Desert Palace, Inc. v. Michael

370 F. Supp. 3d 1177
CourtDistrict Court, D. Nevada
DecidedMarch 28, 2019
DocketCase No.: 2:16-cv-00462-JAD-GWF
StatusPublished
Cited by1 cases

This text of 370 F. Supp. 3d 1177 (Desert Palace, Inc. v. Michael) is published on Counsel Stack Legal Research, covering District Court, D. Nevada primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Desert Palace, Inc. v. Michael, 370 F. Supp. 3d 1177 (D. Nev. 2019).

Opinion

U.S. District Judge Jennifer A. Dorsey

Defendant Andrew P. Michael, a British citizen residing in England,1 was a regular gambler at Caesars Palace2 in Las Vegas. He visited so frequently that Caesars allowed him to wager on credit. Michael signed a credit application promising to execute a subsequent credit instrument (also known as a marker) before, or promptly after, Caesars extended him a line of credit so that Caesars could collect the debt. In September 2014, Caesars extended $ 3 million in credit to Michael, but he didn't sign the marker. Instead, he gambled and lost it all, went home, and left Caesars without an instrument to collect its debt. And although Michael later told Caesars he never intended to leave without signing-blaming the casino for not presenting him with the marker the night of *1180his play-he resisted Caesars's subsequent attempts to obtain his signature.

Caesars sues to compel Michael to sign the marker in order to seek damages for the unpaid debt that the marker represents. It also sues Michael for fraud, alleging that he took out credit he had no ability or intention of repaying and is therefore liable for punitive damages. I granted Caesars partial summary judgment on its specific-performance claim, finding that Michael breached the credit-application contract and ordering him to execute the marker.3 But Michael refuses to comply, contending that I improperly granted Caesars summary judgment and that signing the marker would expose him to criminal prosecution under Nevada law.4 Compounding his intransigence, Michael refused to participate in discovery. So, I sanctioned Michael by deeming established the facts necessary to prove Caesars's fraud claim against him.5

Caesars now moves for summary judgment on its contract claim, arguing that I should, in equity, award it damages in the amount of Michael's loan and contractual interest, minus an offset for over $ 582,000 in unrelated funds that it has on hold for him.6 Caesars also separately seeks summary judgment on its fraud claim.7 Because Michael, by refusing to comply with my order to sign the marker, has rendered specific performance an inadequate remedy, and because Caesars only needs the marker signed to sue Michael for the underlying debt, I find that directly awarding damages to Caesars is appropriate and that Michael is equitably estopped from challenging Caesars's ability to sue him without a signed marker. But because Caesars seeks summary judgment on Michael's counterclaim for the $ 582,000 it has on hold, and it has not sufficiently briefed this issue, I deny, for now, Caesars's claim to these funds but grant it leave to renew its motion. I also grant Caesars summary judgment on its fraud claim because the factual findings that resulted from my sanctions order establish all the elements of that claim. But because Caesars has not yet addressed what punitive damages it seeks, I also grant it leave to address this issue in its subsequent brief. Finally, I hold Michael in contempt of court for refusing to comply with my order to sign the marker and direct Caesars to address what penalty is appropriate.

Background

A. Michael signs a credit agreement with Caesars, gambles away $ 3 million in borrowed money, and refuses to sign the marker for this loan.

In late 2013, Michael entered into a written agreement with Caesars setting out terms for any future credit that it extended him to gamble in its casino, including the process for signing credit instruments-i.e., markers.8 A signed marker is effectively a check because it includes *1181the patron's bank-account information and authorizes the casino to draw on that account for whatever portion of the loaned money he loses.9 Under the terms of the "credit application," Michael agreed to sign any future markers before drawing money from his credit line.10 But in the event that he received the advanced funds first, Michael agreed to then "promptly ... sign a [marker] in the amount of the advance."11 This type of play-first, sign-later arrangement is referred to as "rim credit." In mid-September 2014, Michael signed another document requesting that Caesars increase his credit line to $ 3 million.12

Over a week later, Michael drew on the credit line, taking out the full $ 3 million in chips to gamble with, but without first signing a marker.13 Michael lost the entire amount, left the casino, and returned to England. After Caesars contacted Michael the following day, he emailed its representative, "re-iterat[ing] it was not [his] intention to not sign" the marker.14 Caesars attempted over the next few days to facilitate his payment of the outstanding debt by providing Michael (at his request) information for wiring the funds and even offering him a sizable discount on the loss if he would return to Las Vegas to sign the marker.15 Michael never pursued either avenue.

B. Caesars sues to compel Michael to sign the marker, and I order him to do so.

Caesars filed this suit in early 2016, alleging, among other things, that Michael breached the credit application by failing to sign the marker, and requesting specific performance in the form of a court order directing Michael to sign.16 Michael counterclaimed for breach of contract, alleging that Caesars was withholding more than $ 582,000 in funds from non-descript "prior transitions" between the two parties.17

Both parties eventually moved for summary judgment on Caesars's contract claim. Michael primarily argued that, without a signed marker, Caesars couldn't sue him to recover the loan. In support, he relied exclusively on NRS 463.361, which states that "gaming debts that are not evidenced by a credit instrument are void and unenforceable and do not give rise to any administrative or civil cause of action." Michael's reading of the statute effectively meant that, if a casino extends credit to a patron without first getting him to sign a marker, that patron's debt is forever unenforceable.18 But that statute, I determined, governed the process for patrons recovering gaming debts from casinos. Another statute, NRS 463.368, addresses the inverse situation presented in this case-a patron indebted to a casino-and expressly allows casinos to (1) receive a signed marker after extending credit and (2) enforce *1182"the debt that the [marker] represents" through "legal process."19 Although Michael reads this statutory scheme to effectively require casinos to have a signed marker on hand as a condition precedent to initiating a suit in any way related to enforcing a gaming debt, he failed (and has yet) to cite any case or statutory authority supporting this expansive interpretation.

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Cite This Page — Counsel Stack

Bluebook (online)
370 F. Supp. 3d 1177, Counsel Stack Legal Research, https://law.counselstack.com/opinion/desert-palace-inc-v-michael-nvd-2019.