Churchill Downs, Inc. v. Ribis, Civ. No. 14-03342 (KM) (MAH)
| Decision Date | 09 November 2020 |
| Docket Number | Civ. No. 14-03342 (KM) (MAH) |
| Citation | 499 F.Supp.3d 82 |
| Parties | CHURCHILL DOWNS, INC., Plaintiff, v. Nicholas L. RIBIS, Sr. and NLR Ventures, LLC, Defendant. |
| Court | U.S. District Court — District of New Jersey |
Cathleen Marie Devlin, Patrick Francis Nugent, Saul Ewing Arnstein & Lehr LLP, Philadelphia, PA, Ryan L. Di Clemente, Saul Ewing Arnstein & Lehr LLP, Princeton, NJ, for Plaintiff.
William F. O'Connor, Jr., Joseph P. Lasala, McElroy, Deutsch Mulvaney & Carpenter, LLP, Morristown, NJ, James J. DiGiulio, O'Toole Scrivo Fernandez Weiner Van Lieu, LLC, Cedar Grove, NJ, Stephanie Lopez, Stevens & Lee, Paramus, NJ, for Defendant Nicholas L. Ribis.
Joseph P. Lasala, McElroy, Deutsch, Mulvaney & Carpenter, LLP, Morristown, NJ, Stephanie Lopez, Stevens & Lee, Paramus, NJ, for Defendant NLR Ventures, LLC.
In 2013, defendant Nicholas L. Ribis signed an agreement with plaintiff Churchill Downs, Inc. ("CDI") to purchase a casino in Atlantic City. Ribis signed the agreement on behalf of two purported LLCs: NLR Entertainment, LLC, ("NLRE") and its subsidiary, NLR Acquisitions, LLC, ("NLRA") (collectively, the "NLR LLCs"). CDI paid the NLR LLCs $2.5 million dollars towards purchasing the casino; pursuant to the agreement's terms, however, if the NLR LLCs failed to complete the purchase, then they were required to pay CDI the money back as liquidated damages. The purchase fell through, the casino was never bought, and the LLCs never refunded CDI the money.
Five years later, after this Court had granted judgment in favor of CDI against NLRE for breach of contract, it was revealed that NLRE had never existed; Ribis never actually formed the LLC. Similarly, NLRA had not existed at the time that it purportedly entered into the agreement with CDI, though Ribis did form the company several months later.
CDI seeks to hold Ribis individually liable on the contract. For the reasons that follow, CDI's motion (DE 110) is GRANTED .
CDI, NLRE, and NLRA entered into a binding Term Sheet dated August 3, 2013, which Ribis signed on behalf of the NLR LLCs. (PSTMF ¶ 2.) CDI and NLRA subsequently entered into a License and Operating Agreement on September 4, 2013, which superseded and formalized the Term Sheet agreement but contained essentially the same terms. (DE 110-5.) Under the agreements, CDI would provide online gambling services to the Showboat Atlantic City Hotel and Casino after the NLR LLCs purchased that casino. (DE 110-4 ¶ 1.4.) In exchange for the right to provide online services, CDI paid a $2.5 million fee to the NLR LLCs upon execution of the Term Sheet; an additional $7.5 million was due under the agreement upon the NLR LLCs’ acquisition of the Showboat. (Id. ¶ 1.6.) If the NLR LLCs failed to close on the acquisition of the Showboat by January 31, 2014, however, they were obligated under the agreement to repay CDI the entire $2.5 million. (Id. )
CDI paid the NLR LLCs the initial $2.5 million. The NLR LLCs never closed on the acquisition of the Showboat, and never repaid CDI the $2.5 million. (PSTMF ¶ 1; DS2TMF ¶ 7, 15.) CDI then commenced this action against NLRE on February 25, 2014, and prevailed on a summary judgment motion on March 6, 2017. (Id. ¶¶ 1, 3.)
