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GNOC CORP. v. SHMUEL ABOUD

June 21, 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



The opinion of the court was delivered by: COHEN

 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. *fn1"

 For the reasons that follow, all of the motions now before this Court shall be denied.

 I. FACTS

 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"). *fn2" Mr. Aboud states that on February 19, 1985, he contacted the Golden Nugget and inquired about "receiving accommodations" at the Golden Nugget. JFPTO at 4. Mr. Aboud checked in that same day, and upon his arrival, was informed by hotel/casino personnel that with a $ 10,000 deposit with the casino, Mr. Aboud could obtain complimentary lodging during his stay. To take advantage of this offer, Mr. Aboud duly deposited a sum of $ 10,000, in cash.

 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. *fn3" According to Drs. Trevisan and Serrano, their involvement with Mr. Aboud occurred on only two occasions: a visit by Dr. Serrano on February 21, 1985 and a visit by Dr. Trevisan on March 1, 1985. On both visits, Mr. Aboud specifically requested a prescription for Percodan, a pharmaceutical product that Mr. Aboud maintains is "a narcotic drug which depresses the central nervous system." Aboud Opposition Brief at 2-3. Both doctors made the Percodan available to Mr. Aboud per his demand, according to Mr. Aboud, without requiring any physical examination, and without reviewing his medical records or consulting with his last treating physician. *fn4" However, Dr. Serrano asserts that he did in fact conduct a physical examination of Mr. Aboud, wherein he observed multiple scars, difficulty breathing and pain in the jaw. JFPTO at 10. Dr. Trevisan defends by asserting that he reviewed the "history and physical note recorded by Dr. Serrano in their office records" and conducted his own physical examination before renewing Mr. Aboud's Percodan prescription. At their respective depositions, both doctors testified that the reason why they complied with Mr. Aboud's request for Percodan was because of Mr. Aboud's recital to them that he had "forgotten his prescription of Percodan at home." Certification of Evelyn C. Farkas, Esquire, counsel for Drs. Trevisan and Serrano, filed December 16, 1988 at 2.

 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:

 
As a result of the Percodan which had been supplied by the doctors on call with the Golden Nugget, and the alcoholic beverages which were being provided by various employees and personnel of the Golden Nugget, Mr. Aboud was caused to become sleepy, drowsy, disoriented and handicapped in his ability to reason and comprehend . . . . While in such a disoriented state, Mr. Aboud was caused to gamble and lose to the Golden Nugget an amount in excess of $ 225,000.00. *fn5"

 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 cross-claim 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

 
NEVER ask a player in the casino if he would like a beverage or a second round.

 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, 78 N.J. 342, 351, 396 A.2d 338 (1978). See also Government Employees Ins. Co. v. United States, 678 F. Supp. 454, 456 (D.N.J. 1988). To determine the parameters of "scope of employment," New Jersey courts have turned to the Restatement (Second) of Agency ยง 228 (1957), which provides that:

 
(1) Conduct of a servant is within the scope of employment if, but only if:
 
(a) it is of the kind he is employed to perform;
 
(b) it occurs substantially within the authorized time and space limits;
 
(c) it is actuated, at least in part, by a purpose to serve the master, and
 
* * * *
 
(2) Conduct of a servant is not within the scope of employment if it is different in kind from that authorized, far beyond the authorized time or space limits or too little actuated by a purpose to serve the master.

 Id. See also DiCosala v. Kay, 91 N.J. 159, 169, 450 A.2d 508 (1982); Government Employees Ins. Co., ...


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