, another detail
we can ignore) claim Trump breached a
contract (1) to make them minority (1
percent each) partners in his
Indianagambling enterprise and (2) to
create a foundation--with the two of them
on its board of directors and little
control from Trump--to benefit various
charitable causes in Indiana. A jury
found for Mays and Yosha and awarded them
$1.4 million in damages. After a court
trial, the district judge denied Mays and
Yosha’s request for specific performance,
finding that a different charitable
organization--the Trump Indiana
Foundation--was an acceptable novation-
inspired substitute for what Mays and
Yosha wanted. The judge did, however,
order that Mays and Yosha get seats on
the board of the new foundation. Mays and
Yosha appeal on the specific performance
question and Trump cross-appeals, saying
no contract was ever formed and Mays and
Yosha are entitled to nothing.

  To best understand this case, and to
support why we resolve it as we do, a
lengthy review of the facts, sprinkled
with several observations as we go along,
is necessary.

  Normally, when someone wants to start a
business, one simply starts it. But
everything’s different in a regulated
industry, and it’s even more different in
a super-regulated, explosively charged
business like legal gambling. There’s a
lot of politics involved in this sort of
undertaking and a lot of minefields to
traverse before the prize--a license
toengage in legal gambling--is won. And
under the 1993 law, the Indiana Gaming
Commission decided who would win that
prize.

  The two Gary licenses were to be issued
first, and applicants were required "to
provide assurances that economic
development will occur in [Gary] and that
adequate infrastructure and site
preparation will be provided to
theriverboat operation." Ind. Code sec.
4-33-6-7(b). Consequently, Gary
applicants had to build an "approved
hotel" or "cause economic development
that [would] have an economic impact on
the city [exceeding] the economic impact
that the construction of an approved
hotel would have." Ind. Code sec. 4-33-6-
7(b).

  This was a State of Indiana operation,
yet the City of Gary was, quite
understandably, very interested in
thelicense-awarding process. It wanted a
voice, and one can easily understand why.
So Gary requested proposals from
potential applicants even before they
made contact with the state commission.
Gary’s request outlined several demands
to be met before the city would endorse
(though its endorsement wasn’t legally
required) an application to the
commission. One of Gary’s requirements
was that an applicant have 15 percent
local ownership.

  Most people can smell money when they
hear the phrase "riverboat gambling."
That was especially true when it was
"riverboat gambling" within sight of a
place like Chicago. Trump--and Mays and
Yosha, for that matter--had nothing wrong
with their noses. They could sniff the
smell of money. Trump, as most everyone
knows (judicial notice is usually
confined to undisputable facts like
Greenwich mean time, but we feel safe
here), controls an empire that includes a
gambling casino in Atlantic City, New
Jersey. Mays was active in politics and a
member of the Indiana State Lottery
Commission. He testified during the trial
that "gaming was a really profitable
activity" and a "printing press for
money." As things were playing out, it
looked like the road to that money ran
through Gary, and Trump--along with his
competitors--took steps to secure a
favorable nod from the city.

  As the process unfolded it became
apparent that, as far as Gary was
concerned, there were four horses in this
race but only two would finish in the
winner’s circle. Trump was one of the
four, and it was trying hard to enhance
its standing with the city as 1993 came
to a close.

  Fifteen percent local ownership in the
riverboat casino came to be seen as a
nonnegotiable demand for winning Gary’s
endorsement. Trump did not need nor want
local investment, yet it gave in.
According to a Trump executive:

It [15% local ownership] was not
something that we wanted to do. As
indicated on that first line in the first
page [of Exhibit 200, a December 30,
1993, letter to Trump from the Gary
mayor’s office], we were at this time
negotiating with the City to get their
endorsement of [Trump Indiana’s]
application when we did go before the
Gaming Commission. And the City had
indicated that they were not under any
circumstance going to give us that
endorsement absent our agreement to do
this. So we did agree to make 15% of the
equity available to Gary residents
essentially in exchange for the City’s
endorsement.

  The city memorialized its understanding
of Trump’s commitment (the same December
30, 1993, letter just mentioned) to be:
(1) spending at least $153.35 million on
the riverboat and accompanying
facilities; (2) creating 1,675 new
permanent jobs; (3) filling 67 percent of
those jobs with Gary residents and 90
percent with Lake County residents; (4)
using best efforts to maintain 70 percent
racial minority and 52% female
employment; and (5) making at least 15
percent of the equity in the company
available to Gary residents. If Trump was
selected by the state gaming commission,
a binding development agreement was
required to memorialize these
commitments. Trump was not alone here, as
all other applicants for licenses made
similar commitments to the city.
Competition for Gary’s endorsement, and a
license from the state, was obviously
fierce.

