Court Opinion

ID: 9908317
Source: CourtListenerOpinion
Date Created: 2023-12-08 15:07:52.670304+00
Date Added: 2024-06-11T12:49:05.645816
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-3081-21

LAWRENCE J. MILLS, a/k/a
JUSTIN MILLS, and DANIEL
CHUN,

         Plaintiffs-Appellants,

v.

GOLDEN NUGGET ONLINE
GAMING, INC.,

     Defendant-Respondent.
_________________________

                   Submitted October 2, 2023 – Decided December 8, 2023

                   Before Judges DeAlmeida and Berdote Byrne.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Atlantic County, Docket No. L-0025-22.

                   Lawrence J. Mills appellant pro se, on the joint brief.

                   Daniel Chun appellant pro se, on the joint brief.

                   Yankwitt LLP, attorney for respondent (George
                   Cheesman Godfrey III, Esq., of counsel and on the
                   brief).
PER CURIAM

      Plaintiffs, Lawrence Mills (Mills) and Daniel Chun (Chun), appeal the

Law Division's May 23, 2022, order dismissing their complaint against Golden

Nugget Online Gaming, Inc. (GNOG or defendant) with prejudice and argue the

trial court erred when it found plaintiffs failed to state a claim upon which relief

could be granted pursuant to Rule 4:6-2(e) because res judicata, collateral

estoppel, and the entire controversy doctrine barred their complaint. Mills also

claims the trial court erred in finding he lacked standing to bring a claim against

defendant.

      We agree with the trial court's finding Mills lacks standing to bring a

claim. We disagree with the trial court's conclusion that res judicata, collateral

estoppel, or the entire controversy doctrine apply to bar Chun's sole claim of

conversion. We also hold the court erred in dismissing the complaint with

prejudice. However, we conclude Chun's complaint for conversion fails to state

a claim upon which relief may be granted pursuant to Rule 4:6-2(e). The

dismissal of the pleading is affirmed, but without prejudice as to Chun. We

remand this matter to the trial court for entry of a conforming order.

                                         I.

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                                         2
        We glean the following facts from the record: on November 2, 2017, Chun

opened an online gaming account through GNOG using $1,000 given to him by

Mills. Mills gave Chun the money in exchange for the oral promise they would

split any winnings resulting from gambling the $1,000. Chun deposited the

money in cash at Golden Nugget Atlantic City Casino, owned by Golden Nugget

Atlantic City LLC (GNAC) and opened an online gaming account (the account).

        Pursuant to the account's terms and conditions, defendant was permitted

to place a hold on an account for security review, block a user's account, or

terminate a user's account under certain circumstances. These terms are in

addition to statutes and regulations imposed upon online gaming accounts by

the State of New Jersey.

        The same day Chun deposited the money, defendant placed a hold on the

account for security-related reasons. Chun attempted to immediately withdraw

the money but was prohibited due to the hold on the account. Plaintiffs filed

suit against GNAC 1 in Federal District Court for the District of New Jersey and

alleged, among other things, conversion of the money deposited in the account

1
    It is unclear whether defendant, GNOG, was a party to that lawsuit.

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                                        3
(the Federal Action). 2 The Federal Action was filed on October 31, 2019.

Defendant claims it sent Chun an email on October 25, 2019, stating the account

would be terminated due to account inactivity and the money would be deemed

forfeited if Chun did not log into the account within the next thirty days. It is

undisputed Chun did not log into his account within the thirty-day period.

Defendant terminated the account and deemed the money forfeited on December

2, 2019.

      The District Court granted summary judgment to GNAC and dismissed

plaintiffs' complaint on August 18, 2021.       The District Court found the

temporary hold GNAC placed on Chun's account was valid pursuant to the terms

and conditions of the contractual agreement between it and Chun.

      On September 27, 2021, after the Federal Action was dismissed, Chun

contacted GNOG's support team to withdraw the money. Counsel for GNAC in

the Federal Action informed Chun the money was deemed forfeited on

2
  The casino was not named as a party to this action, but we understand it was
a party to the related Federal Action. These facts are taken from the parties'
briefs because both parties have failed to supply the online gaming contract at
issue. The opinion disposing of the Federal Action is not part of the record. We
denied plaintiffs' motion to supplement the record with the opinion disposing of
the Federal Action.

