Booze And Boating Don’t Mix (But They Do Lead To An Interesting Discussion Of Negligent Entrustment)

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Some sets of facts just seem tailor-made for a potential lawsuit. Climbing up a ladder with a chainsaw to cut your neighbor’s tree limbs that are hanging over your lawn comes to mind. Also on that list, a day out on a boat with your friends from the local bar, more than a few beers, and a jet-ski. Those were the basic facts in Votor-Jones v. Kelly. In that case, what started out as a fun day out at sea for a group of friends became a very bad day for plaintiff and an opportunity for the court to opine on the rarely-invoked tort of negligent entrustment.

In Kelly, plaintiff was “one of seven employees and patrons of Kelly’s Tavern invited on a social trip organized by the tavern’s owner and plaintiff’s boyfriend.” While plaintiff described the event as a “bar outing,” it was not the more formal, “large scale ” “customer appreciation days” that the bar had organized in the past. Instead, it was “small and planned the night prior at the suggestion of the boat’s operator.” Each attendee was required to bring their own food and alcohol. To that end, plaintiff and her boyfriend testified that, on the morning of the cruise, they went to the bar and fulled their cooler with approximately 24 beers and a bottle of wine. The group had a total of four or five coolers like this on the boat.

The attendees had a “tacit agreement” that they would not drink until 4pm, but some apparently ignored this agreement. One defendant acknowledged that she was drinking prior to boarding the boat and plaintiff testified that she saw this woman have “at least three beers on the dock” before the cruise began. Once the cruise started, this same woman was seen with a beer in her hand and was described by plaintiff as being “loud,” “boisterous,” and “excited.” Plaintiff conceded that she did not know if the woman was drunk, but did see her “wobbling on the boat, as was everyone else.”

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Party That Drafted Arbitration Provision Moves To Have Provision Deemed Unenforceable. It Lost.

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Most cases involving commercial contracts and arbitration provisions follow a similar pattern. They generally involve consumers arguing that they cannot be bound by arbitration clauses found in the fine print of boilerplate contracts that they had no ability to negotiate. But Shah v. T & J Builders, LLC turns this scenario on its head. In Shah, plaintiffs, the consumers, drafted the contract that contained the arbitration clause but later argued that it was unenforceable. To make matters worse (or at least more unusual), plaintiffs took this position after participating in an arbitration proceeding with defendant for two years. Not surprisingly, plaintiffs efforts to have their own arbitration clause deemed unenforceable were unsuccessful.

In Shah, plaintiffs hired defendant to build an extension on their home. The contract, which was "heavily negotiated between the parties," albeit without counsel, was drafted by plaintiffs. It contained an arbitration clause that required the parties to arbitrate "any dispute [ ] relative to the performance of [the] contract that [they could not] satisfactorily resolve." After one such dispute arose, plaintiffs terminated the contract and defendant filed an arbitration demand. Plaintiffs answered the demand and filed a counterclaim, alleging breach of contract and violations of New Jersey Consumer Fraud Act. Nowhere in their answer or counterclaim did plaintiffs address, much less challenge, the arbitration clause.

The parties, through counsel, then pursued their claims in arbitration for almost two years, exchanging discovery and expert reports, participating in a site inspection, and participating in several conferences with the arbitrator. Two weeks before the scheduled arbitration date, the parties submitted their pre-arbitration briefs. This is where the fun began.

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Arbitration Provision Bounced Again, Even After Kindred Nursing Decision.

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

As readers of this blog know, arbitration provisions in consumer contracts are difficult to enforce in New Jersey. (Click here or here for a refresher.) There was some belief that the U.S. Supreme Court's recent decision in Kindred Nursing Centers Ltd. P'ship v. Clark might change this, but it does not appear, at least not yet, that it has. In a recent case, Defina v. Go Ahead and Jump 1, LLC d/b/a Sky Zone Indoor Trampoline Park, the Appellate Division was asked to revisit, in light of Kindred Nursing, its prior decision refusing to enforce an arbitration provision in a contract between a trampoline park and one of its customers. The Appellate Division did so, but affirmed its prior decision, holding that Kindred Nursing did not require New Jersey courts to change the manner in which they approach arbitration provisions.

