Rincon Mushroom Corporation of America v. Bo Mazzetti ( 2019 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 RINCON MUSHROOM Case No.: 09-cv-2330-WQH-JLB CORPORATION OF AMERICA, a 11 California Corporation, ORDER 12 Plaintiff, 13 v. 14 BO MAZZETTI, JOHN CURRIER, 15 VERNON WRIGHT, GILBERT PARADA, STEPHANIE SPENCER, 16 CHARLIE KOLB, DICK 17 WATENPAUGH, DOE CO., DOE I, and DOE II, 18 Defendants. 19 20 HAYES, Judge: 21 The matter before the Court is the Second Application for an Emergency Order 22 Staying Enforcement of the Rincon Tribal Court Judgment Pending Appeal filed by 23 Plaintiff Rincon Mushroom Corporation of America. (ECF No. 112). 24 I. BACKGROUND 25 On October 20, 2009, Plaintiff Rincon Mushroom Corporation of America (RMCA) 26 initiated this action by filing the Complaint. (ECF No. 1). The action concerns tribal 27 regulation of non-Indian fee simple land (the Property) located within the boundaries of 1 the reservation of the Rincon Band of Luiseno Mission Indians (the Tribe). Defendants Bo 2 Mazzetti, John Currier, Vernon Wright, Gilbert Parada, Stephanie Spencer, Charlies Kolb, 3 and Dick Watenpaugh (the Rincon Band Defendants) are tribal officials sued in their 4 individual and official capacities. Id. ¶¶ 4–5. 5 The Complaint alleges the following ten causes of action: (1) intentional interference 6 with contract; (2) intentional interference with advantageous economic relationship; (3) 7 conspiracy to intentionally interfere with contract; (4) conspiracy to intentionally interfere 8 with advantageous economic relationship; (5) conspiracy to deprive plaintiff of equal 9 protection and equal privileges and immunities under 42 U.S.C. § 1985(3); (6) civil RICO; 10 (7) civil RICO conspiracy; (8) negligent interference with contract; (9) negligent 11 interference with advantageous economic relationship; and (10) violation of 42 U.S.C. § 12 1983. Id. 13 On September 21, 2010, the Court granted a motion to dismiss filed by the Rincon 14 Band Defendants. (ECF No. 54). The Court dismissed the Complaint for failure to exhaust 15 tribal court remedies, stating, 16 Given the breadth of the declaratory and injunctive relief requested by the Plaintiff, there is a colorable or plausible claim to tribal regulatory and tribal 17 court jurisdiction . . . . Because tribal court jurisdiction is plausible, principles 18 of comity require [federal courts] to give the tribal courts a full opportunity to determine their own jurisdiction in the first instance. . . . The Court concludes 19 that Plaintiff must exhaust tribal remedies prior to asserting its claims in this 20 Court. 21 Id. at 13–14 (quotations and citations omitted). 22 The Court of Appeals for the Ninth Circuit agreed that Plaintiff RMCA must exhaust 23 tribal remedies on the issue of tribal jurisdiction before bringing suit in federal court. (ECF 24 No. 66). The Court of Appeals stated, 25 We emphasize that we are not now deciding whether the tribe actually has 26 jurisdiction . . . . We hold only that where, as here, the tribe’s assertion of jurisdiction is “colorable” or “plausible,” the tribal courts get the first chance 27 1 to decide whether tribal jurisdiction is actually permitted. If the tribal courts sustain tribal jurisdiction and Rincon Mushroom is unhappy with that 2 determination, it may then repair to federal court. 3 Id. at 4. However, the Court of Appeals held that this Court abused its discretion by 4 dismissing the case rather than staying the case. Id. at 5. The Court of Appeals reversed 5 the dismissal and remanded with instructions to stay the case pending Plaintiff RMCA’s 6 exhaustion of tribal remedies. Id. 7 On August 1, 2012, this Court issued an Order spreading the mandate, ordering the 8 Clerk of Court to reopen the case, and staying the case pending the exhaustion of tribal 9 remedies. (ECF No. 65). 