Quapaw Tribe of Oklahoma v. United States , 2015 U.S. Claims LEXIS 1275 ( 2015 )

In the United States Court of Federal Claims
No. 12-592L
(Filed: October 1, 2015)
************************************** *
QUAPAW TRIBE OF OKLAHOMA, *
*
*
Plaintiff, * Indian Tribe Claims; Breach of
* Fiduciary Duty; Breach of Trust
v. * Obligations; Partial Summary
* Judgment; Binding Effect of
THE UNITED STATES, * Government-Sponsored Accounting
* Reports.
Defendant. *
*
************************************** *
Nancie G. Marzulla, with whom were Roger J. Marzulla, Marzulla Law, LLC,
Washington, D.C., Stephen R. Ward and John L. Williams, Conner & Winters, LLP, Tulsa,
Oklahoma, Of Counsel, for Plaintiff.
Stephen R. Terrell, with whom were John C. Cruden, Assistant Attorney General, and
Peter K. Dykema, Environment and Natural Resources Division, U.S. Department of
Justice, Washington, D.C., Kenneth Dalton, Shani N. Walker, and Karen Boyd, U.S.
Department of Interior, Thomas Kearns and Rebecca Saltiel, U.S. Department of the
Treasury, Of Counsel, for Defendant.
OPINION AND ORDER ON PLAINTIFF’S
MOTION FOR PARTIAL SUMMARY JUDGMENT
WHEELER, Judge.
This case involves the claims of the Quapaw Indian Tribe of Oklahoma for breach
of fiduciary duty and breach of trust obligations. On April 6, 2015, the Quapaw Tribe filed
a motion for partial summary judgment on the following three grounds: (1) that the
Government is liable for annual educational payments of $1,000 from 1932 to the present
under the Treaty of 1833; (2) that the Government is liable for $31,680.80 in unauthorized
disbursements from the Quapaw Tribe’s trust accounts, as found in the 1995 Tribal Trust
Funds Reconciliation Project Report prepared by Arthur Andersen LLP; and (3) that the
Government is liable for $70,330.71 in transactions that should have been credited to the
Quapaw Tribe’s trust accounts but were not, as reported in the 2010 Quapaw Analysis.1
On May 28, 2015, the Government filed its opposition to Plaintiff’s motion,
asserting a number of legal and factual reasons why partial summary judgment should not
be granted. On June 29, 2015, Plaintiff filed a reply in support of its motion, and on July
1, 2015, Plaintiff filed a corrected version of its reply, with leave of the Court. The parties
submitted multiple exhibits in support of their positions, which the Court has considered.
The Court also requested and received supplemental briefs from the parties on the question
of whether the findings in the 2010 Quapaw Analysis and the 1995 Arthur Andersen Report
are binding on the Government, or whether the Government may offer other evidence to
rebut Plaintiff’s claims regarding mismanagement of the trust accounts. Order, Aug. 12,
2015. Plaintiff filed the last of the supplemental briefs on September 25, 2015, and
Plaintiff’s motion is ready for decision. Oral argument is unnecessary.
The standard of review on a motion for summary judgment is well established.
Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact, and the movant is entitled to judgment as a matter of law. RCFC 56(a);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A fact is “material” if it
might significantly alter the outcome of the case under the governing law. Anderson, 477
U.S. at 248. Summary judgment will not be granted if the “evidence is such that a
reasonable [trier of fact] could return a verdict for the nonmoving party.” Id. at 248. The
Court’s function is not to weigh the evidence and determine the merits of the case
presented, but to determine whether there is a genuine issue of material fact for trial. Id. at
249; see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).
The Court will examine each of Plaintiff’s three claims in turn below.
I. Educational Payments
The Treaty of May 13, 1833 between the United States and the Quapaw Indians
contained terms under which the Quapaw Tribe would move to new lands and resolve past
disputes with the Government. Among a host of terms describing what the Quapaw Tribe
would receive, one provision provided for the United States to make an annual educational
payment to the Quapaw Tribe as follows:
1
The Quapaw Tribe filed its motion for partial summary judgment in both the present case and in Thomas
Charles Bear et al. v. United States, No. 13-51X, a parallel Congressional Reference case. Because of the
outcome of the motion explained herein, the Court finds it unnecessary to address any of the issues in a
Congressional Reference context.
