GNOC CORP. v. ABOUD Civ. A. No. 85-3005.
715 F.Supp. 644 (1989)
GNOC CORP., t/a Golden Nugget, Plaintiff, v. Shmuel ABOUD, Defendant/Third Party Plaintiff, v. Louis A. TREVISAN, M.D. and Francisco Serrano, M.D., Third-party Defendants.
United States District Court, D. New Jersey.
June 21, 1989.
Francis & Berry, Morristown, N.J. by Evelyn Farkas, for third-party defendants.
COHEN, Senior Judge:
Before us in this negligence, breach of contract, indemnification, fraud, malicious conduct, medical malpractice and gambling debt action are three motions to dismiss various aspects of the case. The suit was initiated by the plaintiff, GNOC Corp. (Golden Nugget Operating Corporation), an entity doing business in Atlantic City, New Jersey as the Golden Nugget Hotel and Casino ("Golden Nugget"), to recoup $28,000 from defendant Shmuel Aboud ("Aboud"), which sum represents the alleged account outstanding from his stay at the Golden Nugget from February 19, 1985 through March 4, 1985. Mr. Aboud in turn counterclaimed against the Golden Nugget for, inter alia, compensatory damages for gambling losses in the amount of $250,000, and punitive damages. Mr. Aboud also interposed Louis A. Trevisan, M.D., and Francisco Serrano, M.D., as third-party defendants for alleged negligence and/or medical malpractice. Again, as remuneration for the injuries allegedly suffered, Mr. Aboud seeks, inter alia, compensatory damages for his $250,000 gambling losses, plus punitive damages against these doctors.
The Golden Nugget has brought two motions for partial summary judgment. The first seeks to dismiss Mr. Aboud's counterclaim on the ground that (a) the Golden Nugget cannot be liable under the doctrine of respondeat superior because the wrongful acts of its employees, if any, were outside the scope of their employment, and (b) the Golden Nugget neither authorized, ratified or participated in any of the allegedly wrongful activities committed by its employees, and therefore, under basic agency principles, cannot be liable for punitive damages. The second, filed on short notice, seeks partial summary judgment with respect to ordinary negligence on the ground that the Golden Nugget had no legal responsibility for Mr. Aboud's gambling losses, or in the alternative, should such a legal responsibility be ascribed to the Golden Nugget, under the facts of this case which remain uncontested, the Golden Nugget may be answerable to Mr. Aboud under fraud and intentional negligence theories, but not ordinary negligence. Finally, third-party defendants, Drs. Trevisan and Serrano, have made application for an Order dismissing any and all punitive damage claims asserted against them by Mr. Aboud.
For the reasons that follow, all of the motions now before this Court shall be denied.
In August of 1984, Mr. Aboud received approximately $395,000 as a settlement for severe and permanent injuries sustained in an automobile accident. Mr. Aboud, along with his friends Rita Slayback, Ephrim Bensull and Susanna Bensull, traveled to Atlantic City in February of 1985. It is alleged that from February 15, 1985 through February 18, 1985, Mr. Aboud was a guest at the Caesars Atlantic City Hotel Casino ("Caesars").
Mr. Aboud thereafter came into contact with Michael J. Neustadter, Golden Nugget's Vice President of Customer Development. Mr. Neustadter, who had direct responsibility for the casino's "host" and "credit" departments, arranged for Mr. Aboud to obtain an initial credit line at the casino, as well as several extensions of that credit line, the amounts of which fluctuated over the term of Mr. Aboud's stay. In addition, Mr. Neustadter authorized "comping", that is, supplying on a complimentary basis, the food, beverages and alcohol consumed by Mr. Aboud at the Golden Nugget. At his deposition, Mr. Neustadter explained that the decision to "comp", and the value of goods and services that can be extended to a particular patron, is based on that patron's "level of casino play", which includes such factors as the duration of gambling activities and the average bet made. Mr. Neustadter also authorized the Golden Nugget to provide and pay for Mr. Aboud to be flown by helicopter to his bank in Queens, New York on February 21, 1985, so that Mr. Aboud could withdraw more money and bring it back to Atlantic City.
Mr. Aboud contends that Mr. Neustadter "repeatedly told [him] he must gamble at the casino every night or he would lose the complimentary services and benefits that were being provided to him," and that he even telephoned Mr. Aboud's room at 4:00 A.M. and "demanded that he gamble." JFPTO at 5. According to Mr. Aboud's account of events, during the entirety of his stay, he consumed complimentary alcoholic beverages whether or not he requested them and as a result, "became visibly intoxicated while [gambling] on the casino floor." JFPTO at 5.
