Zaika v. Del E. Webb Corp.

• Decision Date: 02 March 1981
• Docket Number: Civ. No. LV 79-101 RDF.
• Citation: 508 F. Supp. 1005
• Parties: Nicholas ZAIKA, Plaintiff, v. DEL E. WEBB CORPORATION, an Arizona Corporation; Consolidated Casinos Corporation, a Nevada Corporation; Sahara-Nevada Corporation, a Nevada Corporation; the United States Playing Card Company, a Delaware Corporation; Thurman L. Spach, a/k/a Buddy Spach; Edward M. Nigro, Jointly and Severally, Defendants.
• Court: U.S. District Court — District of Nevada

508 F. Supp. 1005

Nicholas ZAIKA, Plaintiff, v. DEL E. WEBB CORPORATION, an Arizona Corporation; Consolidated Casinos Corporation, a Nevada Corporation; Sahara-Nevada Corporation, a Nevada Corporation; the United States Playing Card Company, a Delaware Corporation; Thurman L. Spach, a/k/a Buddy Spach; Edward M. Nigro, Jointly and Severally, Defendants.

Civ. No. LV 79-101 RDF.

United States District Court, D. Nevada.

March 2, 1981.

Thomas A. Howard, Detroit, Mich., for plaintiff.

James R. Olson of Cromer, Barker & Michaelson, Las Vegas, Nev., for defendant United States Playing Card Co.

Drake DeLanoy of Beckley, Singleton, DeLanoy & Jemison, and Robert D. Faiss of Lionel, Sawyer & Collins, Las Vegas, Nev., for remaining defendants.

ROGER D. FOLEY, District Judge.

OPINION

Nicholas Zaika, a citizen of Michigan, brings this diversity action against Del E. Webb Corporation, an Arizona corporation; Sahara-Nevada Corporation, a Nevada corporation; and Consolidated Casino Corporation, a Nevada corporation (hereinafter referred to as "Corporate Defendants"). Plaintiff also brings this action against Thurman L. Spach and Edward M. Nigro (hereinafter referred to as the "Individual Defendants"). Both men are employees of the Sahara Hotel and are citizens of Nevada. Another defendant in this action is The United States Playing Card Company, a Delaware corporation (hereinafter referred to as the "Defendant Manufacturer").

Plaintiff claims as follows: that he traveled from Detroit, Michigan, to Las Vegas on or about February 13, 1977, and stayed at the Hotel Riviera three days; that while playing blackjack at the Hotel Sahara during that time, he was induced by agents of the Hotel Sahara to move to the Hotel Sahara and gamble there as a "high roller" guest; that he stayed at the Hotel Sahara four days, during which he lost a total of $30,000; that he returned to Las Vegas on April 17, 1977, at the inducement of the Hotel Sahara and proceeded to lose approximately $156,000 in cash and checks, $280,000 in markers later redeemed, and $150,000 in markers he did not redeem following an incident of May 23, 1977; that on that day, plaintiff was engaged in a number of wagering transactions at blackjack table No. 23 at the Hotel Sahara in front of a dealer by the name of Alfreda Polito; that plaintiff discovered an extra five of spades in the deck of cards and that there were 53 cards in the deck; that this extra card increased the odds in favor of the house; that prior to May 23, 1977, there had been many instances of defective decks in play at the Sahara, and that on June 3, 1977, another dealer at the same hotel discovered another defective deck.

On these alleged facts, plaintiff brings suit against the Corporate Defendants for fraud, conspiracy to defraud, breach of implied contract, and breach of quasi-contract. As against the Corporate Defendants and Individual Defendants, plaintiff alleges intentional misrepresentation, negligence, negligent misrepresentation, and innocent misrepresentation. Plaintiff also alleges that defendant manufacturer is liable for negligence, strict liability, and breach of warranty. Plaintiff prays for $466,000 in wagering losses, $4 million in general damages, and $25 million in punitive damages.

This is not the first time that Mr. Zaika has sought relief. The plaintiff filed a complaint with the Gaming Control Board, one of the two state agencies that are charged with the regulation of gambling operations in Nevada, the other being the Gaming Commission. An initial investigation by Board agents determined that the Hotel Sahara was not guilty of any improper action and that the Board should not take any action in regard to the plaintiff's losses. The plaintiff appealed the determination of the agents, and Board Member Jeffrey Silver convened a hearing on December 2, 1977. The plaintiff appeared with counsel, testified, and was permitted to call witnesses. He also had an opportunity to cross-examine all other witnesses called to testify, including the Board agents in charge of the initial investigation. On December 22, 1977, the full Control Board issued a decision, based on the evidence taken at the hearing, stating that the Hotel Sahara was free from any wrongdoing and was not the cause of the plaintiff's losses. Gaming Control Board Case # 77-475 (Dec. 22, 1977).