10 In the years following the Order staying the case, the Court ordered and the parties 11 filed three status reports as to the exhaustion of tribal remedies. (ECF Nos. 72, 78, 81). 12 On June 25, 2015, the Court issued an Order administratively closing the case “without 13 prejudice to any party to move to reopen, and without prejudice to the resolution of any 14 statute of limitations issue associated with the filing of this complaint.” (ECF No. 82 at 3). 15 On July 26, 2017, the Court denied (ECF No. 95) Plaintiff RMCA’s motions to 16 reopen the case (ECF Nos. 83, 92). The Court stated, 17 [T]he record reflects that RMCA has been afforded multiple opportunities to 18 challenge tribal jurisdiction through motions for partial summary judgment 19 and a trial on the issue of jurisdiction. Finally, RMCA will also have the opportunity to seek tribal court appellate review of the tribal court’s ruling on 20 jurisdiction in the trial court. The Court concludes that RMCA has failed to 21 establish that it lacks an adequate opportunity to challenge tribal court jurisdiction. . . . 22 23 (ECF No. 95 at 16). In addition, the Court denied Plaintiff RMCA’s request for preliminary 24 injunction. Id. The Court stated, 25 This Court and the Court of Appeals has determined that RMCA must exhaust its tribal remedies prior to seeking relief in this Court, which includes tribal 26 appellate review on the issue of jurisdiction. Accordingly, the request for a 27 preliminary injunction is denied. 1 Id. The Court ordered the parties to file status reports every sixty days regarding exhaustion 2 of tribal remedies. Id. at 16–17. Between September 21, 2017, and March 6, 2019, the 3 parties filed five status reports. (ECF Nos. 96–98, 100, 103). 4 On April 19, 2019, a tribal court in the Intertribal Court of Southern California (the 5 tribal trial court) signed a judgment stating that the Tribe has regulatory jurisdiction over 6 the Property and that the tribal trial court has jurisdiction over this action (the April 2019 7 Judgment). (ECF No. 109 at 4). In addition, the tribal trial court ordered the following: 8 1. In order to proceed with any development or further use of the property 9 RMCA/Donius shall provide the Tribe with a business plan . . . . 10 5. As a point of clarity RMCA/Donius shall not conduct any activity on the property without an approved business plan being in place and approved. This 11 includes all commercial, residential, or any type of personal or business 12 activity. However, RMCA/Donius may remove existing items from the property. 13 6. Should RMCA/Donius violate any provisions of this order or is not in 14 compliance with an approved business plan they shall be subject to a $2,000 (two-thousand dollar) a day fine payable to the Rincon Tribe. Said fines shall 15 remain in place until said violation is cured. . . . 16 The Court shall in all related manners, retain jurisdiction in this case thereby ensuring enforcement and compliance with this judgement. 17 Judgement in this matter shall be stayed for 30 days from receipt of this 18 decision pending . . . an opportunity to file an appeal. 19 Id. Plaintiff RMCA filed an appeal of the April 2019 Judgment with the Court of Appeal 20 for the Intertribal Court of Southern California (the tribal appellate court), which stayed 21 enforcement of the April 2019 Judgment until May 22, 2019. Id. 22 On May 22, 2019, the tribal trial court denied a motion to stay the April 2019 23 Judgment filed by Plaintiff RMCA and Marvin Donius.1 Id. 24 25 26 1 The Complaint states that Marvin Donius is the successor in interest of Plaintiff RMCA. (ECF No. 1 ¶ 27 1 On May 22, 2019, Plaintiff RMCA and Donius filed a motion to stay the April 2019 2 Judgment with the tribal appellate court. Id. 3 On May 23, 2019, a document was posted on the Property, stating: 4 NOTICE OF PROPERTY CLOSURE MAY 23, 2019 5 PURSUANT TO THAT CERTAIN INTERTRIBAL COURT OF 6 SOUTHERN CALIFORNIA JUDGMENT IN CASE NO. CV-1508-15, AND NO. RINCON-02972009, DATED APRIL 19, 2019 . . . YOU ARE 7 HEREBY NOTIFIED THAT ACCESS TO THE PROPERTY LOCATED 8 AT 33777 VALLEY CENTER ROAD SHALL BE PROHIBITED AS OF NOON, MONDAY, JUNE 3, 2019 BY THE RINCON BAND OF LUISENO 9 INDIANS WITH THE LIMITED EXCEPTION FOR EGRESS TO 10 REMOVE PERSONAL PROPERTY. 