GNOC CORP., t/a ATLANTIC CITY HILTON v. DAVID A. POWERS

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
 
 
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2719-04T2

GNOC CORP., t/a
ATLANTIC CITY HILTON,

Plaintiff-Respondent,

v.

DAVID A. POWERS,

Defendant-Appellant.

_______________________________________

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March 9, 2006

Argued February 16, 2006 Decided

Before Judges Conley and Weissbard.

On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, ATL-2337-03.

Daniel Posternock argued the cause for appellant (Kaestner & Associates and Barron, Baker & Posternock, attorneys; Mr. Posternock and Joseph W. Kaestner, on the brief).

Gerard W. Quinn argued the cause for respondent (Cooper Levenson, attorneys; Jay L. Hundertmark, on the brief).

 
PER CURIAM

Defendant, an admitted "high-stakes gambler," appeals summary judgment granted GNOC Corp. in its action against defendant for collection of his $25,000 gambling debt to the GNOC's Hilton Casino (Hilton) and dismissing defendant's counterclaims against Hilton for its alleged negligence in the theft of casino chips representing his winnings at the Hilton. Defendant concedes the $25,000 gambling debt. See footnote 1 On appeal he challenges the dismissal of his counterclaim. We affirm.
The pertinent facts are not complex. On February 28, 2003, defendant arrived at the Hilton for a two-day stay. He was not new to the Hilton and had previously been there for two-day stays on December 6, 2002, November 16, 2002, and October 5, 2002. At the Hilton front desk, he and his friend were issued electronic room keys. The two checked into their rooms and proceeded to the gambling area. It is not disputed that visible signs are posted both at the front desk and in the hotel rooms notifying the guests that the hotel was not responsible "for valuables or other property left in [the] room[s]" and that the hotel had a safe for the guests' valuables.
Defendant won approximately $76,000. He converted his winnings into $25,000 cash, ten grey chips ($5000 each), and a white chip ($1000 value) and he and his friend retired to their rooms. Throughout the night, various room service deliveries were made to defendant's room. Each of those deliveries was recorded by an electronic lock on the door of the room; the door to the room locked automatically when closed. Prior to going to sleep, defendant put his chips, along with a gold money clip valued at $1500, $700 in cash in the clip, $10,000 cash in a passport wallet, and $22,000 cash in rubber bands, on the dresser.
At 4:19 a.m., the front desk issued a second key to defendant's room to an unknown person. When defendant awoke the next morning, he discovered that his chips, cash and money clip were gone. Two days later, and on several occasions thereafter, various people attempted to negotiate grey chips at the Hilton. They were not thought to be authorized owners of the chips and the Hilton declined to cash them in for money. The police and gambling officials investigated all of these individuals. No warrants for their arrest were issued. There is no evidence in the record that these chips were the ones taken from defendant's room.
There are no material issues of fact in dispute here. The motion judge dismissed the counterclaim on the basis of the Innkeepers' Act, N.J.S.A. 29:2-1 to -4. Enacted in derogation of the common law pursuant to which "an innkeeper is practically the insurer of the safety" of a guest's property, North River Ins. Co. v. Tisch Mgmt., Inc., 64 N.J. Super. 357, 360 (App. Div. 1960), N.J.S.A. 29:2-2, titled: "Loss of property of guests not deposited in safe; liability for", provides in pertinent part:

If the proprietor of any hotel shall provide a safe or other depository in the hotel's office or in another convenient place, for the safekeeping of any valuables belonging to guests of the hotel, and shall place, in a conspicuous position in the room or rooms occupied by each guest, a notice stating the fact that a safe or other depository is provided in which valuables may be deposited, and any guest shall neglect to deliver valuables to the person in charge of the safe or other depository, the proprietor of the hotel shall not be liable in any sum for the loss of valuables sustained by that guest, by theft or otherwise. . . .

[Emphasis added.]

Defendant does not contend here that the Hilton is not a "hotel" or that the required notice was not provided. Neither does he dispute that his cash and money clip are covered by N.J.S.A. 29:2-2's immunity. It is the chips that are at issue.
The Act defines "valuables" thusly:
"Valuables" includes money, bank notes, bonds, precious stones, jewelry, ornaments, furs, watches, securities, transportation tickets, cameras, checks, drafts, and other negotiable instruments, business papers, documents, and other papers, and any other articles of similar value.

[N.J.S.A. 29:2-1c (emphasis added).]