MOTIONS BEFORE THIS COURT

The Corporate Defendants and the Individual Defendants have moved to dismiss for failure to state claims upon which relief can be granted pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, arguing that the administrative proceeding is res judicata. Defendant Del E. Webb Corporation ("Webb") additionally claims that none of the duties, acts, or omissions alleged can be imputed to it, the parent corporation, and therefore the action should be dismissed. These defendants also move to strike the supplemental affidavits submitted by the plaintiff in opposition to the dismissal.

The Defendant Manufacturer filed two motions. The first motion under Rule 12(b)(6), FRCP, asks for dismissal on the basis that Nevada does not recognize a cause of action for breach of warranty where there is no privity of contract between the manufacturer and the plaintiff. The second motion is one for summary judgment pursuant to Rule 56, FRCP. This defendant also contends that the plaintiff is collaterally estopped from asserting his claims by the decision of the Nevada Gaming Control Board.

RES JUDICATA AND COLLATERAL ESTOPPEL

A good comparison of the doctrines of res judicata and collateral estoppel was given in Umberfield v. School District No. 11, Etc., 185 Colo. 165, 522 P.2d 730 (1974), in which the Court stated:

"Res judicata in the strict sense refers to `claim preclusion.' ... The doctrine holds that an existing judgment is conclusive of the rights of the parties in any subsequent suit on the same claim. It bars relitigation not only of all issues actually decided, but of all issues that might have been decided. It requires an identity of parties or their privies ..., as it would be unfair to preclude a party from litigating an issue merely because he could have litigated it against a different party.

"Collateral estoppel, on the other hand, refers to `issue preclusion.' The doctrine holds that the final decision of a court on an issue actually litigated and determined is conclusive of that issue in any subsequent suit ... Collateral estoppel is broader than res judicata in that it applies to a cause of action different from that involved in the original controversy. It is narrower, however, in that it does not apply to matters which could have been litigated but were not." Id. at 732. (Citations omitted.)

The State of Nevada provides two methods of dealing with a claim by a player that he was cheated in a wagering transaction, one is administrative and the other is judicial. The administrative remedy is outlined in Gaming Control Board Bulletin No. 7 (Dec. 5, 1972) as follows:

"1. The investigating agent will perform whatever investigative steps he deems necessary to enable him to render a just decision on the merits of the player's claim.

"...

"...

"3. Review of an agent's decision by a Board member may be had by requesting such review ...

"...

"3.4 The Board member may sustain, modify or reverse the agent's decision and his decision is not subject to further review.

"4. It shall be deemed an unsuitable method of operation for a licensee to fail to pay a player's claim after having been directed to do so by the Board or its agents pursuant to this Bulletin. Such failure may result in a complaint being filed with the Commission pursuant to NRS 463.310, 463.312 and Reg. 7." (Emphasis added.)

Ordering a licensee to pay a player's claim is merely incidental to the Gaming Control Board's supervisory function of insuring that gaming licensees operate in a suitable manner. If the Board finds that a player has been cheated, it may direct the gaming licensee to give the player his money back under the threat that the Board will otherwise file a complaint with the Gaming Commission seeking to fine the licensee or revoke the license. Neither the Gaming Control Board nor the Gaming Commission have the power to award a judgment to a player who has been cheated.

The Corporate Defendants argue that this administrative remedy is the exclusive remedy for the plaintiff under Nevada law. They argue that since Nevada courts do not enforce gaming debts, Sea Air Support, Inc. v. Herrmann, Nev., 613 P.2d 413 (1980); Corbin v. O'Keefe, 87 Nev. 189, 484 P.2d 565 (1971); Weisbrod v. Fremont Hotel, Inc., 74 Nev. 227, 326 P.2d 1104 (1958); West Indies v. First Nat'l Bank, 67 Nev. 13, 214 P.2d 144 (1950), Nevada courts would not recognize a cause of action involving gaming losses where there has been an allegation of cheating. This issue of whether there is a judicial remedy where a player claims he was cheated by a licensee has been resolved by the Ninth Circuit in Berman v. Riverside Casino Corp., 323 F.2d 977 (9th Cir. 1963). In that case, a California resident brought suit against a casino to recover moneys he said he lost because the casino used loaded dice. The Court held that the Supreme Court of Nevada would recognize such a claim. Id. at 979.

Given the two types of relief available under the laws of Nevada, this Court must decide whether the doctrines of res judicata and collateral estoppel apply to the determination made by the Gaming Control Board. The Supreme Court of Nevada adopted both doctrines in regard to judicial decisions in Paradise Palms Community Ass'n v. Paradise Homes, 89 Nev. 27, 505 P.2d 596 (1973). However, this Court has found no decision of the Nevada Supreme Court applying these doctrines to an administrative determination. In the absence of controlling Nevada decisions, this Court must decide the question as it believes the Nevada Supreme Court would do so. Bowen v. United States, 570 F.2d...