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                                       4
December 2, 2019 "[p]ursuant to NJ Regulations and the Terms and Conditions

of the Agreement with GNOG . . . ."

      Plaintiffs filed this complaint in the Law Division asserting one count of

conversion three months later, on December 31, 2021. GNOG moved to dismiss

plaintiffs' complaint on four grounds: (1) the taking of plaintiffs' $1,000 was not

wrongful; and (2) res judicata, (3) collateral estoppel, and (4) the entire

controversy doctrine each barred the present case. Defendant also moved to

dismiss Mills for a lack of standing.

      The trial court granted GNOG's motion to dismiss with prejudice and

found for defendant on each of the five issues raised in its motion. This appeal

followed.

                                        II.

Standing.

      We review the issue of Mill's standing first, as it is a threshold

determination we review de novo on appeal. Cherokee LCP Land, LLC v. City

of Linden Planning Bd., 234 N.J. 403, 414 (2018). No deference is afforded to

the trial court's conclusions. Ibid.

      We review de novo the trial court's dismissal of a complaint pursuant to

Rule 4:6-2(e), applying the same standard as the trial court. Dimitrakopoulos v.

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                                        5
Borrus, Goldin, Foley, Vignuolo, Hyman, & Stahl, P.C., 237 N.J. 91, 108

(2019). Our role is limited to reviewing "the pleadings themselves," id. at 107

(quoting Roa v. Roa, 200 N.J. 555, 562 (2010)), to ascertain "the legal

sufficiency of the facts alleged," (quoting Printing Mart-Morristown v. Sharp

Elecs. Corp., 116 N.J. 736, 746 (1989)).

      Our review is performed "with a generous and hospitable approach." Ibid.

(quoting Printing Mart-Morristown, 116 N.J. at 746). The plaintiff is entitled to

every reasonable factual inference to determine whether a cause of action exists

in the complaint. Ibid. We are not concerned at this stage of the litigation

whether the claim will be successful. Mac Prop. Grp. LLC v. Selective Fire &

Cas. Ins. Co., 473 N.J. Super. 1, 16 (App. Div. 2022) (quoting Leon v. Rite Aid

Corp., 340 N.J. Super. 462, 472 (App. Div. 2001)). A dismissal of a complaint

pursuant Rule 4:6-2(e) is generally made without prejudice, Nostrame v.

Santiago, 213 N.J. 109, 128 (2013), unless any future amendment is patently

insufficient to support a claim, Mac Prop. Grp., 473 N.J. Super. at 17.

      Plaintiffs argue Mills retained a property interest in the money, conferring

standing upon him to bring a claim for conversion. Standing is governed by

Rule 4:26-1. EnviroFinance Grp., LLC v. Env't Barrier Co., 440 N.J. Super.

325, 339 (App. Div. 2015). The rule permits "[e]very action [to] be prosecuted

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                                        6
in the name of the real party in interest . . . ." R. 4:26-1. The relationship

between Chun and defendant is governed by the rules of contract. In that setting,

an individual generally only has standing to pursue a breach of contract claim if

they are party to the contract. Med. Soc'y of N.J. v. AmeriHealth HMO, Inc.,

376 N.J. Super. 48, 61 (App. Div. 2005).          Mills was never a party to the

contractual relationship between Chun and defendant, and the most generous

reading of the pleadings fails to confer upon GNOG any contractual duty or

benefit owed to Mills. Therefore, Mills has no standing to sue GNOG. At best,

perhaps Mills has standing to sue Chun as a third-party plaintiff, pursuant to the

alleged oral promise between Mills and Chun, for return of the funds if Chun is

successful in obtaining reimbursement from GNOG. We see no reason to disturb

the trial court's order in this respect and affirm the dismissal of Mill's complaint,

with prejudice.

                                        III.

The Conversion Claim.

      Conversion is the "[(1)] wrongful exercise of dominion and control over

property [(2)] owned by another [(3)] inconsistent with the owners' rights." Sun

Coast Merch. Corp. v. Myron Corp., 393 N.J. Super. 55, 84 (App. Div. 2007)

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(quoting Port-O-San Corp. v. Teamsters Loc. U. No. 863 Welfare & Pension

Funds, 363 N.J. Super. 431, 440 (App. Div. 2003)).