At some point during Mr. Aboud's stay, he is unsure precisely when, Mr. Aboud required medical assistance because of pain emanating from his chest, right knee, jaw and back. Mr. Aboud came under the care of third-party defendants Drs. Trevisan and Serrano, who were provided to Mr. Aboud by the Golden Nugget.
On June 19, 1985, the Golden Nugget initiated this lawsuit against Mr. Aboud to recover a $28,000 debt for casino credits, which Mr. Aboud was unable to repay. A default judgment in the amount of $29,970.19 was entered against Mr. Aboud, but this was later vacated by the Opinion and Order of this Court filed on November 10, 1987. Mr. Aboud filed his Answer on May 2, 1988, which included a three count counterclaim against the Golden Nugget for compensatory damages in the amount of $250,000, together with interest, punitive damages, costs and attorney's fees. This counterclaim alleges fraud and malicious conduct (Count I); unjust enrichment (Count II); and negligence (Count III). The essence of Mr. Aboud's counterclaim is his allegation that the Golden Nugget "fraudulently, intentionally and maliciously procured [Mr. Aboud's] intoxication ... through the offering to him of alcoholic beverages ... at the time Drs. Trevisan and Serrano prescribed a narcotic drug to him, to wit: PERCODAN," in an orchestrated effort to "extract from [Mr. Aboud], in his drugged state, all of his monies." See Answer, Counterclaim and Jury Demand. As stated in his Brief:
S/J Opposition at 3.
Put another way, Mr. Aboud is alleging that for the duration of his entire stay at the Golden Nugget, various casino floor employees observed Mr. Aboud gamble in an intoxicated and/or drugged state, and did nothing to stop him from doing so. In fact, Mr. Aboud avers, Rita Slayback and Ephrim Bensull asked certain Golden Nugget personnel to prevent Mr. Aboud from gambling while in such a condition, but that these employees "laughed and ignored their requests." JFPTO at 7. Although the Golden Nugget denies any liability for Mr. Aboud's damages, it has asserted a direct claim against Drs. Trevisan and Serrano for complete indemnification should its liability be adjudged "passive" while the Drs.' liability is adjudged "active."
On May 2, 1988, Mr. Aboud filed a three count Third-party Complaint against Drs. Trevisan and Serrano in their individual capacities. Like the counterclaim against the Golden Nugget, the Third-party Complaint seeks compensatory damages in the amount of $250,000, together with interest, punitive damages, costs and attorney's fees. Mr. Aboud charges the doctors with negligence; they prescribed Percodan "with full knowledge that Golden Nugget would be supplying [Mr. Aboud] with intoxicating alcoholic beverages at the same time." See Third-party Complaint. As a result thereof, Mr. Aboud "was deprived of his reason and understanding" which ultimately led to gambling losses. Mr. Aboud alleges these gambling losses to be the damages suffered as a result of medical negligence committed by Drs. Trevisan and Serrano. In addition to denying any liability on their part, they in turn, assert a crossclaim against the Golden Nugget in their Answer for indemnification and/or contribution for any sums recovered by the Golden Nugget if liability is established to be the responsibility of Mr. Aboud. See Answer to Third-party Complaint.
A. Golden Nugget's Motions for Partial Summary Judgment
1. Golden Nugget's Responsibility Under Doctrine of Respondeat Superior
The Golden Nugget submits that, even if we were to assume that its employees did encourage Mr. Aboud to gamble when they knew he was under the influence of alcohol and Percodan with an intent to goad him into gambling away large sums of money, it cannot be held liable under the doctrine of respondeat superior because such conduct would clearly be outside the scope of their employment. The Golden Nugget contends that such activities were not of the variety its employees were hired to perform and that such behavior cannot be said to be actuated by a purpose to serve the master, as all employees working on the casino floor are instructed to
GNOC Handout, Casino Floor — Service Procedure at 29 (quoted in Golden Nugget Brief at 6).
Mr. Aboud maintains that at a minimum, a genuine issue of material fact exists as to whether Golden Nugget personnel were acting within the scope of their employment when they "encouraged, allowed, permitted and supervised Mr. Aboud's gambling ... given [his] physical and mental state." Mr. Aboud Opposition Brief at 10. Mr. Aboud alleges that the dealers and pit bosses, by encouraging him to drink and gamble, were doing precisely what they were employed to do and that these actions were actuated by a desire to serve the Golden Nugget since it was the casino itself, and not employees in their individual capacities, that enjoyed the proceeds of Mr. Aboud's gambling losses. We agree that a legitimate factual issue has been raised.