I wrote about Defina in its first go-around with the Appellate Division — Bounce Around The (Court)Room: Trampoline Park's Arbitration Provision Deemed Unenforceable. The underlying facts of the case are unfortunate. A child fractured his ankle while playing "Ultimate Dodgeball" at a trampoline park. Before entering the facility, the child's father signed a document entitled, "Participation Agreement, Release and Assumption of Risk." The document contained an arbitration provision, which provided:

If there are any disputes regarding this agreement, I on behalf of myself and/or my child(ren) hereby waive any right I and/or my child(ren) may have to a trial and agree that such dispute shall be brought within one year of the date of this Agreement and will be determined by binding arbitration before one arbitrator to be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. I further agree that the arbitration will take place solely in the state of Texas and that the substantive law of Texas shall apply.

Notwithstanding this provision, the child's parents sued the trampoline park in state court, alleging tort claims for simple negligence and gross negligence, and statutory claims for alleged violations of the Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act.

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No Expert Needed When Party’s Attempt To Fix Clogged Tub “Bespeaks Negligence”

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Although I have been a homeowner for a number of years and like to think that I am reasonably handy, my knowledge of plumbing is probably more informed by Mario Brothers than anything else. As the saying goes, I know just enough about the subject to be dangerous, so I generally try to avoid it. One of the parties in a recent Appellate Division decision, Sayat Nova, LLC v. Koestner, probably would have been better served heading this advice, as the Appellate Division held that no expert was needed to show that it acted negligently when it broke a pipe in a clogged tub that caused flooding in a restaurant several floors down.

In Sayat Nova, plaintiff operated a restaurant in defendant's building. After water from a third-floor apartment came flooding like a "waterfall" out of the ceiling and into the restaurant, plaintiff sued. The incident that precipitated the lawsuit was not the first time that the restaurant flooded. Four times in the previous three years, water entered the restaurant from the same general area in the ceiling. Each incident "involved more water and more damage than the previous incident." Each time plaintiff notified defendant, but never received a response. On one prior occasion, after receiving no response from defendant, plaintiff hired contractors at his own expense to repair the damage. Plaintiff was never compensated for these expenses or any losses caused by the prior incidents.

In the incident that led to the complaint, water came into plaintiff's restaurant from the ceiling above a different area of the restaurant than in prior incidents. Moments after plaintiff noticed the intrusion, the building's superintendent entered the restaurant with a man plaintiff did not know. Neither man was a licensed plumber. The superintendent told plaintiff: "By mistake we broke the pipe . . . We try to fix the fixture, and the guy by mistake break the pipe." He was apparently referring to a pipe in a third-floor apartment with a "hair-clogged tub." After the incident, defendant called a licensed plumber to fix the problem, but the damage caused plaintiff to have to close his restaurant several days for repairs.

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In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

The running battle between the Borgata and world renowned poker player Phil Ivey (among others) continues, and, fortunately, continues to be interesting. As I wrote about here and here, the Borgata sued Ivey and an associate, Cheng Yin Sun, after the two men won more than $9.6 million playing Baccarat at the casino. The Borgata claimed that the two men used an impermissible "edge sorting" scheme to win the money, and therefore breached their implicit contract with the casino to abide by the terms of the Casino Control Act. The scheme relied, in part on an alleged defect in the playing cards, which Ivey and Sun knew about and exploited. The Third Circuit described it as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successfully moved for summary judgment against Ivey and Sun, and was awarded more than $10 million in damages.

In addition to suing the players, the casino also sued the manufacturer of the cards that were used in the edge-sorting scheme. Both moved for summary judgment, and both motions were initially denied without prejudice. After the district court's decision on the casino's summary judgment motion against Ivey and Sun, both renewed their motions. The district court again denied both, but in doing so, threw cold water on the casino's claims against the manufacturer, including holding that the most the casino could recover against the manufacturer was $26.88, the cost of the allegedly defective cards.

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