Nola 180 v. Treasure Chest Casino, LLC

• Court: Court of Appeal of Louisiana
• Writing for the Court: FREDERICKA HOMBERG WICKER
• Citation: Nola 180 v. Treasure Chest Casino, LLC, 91 So.3d 446, 282 Ed. Law Rep. 725 (La. App. 2012)
• Decision Date: 27 March 2012
• Docket Number: No. 11–CA–853.,11–CA–853.
• Parties: NOLA 180, a Non–Profit Corporation, as Manager of Langston Hughes Academy Charter School v. TREASURE CHEST CASINO, LLC and Boyd Gaming Corporation.

91 So.3d 446

282 Ed. Law Rep. 725

NOLA 180, a Non–Profit Corporation, as Manager of Langston Hughes Academy Charter School

v.TREASURE CHEST CASINO, LLC and Boyd Gaming Corporation.

No. 11–CA–853.

Court of Appeal of Louisiana, Fifth Circuit.

March 27, 2012.

Jack M. Alltmont, April L. Watson, Attorneys at Law, New Orleans, LA, for Plaintiff/Appellant.

Robert H. Murphy, Peter B. Sloss, Jeffrey A. Raines, Attorneys at Law, New Orleans, LA, for Defendant/Appellee.

Panel composed of Judges FREDERICKA HOMBERG WICKER, JUDE G. GRAVOIS, and ROBERT A. CHAISSON.

FREDERICKA HOMBERG WICKER, Judge.

[5 Cir. 2]This appeal, which arises from a peculiar set of facts, presents this Court with a res nova issue. In this case, we are called upon to determine whether a remedy exists under the law in a case where a third party loses money at a gaming establishment through the criminal activities of another. The court below determined that no cause and no right of action existed in this case. Upon careful review of the record and jurisprudence, we can find no basis to disturb the trial court's ruling. The judgment appealed from is affirmed.

Procedural Background

The plaintiff/appellant, NOLA 180, as manager of Langston Hughes Academy Charter School (“LHA”), filed a petition for damages on June 21, 2010, against the defendants/appellees, Treasure Chest Casino, LLC and Boyd Gaming Corporation (collectively “Treasure Chest”). The petition alleges that NOLA 180 was damaged as a result of Treasure Chest's activities in the operation of its casino. It contends that Treasure Chest is responsible for damages sustained when [5 Cir. 3]LHA's former financial officer, Ms. Kelly Thompson, embezzled approximately $667,000 from the school, losing a substantial amount of those funds on the slot machines at Treasure Chest.¹

On August 16, 2010, Treasure Chest excepted to the petition on the grounds of no right and no cause of action. It relied upon La. R.S. 27:27.1(H) to argue that casinos have no duty to identify compulsive or problem gamblers. The trial on the exceptions was held on September 29, 2010. The trial court sustained the exceptions in open court, and the judgment was reduced to writing on October 8, 2010. In addition to ruling on the exceptions, however, the judgment further provided, “IT IS FURTHER ORDERED that Plaintiff has 90 days to complete discovery and to amend its Petition to state a cause of action against these Defendants.”

NOLA 180 then moved for a new trial on October 18, 2010. However, on November 24, 2010, the parties confected a consent judgment wherein the trial court vacated the above-referenced portion of the judgment, substituting it with the following: “IT IS FURTHER ORDERED that Plaintiff has ninety days to complete discovery and to amend its Petition to state a cause of action and a right of action against these Defendants.” (Emphasis Added).² Treasure Chest noted its intent to seek supervisory review of the November 24th consent judgment. This Court granted the writ in part and denied it in part, finding that the trial court erred in granting discovery before the defects in the petition were cured. NOLA 180 v. Treasure Chest Casino, LLC., 10–1093 (La.App. 5 Cir. 1/27/11) (unpublished writ).

Thereafter, NOLA 180 filed a supplemental and amended petition on March 15, 2011. Treasure Chest reurged its exceptions of no right and no cause of action. [5 Cir. 4]The exceptions were heard on May 27, 2011, and were granted in open court. NOLA 180 appeals the trial court's ruling.

DiscussionFirst Assignment of Error

NOLA 180 asserts three theories of recovery against Treasure Chest. It claims relief under the Louisiana Unfair Trade Practices Act (“LUTPA”), in tort for general negligence, and under the “Abuse of Rights” doctrine. It contends that the trial court erred by granting Treasure Chest's exception of no cause of action.

In reviewing a trial court's ruling on a peremptory exception of no cause of action, appellate courts conduct a de novo review because the exception raises a question of law and the lower court's decision is based solely on the sufficiency of the petition. Wood v. Omni Bancshares, Inc., 10–216 (La.App. 5 Cir. 4/26/11), 69 So.3d 475, 479,citing, Ramey v. DeCaire, 03–1299, p. 7–8 (La.3/19/04), 869 So.2d 114, 119.

The purpose of the exception of no cause of action is to question whether the law extends a remedy to anyone under the factual allegations of the petition. Id., citing, Albarado v. Abadie, 97–478, p. 2 (La.App. 5 Cir. 11/12/97), 703 So.2d 736, 740. (citation omitted). Cause of action, as used in the context of the peremptory exception, means the operative facts which give rise to the plaintiff's right to judicially assert the action against the defendant. Id.