According to New Jersey law, an employer may be held liable for the torts of its employees under the doctrine of respondeat superior only where that employee is acting within his/her "scope of employment." Gilborges v. Wallace,
Id. See also DiCosala v. Kay,
At oral argument, the Golden Nugget asserted that Mr. Aboud has presented no evidence that the furnishing of alcoholic beverages to casino patrons in any way serves the Golden Nugget. Rather, Golden Nugget argued, there is no correlation between alcohol consumption and gambling success, and the furnishing of complimentary beverages to patrons while they are in the act of gambling is merely an additional cost which the Golden Nugget must endure.
The Golden Nugget implies that no legitimate business purpose other than developing general goodwill is advanced by its policy of providing "free" drinks to casino patrons. Thus the Golden Nugget concludes that if its employees did in fact urge Mr. Aboud to gamble while inebriated, as alleged, they clearly were not acting within the scope of their employment.
As Mr. Aboud points out, all of his gambling losses inured to the benefit of the Golden Nugget. While pit bosses, dealers and other floor personnel do not reap the fruits of gambling losses in a direct sense, we are not prepared to accept the notion
On a motion for summary judgment, the court is required to view the pleadings and materials submitted by the parties in the light most favorable to the nonmoving party, and the court must give that party the benefit of all reasonable inferences to be drawn from the facts. See, e.g., Goodman v. Mead Johnson & Co.,
The fact that casino employees are specifically instructed not to offer patrons a "beverage" or a "second round" by management does not insulate the Golden Nugget from all responsibility. As one New Jersey Court has noted, "[w]hen the conduct is activated by a purpose to serve the master, the fact that the act is prohibited by the employer is not determinative of the issue." Cosgrove v. Lawrence,
Thus, Golden Nugget's motion for partial summary judgment on the ground that it cannot be found liable under the doctrine of respondeat superior shall be denied.
2. Golden Nugget's Potential Liability for Punitive Damages
The Golden Nugget asserts that punitive damages are inappropriate against a corporation for employee/agent misconduct unless (a) the corporation authorized, ratified or participated in committing the act; or (b) the agent who committed, authorized or ratified the act may be considered an "executive" of the corporation. It avers that Mr. Aboud can point to no such high corporate officers or managers at the Golden Nugget (acting within the scope of their employment) who participated in or authorized the actions which form the basis for Mr. Aboud's counterclaim.
Mr. Aboud responds by pointing out that the intentional acts and conduct of Mr. Neustadter were sufficiently "managerial" or "executive" to warrant punitive damages, and that his acts and the acts of Golden Nugget's lower employees (dealers and pit bosses) were ratified by the Golden Nugget in the form of initiating its action to recover the $28,000 gambling debt. Mr. Aboud maintains that Mr. Neustadter was aware of his $395,000 settlement because Mr. Neustadter personally checked his bank accounts. Mr. Neustadter testified at his deposition that he viewed Mr. Aboud as a "unique" and "desperate" man with "personal problems." Deposition of Michael J. Neustadter at 18. Mr. Aboud felt pressured by Mr. Neustadter and other Golden Nugget employees to sign markers (which memorialize extensions of credit), drink and gamble in a very direct, overt way under threat of losing his complimentary privileges:
Deposition of Shmuel Aboud at 148. See also Aboud Opposition Brief at 14.
Under New Jersey law, punitive damage awards are available to punish or deter
However, punitive damages may not be recovered against an employer for the wrongful acts of its employee "unless the act was specifically authorized, participated in, or ratified by the master." Winkler v. Hartford Accident and Indemnity Co.,
We believe that the evidence and allegations presented by Mr. Aboud concerning the acts and conduct of Mr. Neustadter, if taken as true, see Goodman, supra, 534 F.2d at 573, present a genuine issue of material fact concerning the propriety of a punitive damage award that is best left to a jury. See Winkler, supra, 66 N.J.Super. at 29,
3. Golden Nugget's Legal Duty For The Foreseeable Gambling Losses of Intoxicated Patrons
In its motion for partial summary judgment with respect to the negligence count of Mr. Aboud's counterclaim, the Golden Nugget urges that it "had no duty recognized by law in ordinary negligence that could create responsibility for Mr. Aboud's gambling losses." Golden Nugget Brief at 14. We disagree. The Golden Nugget submits that "[t]here are no reported cases directly on point," id. at 2, and thus it relies extensively on cases which focus on the legal consequences of intoxication by alcohol and narcotics as a matter of contract law. Such dependence is inappropriate where, as here, partial summary judgment is sought against a count of the Complaint whose gravamen sounds solely in tort (negligence). See Count III of Counterclaim. Golden Nugget has proffered no compelling analysis of the scope of duty in New Jersey jurisprudence sufficient to persuade this Court that conventional negligence principles do not apply to the facts of this case. The party seeking summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion," Celotex Corp. v. Catrett,
Under New Jersey law, "[n]egligence is tested by whether the reasonably prudent person at the time and place should recognize and foresee an unreasonable risk or likelihood of harm or danger to others." Rappaport v. Nichols,
Morril v. Morril, 104 N.J.L. 557, 560-61, 142 A. 337 (1928).