2
The United States also agree to appropriate one thousand
dollars per year for education purposes to be expended under
the direction of the President of the United States; . . . the above
appropriation for education purposes to be continued only as
long as the President of the United States deems necessary for
the best interests of the Indians.
Treaty of the Quapaw, May 13, 1833, 7 Stat. 424 at art. III. From 1932 through 2015,
despite inquiries and demands from the Quapaw Tribe, the United States did not make this
annual treaty payment of $1,000, and the President has never deemed the payment
unnecessary. The Quapaw Tribe asserts that the Government’s failure to meet its treaty
responsibility is a breach of a fiduciary obligation. The Quapaw Tribe claims damages of
$1,000 per year from 1932 to 2015 ($83,000), plus investment income the funds would
have earned had they been timely deposited. The accounting review known as “the
Quapaw Analysis,” performed during 2004-2010, found no record that any educational
payments required by the 1833 Treaty had been made from 1932 to the present. See
Quapaw Analysis at 103.
Defendant does not accept Plaintiff’s educational payments claim, and has raised a
number of defenses. However, none of the defenses has any merit.
First, Defendant asserts that the Court lacks subject matter jurisdiction over this
claim, because the Treaty of 1833 provides for discretionary payments and therefore is not
a money-mandating statute under the Tucker Act, 28 U.S.C. § 1491, or the Indian Tucker
Act, 28 U.S.C. § 1505. According to Defendant, an “appropriation” is only a license from
Congress “to incur obligations and to make payments from [the] Treasury for specified
purposes.” Def.’s Opp. at 8 (citing 1 U.S. Government Accountability Office, Principles
of Federal Appropriations Law 2-5 (3d ed. 2004)). Defendant then states that an
appropriation permits but does not mandate the payment of money. Id. at 8-9. Further,
Defendant contends that the treaty language is discretionary, because it authorizes the
President to discontinue the payments if he deems them “not in the best interests of the
Indians.” Def.’s Opp. at 9 (citing Treaty with the Quapaw at art. III).
The Court will not employ a twisted interpretation of the 1833 Treaty to allow the
Government to escape a promise it so clearly made. The idea that Congress would
appropriate funds for educational payments each year without actually paying the funds to
the Tribe would make the Treaty obligation illusory and give the Tribe nothing. Similarly,
the fact that the President possessed a right he never exercised in 83 years does not change
the outcome. Reading the Treaty as the Quapaw Tribe would read it (or indeed as any
reasonable person would read it), the Government has breached its promise to make annual
educational payments, and should be held accountable.
3
Moreover, as Plaintiff points out, Defendant has already conceded that the Court
has jurisdiction of this claim, and Defendant offers no explanation for now changing its
position. In an earlier filing in this case made to support its motion for partial dismissal,
Defendant stated “the United States acknowledges that plaintiff has pled a cause of action
within the Tucker Act’s waiver of sovereign immunity as to this limited claim [the
educational payments claim].” Def.’s Mot. to Dismiss, Nov. 13, 2012, at 12. The Court
relied on this statement in denying the Government’s motion to dismiss. Quapaw Tribe of
Okla. v. United States, 111 Fed. Cl. 725, 729 (2013).
Second, Defendant contends that the doctrine of claim preclusion bars Plaintiff’s
recovery of educational payments at least for the years 1932 through 1947. The
Government relies upon a case filed by the Quapaw Tribe in 1947 under the Indian Claims
Commission Act, and argues that Plaintiff “could have, and should have, brought its pre-
Fiscal Year 1949 education annuity payment claims in that petition.” Def.’s Opp. at 10.
Defendant states that “[c]laim preclusion reaches not only those matters that were
previously litigated and decided, it also bars subsequent litigation on matters that were
never litigated but could have been advanced in the earlier suit.” Id. at 11 (citing Sharp
Kabushiki Kaisha v. Thinksharp, Inc., 448 F.3d 1368, 1370 (Fed. Cir. 2006)).