      When Chun opened the account and deposited the money therein, the

parties agreed to abide by the account's terms and conditions. Among those

terms was section 4.8, which states:

            After 365 days of account inactivity (meaning no actual
            wagering, game play, deposit or withdrawal), you will
            be informed via email that you have been inactive and
            whether or not you have any remaining funds in the
            account. You hereby acknowledge that, if your account
            remains dormant for more than 365 days, we have the
            right to close the account and any funds remaining in
            the account shall be forfeited.

This section complies with N.J.S.A. 5:12-95.24, which requires "[a]ll amounts

remaining in [dormant] Internet gaming accounts . . . under such conditions as

established by regulation by [the New Jersey Division of Gaming Enforcement]

shall be paid 50% to the casino licensee and 50% to the casino control fund."

The statute requires GNOG attempt contact with the account owner via mail,

phone, or computer. An account is dormant if there is no activity for one year.

N.J.A.C. 13:690-1.1.     At the time the account was opened, defendant was

required to include in the terms and conditions "[n]otification that if the patron's

internet gaming account remains dormant for a period of one year any funds

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remaining on deposit and any pending wagers shall be forfeited." N.J.A.C.

13:690-1.2(1)(8) (amended Jan. 2018).3

      On appeal, there is no dispute Chun demanded return of the money and

defendant refused to return it. The issue is whether defendant's refusal was

inconsistent with Chun's contractual rights. Chun does not dispute he agreed to

the terms and conditions associated with the account. Nor does he dispute

GNOG had the authority to terminate the account pursuant to the terms and

conditions and pursuant to New Jersey law.

      In his arguments to the trial court and to us, Chun claims he never received

the required notice. The complaint does not allege Chun did not receive the

December email notifying him his account would be terminated for inactivity.

Nothing in the complaint disputes the receipt of the December 2019 email or the

validity of the email account Chun used when opening the account.

      The complaint instead disputes the account was dormant because it was

"the subject of active litigation," without citation to any statute or caselaw.

Because the complaint does not allege any actions which could be considered

activity by either section 4.8 of the terms and conditions (wagering, game play,

3
  The regulation was changed to require merely a "[f]ull explanation of all rules
applicable to dormant Internet gaming accounts." N.J.A.C. 13:69O-1.2(l)(8).
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                                        9
deposit, or withdrawal) or N.J.A.C. 13:690-1.1 (the broader "patron initiated

activity") there is no wrongful conduct alleged to justify a claim of conversion

and the trial court was correct to dismiss the conversion claim. Chun's rights

are governed by the agreed contractual terms and conditions or applicable laws

and regulations.

      However, because a grant of dismissal is usually without prejudice, Flinn

v. Amboy Nat'l Bank, 436 N.J. Super. 274, 286-87 (App. Div. 2014), Chun

should have been given an opportunity to amend his complaint to plead any

contractual claim, assuming jurisdiction and venue is properly laid pursuant to

the online gaming contract.

                                       IV.

Res Judicata, Collateral Estoppel, and The Entire Controversy Doctrine.

      We part company with the trial court in finding Chun's claims are barred

by res judicata, collateral estoppel, or the entire controversy doctrine. It is our

understanding, without the benefit of any of the pleadings in the Federal Action,

the conversion claim in the Federal Action was predicated upon the initial

temporary hold of the funds in the account, whereas the present suit is based

upon GNOG's later refusal to return the money after the account was terminated

for inactivity. According to plaintiffs, the current lawsuit "has nothing to do

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                                       10
with [the] initial hold placed on [the] account which was the basis for the

[Federal Action]." Because Chun disputes the permanent seizure of the money

"which occurred on November 3, 2021, [this case] is not the same as the

temporary and lawful hold on the funds which occurred on November 2, 2017."

Further, because defendant did not refuse to return the money until after the

Federal Action concluded, Chun could not bring his claim while the Federal

Action was ongoing, thus foreclosing the application of the entire controversy

doctrine.

      The doctrine of res judicata precludes the re-litigation of substantially the

same cause of action once it is finally determined on the merits by a court of

competent jurisdiction. Wadeer v. N.J. Mfrs. Ins. Co., 220 N.J. 591, 606 (2015).

Collateral estoppel is a subset of res judicata, In re Liquidation of Integrity Ins.

Co./Celotex Asbestos Tr., 214 N.J. 51, 66 (2013) (quoting Div. of Youth & Fam.

