Sullivan v. STATE OF NJ, DIV. OF GAMING ENFORCE.

• Decision Date: 14 February 1985
• Docket Number: Civ. A. No. 83-3892.
• Citation: 602 F. Supp. 1216
• Parties: Daniel J. SULLIVAN, Saul Satulsky and Satvan Industries, Inc., Plaintiffs, v. STATE OF NEW JERSEY, DIVISION OF GAMING ENFORCEMENT, Irwin Kimmelman, James Zazzali, Michael G. Brown, Mary Jo Flaherty, Robert Sturges, Irving Schecter, John Rogalski, Douglas Weber and Guy S. Michael, Defendants.
• Court: U.S. District Court — District of New Jersey

602 F. Supp. 1216

Daniel J. SULLIVAN, Saul Satulsky and Satvan Industries, Inc., Plaintiffs, v. STATE OF NEW JERSEY, DIVISION OF GAMING ENFORCEMENT, Irwin Kimmelman, James Zazzali, Michael G. Brown, Mary Jo Flaherty, Robert Sturges, Irving Schecter, John Rogalski, Douglas Weber and Guy S. Michael, Defendants.

Civ. A. No. 83-3892.

United States District Court, D. New Jersey.

February 14, 1985.

COPYRIGHT MATERIAL OMITTED

Brown, Brown & Furst, P.C. by Raymond A. Brown, Susan S. Singer, Newark, N.J., for plaintiffs.

Irwin I. Kimmelman, Atty. Gen. of New Jersey by Eugene J. Sullivan, Asst. Atty. Gen., Emerald L. Erickson, Deputy Atty. Gen., Trenton, N.J., for defendants.

OPINION

GERRY, District Judge.

This is an action for injunctive relief and damages based upon claims under 42 U.S.C. § 1983 and upon state law claims of tortious interference with contractual relations and interference with prospective economic advantage. The jurisdictional bases of the complaint are 28 U.S.C. § 1343 (civil rights) and 28 U.S.C. § 1331 (federal question) and, as to the state law claims, 28 U.S.C. § 1332 (diversity of citizenship) and the principles of pendent jurisdiction.

The gravamen of the complaint is that during an investigation concerning the Trump Plaza Corporation and its principals conducted by the Division of Gaming Enforcement in deciding Trump's casino license application, the individual defendants destroyed a valuable economic relationship between the plaintiffs and the real estate developer Donald J. Trump. This behavior allegedly resulted in the plaintiffs' loss of a contract to purchase a dry wall cement business located in New York and in various other business and employment opportunities.

The plaintiffs in this action include two individuals and a corporation. The primary plaintiff is Daniel J. Sullivan, a professed labor consultant and owner of land in Atlantic City, New Jersey, which was leased to a casino license applicant. Sullivan also alleges that he owns a trash-hauling firm in Bucks County, Pennsylvania, where he resides. The other plaintiffs are Saul Satulsky, a New York resident, and Satvan Industries, Inc. (Satvan). Sullivan and Satulsky allege that they are each thirty percent shareholders of Satvan, a New York corporation, established for the purpose of acquiring and operating a sheet rock contracting company known as Circle Industries. It is also alleged that Satulsky was President of Circle Industries.

The individuals named as defendants include the present Attorney General, a former Attorney General, a former Director of the Division, a former Acting Director of the Division who was also Deputy Director for part of the relevant time period, another Deputy Director of the Division, all of whom were Assistant Attorneys General, and a Deputy Attorney General of the Division. The four remaining defendants are the Division or State itself and three individuals who served the Division in an investigatory capacity during the Division's investigation of the casino license application in question.

The claims asserted in the complaint arose from Sullivan's association with prominent developer and businessman Donald J. Trump (Trump) and the Division's investigation and report filed with the Casino Control Commission with respect to Trump's application for a casino license under the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq. (the Act). Trump, through Trump Plaza Corporation, applied for a casino license in May, 1981. Sullivan was one of three individuals in a partnership which owned a portion of the land on which Trump intended to build his casino hotel and which was leased for the casino. The Act empowers the Casino Control Commission to determine whether a casino license should be issued and, if so, on what conditions. N.J.S.A. 5:12-63, 64. The Act also empowers and requires the Division to investigate all applications and the qualifications of all applicants for casino licenses, and to provide the Commission with all information necessary under the Act in order to insure, among other things, that undesirable elements have no control of or authority in casino operations. N.J.S.A. 5:12-76, 5:12-87(a), 5:12-94(a) and 5:12-1(b)(7). In investigating an applicant, the Division must investigate the applicant's personal and business associations because associations may have bearing on the reputation and economic stability of the applicant, and associates could have controlling influences upon the applicant.