Plaintiff rebuts Defendant’s claim preclusion defense by citing the actual claims
made in the Indian Claims Commission case, and asserting that the issues presented there
involved the valuation of land under different treaties, one dated August 24, 1818 (7 Stat.
176), and the other dated November 15, 1824 (7 Stat. 232). Quapaw Tribe of Okla. v.
United States, 1 Ind. Cl. Comm. 469, 475 (1951). These claims were not based on the same
set of transactional facts as the present case, and therefore the doctrine of claim preclusion
would not apply. A 2011 case in this Court involving nearly identical facts is dispositive
of Defendant’s position. Round Valley Indian Tribes v. United States, 97 Fed. Cl. 500(2011). There, in a comprehensive opinion, the Court rejected the Government’s claim
preclusion defense, holding that Round Valley’s breach of trust claims had not been
previously brought because they were not based on the same transactional facts. Id. at 515-
16. Defendant’s counsel in Round Valley was the same as in this case, yet Defendant did
not even disclose or discuss Round Valley in its brief to the Court.
Third, Defendant asserts that Plaintiff’s claims for educational payments is barred
by the Court’s six-year statute of limitations, 28 U.S.C. § 2501, to the extent that Plaintiff’s
claims pre-date September 11, 2006 (six years prior to the filing of the complaint). Def.’s
Opp. at 14-18. Defendant states that the educational payments are not “trust funds” under
the Consolidated Appropriations Act of 2012, providing that the statute of limitations
would not begin to run until “an accounting of such funds from which the beneficiary can
determine whether there has been a loss.” Id. at 16-17 (quoting Pub. L. No. 112-74, 125
4
Stat. 786 (2011)). If the Consolidated Appropriations Act does not apply, then the normal
six-year statute of limitations would govern.
In response, Plaintiff contends that the educational payments claim did not accrue
until the Quapaw Tribe received an accounting identifying this claim in 2010. Plaintiff
states that the educational payments are trust funds because they were to be spent “at the
direction of the President.” Pl.’s Reply at 11 (quoting Treaty with the Quapaw at art. III).
Whenever the Government manages treaty payments for Tribes, it acts as a trustee and is
subject to “the most exacting fiduciary standards.” Seminole Nation v. United States, 316
U.S. 286, 297 (1942). The Federal Circuit has held that the phrase “losses to or
mismanagement of trust funds” from the Consolidated Appropriations Act includes
circumstances where money was due but not deposited in tribal trust accounts. Shoshone
Indian Tribe of the Wind River Reservation v. United States, 364 F.3d 1339, 1349-51 (Fed.
Cir. 2004). Since the educational payments were to be made to the Quapaw Tribe in
general, not to individual persons, they are fairly and reasonably classified as “trust funds.”
Thus, the Court agrees with Plaintiff that the educational payments claim is timely because
did not accrue until the 2010 accounting.
Last, Defendant argues that genuine issues of material fact preclude the granting of
summary judgment. Def.’s Opp. at 18. However, by citing other examples where the
Government has budgeted large funds for Indian Tribes, including education, Defendant
cannot thereby show that it satisfied the specific promise to make annual education
payments in the Treaty of 1833. The Government’s Rule 30(b)(6) deponent, Paul Yates,
conceded that these payments have not been made since 1932. Yates Dep. 138:2-21, Dec.
4, 2014.
II. Unauthorized Disbursements
As a second basis for partial summary judgment, Plaintiff asserts that the
congressionally authorized Tribal Trust Funds Reconciliation, which culminated in a
December 31, 1995 report by Arthur Andersen LLP, identified three disbursements from
the Quapaw Tribe’s trust accounts, totaling $31,680.80, that were not authorized. Arthur
Andersen Report at 9. The 2010 Quapaw Analysis confirmed this total, and also calculated
that, had those funds been kept in the trust account, they would have accumulated $903.00
in statutorily required interest as of September 30, 1992.
In the early 1990s, the U.S. Bureau of Indian Affairs hired Arthur Andersen LLP
“to reconstruct historical transactions, to the extent practicable, for all years for which
records are available for all Tribal Trust accounts managed by the Bureau.” Id. at 1.