Servs. v. R.D., 207 N.J. 88, 114 (2011)), and precludes the re-litigation of issues

actually determined in the previous action between the same or similar parties,

but involving a different cause of action, R.D., 207 N.J. at 115 (quoting State v.

Gonzalez, 75 N.J. 181, 186 (1977)). Similarly, the entire controversy doctrine—

codified at Rule 4:30A—"stems directly from the principles underlying the

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                                        11
doctrine of res judicata . . . ." Bank Leumi USA v. Kloss, 243 N.J. 218, 227

(2020) (quoting Prevratil v. Mohr, 145 N.J. 180, 187 (1996)).

      To invoke res judicata, there must be (1) a final judgment on the merits;

(2) the same parties, or parties in privity with those of the prior suit; and (3) the

same or substantially similar claims arising from the same transaction or

occurrence. N.J. Div. of Child Prot. & Permanency v. J.Y., 467 N.J. Super. 235,

244 (App. Div. 2021); Rippon v. Smigel, 449 N.J. Super. 344, 367-68 (App.

Div. 2017).4 "[R]es judicata does not bar claims that are predicated on events

that postdate the filing of the initial complaint." Rippon, 449 N.J. Super. at 368

(quoting Whole Woman's Health v. Hellerstedt, 136 S. Ct. 2292, 2305 (2016)

abrogated by Dobbs v. Jackson Women's Health Org., 597 U.S. ___, 142 S. Ct.

2228 (2022)). Likewise, "a prior judgment does not preclude new claims based

on acts occurring after the time of the first judgment." Hellerstedt, 136 S. Ct. at

2335 (Alito, J. dissenting).

4
  The requirements for collateral estoppel are substantially similar: (1) identical
issues, (2) actually litigated in the prior proceeding, (3) by a court which issued
a final judgment on the merits, (4) where the determination was essential to the
prior judgment, with (5) identical parties or parties in privity to those in the prior
proceeding. Adelman v. BSI Fin. Servs., Inc., 453 N.J. Super. 31, 40 (App. Div.
2018) (quoting Allen v. V & A Bros., Inc., 208 N.J. 114, 137 (2011)).
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                                        12
      Privity exists when there is a legal connection between the parties.

Rutgers Cas. Ins. Co. v. Dickerson, 215 N.J. Super. 116, 122 (App. Div. 1987).

Put differently, privity is present when one party is, in essence, the

representative of the non-party or controlled the prior litigation. O'Brien v.

Telcordia Techs., Inc., 420 N.J. Super. 256, 269 (App. Div. 2011) (quoting

Zirger v. Gen. Accident Ins. Co., 144 N.J. 327, 338-39 (1996)); State v. K.P.S.,

221 N.J. 226, 277-78 (2015) (using the same test for collateral estoppel).

      Similarly, the primary consideration for the entire controversy doctrine is

whether the claims against the parties are rooted in the same transaction or

occurrence. Wadeer, 220 N.J. at 605. It does not "bar component claims that

are unknown, unarisen, or unaccrued at the time of the original action." Higgins

v. Thurber, 413 N.J. Super. 1, 12 (App. Div. 2010) (quoting Mystic Isle Dev.

Corp. v. Perskie & Nehmad, 142 N.J. 310, 323 (1995)).

      Contrary to the trial court's findings, the record before us does not suggest

res judicata, collateral estoppel, or the entire controversy doctrine apply based

on the complaint's allegations. Plaintiff mentions the prior Federal Action, but

states GNAC was dismissed because it removed the temporary hold on the

account and made the funds available for Chun to withdraw. GNAC is not a

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                                       13
party to this action and defendant permanently refused to return the money only

after the Federal Action concluded.

      There was no basis to dismiss the complaint pursuant to res judicata,

collateral estoppel, or the entire controversy doctrine based on any of the

complaint's allegations. We agree with the trial court's finding Mills lacks

standing to bring a claim against GNOG. We also agree Chun's complaint for

conversion fails to state a claim upon which relief may be granted pursuant to

Rule 4:6-2(e) but we conclude the court erred in dismissing the complaint with

prejudice to Chun's ability to bring an action sounding in contract, assuming

jurisdiction and venue is proper. The dismissal of the complaint is affirmed, but

without prejudice as to Chun. We remand this matter to the trial court for entry

of a conforming order.

      Affirmed in part, reversed in part, and remanded for a conforming order.

We do not retain jurisdiction.

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