It is defendant's contentions that because casino chips are not specifically enumerated in N.J.S.A. 29:2-1c and are not items of value as they are merely an accounting mechanism to evidence a debt owed by the casino, N.J.S.A. 29:2-2 does not apply to them. Further, he asserts that the chips do not "belong to guests", pointing to N.J.A.C. 19:46-1.5(f) which provides:
Each gaming chip and plaque is solely evidence of a debt that the issuing casino licensee owes to the person legally in possession of the gaming chip or plaque, and shall remain in the property of the issuing casino licensee. Each casino licensee shall have the right at any time to demand that the person in possession of the gaming chip or plaque surrender the item for redemption . . . .

[Emphasis added.]

To be sure, casino chips are not specifically listed as one of the enumerated items in the definition of "valuables". But the list in N.J.S.A. 29:2-1c is not exhaustive, as it is preceded by the word "includes" and followed by the words "any other articles of similar value". Included under the statutory definition of valuables are "money, bank notes, bonds, . . . securities, . . . checks, . . . business papers, . . . documents, . . . ." N.J.S.A. 29:2-1c. As the motion judge observed: "[W]hile the statute may not say casino chips . . . it does have in there the things that have, like chips, no intrinsic value of their own such as bank notes, bonds, securities, those are evidence of either value or debt, bond being evidence of debt just as a chip is evidence of a debt. . . . " And too, although the hotel owns the chips, while they are in the possession of the guest they belong to that guest until redeemed for cash.
We recognize that the Third Circuit has said that gambling chips are not "property" of the gambler and are "merely an accounting mechanism of debt" with no "independent economic value." Zarin v. Comm'r of Internal Revenue, 916 F.2d 110, 113 (3d Cir. 1990). Zarin, however, is readily distinguishable. Collins v. Comm'r of Internal Revenue, 3 F.3d 625, 633-34 (2d Cir. 1993). At issue in Zarin was "the narrow income exclusion provision of 108(d) of the (Internal Revenue) Code." Collins, supra, 3 F.3d at 634. Moreover, in concluding that the chips held by the gambler were not "property," the Zarin Court observed that while "theoretically" they could have been redeemed for cash, "the reality of the situation was quite different" as the gambler owed the casino much more than the value of the chips, which he would be required to repay before cashing them in. Zarin, supra, 916 F.2d at 114. Those are not the circumstances here.
Thus, defendant's reliance upon N.J.S.A. 29:2-3a is misplaced. It provides:
No proprietor of any hotel shall be liable in any sum to any guest of the hotel for the loss of personal property not mentioned in [N.J.S.A.] 29:2-2 where it shall appear that such loss occurred without the fault or negligence of the proprietor.

[Emphasis added.]

 
This provision absolves an innkeeper from liability for loss of property not covered by N.J.S.A. 29:2-2 only where there is no negligence or fault on the part of the innkeeper, his servants, or employees. See e.g. Kushner v. President of Atlantic City, Inc., 105 N.J. Super. 203, 210 (App. Div. 1969). But here, the chips fall within the scope of N.J.S.A. 20:2-2.
So too, defendant's reliance upon Heinz v. Leeds & Lippincott Co., 55 F.2d 829 (3d Cir. 1932), is misplaced. Heinz concerned strict compliance with the statutorily required notice. Here, defendant concedes that the Hilton complied with the statutory notice requirements. Where, as here, a hotel is in strict compliance with the notice requirements, the Act operates as a bar to plaintiff's recovery. Compare Platt v. New Irvington Hotel of Lakewood Inc., 85 N.J. Super. 330, 336 (App. Div. 1964) (no genuine issue of fact as to the conspicuousness of the statutory notice) with North River Ins. Co. v. Tisch Mgmt., Inc., 64 N.J. Super. 357 (App. Div. 1960) (statutory notice, "a minor appendage to what in primary purport was a hotel directory", failed to satisfy the statute as a matter of law. Id. at 362.).
Finally, we briefly comment on defendant's claim that summary judgment should not have been granted on his set-off contention set forth in count four of his counterclaim as a casino should not be able to rely upon a theft of chips from its "creditor" guest to avoid its debt. But it seems undisputed that without the chips, defendant has nothing to establish the debt. If the hotel is not responsible for the loss of the chips, it is not responsible for the consequences, i.e., defendant's inability to collect on the debt. To the extent defendant claims, beyond the theft, that the Hilton was negligent in not recovering "his" chips when "they" were subsequently attempted to be cashed in by others, he has presented no authority, factual or otherwise, to support the contention that Hilton had a duty to seize the chips or, more importantly, that they were "his" chips.
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Affirmed.
Footnote: 1 Defendant incurred this debt when, a month after the theft he returned to the Hilton and negotiated a $25,000 casino gambling check (a marker) drawn on his Virginia law firm's business account. He thereafter closed out the account causing the marker to be dishonored.

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