Caesars Riverboat Casino, LLC v. Kephart

• Decision Date: 20 March 2009
• Docket Number: No. 31A01-0711-CV-530.,31A01-0711-CV-530.
• Citation: 903 N.E.2d 117
• Parties: CAESARS RIVERBOAT CASINO, LLC, Appellant-Plaintiff-Counterclaim Defendant, v. Genevieve M. KEPHART, Appellee-Defendant-Counterclaimant.
• Court: Indiana Appellate Court

903 N.E.2d 117

CAESARS RIVERBOAT CASINO, LLC, Appellant-Plaintiff-Counterclaim Defendant, v. Genevieve M. KEPHART, Appellee-Defendant-Counterclaimant.

No. 31A01-0711-CV-530.

Court of Appeals of Indiana.

March 20, 2009.

Gene F. Price, Steven P. Langdon, Frost Brown Todd, LLC, New Albany, IN, Attorneys for Appellant.

Terry Noffsinger, Noffsinger Law, P.C., Evansville, IN, Attorney for Appellee.

OPINION

MATHIAS, Judge.

Caesar's Riverboat Casino, LLC ("Caesar's") filed suit in Harrison Circuit Court alleging that Genevieve M. Kephart ("Kephart") failed to provide funds to cover checks written while gambling at Caesar's establishment. Kephart countersued alleging that Caesar's took advantage of her pathological gambling condition to unjustly enrich itself. Caesar's filed a Trial Rule 12(B)(6) motion on Kephart's counterclaim. The trial court denied Caesar's motion and Caesar's appeals. Concluding that Indiana's common law does not provide Kephart a private cause of action in negligence against Caesar's in the form of a counterclaim, we reverse.

Facts and Procedural History

On March 18, 2006, Kephart visited Caesar's after Caesar's offered her a free hotel room, drinks, and meals. While at the casino, Kephart gambled and lost $125,000 in a single evening through the use of six counter checks provided to her by Caesar's.

Subsequently, Kephart's checks were returned for insufficient funds. Caesar's filed suit against Kephart on January 23, 2007, for payment of the checks, treble damages, and attorney fees, all as provided by Indiana law.¹ On April 2, 2007, Kephart filed an answer and counterclaim in which she alleged that she is a pathological gambler and that Caesar's knew of her condition and took advantage of her condition to enrich itself. She seeks to recover damages for past, present, and future mental, emotional, and psychological damages; destroyed and/or strained relationships with family members and friends; doctor, hospital, pharmaceutical, or other medical expenses; loss of quality of life and enjoyment of life; and other expenses not yet known to her.

Caesar's moved to dismiss the counterclaim pursuant to Trial Rule 12(B)(6) and the trial court denied that motion. Caesar's filed a motion requesting that the trial court certify its order for interlocutory appeal.² The trial court granted that request and we subsequently accepted interlocutory jurisdiction.

Standard of Review

A motion to dismiss under Trial Rule 12(B)(6) tests only the legal sufficiency of the complaint, not the facts supporting it. Thompson v. Hays, 867 N.E.2d 654, 656 (Ind.Ct.App.2007), trans. denied. The court may only look to the complaint and may not look to other evidence in the record. Id. A motion to dismiss should be granted only if "facts alleged in the complaint are incapable of supporting relief under any set of circumstances." Godby v. Whitehead, 837 N.E.2d 146, 149 (Ind.Ct. App.2005), trans. denied. We will review a trial court's ruling on a motion to dismiss de novo. Thompson, 867 N.E.2d at 656.

Discussion and Decision

Indiana courts have not addressed the precise issue now before us, most likely because of existing state regulation of Indiana's gaming industry and the relatively short history of that industry. However, two cases from Indiana have addressed compulsive gamblers' claims against casinos for gambling losses. In Merrill v. Trump Ind., Inc., 320 F.3d 729 (7th Cir.2003), Merrill, a compulsive gambler, alleged that the riverboat casino failed to prevent him from gambling after he asked to be evicted from the casino if he entered. The Merrill court determined that in light of the state regulation of gambling in Indiana, the Indiana Supreme Court most likely would not conclude that the legislature intended to create a private cause of action. Id. at 732. The court found that the regulations would at most impose a duty upon the casino operator to the State through the Indiana Gaming Commission, not to the individual gambler. Id.

The Merrill court also addressed whether a common law duty of care existed, a question not yet answered by any Indiana court. The court determined that casinos would be held to the same standard of care as that of other businesses. Id. at 733. The court analogized Merrill's claimed duty to dram shop liability. However, it held that just as a patron who drinks, drives, and is personally injured cannot recover from the tavern that served him alcohol, a gambler cannot hold a casino liable for the gambler's personal damages incurred through his own gambling. Id. The court did not consider how one's status as an alcoholic bar patron or a compulsive gambler might affect the question of duty.