  Trump then turned his attention to
identifying local investors before
February 14, 1994, the date another step
in the application process was due before
the state commission. But bad news
arrived when Trump learned Gary would not
endorse its application, but would
instead endorse two other applicants.
Undaunted, Trump continued its efforts to
identify local investors because it
believed a third license might be awarded
to Gary, and if the commission gave it to
Trump, a development agreement with the
city, which would require local
ownership, would still be necessary. As a
Trump executive put it, "We wanted to be
sure that on a going-forward basis if we
were fortunate enough to be awarded the
license that our relationship with the
City of Gary was on very amicable terms."
  By early 1994, seven individuals from
the Gary area and two from Indianapolis--
Mays and Yosha--were tapped to be Trump’s
"local investors." The entree to Mays was
through a Trump attorney (Greg Hahn),
Mays’ friend since the days when both
were living and apparently going to
school in Evansville, Indiana. Mays (and
Yosha, for that matter) had no connection
with Gary, but because this was still a
State of Indiana license, it was thought
that someone of statewide prominence
would gussy up Trump’s application.

  At this point it is helpful to step back
and view the lawsuit claims of these
parties. Mays and Yosha claim they
entered into a binding contract with
Trump and that they held up their part of
the bargain, while Trump did nothing he
was contractually obligated to do. Mays
and Yosha find "the contract" by cobbling
together several documents, notably
letters of February 26, 1994 (trial
exhibit 5), April 6, 1994 (trial exhibit
10), and September 16, 1994 (trial
exhibit 35)./1 Trump says no binding
deal was reached: there were
negotiations, there were ideas, there
were proposals, and there were plans, but
there was no finished contract upon which
Mays and Yosha could seek damages or
specific performance in court. While the
jury, in a simple general verdict, found
for Mays and Yosha on their claim that a
contract was breached, whether as a
matter of law (Indiana law applies) a
contract was formed is a different
question, one committed to a judge or, at
this stage of the case, a panel of
judges.

  Back to the facts. Mays and Yosha (and
the seven folks-- later reduced to six--
from Gary, including a doctor, an
optometrist, a steel worker, a union
president, and a school administrator)
were listed as "proposed local minority
participants" on Trump’s license
application filed with the state gaming
commission. The February 26 letter (we’ll
have something to add from this letter in
the penultimate paragraph of our
opinion), sent to Mays and Yosha by
Trump’s attorneys, said "nine (9)
investors . . . will own, collectively,
7.5 percent of the project being
developed in Gary." The letter also
stated that "7.5 percent will be owned by
a trust, which will make contributions to
charitable organizations throughout the
Gary area."

  On April 6, 1994, Trump attorney Hahn
sent letters to Mays and Yosha which
included the following statements
regarding the terms of the proposed deal:

The investors will be holders of Class
"B" stock which "will not have the full
voting privileges of Class ’A’ stock but
will have the same per share economic
rights with respect to dividends."

The Class "B" stock will be owned
equally by a charitable trust (7.5%)
and the identified group of eight (8)
individual investors (7.5%), of which
you are one.

Trump has agreed to "loan" each
investor an amount equal to their
investment. By executing the non-
recourse promissory note, you, as an
investor, agree to pay Trump the
principal sum of $1,434,750.00.

[T]he principal amount is to be paid
solely from cash distributions or
dividends declared by Trump Hotels &
Casino Resorts, Inc.

Trump will have the first right of
refusal to purchase your stock if you
decide to sell said stock in the
future.

The finality of these terms is qualified
in the letter by the following
statements:

[I]t is reasonable to assume that the
accompanying financial information will
also be fluctuating as the proposal is
revamped.

Presently, it is anticipated that 85%
of the total number of stock issued
will be Class "A" and theremaining 15%
will be Class "B."

Again, the total development cost
figure ($153 million) and the ultimate
amount that your investment represents
is subject to change.

We have not completed all the terms
of this transaction. We hope to have
all the documents finished for your
review within the next 2-3 weeks.

  On May 24, 1994, Hahn wrote Mays and
Yosha regarding the charitable foundation
project mentioned in the April 6 letter:

In order to give the [Indiana Gaming]
commission an idea of what we are
striving for, we would like to go ahead
and designate ten local charities as part
of the foundation. In that vein, please
give us an indication as to whether or
not you would be willing to serve on the
foundation, and a list of charities you
believe should be included.

. . . .

We will be contacting you on or about
June 1, 1994, with the date and times of
the investment meetings to be held in
Gary and we would appreciate having
received your input with respect to the
charitable organizations and/or your
willingness to serve on the foundation by
that time.

