The enforceability of a “hush money” contract is at issue in the case of a casino host who alleges a Virginia businessman has reneged on an agreement to pay her $230,000 for not telling police that he sexually assaulted her

According to a complaint filed Dec. 23 in Los Angeles, Arnold Gale has “unequivocally stated” that he does not intend to honor the contract he made with Suzanne Le after the alleged assault at a casino hotel in Ontario, Canada. She had traveled there from California to accompany Gale on a gambling junket.

In addition to suing Gale for breach of contract, Le is seeking a court order declaring that the contract is “a valid, binding agreement” and “Mr. Gale is obligated to compensate her in the amount of $230,000.00 in accordance with the terms of the Contract.”

“Ms. Le was physically and emotionally violated by Mr. Gale's degenerate and illegal conduct at the Windsor Casino, and was further damaged financially when Mr. Gale failed to comply with the terms of the Contract,” the suit says.

Gale allegedly wrote the agreement out on Caesars Windsor Hotel & Casino letterhead. But case law –- including a celebrated case involving NBA great Michael Jordan –- suggests it may not be worth the paper it was written on.

“Not all contracts for silence violate public policy,” the Illinois Appellate Court said in Knafel v. Jordan, 823 N.E.2d 1113 (2005). “... However, we also recognize that there are contracts for silence that are unenforceable. For example, they may suppress information about harmful products or information about public safety, they may conceal criminal conduct, or they may constitute extortion or blackmail.”

Karla Knafel was a longtime mistress of Jordan's when he agreed to pay her $5 million if she did not file a paternity suit against him and kept their relationship secret. By contrast, Gale and Le hardly knew each other.

They met in January 2008, the suit says, at a casino near San Diego where Le worked as a host and Gale, with Le at his side, won “an undisclosed sum of money.” Apparently considering her a “good luck” charm, he invited her to join him on the junket at Caesars Windsor in March.

“Mr. Gale assured Ms. Le ... that Ms. Le would be compensated in the amount of $3,000.00 for her platonic companionship that weekend,” Le says.

The alleged sexual assault occurred March 7 in their hotel suite after he allegedly drugged her. Le tried to call police but Gale took the phone away from her and then

proposed that they enter into a contract, whereby he would pay Ms. Le a sum of money as compensation for the physical and emotional distress he had caused and in exchange for her not contacting local law enforcement.

Gale immediately handed over $20,000 and Le, under the terms of the contract, expected to receive monthly payments of $5,000 on the additional $230,000. After contacting Gale “to inquire as to why the payments were not received,” she learned in November that he “did not intend to honor the Contract.”

Le is also claiming deceit and intentional infliction of emotional distress. But the alleged agreement for her silence with Gale certainly seems to fit the description of a contract to “conceal criminal conduct” that was recognized as unenforceable in Knafel.

A New York appeals court, moreover, found that a similar agreement was extortionate in Yao v. Bult, 666 N.Y.S. 2d (1997). The plaintiff in that case sued a “wealthy financial executive” for breaching an agreement to pay him in exchange for his promise not to publicize their “brief, intimate relationship.”

By Matthew Heller
1/4/09