Bryan D. McLeese

The defendant casino operator moved under rule 21.01 to strike a claim brought by estate plaintiffs whose funds had been fraudulently obtained and then lost through gambling.

Applying the Anns/Cooper framework, the court held the pleadings did not disclose sufficient proximity to establish a duty of care to problem gamblers, and therefore no derivative duty to the plaintiffs.

The unjust enrichment, conversion, and knowing receipt claims were also untenable because the defendant had valid gambling contracts with the gamblers, was a bona fide purchaser without notice, and had no obligation to investigate the source of patrons' funds.

The action was dismissed without leave to amend.

The plaintiffs sought repayment of a $1 million non-refundable amount paid under a mining share and debt purchase and lock-up agreement after they failed to complete a proposed takeover bid.

They alleged breach of contract arising from the defendants’ handling of a third-party financing proposal, non-delivery of share certificates, and exercise of a repurchase option, and argued the option was an unenforceable penalty or should be relieved against in equity.

The court held there was no contractual obligation to shut down the third-party transaction, no fundamental breach in relation to share certificates or the $1.00 repurchase payment, and no damages were proven on those allegations.

Applying the relief from forfeiture jurisprudence, the court found the clause was a forfeiture provision, not penal, and in any event not unconscionable in a heavily negotiated agreement between sophisticated parties.

The action was dismissed.