11 Id. at 8. 12 On May 24, 2019, Plaintiff RMCA filed an ex parte motion with this Court, seeking 13 an emergency order staying enforcement of the April 2019 Judgment and prohibiting the 14 Tribe from blocking the entrance to the Property. Id. at 5. 15 On June 3, 2019, this Court denied the ex parte emergency motion to stay the April 16 2019 Judgment, stating, 17 Based on the record before this Court, the tribal appellate court has not 18 conducted any review of the issues of tribal jurisdiction or a stay of the tribal court’s April 2019 Judgment. RMCA fails to establish that the tribal court’s 19 decisions on jurisdiction or the motion to stay would not be subject to tribal 20 appellate review during tribal court proceedings. See Elliott v. White Mountain Apache Tribal Court, 566 F.3d 842, 847 (9th Cir. 2009) 21 (determining that where a tribal appellate review process did not permit 22 interlocutory appeals from jurisdictional rulings, the plaintiff was still required to exhaust tribal court remedies by waiting to seek appellate review 23 until a final decision on the merits). Based on the record before the Court, the 24 Court concludes that RMCA has not exhausted its tribal court remedies. 25 Id. at 9. 26 27 1 Plaintiff RMCA provides evidence that on June 3, 2019, cement blocks were placed 2 at the entrance of the Property, preventing entrance to and exit from the Property. (ECF 3 No. 112 at 68, 72, 74, 76). Plaintiff RMCA provides evidence that on June 25, 2019, the 4 tribal appellate court extended the tribal trial court’s stay of the April 2019 Judgment until 5 the later of 60 days or the tribal appellate court’s ruling on the motion to stay the April 6 2019 Judgment. Id. at 84. Plaintiff RMCA states that the blocks were removed on June 7 25, 2019. Id. at 6. 8 On July 8, 2019, the tribal appellate court granted a conditional stay of the April 9 2019 Judgment. Id. at 82–89. One condition provides that “Appellants shall submit for 10 approval by this Court and if approved, post a corporate surety bond in the sum of 11 $1,000,000 payable (1) upon affirmation of judgment in favor of Appellees and or (2) upon 12 a finding by this Court that Appellants, or either of them, have violated this conditional 13 stay.” Id. at 88. 14 On July 25, 2019, the tribal appellate court denied a motion to reconsider the bond 15 condition filed by Plaintiff RMCA and Donius. Id. at 92–96. In addition, the tribal 16 appellate court amended the bond condition to provide: 17 (5) Appellants shall submit for approval by this Court and if approved, post a corporate surety bond in the sum of $1,000,000, with the following as 18 essential terms: (1) any obligation of Appellants or of the corporate surety 19 shall totally dissolve and be exonerated if this Court sustains Appellants’ legal position that the Judgment appealed from was by a court without jurisdiction 20 (subject matter, personal, in rem, or quasi in rem) to issue the Judgment and 21 that there has been no violation of the terms of the stay conditions imposed by this Court; (2) the bond by its terms would be forfeited to Appellees if any 22 monetary relief is sustained as awarded to Appellees under the Judgment 23 appealed from for (i) any compensable harm awarded under the Judgment or (ii) any compensable harm awarded for violation of the Stay Order imposed 24 by this Court; (3) if, and only if, this Court and any higher court of competent 25 jurisdiction sustains the jurisdiction of the court that issued the Judgment from which this appeal is taken (i) over the Appellants because of their legal 26 relationship to the subject property, (ii) or over the subject property, (iii) or 27 over Appellants’ conduct on the subject property as restrained or prohibited 1 by the Judgment; and (4) when approved and posted, shall by its terms remain liable until final mandate is returned to the court from which this appeal is 2 taken affirming or reversing the Judgment from which this appeal is taken. 