Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-11-17939/USCOURTS-ca9-11-17939-0/pdf.json

Parties Involved:
Wynn Las Vegas, LLC
Appellee
Konstantin Zoggolis
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KONSTANTIN ZOGGOLIS,

Plaintiff-Appellant,

v.

WYNN LAS VEGAS, LLC,

Defendant-Appellee.

No. 11-17939

D.C. No.

2:11-cv-01562-PMP-PAL

OPINION

Appeal from the United States District Court

for the District of Nevada

Philip M. Pro, Senior District Judge, Presiding

Argued and Submitted

November 6, 2013—San Francisco, California

Filed September 23, 2014

Before: Andrew J. Kleinfeld, Sidney R. Thomas,

and Johnnie B. Rawlinson, Circuit Judges.

Opinion by Judge Rawlinson

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2 ZOGGOLIS V. WYNN LAS VEGAS

SUMMARY*

Nevada State Law

The panel reversed the district court’s dismissal, due to

failure to exhaust claims before the Nevada Gaming Control

Board, of Konstantin Zoggolis’s Nevada state law breach of

contract and recoupment claims concerning gambling debts

that Zoggolis owed to Wynn Las Vegas.

The panel held that Zoggolis was not required to exhaust

his claims before the Gaming Control Board because the

markers that underlay this case were credit instruments. The

panel also held that because the markers were credit

instruments, Zoggolis’ claims did not trigger the Gaming

Control Board’s exclusive jurisdiction over a “gaming debt

that is not evidenced by a credit instrument” under Nev. Rev.

Stat. § 463.361(2). The panel concluded that Zoggolis’s

claims must be resolved in the same manner as any other

dispute involving the enforceability of a negotiable

instrument. The panel expressed no view on the outcome of

the proceedings on remand.

COUNSEL

Gary Logan, Las Vegas, Nevada, for Plaintiff-Appellant.

Lawrence J. Semenza III, Semenza & Semenza, LLP, Las

Vegas, Nevada, for Defendant-Appellee.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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ZOGGOLIS V. WYNN LAS VEGAS 3

OPINION

RAWLINSON, Circuit Judge:

Appellant Konsantin Zoggolis (Zoggolis) challenges the

district court’s dismissal of his state law breach of contract

and recoupment claims concerning gambling debts that

Zoggolis owed to Appellee Wynn Las Vegas (Wynn). 

Zoggolis contends that the district court erred in dismissing

his complaint due to Zoggolis’ failure to exhaust his claims

before the Nevada Gaming Control Board. Because

Zoggolis’ gambling debts were evidenced by credit

instruments in the form of markers, we reverse the district

court’s dismissal of Zoggolis’ claims.

I. BACKGROUND

In his Complaint, Zoggolis alleged that he entered into a

credit agreement with Wynn for a $150,000 credit line. The

credit agreement provided that “[b]efore drawing on [his] line

of credit, if granted, [Zoggolis] agree[d] to sign credit

instruments (i.e. checks) in the amount of the draw.” 

Zoggolis also “authoriz[ed] [Wynn] to complete any of the

following missing items on these credit instruments: (1) the

name of a payee; (2) any missing amounts; (3) a date; (4) the

name, account, number and/or address and branch of any

banks and financial institutions and (5) any electronic

encoding of the above items.” Zoggolis agreed that “each

draw against [his] credit line [was] a separate advance of

money by [Wynn]. If [Zoggolis] receive[d] the advance

before [he] executed a credit instrument, [he] promptly

[would] sign a credit instrument in the amount of the

advance.”

