Rahmani v. Resorts Intern. Hotel, Inc.

• Decision Date: 08 September 1998
• Docket Number: No. CIV. A. 98-205-A.,CIV. A. 98-205-A.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Najia RAHMANI, Plaintiff, v. RESORTS INTERNATIONAL HOTEL, INC., et al., Defendants.

20 F.Supp.2d 932

Najia RAHMANI, Plaintiff, v. RESORTS INTERNATIONAL HOTEL, INC., et al., Defendants.

No. CIV. A. 98-205-A.

United States District Court, E.D. Virginia, Alexandria Division.

September 8, 1998.

Barry Coburn, Coburn & Schertler, Washington, DC, for Plaintiff.

Hugh P. Quinn, Rosenman & Colin, LLP, Washington, DC, Daniel Schiffman, Schiffman & Frank, New York City, for Resorts International Hotel, Inc.

Michael J. Klisch, Robert T. Cahill, McGuire, Woods, Battle & Boothe LLP, McLean, VA, for Boardwalk Regency Corporation.

MEMORANDUM OPINION

ELLIS, District Judge.

In this unusual diversity case, a Virginia plaintiff hopes to use her home state's laws against gambling to help her recover from New Jersey casinos the large gambling losses she incurred there. Plaintiff Najia Rahmani alleges that defendants Boardwalk Regency Corporation ("Boardwalk") and Resorts International Hotel, Inc. ("Resorts") induced her to travel to New Jersey and squander her money in their casinos. She further alleges that her acceptance of such inducements created a contract between the parties, but that these contracts were void as a matter of Virginia law. She therefore seeks restitution of all monies she has lost gambling in defendants' New Jersey casinos over the past thirteen years. For the reasons that follow, plaintiff's effort fails; the law sensibly affords no remedy in these circumstances.

I.¹

Rahmani is a Virginia citizen, while defendants Resorts and Boardwalk are New Jersey corporations that own and operate gambling casinos. Resorts owns and operates Resorts International Casino, in Atlantic City, New Jersey, while Boardwalk owns and operates Caesars, another gambling establishment in Atlantic City, New Jersey.

Rahmani's first experience with casino gambling occurred in 1984 when she visited Resorts. During that visit, Resorts employees noticed that Rahmani lost a considerable sum of money, and that she appeared to be a wealthy woman. As a result of these observations, Resorts repeatedly contacted Rahmani in Virginia over the course of the next thirteen years and induced her to return to Atlantic City to gamble. Boardwalk became aware of Rahmani's gambling habits in 1990, and it, too, began to encourage her to visit Atlantic City. Specifically, Resorts and Boardwalk called Rahmani and sent her letters, promising that if she agreed to come to the casino to gamble, Resorts or Boardwalk would send limousines to transport her and her friends and family to New Jersey, where she would be provided free hotel accommodations, meals and entertainment. These solicitations, which continued through November 1997, largely succeeded, for according to Rahmani, soon after her introduction to casino gambling in 1984, she became addicted to the activity, i.e., she became a compulsive gambler. She claims that both Resorts and Boardwalk knew or should have known of her condition, but nonetheless continued to induce her to travel to Atlantic City to gamble. Over approximately a thirteen year period, Rahmani claims to have lost over $3.8 million while gambling at Resorts and Caesars.

Rahmani filed suit on February 11, 1998, arguing that her agreements with Resorts and Boardwalk were void under Virginia law and seeking rescission of the contracts and restitution of the money she gambled and lost at the casinos over the thirteen-year period. She alleged other state law claims as well, including negligence and "unlawful harassment." On April 4, 1998, Boardwalk's Motion to Dismiss was granted; on July 17, 1998, Resorts' Motion to Dismiss was granted, and Counts I, II, III, V, and VI were dismissed with prejudice in their entirety. Count IV, a forgery claim, was dismissed without prejudice to allow Rahmani leave to amend her Complaint solely on this count, as requested by Rahmani's counsel. This memorandum opinion sets forth the reasons for the dismissals.

II.

As this is a diversity case, Virginia's choice-of-law rules govern. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In this regard, Virginia adheres to the traditional First Restatement rule for contracts cases, namely that the laws of the place of contracting govern the validity of a contract. See Fuisz v. Selective Ins. Co., 61 F.3d 238, 241 (4th Cir.1995) (applying Virginia law); Woodson v. Celina Mut. Ins. Co., 211 Va. 423, 426-27, 177 S.E.2d 610, 613-14 (1970). Under the traditional First Restatement rule, the place of contracting is determined by the location of the last act necessary to complete the contract. See Keco Indus., Inc. v. ACF Indus., Inc., 316 F.2d 513, 514 (4th Cir.1963) (citing Restatement, Conflict of Laws, § 326 (1934)). The threshold inquiry, therefore, is where the last act necessary to complete the contracts occurred, and thus where the contracts between Rahmani and the defendants were formed.