3 Id. 4 On July 29, 2019, Plaintiff RMCA filed in this Court the Second Application for an 5 Emergency Order Staying Enforcement of the Rincon Tribal Court Judgment Pending 6 Appeal, on the grounds that the tribal appellate court ruled on the motion to stay the April 7 2019 Judgment and the motion to reconsider the bond requirement filed by Plaintiff RMCA 8 and Donius, exhausting Plaintiff RMCA’s tribal remedies regarding a stay of the April 9 2019 Judgment pending appeal. Id. 10 On August 2, 2019, Defendants filed a Response in opposition to the Motion. (ECF 11 No. 115). 12 On May 31, 2019, Plaintiff RMCA filed a Reply in support of the Motion. (ECF 13 No. 116). 14 II. DISCUSSION 15 Plaintiff RMCA seeks an order “staying the Tribal Trial Court Judgment, including 16 staying the Judgment without the requirement of posting a bond,” and providing “that the 17 Tribe not be permitted to block the subject property with cement blocks or otherwise.” 18 (ECF No. 112 at 4, 25). Plaintiff RMCA contends that tribal remedies with respect to a 19 stay of the April 2019 Judgment have been exhausted because the tribal appellate court has 20 denied Plaintiff RMCA’s motion to reconsider the bond condition. Plaintiff RMCA 21 contends that “the requirement of a $1 million bond, or a bond in any amount” is 22 unwarranted according to California law because the April 2019 Judgment provides that 23 the Tribe is entitled to equitable relief and attorney’s fees, not money damages. Id. at 8. 24 Plaintiff RMCA contends that grounds for a stay exist based on the likelihood that this 25 Court will find in favor of Plaintiff RMCA, the irreparable harm to Plaintiff RMCA and 26 others if the Tribe blocks the entrance to the Property, and the lack of prejudice to the Tribe 27 1 if the April 2019 Judgment is stayed without the bond. Plaintiff RMCA asserts that paying 2 the bond to stay the April 2019 Judgment “makes no sense” in this case because the bond 3 funds would be released to the Tribe if the tribal appellate court affirms the April 2019 4 Judgment, even if the litigation subsequently proceeds to federal court review of the claims 5 in this case. Id. at 20. Plaintiff RMCA contends that sovereign immunity would prevent 6 Plaintiff RMCA from suing to recover the bond funds. 7 Defendants contend that the tribal appellate court’s conditional stay did not 8 constitute exhaustion of tribal remedies in this case because the stay provides Plaintiff 9 RMCA with an additional option for conducting business pending appeal. Defendants 10 contend that the tribal appellate court properly conditioned the stay on the bond according 11 to the Federal Rules of Civil procedure, and accounting for damage that could be caused if 12 Plaintiff RMCA fails to comply with the other conditions of the stay. Defendants contend 13 that the amount of the bond properly corresponds to the damage that could be caused by 14 Plaintiff RMCA’s failure to comply with the other conditions of the stay. Defendants assert 15 that the tribal appellate court heard and rejected the same grounds for relief that Plaintiff 16 RMCA now raises before this Court. Defendants assert that Plaintiff RMCA could prevent 17 the Tribe from blocking access to the Property by complying with the April 2019 Judgment 18 instead of posting the bond. Defendants contend that posting the bond does not preclude 19 Plaintiff RMCA from continuing to challenge tribal jurisdiction in this matter. Defendants 20 contend that the order of the tribal appellate court releases the bond funds to the Tribe only 21 if the Tribe has prevailed on the merits in the tribal appellate court and in federal court. 