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4 ZOGGOLIS V. WYNN LAS VEGAS

According to Zoggolis, on November 12, 2008, and as

provided in Nevada law, he directed Wynn to limit his credit

line to $250,000. The Complaint alleges that Wynn agreed

one day later, in writing, that Wynn would honor Zoggolis’

request to limit his credit line to $250,000.1

Zoggolis alleged that Wynn breached the credit

agreement because Wynn did not cancel or reduce Zoggolis’

credit line as agreed, and that any duty to repay markers in

excess of $250,000 was discharged. Zoggolis also asserted a

recoupment claim for $1,300,000 based on eleven markers

Wynn issued to him in excess of the restricted credit line. In

addition, Zoggolis sought $1,050,000 in damages

representing “the amount of casino credit extended to him

beyond his self-limited amount of $250,000.00. . . .” Finally,

Zoggolis sought injunctive relief premised on Wynn’s

initiation of criminal proceedings due to the unpaid markers.

Wynn filed a motion to dismiss Zoggolis’ complaint

because Zoggolis failed to pursue his claims before the

Nevada GamingControl Board as required byNev. Rev. Stat.

§ 463.361. The district court granted Wynn’s motion and

dismissed Zoggolis’ breach of contract and recoupment

claims because the claims arose “from a dispute concerning

a gambling debt which requires that [Zoggolis] exhaust

1 Zoggolis’ request was made pursuant to Nevada Gaming Control

Regulation § 5.170(4), which provides:

Each licensee that engages in the issuance of credit,

check cashing, or the direct mail marketing of gaming

opportunities, shall implement a program . . . that

allows patrons to self-limit their access to the issuance

of credit, check cashing, or direct mail marketing by

that licensee. . . .

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ZOGGOLIS V. WYNN LAS VEGAS 5

administrative remedies pursuant to N.R.S. 463.361 . . .”2

Zoggolis filed a timely notice of appeal.

II. STANDARD OF REVIEW

“We review de novo the district court’s dismissal for lack

of subject matter jurisdiction. . . .” Tritz v. United States

Postal Serv., 721 F.3d 1133, 1136 (9th Cir. 2013) (citation

omitted).

III. DISCUSSION

The district court held that dismissal of Zoggolis’ claim

was warranted because the dispute concerned “a gambling

debt.” However, dismissal was warranted only if Zoggolis’

“gambling debt” was of the type required to be exhausted

before the Gaming Control Board under Nevada law.

Nevada courts “traditionally followed the common law

doctrine . . . that a gaming debt is not legally

enforceable. . . .” Sigel v. McEvoy, 707 P.2d 1145, 1146

(Nev. 1985) (citations omitted). The lack of enforceability

encompassed “gaming debts incurred between two players in

the same game or between a casino and a patron . . .” Id. at

1147 n.2. However, in 1983, the Nevada legislature enacted

Nev. Rev. Stat. § 463.361(1), which provides “that gaming

debts not evidenced by a credit instrument are void and

unenforceable and do not give rise to any administrative or

civil cause of action.” Id. at 1146 (internal quotation marks

2 The district court also held that Zoggolis’ claim for injunctive relief

was moot because Wynn had already referred Zoggolis’ unpaid markers

to the Clark County District Attorney’s Office. Zoggolis does not

challenge this ruling.

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6 ZOGGOLIS V. WYNN LAS VEGAS

omitted). This part of the statute is consistent with the

common-law prohibition against enforcement of gaming

debts. In other words, gaming debts not evidenced by a credit

instrument are subject to the common-law doctrine

precluding enforcement of gaming debts. That would be the

end of the story but for Nev. Rev. Stat. § 463.361(2), which

provides that “[a] claim by a patron of a licensee for payment

of a gaming debt that is not evidenced by a credit instrument

may be resolved . . . (a) By the [Gaming Control] Board . . .” 

This statute has been interpreted as conferring exclusive

jurisdiction upon the Gaming Control Board “to resolve a

disputed claim . . . by a patron of a gaming licensee for

payment of a gambling debt that is not evidenced by a credit

instrument. . . .” Sengel v. IGT, 2 P.3d 258, 260 (Nev. 2000)

(citation and footnote reference omitted). In sum, under

Nevada’s statutory scheme, a proceeding before the Gaming

Control Board is the only remedy available “to enforce a

gaming debt not evidenced by a credit instrument . . .” Id.