Enclosed with the letter was a copy of a
document entitled "The Trump-Indiana
Charitable Foundation," identifying Trump
Marina Resorts, Inc. d/b/a Trump Princess
Indiana, Inc. as the "Donor" but with an
open space for the names of the
"Trustees."

  In August and September 1994, the
Indiana Gaming Commission conducted
hearings regarding the license selection
process. At those hearings, commissioners
raised questions about Trump’s
application centering on the "local
investors." In answer to a question from
one of the commissioners (Sundwick), a
Trump representative explained:

A: Can I address one part of your
question with respect to why we did this
because I was the decision-maker. It was
strongly suggested during the approval
process. This was one of the major
criteria in determining the acceptability
of a proposal from the City of Gary, that
local participation was mandatory and
that was what was carried back to me by
our representatives. If you’re asking me,
Does this make economic sense? Does it
make business sense? Absolutely not. I
have to finance this project. I have to
put in real dollars and real equity.

. . . .

But as for investors, in all candor,
there is no economic basis to do that. It
became part of the process.

Q: It wasn’t the policy that was actually
just required.

A: No, no, it certainly wasn’t. Mr. Trump
and I discussed it in some great deal
because we had a lot of problems
understanding why and on what basis we
would do something like this.

Another commissioner, Bochnowski, then
commented:

I mean the intent is to have local
involvement. This is not local
involvement. This is like buying names so
that you can look like you have local
involvement, and you’re no different than
anybody else in this regard, and that’s
why we have these so-called local
investors from Indianapolis. Hopefully
this experience will not be carried out
in other states.

  During the hearing process, in answer to
a commission letter asking for responses
to six questions, Hahn (with another
member of his law firm) sent a letter to
the gaming commission on September 16.
This letter, which we noted earlier is
relied on (along with the letters of
February 26 and April 6) by Mays and
Yosha to prove the existence of their
contractual rights, listed the eight
investors, their net worth, and a range
of details about the investors’
involvement and the structure and
workings of the proposed charitable
foundation.

  We are now at the critical point in time
in the case. Trump says he decided that
the whole "local investors" thing was not
helping the quest for a license, so he
jettisoned the idea and proceeded on a
different track. This move, says Mays and
Yosha, was a breach of contract for which
they are entitled to damages representing
the value of the equity interest in the
casino that did not come their way plus
the establishment of a foundation over
which they would exercise substantial
power.

  After the Trump/Mays-Yosha divorce,
Trump moved stock around several of his
companies and eventually offered new
stock in a public sale. This was
happening at a time of uncertainty
because Trump did not yet have a license
to operate the casino. In addition, there
were concerns about whether operating a
riverboat casino on Lake Michigan would
be permissible under federal law. And
Trump also was fighting a rearguard
action against Mays and Yosha who tried
to convince the gaming commission that
Trump should not get a license for
several reasons, including his breach of
contract with them and his involvement in
inappropriate financing and public stock
offerings. Ultimately, the commission
issued a license, the project went
forward, and Trump established a
different charitable foundation that was
acceptable to the City of Gary.

  The pivotal issue is whether the alleged
contractual agreement Mays and Yosha say
they had with Trump was sufficiently
certain to create the two enforceable
obligations they seek to establish. The
first obligation would require Trump to
cut Mays and Yosha in on the final deal
to the extent of a 1 percent ownership (a
.9375 percent share, to be exact)
interest for each. The second obligation
would be to create a charitable
foundation exactly as described in the
letters of February 26, April 6, and
September 16 of 1994.

  Before the trial of this case, both
sides moved for summary judgment, arguing
that the facts were not in dispute and
that a contract existed (Mays and Yosha)
or didn’t exist (Trump), as a matter of
law. The motions were denied. After Mays
and Yosha presented their case, and again
before the jury spoke, Trump moved for
judgment in his favor as a matter of law.
Both motions were denied. For the reasons
we are about to note, we think no binding
contractual agreement was reached.

  Under Indiana law, and in fact the law
of every jurisdiction, a meeting of the
minds on all essential terms must exist
in order to form a binding contract. See
Eastern Natural Gas Corp. v. Aluminum Co.
of America, 

, 1002 (7th Cir.
1997) (applying Indiana law). And a mere
agreement to agree does not a binding
contract make. As the Indiana Supreme
Court observed in Wolvos v. Meyer, 

(Ind. 1996),

[i]t is quite possible for parties to
make an enforceable contract binding them
to prepare and execute a subsequent final
agreement. In order that such may be the
effect, it is necessary that agreement
shall have been expressed on all
essential terms that are to be
incorporated in the document. That
document is understood to be a mere
memorial of the agreement already
reached. If the document or contract that
the parties agree to make is to contain
any material term that is not already
agreed on, no contract has yet been made;
the so-called "contract to contract" is
not a contract at all.