A case may then be submitted to the jury only if such a duty is "declared by the court." Id. at 561, 142 A. 337. This preliminary determination is made "by reference to the body of statutes, rules, principles and precedents which make up the law...." W. Keeton, D. Dobbs, R. Keeton and D. Owen, Prosser and Keeton on Torts § 37 at 236 (5th Ed.1984). Our jurisdiction in this case is based upon diversity of citizenship. Consequently, under Erie R. Co. v. Tompkins,
To find that the Golden Nugget owes a duty to act reasonably under the circumstances, we need not look far. The New Jersey Supreme Court has stated that:
DiCosala, supra, 91 N.J. at 175,
Foreseeability is articulated in terms of palpable and identifiable "risk":
Kahalili v. Rosecliff Realty, Inc.,
What is "reasonable in the light of the apparent risk", therefore, is a question of public policy to be resolved by the court. See e.g. Hill, supra, 75 N.J. at 148,
Goldberg v. Housing Authority of Newark,
Wytupeck, supra, 25 N.J. at 462,
New Jersey has unambiguously communicated a strong public policy against the noxious potential of excessive alcohol consumption in the twin contexts of common law dram shop liability and statutory/administrative regulation of casino alcoholic beverage service. In so doing, New Jersey has struck a delicate balance between the competing interests we have just discussed, supra, and has issued a clear statement about the foreseeability and reasonableness of intoxication related risk and harm.
In Soronen v. Olde Milford Inn, Inc.,
Id. at 594,
Superimposed on top of common law dram shop liability is the Casino Control Act, which explicitly proscribes a casino from making alcoholic beverages available to a patron at a gaming table "unless so requested by the patron." N.J.S.A. 5:12-103(g)(1).
N.J.A.C. 19:50-2.1(a). Under this regulatory scheme, violations committed by an "agent, servant or employee" of the licensee
It is clear that the standard of conduct required of the reasonably prudent person may be prescribed by legislative enactment, municipal ordinance or administrative regulation. "When a statute provides that under certain circumstances particular acts shall or shall not be done, it may be interpreted as fixing a standard ... from which it is negligence to deviate." Prosser, supra, § 36 at 220. By imposing a duty upon a casino to act reasonably under the circumstances and prevent obviously intoxicated patrons from gambling, we are merely furthering the public policy goals underlying the Casino Control Act and the regulations promulgated thereunder, which is the protection of gambling patrons from the deleterious effects of alcohol imbibement. In Galvin v. Jennings,
Many states hold that once a statute is deemed applicable to the facts of a particular case, an unexcused breach of that statute is dispositive of the negligence issue, or is "negligence per se." See, e.g., Martin v. Herzog, 228 N.Y. 164, 126 N.E. 814 (1920) (Cardozo, J.). New Jersey follows the rule adopted by a minority of jurisdictions, that a statutory or regulatory violation is merely "evidence of negligence" (prima facie evidence that the tort feasor's conduct was negligent) which may be accepted or rejected according to all of the evidence. See, e.g., Braitman v. Overlook Terrace Corp.,
Even if we were to assume, arguendo, the applicability of the authorities cited by Golden Nugget, summary judgment would still be inappropriate. Golden Nugget cites several cases standing for the proposition that "a contract made by a person while intoxicated is enforceable, unless the other contracting party knows the drunk lacks the capacity to understand or control his acts." Golden Nugget Brief at 9 (emphasis in original). However, at the very most, this merely demonstrates with even greater force, the existence of genuine issues of material fact concerning the degree to which Mr. Aboud's intoxication impaired his comprehension and the extent of Golden Nugget's knowledge of Mr. Aboud's condition. We nevertheless do not see how Golden Nugget's theory impacts or renders nugatory any duty owed to Mr. Aboud in ordinary negligence.