(citation omitted). To that extent, the Nevada legislature

“modified the common law prohibition against enforcement

of gaming debts. . . .” Sigel, 707 P.2d at 1146.3

 

3

 Nev. Rev. Stat. § 463.361 provides:

1. Except as otherwise provided in NRS 463.361 to

463.366, inclusive, and 463.780, 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.

2. A claim by a patron of a licensee for payment of a

gaming debt that is not evidenced by a credit instrument

may be resolved in accordance with NRS 463.362 to

463.366, inclusive: (a) By the Board; or (b) If the claim

is for less than $500, by a hearing examiner designated

by the Board.

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ZOGGOLIS V. WYNN LAS VEGAS 7

Nev. Rev. Stat. § 463.01467 defines a credit instrument as

“a writing which evidences a gaming debt owed to a person

who holds a nonrestricted license at the time the debt is

created . . .” A licensee is defined as “any person to whom a

valid gaming license . . . has been issued. . . .” Id. n.1

(quoting Nev. Rev. Stat. § 463.0171). It is undisputed that

Wynn is a licensee. Therefore, as between Wynn and

Zoggolis, a licensee and a patron, if the gaming debt is not

evidenced by a credit instrument, the only way to enforce that

gaming debt is through a proceeding before the Gaming

Control Board. See Sengel, 2 P.3d at 260. Although these

statutes do not address the situation where the gaming debt is

evidenced by a credit instrument, as discussed below, Nevada

cases indicate that a gaming debt evidenced by a credit

instrument is enforced in the same manner as any other

negotiable instrument.

To resolve this appeal, we must decide whether markers

like the ones issued to Zoggolis by Wynn are credit

instruments under Nevada law. If the markers were credit

instruments, the Gaming Control Board would not have

exclusive jurisdiction over Zoggolis’ claims, and no

exhaustion would be required. See Nev. Rev. Stat.

§ 463.361(2) (addressing only gaming debts not evidenced by

a credit instrument). The Nevada Supreme Court has defined

a marker as “an instrument, usually dated, bearing the

following information: the name of the player; the name,

location, and account number of the player’s bank; and the

instruction ‘Pay to the Order of’ the casino for a specific

value in United States dollars.” Nguyen v. State, 14 P.3d 515,

516 (Nev. 2000). Part of the content of the marker is a

representation by the payor “that the amount drawn by the

marker is on deposit in the referenced financial institution,

and that he guarantees payment. . . .” Id. When a casino

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8 ZOGGOLIS V. WYNN LAS VEGAS

patron has completed his gaming activity, he either pays the

full amount reflected in the marker or leaves the marker

outstanding with the casino. “If the marker remains

outstanding, casino personnel attempt to notify the patron

and, after a specified period of time, submit the marker to the

patron’s bank for collection. . . .” Id. (footnote reference

omitted).

The markers issued to Zoggolis contained the information

delineated in Nguyen. In the accompanying credit agreement,

Zoggolis committed to “sign credit instruments (i.e. checks)

in the amount of the draw,” and authorized Wynn “to

complete any of the following on these credit instruments:

(1) the name of a payee; (2) any missing amounts, (3) a date,

(4) the name, account number, and/or address and branch of

any banks and financial institutions, and (5) any electronic

coding of the above items. . . .” Zoggolis was also required

to “promptly . . . sign a credit instrument in the amount of

[an] advance.” The markers issued by Wynn were signed by

Zoggolis, contained the requisite credit instrument

information contemplated by the credit agreement, and

confirmed that the marker was “identical to a personal

check.”