No evidence may be introduced at any time to support or controvert the objection that the petition fails to state a cause of action. La. C.C.P. art. 931. Therefore, an exception of no cause of action is triable solely on the face of the petition. Wood, supra. All well-pleaded allegations of fact are accepted as true, and if the allegations set forth a cause of action as to any part of the demand, the [5 Cir. 5]exception must be overruled. Id.; See also Lambert v. Riverboat Gaming Enforcement Div., 96–1856, p. 4 (La.App. 1 Cir. 12/29/97), 706 So.2d 172, 175.

Louisiana Unfair Trade Practices Act

The LUTPA, embodied in La. R.S. 51:1405 et seq., makes “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce” unlawful. La. R.S. 51:1405. A practice is “unfair” when it offends established public policy and when the practice is unethical, oppressive, unscrupulous or substantially injurious. Hernaez v. Mothe Life Ins. Co., 09–147, p. 7 (La.App. 5 Cir. 11/10/09), 28 So.3d 454, 458;see Risk Management Services, LLC v. Moss, 09–632, p. 11 (La.App. 5 Cir. 4/13/2010), 40 So.3d 176, 185.

As this Court has explained:

[A]cts which constitute unfair or deceptive practices are not specifically defined in the statute and are determined by the courts on a case-by-case basis.... In order to recover damages for a claim made under this act, a plaintiff must prove that the conduct offends public policy, is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.... For conduct to be unfair it must offend established public policy.... Fraud, deceit and misrepresentation constitute deceptive practices....

Hernaez, supra, at 458.

Traditionally, Louisiana courts have limited causes of action under LUTPA to consumers and business competitors. See Risk Mgmt. Serv., LLC v. Moss, 09–632 p. 10 (La.App. 5 Cir. 4/13/10), 40 So.3d 176, 184 (“a right of action exists under LUTPA only for consumers or business competitors”); Levine v. First Nat. Bank of Commerce, 02–1114, p. 5 (La.App. 5 Cir. 4/29/03), 845 So.2d 1189, 1193 (an action under LUTPA is a personal right of action applying only to direct consumers or to business competitors); Davis v. Manpower Int'l, Inc., 623 So.2d 946, 947 (La.App. 4 Cir.1993), writ denied,629 So.2d 1173 (La.1993) (“plaintiff was not a business competitor of the defendant within the meaning of the Unfair [5 Cir. 6]Trade Practices Act”); Vermilion Hosp., Inc. v. Patout, 05–82, p. 4 (La.App. 3 Cir. 6/8/05), 906 So.2d 688, 692 (“Louisiana courts, both state and federal, have uniformly held the personal right of action granted under LUTPA applies only to direct consumers or to business competitors”); and Schenck v. Living Ctrs.–East, Inc., 94–2514 (E.D.La.2/21/1996), 917 F.Supp. 432, 438 (“the statute [LUTPA] protects consumers and business competitors”).

More recently, however, the Louisiana Supreme Court expanded LUTPA to grant a right of action to “any person, natural or juridical, who suffers an ascertainable loss as a result of another person's use of unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Cheramie Serv., Inc. v. Shell Deepwater Prod., Inc., 09–1633, p. 6 (La.4/23/10), 35 So.3d 1053, 1057. The Supreme Court added, “[a]lthough business consumers and competitors are included in the group afforded this private right of action, they are not its exclusive members.” Id. (citation omitted). Thus, in keeping with this holding, we find that a private right of action exists under LUTPA for all persons. However, to sustain a cause of action under LUTPA, Cheramie promulgated a two-prong test: 1) the person must suffer an ascertainable loss; and 2) the loss must result from another's use of unfair methods of competition and unfair or deceptive acts or practices.

There is no dispute here that NOLA 180 has sustained an ascertainable loss in excess of $667,000, thereby satisfying the first prong under Cheramie. The next inquiry, however, is whether NOLA 180's loss resulted from Treasure Chest's unfair or deceptive trade practices.

In order for a practice to be unfair, it must offend established public policy and be unethical, oppressive, unscrupulous, or substantially injurious. The allegations set forth in NOLA 180's petition, however, fail to show that Treasure [5 Cir. 7]Chest committed any egregious actions that are inherently fraudulent, unethical, or deceitful or that offend established public policy. On the contrary, the Second Circuit, in Strong v. Eldorado Casino Shreveport Joint Venture, 46,464, p. 9 (La.App. 2 Cir. 8/10/11), 73 So.3d 967, stated that Louisiana's public policy favors strictly regulated legalized gaming to promote the state's economic development. This sentiment, which is codified in La. R.S. 27:202(B)(1), provides, that “[t]he development of a controlled gaming industry is important to the development of the economy of the state of Louisiana in that it will assist in the continuing growth of the tourism industry and thus will benefit the general welfare of our citizens.” Moreover, La. R.S. 27:42(A)(1) and (3) provides:

A. The legislature hereby finds and declares to...