The Division submitted a report to the Commission on Trump's May 1, 1981 application for a casino license, dated October 16, 1981. It reported that it made no objection to the corporate application or to Trump individually as its owner. The report contains an 11 page discussion of Sullivan because of his association with Trump on the lease and in other matters. Sullivan alleges in the complaint that the statements about him were defamatory, and that the statements were publicized by the Division in a press conference when the report was filed. He also claims that Division officials threatened Trump that it would delay the investigation of Trump's application and withdraw from an agreement to recommend that the lessors of the casino property need not be separately licensed, if Trump maintained any associations with Sullivan beyond the lessor-lessee relation already in existence with respect to the casino property.

In count I of the complaint, the only count asserting a federal claim, plaintiffs allege that the defendants' conduct represents a blatant interference with the plaintiffs' right to be free from deprivations of liberty and property without due process of law, in violation of 42 U.S.C. § 1983 and the Fourteenth Amendment. Specifically, plaintiffs allege that defendants deprived Sullivan of his right to be free of arbitrary actions by the state government and its officials which damage his reputation and stigmatize him and which deprive him of his property, business and contractual relations, employment opportunities and freedom of association, all without notice and an opportunity to be heard.

In count II of the complaint, plaintiffs claim that the Division intentionally interfered with plaintiffs' contractual relations with Trump. Specifically, plaintiffs allege that because of the Division's threats, Trump determined not to join with Sullivan and Satulsky for the acquisition of Circle Industries, or to issue a $3.5 million guarantee on a line of credit for Satvan in connection with the acquisition. In count III of the complaint, plaintiffs again allege that the defendants maliciously interfered with the Circle Industries acquisition, and further that they did so to retaliate against Sullivan. Finally, in count IV of the complaint, Sullivan claims that he was deprived of other business opportunities with Trump, including an opportunity to act as a labor consultant in 1982 in connection with the construction of Trump's casino, again because the defendants continued to threaten Trump if he associated with Sullivan. Plaintiffs seek $30 million in compensatory damages, punitive damages and attorney fees from the individual defendants. As to all defendants, including the State, they seek an order "enjoining them from arbitrarily interfering, without an adequate hearing, Sullivan's liberty and property interests in entering into contracts and maintaining business and social relationships with Trump."

This case is presently before the court on two motions: first, plaintiffs' motion to drop the State of New Jersey, Division of Gaming Enforcement from the action; and, second, defendants' motion to dismiss the complaint. The motions will be discussed in turn.

I. PLAINTIFFS' MOTION TO DISMISS STATE OF NEW JERSEY, DIVISION OF GAMING ENFORCEMENT FROM ACTION.

Plaintiffs have moved to drop the State of New Jersey, Division of Gaming Enforcement, from this action. Since the defendants have indicated that they have no objection to the plaintiffs' motion, the court will grant the motion and order that the action against the State of New Jersey, Division of Gaming Enforcement, be dismissed in accordance with F.R.Civ.P. 41(a)(2).

II. DEFENDANTS' MOTION TO DISMISS COMPLAINT.

The defendants' motion to dismiss the complaint against them must be considered in two parts. First, the court will address the viability of the plaintiffs' § 1983 claim. Next, the court will turn to the plaintiffs' state law claims of tortious interference with contractual relations and prospective economic advantage.

A. § 1983 CLAIM.

From the plaintiffs' explanation in their brief opposing defendants' motion for summary judgment, it appears that the rationale behind their § 1983 claim is as follows: the defendant state officers, under color of the state laws and regulations pertaining to casino licensing, subjected (or caused to be subjected) the plaintiffs to a deprivation of their property and liberty interests secured by the Constitution without due process of law. The property interest in the case apparently consists of contracts with Trump which are recognized and protected by state law. The liberty interest deprivation allegedly consisted of the State's stigmatization of Sullivan's reputation, coupled with tangible injury, namely the impaired contractual relations with Trump. Plaintiffs claim that they were deprived of these rights without due process because they had no notice that their contractual relations with Trump were in jeopardy and no opportunity to be heard in this regard.

1. DEPRIVATION OF PROPERTY.

Even accepting all of plaintiffs' factual allegations as true, the court finds that plaintiffs have not stated a cause of action under § 1983. Assuming arguendo that contract rights are considered "property" for purposes of the Fourteenth Amendment and § 1983 — a proposition which plaintiffs assert without citing any case law on point — and assuming further that plaintiffs had already acquired...