In Nguyen, the Nevada Supreme Court reviewed

Nguyen’s conviction for drawing and passing a check without

sufficient funds. The genesis of the criminal charges was a

series of markers issued at several licensed Las Vegas gaming

establishments. See 14 P.3d at 516. The Nevada Supreme

Court framed the primary issue as whether the criminal

statute prohibiting the issuance of “bad checks, applies to

gaming credit instruments commonly known as markers.” Id.

at 517 (internal quotation marks omitted). The Nevada

Supreme Court noted that the applicable criminal statute

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ZOGGOLIS V. WYNN LAS VEGAS 9

prohibits passing a check or draft to obtain credit from a

licensed gaming establishment without sufficient fundsto pay

the check or draft upon presentation. See id. Although the

governing statute does not define “check or draft,” the court

referenced the Uniform Commercial Code provisions

governing negotiable instruments, as codified in the Nevada

Statutes. See id. at 517–18. Those provisions define “check”

as “an instrument drawn upon a bank and payable on demand,

signed by the drawer, containing an instruction to pay a

certain amount to another party. . . .” Id. at 518 (footnote

reference omitted). The court noted that an instrument may

be a check even though on its face it bears a different name. 

See id.

The court opined that the “bad check statute” applies to

“instruments that are drawn upon a bank, payable on demand,

signed by the payor, and which instruct the bank to pay a

certain amount to the payee.” Id. The court described the

markers as checks because they provided for payment of a

specific sum of money drawn from a bank on demand. See

id. The court rejected the argument that the markers

represented a loan rather than a check. See id.

Our decision in Las Vegas Sands, LLC v. Nehme,

632 F.3d 526 (9th Cir. 2011) bolsters our conclusion that the

markers are credit instruments under Nevada law. In that

case, we considered whether the Venetian, a hotel and casino

operated by Las Vegas Sands, LLC, could enforce a marker. 

See id. at 529. We observed that:

A marker is a gambling credit instrument that

allows a gambler to receive all or part of the

credit line the casino has approved for him,

based on the gambler’s prior credit

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10 ZOGGOLIS V. WYNN LAS VEGAS

application with the casino. Once the gambler

and a casino representative sign the marker,

the gambler may exchange the marker for

gambling tokens, or chips. If the gambler

does not pay the marker when he has finished

gambling, the marker is outstanding and the

casino may later submit the marker, like a

check, to the gambler’s bank for payment.

Id. (emphases added). Applying Nevada’s statutory

framework for gambling debts, we concluded:

Here, the marker is a negotiable instrument

and a check because it provides a mechanism

for payment of $500,000 from Bank of

America to the order of the Venetian, is

signed by Nehme, and is payable on demand

because it states no time or date of payment. 

On the face of the marker, the order is

unconditional and states no undertakings by

Nehme other than to pay a specific sum of

money. The marker therefore was valid and

enforceable as a negotiable instrument under

Nevada law. . . .

Id. at 535 (emphasis added) (citations and footnote references

omitted).

Our conclusion is consistent with other rulings describing

markers as credit instruments under Nevada law. See, e.g.,

Summa Corp. v. State Gaming Control Bd., 649 P.2d 1363,

1364 (Nev. 1982), as modified; Miller v. Miller (In re Miller),

292 B.R. 409, 411 (9th Cir. B.A.P. 2003).

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ZOGGOLIS V. WYNN LAS VEGAS 11

Markers representing gambling debt have been variously

characterized as checks, negotiable instruments and credit

instruments. See Nguyen, 14 P.3d at 518; see also Nehme,

632 F.3d at 529, 535. Regardless of the label assigned, it is

evident that courts in Nevada construe a marker to represent

a gaming debt evidenced by a credit instrument as that term

is used in Nev. Rev. Stat. § 463.361. See Nguyen, 14 P.3d at

517 (describing a marker as a credit instrument). In holding

that Zoggolis was required to exhaust his claims before the

Gaming Control Board, the district court did not have the

benefit of the parties’ factual clarification on appeal

concerning the nature of Zoggolis’ gaming debt. During

argument, Wynn acknowledged that Zoggolis’ claims were

predicated on several markers and that those markers were

credit instruments under Nevada law.4 Because Zoggolis’

gaming debts were evidenced by credit instruments, it is now

apparent that Zoggolis was not required to exhaust his claims

before the Gaming Control Board. See Nev. Rev. Stat.