Nor do we see how Golden Nugget's reliance on Harrahs Club v. Van Blitter, Civ. No. R-85-267, Civ. No. R-86-21, slip op. (D.Nev. Feb. 17, 1988) (cited in Golden Nugget's Brief at 10, 13) strengthens its
Van Blitter, supra, slip op. at 5. In the case at bar, by contrast, there is evidence of Golden Nugget's knowledge of Mr. Aboud's problems and a reasonable juror could conclude that the casino had the intent to profit thereon. Moreover, Van Blitter is distinguishable because it involved a substantially different theory of tort liability than that which was raised in the matter sub judice. There, plaintiff argued that the casino "breached its duty to play a fair game" by failing to control her gambling once realizing her incompetence at blackjack, and that the breach was further aggravated by enticing her to gamble more via "comping" her. Id., slip op. at 4. Van Blitter, however, did not involve visible intoxication or any allegations of diminished capacity by the plaintiff.
Similarly, the Golden Nugget presents Claridge, Limited v. Shamy, No. A-2407-86T7, slip op. (N.J.App.Div. Dec. 8, 1987) to support the proposition that "[i]t would indeed be a novel precedent to allow a jury to decide whether to return money to a gambler who lost it legally while gambling." Id., slip op. at 3-4 (quoted in Golden Nugget Brief at 12). Nevertheless, the issue at bar in Shamy was whether "a casino is under a duty to use reasonable care to satisfy itself that a gambler is worthy of credit prior to advancing credit," and not the visible intoxication or diminished capacity of the defendant therein. Also, to conclude that Mr. Aboud lost his money "legally," like the defendant in Shamy, puts the cart before the horse — at issue here is precisely how "legal" or "illegal" Mr. Aboud's losses were according to accepted duty and ordinary negligence precepts. Thus, once again, Golden Nugget has raised a question of material fact which must be resolved by a jury.
Our survey of the statutes, rules, principles and precedents which make up the law of the State of New Jersey indicates that the Golden Nugget owes a duty to act reasonably under the circumstances of this case. Such a conclusion is but a logical extension of well established doctrine and pre-existing law, although its application to the facts at bar is novel. Under the circumstances of this case, the Golden Nugget should reasonably have foreseen the type of harm sustained by Mr. Aboud. In a gambling parlour environment, the risk that an obviously intoxicated and/or drugged patron might not appreciate the consequences or substantiality of his endeavors is great. The relevant inquiry is not, as the Golden Nugget suggests, whether a gambler knows that the odds of winning in a casino are against him/her, but rather, whether a gambler comprehends the consequences of continued, protracted gambling. There is nothing fundamentally unfair about imposing upon a casino the duty to prevent patrons such as Mr. Aboud from gambling while patently intoxicated, for they are in the best position to do so. Indeed, casinos are already under an obligation not to serve visibly intoxicated patrons pursuant to New Jersey's common law dram shop liability as well as the statutory framework and administrative regulations which govern alcoholic beverage service in casinos.
In sum, a casino has a duty to refrain from knowingly permitting an invitee to gamble where that patron is obviously and visibly intoxicated and/or under the influence of a narcotic substance. Here there are allegations of patent and overt inebriety coupled with the consumption of a powerful narcotic medication prescribed by physicians summoned by and paid for by the casino itself. While under the influence of drugs or alcohol, one suffers a deficit, to varying degrees, of cognitive faculties such as the power to reason sensibly, to appreciate the danger of activities engaged in, and/or to exercise sound judgment. Cf. Buckley v. Estate of Pirolo,
Golden Nugget Brief at 11-12. It is indeed curious that the appropriate "beverages of choice" are seldom available to patrons on a complimentary basis outside of the gambling parlour. Consequently, in justice and fairness, a casino which negligently breaches this duty should be answerable, by applying traditional negligence concepts, for the damages that flow therefrom.
In People Express Airlines, Inc. v. Consolidated Rail,
Id. at 263,
Id. at 264,
B. Third-Party Defendants' Motion to Dismiss Punitive Damage Claim
Drs. Trevisan and Serrano posit that punitive damages may be properly awarded only upon a showing of "actual malice" (evil-minded intentional wrongdoing) or "wanton and willful" behavior. LaBruno v. Lawrence,
Mr. Aboud submits that the following facts demonstrate particularly egregious conduct under the test announced in Berg v. Reaction Motors Div.,
It is clear that punitive damages are available in a medical malpractice action to punish doctors for aggravated or outrageous conduct and to deter future similar conduct. See, e.g., DiGiovanni v.
For the foregoing reasons, the two motions for partial summary judgment filed by the Golden Nugget shall be denied. The application by third-party defendants Drs. Trevisan and Serrano for an Order dismissing any and all punitive damage claims shall also be denied.
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