LEVONDOSKY v. MARINA ASSOCIATES, (D.N.J. 1990)

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Docket Number

Civ. A. No. 88-3349.

Motions

Motion for summary judgment : Denied

Motion for partial summary judgment : In Part

Attorney(S)

Leonard, Tillery Davison by Gregory E. Sciolla, Moorestown, N.J., for plaintiffs. Budd, Larner, Gross, Rosenbaum, Greenberg Sade P.C. by Sarabeth Egan Howarth, Cherry Hill, N.J., for defendants.

Judges

Mitchell Harry Cohen

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Smart Summary

Factual and Procedural Background

Plaintiffs Robert and Loretta Levondosky brought this action against defendant Marina Associates, doing business as Harrah's Marina Hotel Casino, alleging negligence, breach of warranty, and strict liability. The incident arose when Robert Levondosky, a patron at the defendant's Atlantic City casino, was served a complimentary alcoholic beverage at a gaming table. He alleges that he swallowed thin chips of glass from the rim of the glass containing the beverage, resulting in injury. The defendant moved for partial summary judgment seeking dismissal of the plaintiffs’ warranty and strict liability claims, contending there was no genuine issue of material fact on these claims.

Legal Issues Presented

Whether an express warranty existed under N.J.Stat.Ann. 12A:2-313 in the context of a complimentary drink served by the defendant.
Whether an implied warranty under N.J.Stat.Ann. 12A:2-314 applies to the serving of a complimentary alcoholic beverage in a casino setting.
Whether strict liability may be imposed on the defendant for injuries caused by defective goods served to a patron, despite the absence of a traditional sale.

Arguments of the Parties

Defendant's Arguments

There is no express warranty because the cocktail server made no affirmation, promise, or description regarding the beverage.
The drink was served free of charge, so no "sale" occurred, thereby negating implied warranty and strict liability claims.
Applying implied warranty or strict liability to complimentary drinks would unduly broaden liability, citing an analogy to free wine at art gallery openings or free parking/restroom facilities as non-merchantable services.
Strict liability should not apply based on the precedent in Dixon v. Four Seasons Bowling Alley, Inc. where strict liability was denied because the plaintiff selected her own bowling ball and was in as good a position as the defendant to guard against injury.

Plaintiffs' Arguments

Plaintiffs assert that the defendant impliedly warranted the drink and its container to be fit for consumption under New Jersey law.
They maintain that the service of the drink, even if complimentary, was part of a business transaction because the defendant provided drinks as an incentive to gambling patrons, constituting a "sale" for purposes of implied warranty.
Plaintiffs argue that strict liability applies because the defendant was in a better position to guard against defects in the glass and drink served.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Hersh v. Allen Prods. Co., 789 F.2d 230 (3d Cir. 1986)	Standard for granting summary judgment: no genuine issue of material fact.	Used to affirm the stringent standard for summary judgment and to evaluate the evidence in favor of the non-moving party.
Lang v. New York Life Ins. Co., 721 F.2d 118 (3d Cir. 1983)	Summary judgment standard.	Reinforced the requirement that summary judgment be granted only when no genuine factual dispute exists.
Meyer v. Riegel Prods. Corp., 720 F.2d 303 (3d Cir. 1983)	Doubt must be resolved in favor of the non-moving party on summary judgment.	Guided the court to accept plaintiff’s version of facts for purposes of the motion.
Smith v. Pittsburgh Gage Supply Co., 464 F.2d 870 (3d Cir. 1972)	Summary judgment standard.	Supported the court’s approach to resolving factual disputes.
J.E. Mamiye Sons, Inc. v. Fidelity Bank, 813 F.2d 610 (3d Cir. 1987)	Burden of proof at trial and summary judgment standards.	Used to emphasize that the non-moving party must produce evidence supporting a jury finding.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)	Summary judgment evidentiary standard.	Guided the court’s evaluation of evidence in summary judgment context.
Huddell v. Levin, 537 F.2d 726 (3d Cir. 1976)	Equivalence of implied warranty and strict liability principles in New Jersey.	Supported the court’s treatment of implied warranty and strict liability as related but distinct claims.
Newmark v. Gimbels Inc., 54 N.J. 585, 258 A.2d 697 (1969)	Implied warranty applies beyond strict technical sales; services including goods supplied may give rise to implied warranty.	Used to justify finding a "sale" for implied warranty purposes despite the complimentary nature of the drink.
Shaffer v. Victoria Station, Inc., 91 Wn.2d 295, 588 P.2d 233 (1978)	Implied warranty includes both drink and container as goods subject to warranty.	Adopted to hold that the glass and its contents must be fit for ordinary use, supporting denial of summary judgment on implied warranty claim.
Dixon v. Four Seasons Bowling Alley, Inc., 176 N.J.Super. 540, 424 A.2d 428 (App.Div. 1980)	Strict liability not imposed when plaintiff selects own product, is in equal position to guard against injury, and product is part of a larger service.	Distinguished from the instant case; court found strict liability appropriate here because plaintiff did not select his own glass and defendant was better positioned to prevent injury.
Michalko v. Cooke Color Chemical Corp., 91 N.J. 386, 451 A.2d 179 (1982)	Strict liability may apply even absent a technical sale.	Supported rejection of defendant’s argument that strict liability requires a sale.
Gentile v. MacGregor Mfg. Co., 201 N.J.Super. 612, 493 A.2d 647 (Law Div. 1985)	Policy underlying strict liability shifts cost of injury to those who create opportunity for defective product use.	Used to justify imposing strict liability on defendant as better positioned to bear the cost of injury.