§ 463.361.

Relying on Nev. Rev. Stat. § 463.368(1), Wynn asserts

that only gaming licensees, not patrons, may challenge

gambling debts in court. Wynn’s argument is unavailing. 

Pursuant to Nev. Rev. Stat. § 463.368(1), “[a] credit

instrument accepted on or after June 1, 1983, and the debt

that the credit instrument represents are valid and may be

enforced by legal process.” Although § 463.368(1) provides

4

In response to the panel’s request for a more legible copy of the credit

agreement, Wynn also provided copies of the markers referenced in the

Complaint. The submitted markers only confirmed our conclusion that the

GamingControl Board lacked exclusive jurisdiction over Zoggolis’ claims

in light of Wynn’s concession that the markers referenced in the

Complaint are credit instruments.

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12 ZOGGOLIS V. WYNN LAS VEGAS

that a licensee may enforce a gaming debt premised on a

credit instrument, it does not provide that only licensees may

litigate a gaming debt in court. See id. Rather, Nev. Rev.

Stat. § 463.361(1) provides the only express limitation on

enforcement of a gaming debt through litigation. See Nev.

Rev. Stat. § 463.361(1) (“[G]ambling 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.”). If the Nevada legislature intended to completely

deprive patrons of the ability to litigate gaming debts, it could

have easily drafted Nev. Rev. Stat. § 463.361(1) to provide

that no gaming debts give rise to “any administrative or civil

cause of action” on the part of gamblers, rather than

addressing only gaming debts not evidenced by a credit

instrument. Id. Because the Nevada legislature only limited

enforcement of gaming debts that are not evidenced by a

credit instrument, the obvious implication is that enforcement

of gaming debts evidenced by a credit instrument is not so

limited. Indeed, as discussed earlier, we have previously

recognized the enforceability of gaming debts evidenced by

a credit instrument. See Nehme, 632 F.3d at 536–37

(recognizing the potential of a defensive claim by the patron

against the casino for failure to reduce the line of credit upon

request).

Wynn’s reliance on Weisbrod v. Fremont Hotel, Inc.,

326 P.2d 1104 (Nev. 1958) is also misplaced. In that case,

the Nevada Supreme Court considered a patron’s claim that

a casino had improperly refused to pay him $12,500 in keno

winnings. See Weisbrod, 326 P.2d at 1104. The Nevada

Supreme Court opined that “[i]n 1872 it was established as

the law of this state that an action does not lie for the

collection of money won in gambling. . . .” Id. (citation

omitted). Based on existing law, the Nevada Supreme Court

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ZOGGOLIS V. WYNN LAS VEGAS 13

held that the patron was unable to pursue his claim in court. 

See id. at 1105. Notably, Weisbrod was decided prior to the

Nevada legislature’s 1983 modification of “the common law

prohibition against enforcing gaming debts.” Sigel, 707 P.2d

at 1146.

IV. CONCLUSION

Because the markers that underlie this case are credit

instruments under Nevada law, Zoggolis was not required to

exhaust his claims before the Gaming Control Board. 

Because the markers are credit instruments, Zoggolis’ claims

did not trigger the Gaming Control Board’s exclusive

jurisdiction over “a gaming debt that is not evidenced by a

credit instrument . . .” Nev. Rev. Stat. § 463.361(2). Rather,

Zoggolis’ claims must be resolved in the same manner as any

other dispute involving the enforceability of a negotiable

instrument. See Nehme, 632 F.3d at 535–39. We express no

view on the outcome of the proceedings on remand. We hold

only that Zoggolis is not required to exhaust his claims before

the Gaming Control Board.

REVERSED and REMANDED.

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