To determine where the last act necessary to complete the contracts occurred, it is important to identify with some precision just what the contracts were. In this regard, Rahmani alleges that the contracts consisted of the defendants' promise of limousines and free accommodations (the offer) and her agreement to travel to Atlantic City to enjoy these amenities and gamble (the acceptance).² Accordingly, under Rahmani's theory, the last act necessary to form the contracts, namely Rahmani's acceptance of the offers, occurred in Virginia. Thus, Rahmani argues, Virginia law should apply.

Boardwalk and Resorts counter by arguing that common sense suggests that the contracts were formed not in Virginia, but in New Jersey when Rahmani placed her bets at the casino gambling table. Resorts attacks Rahmani's characterization of the contracts on the ground that such contracts could not have been enforced under Virginia law for they would lack the mutuality required for formation of a valid contract in Virginia.³ Thus, if after arriving in Atlantic City and enjoying Resorts' hospitality, Rahmani had decided not to gamble, Resorts would not have been able to enforce such a contract under Virginia law. Both defendants argue that the only contracts between the casinos and Rahmani arose when Rahmani placed her bets at the casino gambling tables in New Jersey, and thus New Jersey law governs.

Although not free from doubt, the argument for application of New Jersey law is more persuasive. No mutually enforceable obligations were created until Rahmani placed a bet at a New Jersey gambling table.

Given that New Jersey law governs, Rahmani's claims for rescission and restitution plainly fail. In New Jersey, "[c]asino gambling has been legal ... since 1977, and the casino industry is purely a creature of statute." Hakimoglu v. Trump Taj Mahal Assoc., 876 F.Supp. 625, 633 (D.N.J.1994), aff'd 70 F.3d 291 (3d Cir.1995). New Jersey's casino industry is governed exclusively by New Jersey's Casino Control Act, N.J.S.A. §§ 5:12-1 to -210 (1997) ("CCA"), which provides a "regulatory scheme [that] is both comprehensive and minutely elaborate." Knight v. City of Margate, 86 N.J. 374, 431 A.2d 833 (1981); Hakimoglu, 876 F.Supp. at 631. The Casino Control Commission establishes the rules governing the operation of casinos, including setting the odds for each game, odds that always favor the casino. See Tose v. Greate Bay Hotel & Casino Inc., 819 F.Supp. 1312, 1319 (D.N.J.1993). More importantly, the CCA specifically "permits casinos to offer free food, lodging, transportation and other inducements to potential customers" as part of "junkets" that casinos may offer to their patrons. See Tose, 819 F.Supp. at 1320 n. 11 (describing a junket as the provision of "complimentary transportation, food, lodging and entertainment based on [a] person's propensity to gamble").

Under New Jersey law, therefore, the casino gambling contracts are valid. Not only does the CCA legalize casino gambling generally, it specifically recognizes and authorizes the very activity Rahmani complains of, namely the practice of offering junkets to people with a propensity to gamble for the purpose of encouraging them to travel to New Jersey to do so. See N.J.S.A. 5:12-29 and 5:12-102 (defining junkets and setting forth conditions for junkets).⁴ Accordingly, under New Jersey law, the contracts are valid and enforceable, and thus Rahmani cannot sue for their rescission or for restitution.

III.

Given the closeness of the choice of law issue, it is worth noting that Rahmani fares no better under Virginia law. To begin with, it is readily apparent that Virginia affords Rahmani no contract remedies. If, as Rahmani asserts, the last act necessary to the contract occurred in Virginia, the contract created, putting aside the absence of mutuality, would be deemed a gambling contract under Virginia law.⁵ Such a contract, of course, is void under Virginia law;⁶ it is "a complete nullity, one that has no legal force or binding effect." Kennedy, 272 S.E.2d at 39. Further, "[i]t is one which never had any legal existence or effect, and one which cannot in any manner have life breathed into it." Id. As gambling contracts are illegal or immoral contracts in Virginia, "[Virginia] law simply leaves the litigants in the plight in which they have seen fit to place themselves without undertaking to balance benefits or burdens." Phillip Levy & Co. v. Davis, 115 Va. 814, 80 S.E. 791, 792 (Va.1914) ("[T]he law ... will neither lend its aid to enforce [the illegal or immoral] contract while executory nor to rescind it and recover the consideration parted with when executed."). See also Higgins v. McCrea, 116 U.S. 671, 6 S.Ct. 557, 29 L.Ed. 764 (1886) ("`No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act.'"). Given that the contracts defined by Rahmani are a nullity under Virginia law, it follows that she cannot sue for rescission or restitution;⁷ under Virginia law, she is simply left "in the plight in which [she has] seen fit to place [herself...