Thursday, September 08, 2005
Copyright © Las Vegas Review-Journal

Jury sides with Rio, decides Stewart must repay $2 million

Rod Stewart leaves the Federal Building for a lunch break in his trial in August. REVIEW-JOURNAL

A federal jury found Wednesday that rock star Rod Stewart must repay the Rio $2 million for a performance he canceled in 2000.

The verdict stunned Stewart's lawyer, who had maintained that a signed contract between the parties allowed the British singer to keep the cash advance and stage a makeup concert.

"Apparently, the jury found that there was no contract," said Stewart's Los Angeles-based attorney, Louis "Skip" Miller, who said he would appeal the decision.

"My reaction is surprise and disappointment since we have a contract with the signatures of Mr. Stewart and representatives of the Rio. I don't see how this is possible. ... How can you have no contract when both parties signed on the dotted line?"

Steve Morris, a lawyer for the Las Vegas casino and its parent company, Harrah's Entertainment, said he was "delighted and relieved" by the unanimous verdict.

"As the verdict shows, there wasn't any reason for this lawsuit other than the refusal of Mr. Stewart to perform," Morris said.

Jurors deliberated about three hours before rendering their decision.

Stewart was not in the courtroom when the verdict was announced.

Several of the seven jurors said later that they found the 60-year-old Stewart to be a credible witness and believed that he bowed out of a December 2000 show because of a battle with thyroid cancer.

They faulted attorneys for both Stewart and the Rio who drafted the business contracts, saying they loaded key clauses with ambiguous language. The complicated wording and contradictory clauses made it hard to determine what should happen if Stewart was unable to perform, they said.

"This was the best conclusion that we felt was fair to both parties," jury foreman Stevan Jorgensen said outside U.S. District Court.

Stewart is responsible for the $2 million refund to the Rio, jurors decided, and also could be liable for hundreds of thousands of dollars in interest fees.

However, jurors spared the singer from having to pay attorney fees for the plaintiffs. Those fees probably will be substantial given that the lawsuit was filed in March 2001.

According to the lawsuit, Rio officials paid Stewart $3 million in 1999 for a millennium eve concert. Stewart's handlers threatened to pull out of the show unless they received a contract for a second show the following day, Rio officials contended. Rio officials said they eventually caved to the demands, paying Stewart $2 million in advance for a second show on New Year's weekend in 2000.

Stewart honored the 1999 millennium concert but pulled out of the 2000 show after being diagnosed with thyroid cancer. The Rio, which is owned by Harrah's, wanted its money back.

But Stewart wanted to reschedule the 2000 concert, claiming it was legally permissible under the contract, which stated, "If any party's obligations contained in this agreement are rendered impossible ... then there shall be no claim for damages by either party to this agreement, and the performance shall be rescheduled to a mutually agreeable time."

A key provision of the much-disputed contract mentions "flood, fire, riots, acts of God ... or any other cause beyond such party's reasonable control."

The contract for the 1999 concert stated that if Stewart canceled because of illness, he was to repay the $3 million advance. An amended contract for the 2000 concert stated that in the event of a catastrophic illness, Stewart could reschedule the concert and keep the money. Lawyers battled over whether the "illness clause" also applied to the second concert, but jurors remained unclear, Jorgensen said.

"They should have figured out which clause applied," Miller said.

"They have to resolve it. And that's why we'll appeal. That's the error. That's the problem."

Miller said a judge previously had ruled against Stewart in the case, but the ruling was appealed and reversed by the 9th U.S. Circuit Court of Appeals in San Francisco.

Stewart, meanwhile, testified during the two-week trial that his voice is back to full strength.

Juror Kent Brooks said he admires Stewart's work and intends to buy more of his CDs.

"We may see him (perform) in Las Vegas again," Brooks said.

"But I'm not so sure it will be on Harrah's property."

The Associated Press contributed to this report.