Next, Stulajter v. Harrah's Indiana Corp., 808 N.E.2d 746 (Ind.Ct.App.2004), specifically addressed whether Stulajter could sue Harrah's for failing to prevent him from gambling at their casino, despite Stulajter's participation in the voluntary self-exclusion program administered by the Indiana Gaming Commission. Stulajter sought to sue Harrah's alleging that Harrah's violated regulations pertaining to the self-exclusion program when it did not prevent him from gambling at its casino. We determined that the gaming statutes and regulations did not create a private cause of action against a casino operator to protect compulsive gamblers from themselves. Id. at 749. Our court also cited Merrill and adopted its holding.

However, neither of these cases is entirely dispositive in the present case. Merrill addressed the availability of common law negligence recovery against casinos and analogized the losing gambler to an injured, intoxicated bar patron but did not consider whether the result would be different in the case of a known alcoholic bar patron or a known compulsive gambler. Stulajter addressed the issue of whether Indiana's gaming laws and regulations allow a private cause of action for failure to comply with those gaming laws, specifically with the self-exclusion list. The case now before us requires that we examine whether an Indiana casino operator can owe a duty to a patron or potential patron who the casino knows to be a compulsive gambler as alleged in Kephart's counterclaim.

I. Negligence Theory

Kephart argues that, because Caesar's knew her to be a compulsive gambler at all relevant times, the casino owes her a duty under common law to protect her from its enticements to gamble. Indiana common law requires that Kephart must establish three elements to recover on a theory of negligence: (1) a duty on the part of the defendant to conform its conduct to a standard of care arising from its relationship with the plaintiff, (2) a failure of the defendant to conform its conduct to the requisite standard of care required by the relationship, and (3) an injury to the plaintiff proximately caused by the breach. Miller v. Griesel, 261 Ind. 604, 611, 308 N.E.2d 701, 706 (1974).

"No better general statement can be made than that the courts will find a duty where, in general, reasonable persons would recognize it and agree that it exists." Gariup Construction Co. v. Foster, 519 N.E.2d 1224, 1227 (Ind.1988) (quoting W. Prosser & J. Keeton, Prosser & Keeton on Torts § 53, at 359 (5th ed.1984)). To determine whether the law recognizes any obligation on the part of Caesar's to conform its conduct to a certain standard for the benefit of the plaintiff is a question of law. Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind.1991). To determine if a duty exists, we must look at (1) the relationship between the parties, (2) the reasonable foreseeability of harm to the person injured, and (3) public policy concerns. Id. We will examine each component in turn.

A. Relationship between the Parties

Kephart argues that the relationship between the parties is that of a business invitee and proprietor. To determine whether a relationship exists, we must look to the nature of the relationship, a party's knowledge, and the circumstances surrounding the relationship. Downs v. Panhandle E. Pipeline Co., 694 N.E.2d 1198, 1203 (Ind.Ct.App.1998), trans. denied. "A duty of reasonable care is not owed to the world at large, but must arise out of a relationship between the parties." Bowman ex rel. Bowman v. McNary, 853 N.E.2d 984, 990 (Ind.Ct.App. 2006). Kephart has alleged that the relationship is based on her trip to gamble at Caesar's casino upon Caesar's invitation.

Kephart cites to Burrell v. Meads, 569 N.E.2d 637, 639 (Ind.1991), for the proposition that a business owner like Caesar's owes a duty to its business invitees to use reasonable care for their protection while they are on the landowner's premises. Then she refers to the Burrell court's adoption of the Restatement (Second) of Torts Section 343 (1965) to support her claim against Caesar's. However Section 343 subjects the landowner to liability for physical harm. Restatement (Second) of Torts § 343 (1965). In Kephart's counterclaim, she does not allege any direct physical harm from a condition or improvement upon Caesar's premises, but rather asserts that Caesar's caused her mental, emotional, and psychological distress. Therefore, we believe that Section 343 is distinguishable.

It is also instructive for us to look to other business owners who sell goods and services to the public in order to examine their duties to invitees. While it is clear that such owners owe patrons a duty to protect them from physical risks while on the premises, we have not discovered any case law from any state that imposes an additional duty such as that which Kephart seeks to impose on Caesar's. For example, department stores have no common law duty to refuse to sell goods and services to a known compulsive shopper. The fact that such a shopper may have borrowed the funds used or will become indebted to the store's own or a third-party credit card company for the purchase is not the department store's responsibility, even if the invitee's compulsiveness is known. We believe that...