Court's Reasoning and Analysis

The court began by accepting the plaintiff’s factual account, including the injury from glass chips, for purposes of the summary judgment motion. It then analyzed the applicability of express warranty, implied warranty, and strict liability claims under New Jersey law.

Regarding express warranty under N.J.Stat.Ann. 12A:2-313, the court found no evidence that the defendant made any affirmation, promise, or description about the beverage that would create such a warranty. The free serving without comment did not constitute an express warranty, so summary judgment was granted on this claim.

On implied warranty under N.J.Stat.Ann. 12A:2-314, the court examined whether a "sale" occurred despite the drink being complimentary. It reasoned that the defendant, a merchant, regularly serves drinks as part of its business to incentivize gambling, effectively making the complimentary drink part of the overall transaction. Citing Newmark, the court held that the plaintiff’s gambling patronage constituted consideration sufficient to establish a sale for implied warranty purposes.

The court further held that the implied warranty extended to the container (the glass), referencing Shaffer v. Victoria Station, which recognized that both drink and container must be fit for ordinary use. Because the glass was the defendant’s property and part of the served goods, the implied warranty claim could proceed, and summary judgment was denied on this issue.

Regarding strict liability, the court noted New Jersey’s relaxed requirement for a technical sale and rejected the defendant’s argument that strict liability did not apply absent a sale, citing Michalko. It distinguished Dixon, where strict liability was denied because the plaintiff chose her own bowling ball and was equally capable of guarding against injury. Here, the plaintiff did not select the glass, relied on the defendant’s expertise, and the defendant was in a better position to prevent injury, having control over the glass’s condition and use.

The court emphasized the policy of strict liability to shift injury costs to those who create opportunities for defective products. Therefore, strict liability applied and summary judgment was denied on that claim.

In sum, the court granted summary judgment on the express warranty claim but denied it as to implied warranty and strict liability claims.

Holding and Implications

The court’s final decision was to grant in part and deny in part the defendant’s motion for partial summary judgment. Specifically, it GRANTED summary judgment on the plaintiffs’ express warranty claim and DENIED summary judgment on the implied warranty and strict liability claims.

This decision allows the plaintiffs’ implied warranty and strict liability claims to proceed to trial, recognizing that a complimentary drink served as part of a casino patronage may constitute a sale for warranty purposes, and that strict liability can apply even absent a traditional sale. The court did not establish new precedent but applied existing New Jersey law to the facts presented, clarifying the scope of implied warranty and strict liability in the context of complimentary goods served in a commercial setting.

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Robert LEVONDOSKY and Loretta Le v. ndosky, Plaintiffs,

OPINION

COHEN, Senior District Judge:

This negligence, warranty, and strict liability action comes before the court on a motion for partial summary judgment by defendant, Marina Associates d/b/a Harrah's Marina Hotel Casino, against plaintiffs, Robert and Loretta Levondosky. Defendant maintains that there is no genuine issue of fact regarding plaintiffs' warranty and strict liability claims, and that they are entitled to partial summary judgment as to these claims.

FACTS

Plaintiff, Robert Levondosky, was a patron at defendant's hotel and casino in Atlantic City. While playing at one of the gaming tables, he ordered an alcoholic beverage from a cocktail server. The beverage was served free of charge. Plaintiff maintains that he swallowed a few thin chips of glass from the rim of the glass in which the beverage was served, and that he suffered injury therefrom. Consequently he, and his wife, instituted this action for negligence, breach of warranty, and strict liability.