22 Generally, if a non-Indian defendant is haled into a tribal court and asserts that the 23 tribal court lacks jurisdiction, the defendant must exhaust tribal remedies before seeking to 24 enjoin the tribal proceeding in federal court. See Nat’l Farmers Union Ins. Co. v. Crow 25 Tribe of Indians, 471 U.S. 845, 855–57 (1985). Even if there is no pending proceeding in 26 tribal court, a non-member plaintiff may not sue in federal court asserting that the tribe 27 lacks regulatory authority over non-member actions taken on non-Indian land within a 1 reservation without exhausting tribal court remedies. See Burlington N. v. Crow Tribal 2 Council, 940 F.2d 1239, 1246 (9th Cir. 1991). “Exhaustion is prudential; it is required as 3 a matter of comity, not as a jurisdictional prerequisite.” Boozer v. Wilder, 381 F.3d 931, 4 935 (9th Cir. 2004). 5 This Court has previously ruled, and the Court of Appeals has affirmed, that Plaintiff 6 RMCA must exhaust tribal remedies before seeking relief in federal district court. The 7 Court of Appeals for the Ninth Circuit and the Supreme Court have both held that the 8 exhaustion of tribal remedies includes tribal appellate review on the issue of jurisdiction. 9 Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 16–17 (1987) (“At a minimum, exhaustion of 10 tribal remedies means that tribal appellate courts must have the opportunity to review the 11 determinations of the lower tribal courts.”); Allstate Indem. Co. v. Stump, 191 F.3d 1071, 12 1073 (9th Cir. 1999) (“Exhaustion of tribal remedies includes tribal appellate review on 13 the question of jurisdiction; thus, federal courts should not intervene until tribal appellate 14 review is complete.”). 15 In this case, exhaustion of tribal remedies requires tribal appellate review of the April 16 2019 Judgment determining that the Tribe has regulatory jurisdiction over the Property. 17 See Elliott, 566 F.3d at 847 (“Until appellate review is complete, the Blackfeet Tribal 18 Courts have not had a full opportunity to evaluate the claim and federal courts should not 19 intervene.”) (quoting Iowa, 480 U.S. at 16–17). The record demonstrates that tribal 20 appellate review of the April 2019 Judgment is not “complete.” See Elliot, 566 F.3d at 21 847. This Court “should not intervene” with respect to the April 2019 Judgment “until 22 tribal appellate review is complete.” See Allstate, 191 F.3d at 1073. “[T]he orderly 23 administration of justice” is served in this case “by allowing a full record to be developed 24 in the Tribal Court before either the merits or any question concerning appropriate relief is 25 addressed.” See Nat’l Farmers, 471 U.S. at 856; cf. Gulfstream Aerospace Corp. v. 26 Mayacamas Corp., 485 U.S. 271, 275 (1988) (noting in the context of federal appellate 27 jurisdiction that “as a general rule a district court’s decision is appealable . . . only when 1 || the decision ‘ends the litigation on the merits and leaves nothing for the court to do but 2 ||execute the judgment.’’”’) (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)). 3 || Based on the record at this stage in the litigation, the Court concludes that Plaintiff RMCA 4 not exhausted its tribal court remedies. For the reasons stated in the Court’s June 3, 5 and July 26, 2017 Orders, no exception to the exhaustion requirement applies in this 6 || case. 7 Ht. CONCLUSION 8 IT IS HEREBY ORDERED that the Second Application for an Emergency Order 9 || Staying the Enforcement of the Rincon Tribal Court Judgment Pending Appeal (ECF No. 10 || 112) filed by Plaintiff Rincon Mushroom Corporation of America is DENIED. 11 |} Dated: August 14, 2019 itt Z. Ma 12 Hon. William Q. Hayes 13 United States District Court 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10