In ruling on CDI's summary judgment motion, I found that NLRE was obligated to repay the $2.5 million and had not done so. (Id. ¶ 3; March 6, 2017 Op.) The theory was breach of contract: I found that there was "no doubt that NLR[E] breached the License Agreement when it failed to acquire Showboat and then declined to return CDI's $ 2.5 million." (March 6, 2017 Op. at 12.) NLRE did not dispute its obligation under the contract; rather, it asserted that CDI had breached the agreement first, either by acting in bad faith or by breaching the License Agreement. (Id. at 13.) I concluded that CDI had not breached the contract first, which might have excused NLRE's breach. (Id. ) In that same action, CDI brought a claim for fraud against Ribis based on certain statements he made to them in September and December 2013 indicating that a deal with a casino was soon forthcoming, which I rejected on the ground that CDI could not show any damages. (Id. at 23–24.) I entered judgment in favor of CDI against NLRE for $2.5 million on April 4, 2017. (April 4, 2017 Judgment.)
Ribis represented to CDI, and repeatedly to this Court, that NLRE was a limited liability company formed under Delaware law which was owned solely by Ribis. (PSTMF ¶¶ 4–5; DSTMF ¶¶ 4–5.) When CDI initiated post-judgment discovery in aid of execution on the judgment, however, it learned that NLRE was not, and never had been, incorporated in Delaware or any other state. (PSTMF ¶ 7; DSTMF ¶ 7.) CDI also learned that NLRA, the subsidiary of NLRE referenced in the Term Sheet agreement, was not formed as a legal entity until December 2013, several months after the agreements were executed. (Id. ¶ 8; DSTMF ¶ 8; DE 110-10.)
According to Ribis, this was all an innocent error. He hired Willkie Farr & Gallagher LLP to represent him in the negotiations with CDI. Willkie Farr, he says, was responsible for "all legal nuances of the transactions," including "form[ing] NLR[E] and NLR[A]," which Ribis claims he "expressly instructed" them to do. (Ribis Decl. ¶¶ 8–9.) Ribis claims that he "believed NLR[E] and NLR[a] to be duly formed limited liability companies" and asserts that he "had no reason to think otherwise," arguing that his attorneys "prepared the formal agreements, which provided the corporate structure of the NLR entity entering into the agreement." (Id. ¶ 12.) He claims that the "first time [he] learned that NLR[E] was never duly formed by [his] attorney was through CDI's motion to modify the final judgment filed in 2018." (Id. ¶ 14.)
After CDI determined that NLRE had never existed, it moved to modify the April 4, 2017 judgment to impose liability on Ribis individually. (DE 90.) I partially granted its motion, permitting it to amend its complaint to add Ribis individually. (September 25, 2018 Op.) I concluded that amending the judgment to impose liability on Ribis directly would be a step too far, reasoning that "I cannot award judgment on claims that were not pled or meaningfully explored in discovery." (Id. at 7.)
CDI then amended its complaint on February 18, 2019 to add Ribis and another LLC, NLR Ventures, LLC, as defendants. (DE 96.) It then initiated discovery. Once discovery ended, CDI filed this motion for summary judgment as to Ribis's individual liability. (DE 110.)
Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." See Kreschollek v. S. Stevedoring Co. , 223 F.3d 202, 204 (3d Cir. 2000) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. Cnty. of Allegheny Pennsylvania , 139 F.3d 386, 393 (3d Cir. 1998) (citing Peters v. Delaware River Port Auth. of Pa. & N.J. , 16 F.3d 1346, 1349 (3d Cir. 1994) ). The moving party bears the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "[W]ith respect to an issue on which the nonmoving party bears the burden of proof ... the burden on the moving party may be discharged by ‘showing’ — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548.
Once the moving party has met that threshold burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The opposing party must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ; see also Fed. R. Civ. P. 56(c) ().
Unsupported allegations, subjective beliefs, or argument alone, however, cannot forestall summary judgment. See Lujan v. Nat'l Wildlife Fed'n , 497 U.S. 871, 888, 110 S. Ct. 3177, 111 L. Ed. 2d 695 (1990) (); see also Gleason v. Norwest Mortg., Inc. , 243 F.3d 130, 138 (3d Cir. 2001) (). Thus, if the nonmoving party fails "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial ... there can be ‘no genuine issue of material fact,’ since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co. , 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex , 477 U.S. at 322-23, 106 S.Ct. 2548 ).
Moreover, the "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson , 477 U.S. at 247-48, 106 S.Ct. 2505. A fact is only "material" for purposes of a summary judgment motion if a dispute over that fact "might affect the outcome of the suit under the governing law." Id. at 248, 106 S.Ct. 2505. A dispute about a material fact...
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