(quoting Corbin on
Contracts sec. 2.8, p. 131 (rev. ed.
1993). The Wolvos court clarified this
statement by noting, "The question of
whether an agreement is an enforceable .
. . contract or merely an agreement to
agree involves two interrelated areas:
’intent to be bound and definiteness of terms.’"

Without an express statement
of intent, the focus is on whether the
contract is too indefinite to enforce.
Thus, the existence or nonexistence of a
contract turns on whether material terms
are missing. And here, material terms are
absent in spades.

  Mays and Yosha, unlike the six Gary
"local investors," (who, by the way,
settled their disputes with Trump before
trial) were savvy in the ways of business
deals and law. While we have no reason to
doubt that both were interested in the
proposed charitable aspects of the
arrangement, the fact remains that this
was a financial deal for them that was
almost too good to be true. For
essentially doing little more than adding
their names to the Trump license
application--which would demonstrate that
the Trump team was "Hoosierized"--they
were to receive a financial windfall.
They would get a million or so dollars
with no risk because, for most of the
time, the proposed "loan" to them for the
purchase price of their "investment" was
without recourse and the "loan" was to be
repaid with Trump’s money. Anyone in his
right mind would jump at the chance to
get on a gravy train like this.

  As a general proposition, common sense
dictates that as an agreement becomes
more complex, the need for clarity and
formality increases. An agreement to sell
a sofa at a rummage sale requires a lot
less than an agreement to sell a house.
And this was a very complex,
multimillion-dollar venture. Early in the
process, Trump thought adding "locals"
like Mays and Yosha to his team would
have value when the city and/or the state
gaming commission considered his license
application. But the details of how they
were to participate, although sketched in
broad outline, were never cemented. Would
the Mays/Yosha "notes" be recourse or
nonrecourse? What if any interest rate
would attach to the "loan"? Neither Mays
nor Yosha ever saw a finalized promissory
note. What was the duration of the loan?
What were its terms of repayment? Would
security for the loan (if it was
recourse) be required? And a particularly
key element in the deal--also undefined--
was Trump’s right to repurchase the
proposed investors’ stock. If that right
was exercised, how would the price and
terms of repurchase be established? None
of these details, it seems, were even
discussed, much less finalized. In short,
what we have here is best characterized
as an agreement to agree, and that is
unenforceable under Indiana law. Wolvos,
at 674-75.

  Further support for finding that
essential terms were still to be nailed
down can be found, ironically, in two of
the three letters Mays and Yosha point to
as evidence of the existence of a
finished contract. The February 26
letter, while opening with a confusing
statement that (Mays or Yosha) is "an
investor in the Trump application"
(whatever that means), concludes with
this statement: "Our office looks
forward to working with you and we will
be communicating with you in the next few
days to arrange a meeting wherein you can
meet with us . . . to discuss, in further
detail, the Gary project and your
specific participation." The letter of
April 6, while noting the Trump right-of-
first refusal if an investor decides to
sell the stock, says, "We have not
completed all the terms of this
transaction. We hope to have all the
documents finished for your review within
the next 2-3 weeks." These statements
demonstrate that further clarifications
and modifications on material points were
anticipated.

  In their suit, Mays and Yosha were
essentially seeking millions for almost
nothing because for a time they thought
they were going to get exactly that,
millions for almost nothing. For lending
their names to the Trump team during the
license application process, but without
actually investing any money or putting
any of their assets at risk, Mays and
Yosha hoped to hit a jackpot once the
casino boat was launched. The desire to
put one’s self in that position is
completely understandable. But this
complicated deal was never reduced to the
kind of solid contract that could be
comfortably enforced in a court of law.
The judgment of the district court is
REVERSED and the case REMANDED to the
district court for the entry of judgment
in favor of the defendants.

FOOTNOTES

/1 These letters, by the way, were sent by Trump’s
local counsel in Indiana, Don Tabbert (February
26), Mr. Hahn (April 6), and Tabbert and Hahn
(September 16). Although their authority to
generally act for Trump is unquestioned, their
actual authority to bind him to specific contrac-
tual provisions is less than clear. In fact,
Trump testified (by deposition) at the trial that
his ground troops in Indiana were his regular
people, Nicolas Ribis and Robert Pickus. He said,
in fact, that he would sue Hahn and Tabbert "if
they did anything other than" what he instructed
them to do, which was not get tangled up with
"local investors."