Congress required the Andersen Report “in an effort to correct longstanding problems in
accounting for tribal trust funds by BIA [Bureau of Indian Affairs]. The report took five
5
years to research and draft, and cost the United States $21 million to complete.” Osage
Tribe of Okla. v. United States, 93 Fed. Cl. 1, 26 (2010). The three unauthorized
disbursements totaling $31,680.80 for the Quapaw Tribe were made payable to the Tribe
“in care of Superintendent or third party (Bank) and did not have both Tribal and other
governmental signed authorization.” Arthur Andersen Report at 9. The Government’s
Rule 30(b)(6) deponent for this topic testified that these transactions are “lacking certain
approval documents.” Chavarria Dep. 190:18-19, Nov. 18, 2014.
In the Quapaw Analysis, Quapaw Information Systems, Inc. contracted with an
independent accountant, Gerding, Korte & Chitwood, P.C., to review the Arthur Andersen
Report and identify “disbursements that did not have both Tribal and governmental
authorization” and “interest adjustments or variances.” Quapaw Analysis at 158-64.
Gerding, Korte & Chitwood confirmed that $31,680.80 in disbursements were made
without proper authorization. Id. at 164. This firm also calculated that interest as of
September 30, 1992 on these disbursements was $903.00. Id.
Defendant opposes the unauthorized disbursements claim on statute of limitations
grounds, and because genuine issues of material facts exist. The Court rejects the statute
of limitations defense because the Government apparently did not accept the findings of
the 1995 Arthur Andersen Report, and compelled the Quapaw Tribe to file suit in
Oklahoma. Quapaw Tribe of Okla. v. Dep’t of Interior, No. 02-cv-129 (N.D. Okla. filed
Feb. 14, 2002). The parties settled that case in 2004 on terms that resulted in the
preparation of the Quapaw Analysis, accepted by the Department of Interior in November
2010. As noted above, the Quapaw Analysis addressed the question of the unauthorized
disbursements, and reached the same conclusion as the 1995 Arthur Andersen Report. The
present lawsuit is timely because it was filed within six years after the Government’s
acceptance of the Quapaw Analysis.
The Court also rejects the Government’s attempt to take issue with the Quapaw
Analysis and the Arthur Andersen Report. These accounting endeavors were undertaken
with the full support and cooperation of the United States. There comes a point when
finality must be applied. If there are newly discovered documents that cause the
Government to question the conclusions reached in the Quapaw Analysis or the Arthur
Andersen report, the Government should have produced those documents earlier. The
public’s interest in ending decades-old disputes with Native American Tribes outweighs
the continued expenditure of time and resources to account for every last nickel. Allowing
the Government to continue opposing the Arthur Andersen Report and the Quapaw
Analysis is contrary to the purpose and spirit of the legislation and settlement agreement
that caused them to occur.
6
III. Transactions That Should Have Been Credited
As its third basis for partial summary judgment, Plaintiff claims $70,330.71 in
unauthorized transactions. Pl.’s Mot. at 14-15. The Quapaw Analysis refers to these
amounts as “transactions posted to the Tribal Trust Accounts and transactions in which
monies should have been received, or were received, but that cannot be verified (as posted)
to the Tribal Trust Accounts. . . . The total dollar amounts unaccounted for before interest
accrual are $70,331.” Quapaw Analysis at 103. The Government has stated in discovery
that it has no information regarding these transactions. See Req. for Admission No. 15.
The Government updated its discovery response on October 24, 2014 to say that it now has
information to contest these amounts, i.e., eight ledger sheets for account Q-32. Def.’s
Opp. at 29.
As noted in Section II above, finality must attach to the Quapaw Analysis. The
Court will not permit Defendant to impeach this detailed report, when it could have
produced documents or raised its concerns at a much earlier time. The Quapaw Analysis
is binding upon the United States.
Conclusion
Based upon the foregoing, the Court GRANTS Plaintiff’s motion for partial
summary judgment on its educational payments claim ($83,000), its unauthorized
disbursements claim ($31,680.80), and its unauthorized transactions claim ($70,331),
together with investment income that would have been earned if these amounts had been
timely credited to the Quapaw Tribe’s account.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge
7