DISCUSSION

It is axiomatic that the standard for granting summary judgment is a stringent one. A court may grant summary judgment only when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). In deciding whether there is a disputed issue of material fact the court must determine all doubt in favor of the non-moving party. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir. 1983), cert. dismissed, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910 (1984); Smith v. Pittsburgh Gage Supply Co., 464 F.2d 870, 874 (3d Cir. 1972).

For purposes of this motion, the court accepts Robert Levondosky's version of the incident, including his allegation that he suffered from internal injuries. In this diversity action the court must determine whether, under these facts, New Jersey would find the express and implied warranty provisions of N.J.Stat.Ann. 12A:2-313 and 12A:2-314 applicable, and whether strict liability may be imposed on defendant. We will deal with each of these issues in turn.

Express Warranty

N.J.Stat.Ann. 12A:2-313 provides that "[e]xpress warranties by the seller are created [by] any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain, . . . [or by] any description of the goods which is made part of the basis of the bargain, . . . [or by] [a]ny sample or model which is made part of the basis of the bargain."

In the instant case, defendant's employee, a cocktail server, gave plaintiff, Robert Levondosky an alcoholic beverage free of charge. The cocktail server did not promise anything regarding the beverage, did not describe the beverage, and did not provide any sample or model beforehand. She simply served the beverage without comment. Plaintiff has not asserted any facts to the contrary, and a "motion for summary judgment must be granted unless the party opposing the motion can produce evidence which, when considered in light of that party's burden of proof at trial, could be the basis for a jury finding in that party's favor." J.E. Mamiye Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir. 1987) (Becker, J., concurring) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986)). There is no evidence before the court that an express warranty was created. Therefore defendant's motion for summary judgment as to plaintiffs' express warranty claim shall be granted.

Implied Warranty

"Since 1960 the terminology of liability has changed from 'implied warranty' to 'strict liability', but the jural foundation of liability has remained unchanged. New Jersey has recognized that, as between an implied warranty theory and a strict liability theory, '[t]he governing principles are identic'." Huddell v. Levin, 537 F.2d 726 (3d Cir. 1976) (citing Jackson v. Muhlenberg Hospital, 96 N.J.Super. 314, 324, 232 A.2d 879 (1967)). The nature of this case lends itself more strongly to the rubric of strict liability in tort, than to implied warranty, although there is a colorable claim under either one. Due to the distinct statutory basis of implied warranty, and differences between strict liability and warranty in their application, we will deal with each claim separately despite the identical underlying principles.

N.J.Stat.Ann. 12A:2-314 provides that:

"a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to the goods of that kind. Under this section the serving for value of food or drink to be consumed . . . on the premises . . . is a sale. Goods to be merchantable must be at least such as . . . are adequately contained . . ."

(emphasis added). The first inquiry is whether a "sale" occurred. The statute describes the "serving for value of food or drink" as a sale. There is no doubt that defendant's employee served plaintiff, Robert Levondosky, a drink. It is less clear, however, whether defendant served that drink for "value".

Defendant was offering complimentary drinks to its patrons. Nonetheless, it was not offering these drinks out of any sense of hospitality or charity. Defendant runs a casino, and the complimentary drinks were offered as an incentive to patrons to gamble, and therefore enhance defendant's business. The statute requires that the seller be "a merchant with respect to goods of that kind." Defendant serves these drinks on a regular basis as part of its business. In fact, it would be difficult to imagine a casino without alcoholic beverages. While Robert Levondosky did not pay the cocktail server a specific amount of money for the drink in question, he was giving defendant his gambling patronage in return. "It was not the intention of the framers of the Uniform Commercial Code to limit the birth of implied warranties to transactions which technically meet its definition of a sale." Newmark v. Gimbels Inc., 54 N.J. 585, 258 A.2d 697, 258 A.2d 697 (1969).

It is common knowledge the casinos are not charitable institutions, and the odds at the gambling tables are set in their favor.

In Newmark the plaintiff was injured by a hair product applied by her hairdresser. The court found that while the plaintiff was primarily paying for the hairdresser's services, there was still an implied warranty as to the hair products. When the plaintiff paid for the service, she also paid for the product. That sale gave rise to an implied warranty. In this case, Robert Levondosky paid for the drink when he purchased the services provided by the casino. When he purchased "chips" from the casino in order to gamble, he was "buying" the gambling services as well as all the incidentals that came with it. We therefore find there was a "sale" for purposes of an implied warranty.

