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Greate Bay Hotel & Casino v. Tose

filed: September 6, 1994; As Corrected September 8, 1994. Second Correction September 14, 1994. .

GREATE BAY HOTEL & CASINO, D/B/A SANDS HOTEL, CASINO & COUNTRY CLUB
v.
LEONARD H. TOSE, APPELLANT; GREATE BAY HOTEL & CASINO, D/B/A SANDS HOTEL, CASINO & COUNTRY CLUB V. LEONARD H. TOSE, GREATE BAY HOTEL & CASINO, INC., APPELLANT



On Appeal from the United States District Court for the District of New Jersey. (D.C. Civil No. 91-00600).

Before: Stapleton and Greenberg, Circuit Judges, and Atkins, District Judge*fn*

Author: Greenberg

Opinion OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

Leonard H. Tose claims to have lost over $3,000,000 while gambling from 1983 through 1987 at the Greate Bay Hotel & Casino (the "Sands") in Atlantic City, New Jersey. In particular, while playing blackjack at the Sands on April 11 and April 26, 1986, Tose lost $1,000 in cash and $1,200,000 on credit. He later paid the Sands $65,000 of the $1,200,000, leaving a balance of $1,135,000. After negotiations, the Sands and Tose signed a settlement agreement providing for Tose to repay the $1,135,000 in two payments.

Tose, however, did not make the first payment, so the Sands brought an action to enforce the settlement agreement. Tose counterclaimed, alleging that because the Sands knowingly allowed him to gamble while intoxicated, it must return his gambling losses. The district court entered partial summary judgment for the Sands on the settlement agreement thereby obliging Tose to adhere to its terms. However, the court denied the Sands' motion to dismiss the counterclaim for want of subject matter jurisdiction. Thus, the counterclaim was tried to a jury which returned a verdict in the Sands' favor.

Tose appeals from the district court's denial of his post-trial motions.*fn1 The Sands cross-appeals from the district court's denial of its motion to dismiss Tose's counterclaim for want of jurisdiction. We hold that the district court correctly found that it had subject matter jurisdiction over Tose's counterclaim and that the district court properly denied his post-trial motions. Accordingly, we will affirm the district court's orders.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The Sands instituted this action in the Superior Court of New Jersey, but Tose removed it to the district court on the basis of diversity jurisdiction. Thereafter, he filed his counterclaim seeking to recover over $3,000,000 in gambling losses he claimed to have incurred from 1983 to 1987, plus punitive damages and attorney's fees. Tose based his counterclaim on GNOC Corp. v. Aboud, 715 F. Supp. 644, 655 (D.N.J. 1989), which held that "a casino has a duty to refrain from knowingly permitting an invitee to gamble where that patron is obviously and visibly intoxicated." Specifically, Tose alleged that the Sands intentionally and maliciously provided him with alcoholic beverages so that he would become intoxicated, continued to provide him with these beverages after he became visibly intoxicated, and encouraged and allowed him to gamble while visibly intoxicated.

The Sands filed a motion for summary judgment seeking an order enforcing the settlement agreement. In addition, the Sands sought a partial dismissal of the counterclaim on the ground that a six-year statute of limitations barred Tose from recovering for any losses before February 26, 1985, as he filed his counterclaim six years after that date. The Sands also contended that the timely portion of Tose's counterclaim was barred because he was an overall winner during that time period (i.e., "net winner theory"). The district court by opinion and order dated December 16, 1991, held the following: (1) the settlement agreement was "enforceable and not voidable because of fraud, mistake or other compelling circumstances"; (2) the statute of limitations, N.J. Stat. Ann. § 2A:14-1 (West 1987), was six years, so Tose "cannot recover any gambling losses prior to February 26, 1985"; and (3) the "net winner theory" did not apply as it "would lead to inequitable results." Greate Bay Hotel & Casino, Inc. v. Tose, No. 91-600, slip op. at 19, 21 (D.N.J. Dec. 16, 1991).*fn2

The Sands filed a motion for reargument, contending that the district court lacked subject matter jurisdiction over the counterclaim because the New Jersey Casino Control Commission (the "Commission") has exclusive jurisdiction to order repayment of gambling losses and that Aboud should be reexamined in light of Miller v. Zoby, 250 N.J. Super. 568, 595 A.2d 1104, 1109 (N.J. Super. Ct. App. Div.), certif. denied, 606 A.2d 366 (N.J. 1991). In an opinion and order dated May 12, 1992, the district court rejected the Sands' jurisdictional argument, reasoning that the "counterclaim sounds in common-law negligence . . . [and] is not based on an implied right of action arising from a violation of the [Casino Control] Act." Greate Bay Hotel & Casino, Inc. v. Tose, No. 91-600, slip op. at 3 (D.N.J. May 12, 1992). The court also rejected the Sands' reliance on Zoby, reasoning that while Zoby held that a private cause of action did not arise against a casino for violations of the regulations under the Casino Control Act (the "Act"), Zoby dealt only with violations of the Act for which "'there is no existing or analogous New Jersey tort action, or contract action'." Id. at 4 (quoting Zoby, 595 A.2d at 1109). Thus, the district court found that Zoby did not apply to Tose's counterclaim, as "New Jersey courts have already fashioned the underlying tort action" which Tose asserted. Id. Finally, the court declined to reconsider its decision on the "net winner theory," as the Sands failed to "cite new authority or reasoning which would alter this court's decision." Greate Bay Hotel & Casino, Inc. v. Tose, No. 91-600, slip op. at 5 (D.N.J. May 12, 1992).

In view of the district court's pretrial orders, only the counterclaim remained for trial. At trial, the court instructed the jury "to make separate findings of liability for each of seven dates on which Tose allegedly gambled while visibly intoxicated and lost money." Tose v. Greate Bay Hotel and Casino Inc., 819 F. Supp. 1312, 1314 n.3 (D.N.J. 1993). The jury found for the Sands on four of the dates, but deadlocked on the remaining three. Id. The district court then "entered judgment in favor of Sands on the dates for which a verdict was returned, and granted Sands' motion for a mistrial as to the claims on the remaining dates." Id.

At a second trial regarding the remaining dates, the jury returned a unanimous verdict in the Sands' favor. Tose then moved for a new trial pursuant to Fed. R. Civ. P. 59(e), for a judgment as a matter of law, and for an order vacating the partial summary judgment in the Sands' favor enforcing the settlement agreement. In an opinion and order dated August 16, 1993, the district court denied Tose's motion in its entirety. Tose v. Greate Bay Hotel and Casino Inc., No. 91-600, slip op. at 13 (D.N.J. Aug. 13, 1993). Tose then filed an appeal from the denial of his post-trial motions ...


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