34 F.3d 1227 (3rd Cir. 1994), 93-5560, Greate Bay Hotel & Casino v. Tose

Docket Nº:93-5560, 93-5600.
Citation:34 F.3d 1227
Party Name: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.
Case Date:September 06, 1994
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 1227

34 F.3d 1227 (3rd Cir. 1994)

GREATE BAY HOTEL & CASINO, d/b/a Sands Hotel, Casino & Country Club


Leonard H. TOSE, Appellant.

GREATE BAY HOTEL & CASINO, d/b/a Sands Hotel, Casino & Country Club


Leonard H. TOSE, Greate Bay Hotel & Casino, Inc., Appellant.

Nos. 93-5560, 93-5600.

United States Court of Appeals, Third Circuit

September 6, 1994

August 5, 1994.

Sur Petition for Rehearing Oct. 19, 1994.

Page 1228

Frederick H. Kraus, Sands Hotel & Casino, Atlantic City, NJ, for appellee-cross-appellant.

Leonard H. Tose, pro se.

Before STAPLETON and GREENBERG, Circuit Judges, and ATKINS, District Judge. [*]


GREENBERG, Circuit Judge.


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. 1 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.


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

Page 1229

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. Sec. 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, 1993 WL 760382, slip op. at 19, 21 (D.N.J. Dec. 16, 1991). 2

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 (App.Div.), certif. denied, 127 N.J. 553, 606 A.2d 366 (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 " '[t]here 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

Page 1230

his post-trial motions following which the Sands filed a cross-appeal from the order denying its motion to dismiss the counterclaim for lack of subject matter jurisdiction. 3


  1. Introduction

    While it is clear that Tose's counterclaim satisfied the requirements for the district court to exercise diversity jurisdiction as set forth in 28 U.S.C. Sec. 1332(a), the Sands asserts the court did not have subject matter jurisdiction "because exclusive jurisdiction to order restitution of gaming losses was vested with the casino control commission." Brief at 15. Thus, the Sands contends that a New Jersey court would not have entertained Tose's counterclaim seeking to recover his gambling losses. Consequently, it argues that the district court should not have exercised jurisdiction over the counterclaim. 4

  2. The New Jersey Supreme Court Methodology

    We start our jurisdictional discussion by recognizing that inasmuch as New Jersey law is applicable, we must predict whether the New Jersey Supreme Court would hold that a court has jurisdiction to entertain a claim by a gambler to recover his losses from a casino. See J & R Ice Cream Corp. v. California Smoothie Licensing Corp., 31 F.3d 1259, 1270-71 (3d Cir.1994). That court has indicated that, "except in those cases where the legislature vests exclusive primary jurisdiction in an agency, a plaintiff may seek relief in our trial courts." Abbott v. Burke, 100 N.J. 269, 495 A.2d 376, 391 (1985); cf. Swede v. City of Clifton, 22 N.J. 303, 125 A.2d 865, 871 (1956) (discussing exhaustion of administrative remedies when agency's jurisdiction is not "primary and exclusive"). But if the legislature has vested an administrative agency with exclusive primary jurisdiction, the agency is the only forum in which complaints within that jurisdiction may be adjudicated originally. 5 The Sands contends that through N.J.Stat.Ann. Sec. 5:12-133(b) (West 1988), which provides in part that the "commission shall have exclusive jurisdiction over all matters delegated to it or within the scope of its powers under the provisions of this act," the New Jersey Legislature intended to give the Commission exclusive primary jurisdiction over gamblers' claims against casinos for their losses.

    The New Jersey Supreme Court demonstrated how it decides if an agency has exclusive primary jurisdiction in DeFazio v. Haven Sav. and Loan Ass'n, 22 N.J. 511, 126 A.2d 639 (1956), and Lally v. Copygraphics, 85 N.J. 668, 428 A.2d 1317 (1981). In DeFazio, the court recognized that the legislature intended N.J.Stat.Ann. Sec. 17:12A-100 (repealed) to supplant the common law right...

To continue reading