Defendant argues that finding a sale in this instance, would unduly broaden liability under implied warranty provisions. Defendant uses the example of an art gallery serving free wine at an opening, and an accident resulting therefrom. This case, however, differs significantly from that example. A visitor to an art gallery opening is free to enter the gallery, view the art work, have some of the wine and leave without any payment whatsoever. In this case, the casino only serves drinks to patrons who have purchased gambling chips, and are gambling. Defendant also argues that serving free drinks is like offering free parking and restroom facilities, and that finding implied warranties for these services would be unduly burdensome. Free parking and restroom facilities, however, are purely services, and as services not subject to the implied warranty provision. A drink, on the other hand, is a good to be consumed by the gambling patron.

The second inquiry is whether the defendant gave an implied warranty as to the glass as well as to the drink in it. Robert Levondosky was the ultimate consumer of the drink, but the glass remained the property of defendant. In Shaffer v. Victoria Station, Inc., 91 Wn.2d 295, 588 P.2d 233 (1978) the Supreme Court of Washington was faced with a similar situation. In that case plaintiff ordered a glass of wine and the glass broke in his hand causing permanent injury. The state of Washington adopted the identical provision from the Uniform Commercial Code regarding implied warranties as did the state of New Jersey.

In the opinion of the Supreme Court of Washington, when the "Uniform Commercial Code states 'the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale' and that such food and drink must be 'adequately contained, packaged and labeled as the agreement may require,' it covers entirely the situation [when a glass causes injury]. . . . The drink sold includes the wine and the container both of which must be fit for the ordinary purpose for which used." Id. We agree. Defendant gave Robert Levondosky an implied warranty that the drink served was fit for consumption. If that drink was not properly contained, it was not fit for consumption. Therefore, defendant's motion for summary judgment regarding plaintiffs' claim as to implied warranty shall be denied.

Strict Liability

"Imposition of strict liability has been justified on the basis that the manufacturer or seller is in a better position than the consumer to guard against defects in the product." Dixon v. Four Seasons Bowling Alley, Inc., 176 N.J.Super. 540, 545, 424 A.2d 428 (App.Div. 1980). Moreover, just as New Jersey has relaxed the requirement of a technical sale in implied warranty, it has also "clearly rejected the argument that a technical sale occur before strict liability will be imposed." Michalko v. Cooke Color Chemical Corp., 91 N.J. 386, 401, 451 A.2d 179 (1982). "Thus defendant's argument that strict liability cannot be applied in the absence of a 'sale' is unavailing." Id. at 401, 451 A.2d 179.

Defendant cites Dixon v. Four Seasons Bowling Alley, Inc., 176 N.J.Super. 540, 424 A.2d 428 (App.Div. 1980) to bolster its position that strict liability should not be imposed in this case. In Dixon plaintiff was a patron at defendant's bowling alley. She picked out one of the bowling balls made available to her by defendant. The bowling ball was chipped, and while using it she injured her finger. The court found that strict liability should not be imposed. The court relied on the following factors; 1) plaintiff selected her own ball without the assistance of defendant; 2) she could have brought her own ball; 3) the balls were part of a larger service; 4) she did not rely on defendant's expertise for the safety of the ball; 5) she only used the ball for a short time on defendant's premises; and 6) she was in just as good a position to guard against injury as the defendant.

Dixon's only similarity to this case is factor number 3, the drink was part of a larger service. Robert Levondosky, however, did not choose his own glass. He drank what was served to him. He could not have brought his own alcoholic beverage, he relied on defendant for the safety of the drink and the drink was for consumption, not to be returned to defendant. Although he was to return the glass, we consider it part and parcel of the drink. Most importantly defendant was in a better position than Mr. Levondosky to guard against injury.

Defendant purchased the glass. It was in a better position to determine whether the glass was of sufficient quality. It knew how old the glass was, approximately how many times it had been used, and how the glass had been washed and stored. Defendant's employee poured the drink into the glass. She was in a better position to inspect the glass before the liquid might obscure the defect. "The policy underlying strict liability, stated quite simply, is to provide that the cost of injury or property damage is borne not by the injured or damaged person who is unable to protect himself or herself, but by those who create the opportunity for a defective product to be used." Gentile v. MacGregor Mfg. Co., 201 N.J.Super. 612, 622, 493 A.2d 647 (Law Div. 1985). We therefore find that strict liability is appropriate in this case and defendant's motion for summary judgment regarding plaintiffs' claim as to strict liability shall be denied.

For the aforementioned reasons defendant's motion for partial summary judgment shall be granted in part and denied in part.