DocketNumber: BAP Nos. 12-6004, 12-6005, 12-6006, 12-6007
Citation Numbers: 474 B.R. 687
Judges: Federman, Saladino, Venters
Filed Date: 7/19/2012
Status: Precedential
Modified Date: 11/22/2022
These four adversary proceedings involve suits by Chapter 7 bankruptcy trustees against defendants The Lower Sioux Indian Community (the “Tribe”) and its “subsidiary,” Dakota Finance Corporation. In three of the adversaries, the trustees are pursuing the Tribe and the debtors for turnover of ongoing tribal revenue payments owed to the debtors under the Tribe’s ordinances and the Indian Gaming Regulatory Act. In one of the adversaries, the trustee is seeking to avoid a lien as
Standard, of Review
We review findings of fact for clear error, and conclusions of law de novo.
The Tribe’s Sovereign Immunity
Indian tribes have long been recognized as possessing common law immunity from suit traditionally enjoyed by sovereign powers.
In In re National Cattle Congress,
Courts have found abrogation of tribal sovereign immunity in cases where Congress has included “Indian tribes” in definitions of parties who may be sued under specific statutes. See Blue Legs v. United States Bureau of Indian Affairs, 867 F.2d 1094, 1097 (8th Cir.1989) (finding congressional intent to abrogate Tribe’s sovereign immunity with respect to violations of the Resource Conservation and Recovery Act, [which expressly included “an Indian tribe or authorized tribal organization” in the definition of “municipalities” covered by the Act]); Osage Tribal Council v. United States Dep’t of Labor, 187 F.3d 1174, 1182 (10th Cir.1999) (same re Safe Drinking Water Act [which also included “Indian Tribes” in the definition of “municipalities” covered by the Act]). “Where the language of a jurisdictional grant is unambiguous as to its application to Indian tribes, no more is needed to satisfy the Santa Clara requirement than that Congress unequivocally state its intent.” Osage Tribal Council, 187 F.3d at 1182.
Where the language of a federal statute does not include “Indian tribes” in definitions of parties subject to suit or does not specifically assert jurisdiction over “Indian tribes”, courts find the statute insufficient to express an unequivocal congressional abrogation of tribal sovereign immunity. See Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 357-58 (2d Cir.2000) (holding Indian tribe immune from suit under the Copyright Act); Florida Paraplegic [Ass’n. Inc. v. Miccosukee Tribe of Indians of Florida, 166 F.3d 1126, 1131 (11th Cir. 1999)] (stating that because Congress made no specific reference to Tribes anywhere in the ADA, tribal immunity is not abrogated; suit under ADA dismissed). A Congressional abrogation of tribal immunity cannot be implied. Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. 1670.14
In bankruptcy cases, Congress’s abrogation of sovereign immunity is found in § 106(a) of the Bankruptcy Code. Thus, the issue here is whether § 106(a) evinces Congress’s unequivocal intent to abrogate the sovereign immunity of Indian tribes by explicit legislation. Section 106(a) states in relevant part as follows:
§ 106. Waiver of sovereign immunity (a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to*692 the extent set forth in this section with respect to ...
(1) [Several enumerated sections of the Bankruptcy Code, including § 542 relating to turnover of estate assets, and § 544 relating to avoidance of liens.]
(2) The court may hear and determine any issue arising with respect to the application of such sections to governmental units.15
As seen above, courts have found abrogation where Congress has included “Indian tribes” in the definition of the parties that may be sued under a statute. Here, the statute does not mention “Indian tribes” specifically, but instead abrogates immunity as to “governmental units,” which are defined in § 101(27) as follows:
(27) “governmental unit” means United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States (but not a United States trustee while serving as a trustee in a case under this title), a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.16
The issue here, simply put, is whether, by enacting § 106(a) of the Bankruptcy Code, Congress unequivocally expressed its intent to abrogate the sovereign immunity of Indian tribes, in explicit legislation, by providing for such abrogation as to “other foreign or domestic governments.”
A leading case holding that § 106 did abrogate sovereign immunity as to Indian tribes is Krystal Energy Company v. Navajo Nation.
Indian tribes are certainly governments, whether considered foreign or domestic (and, logically, there is no other form of government outside the foreign/domestic dichotomy, unless one entertains the possibility of extra-terrestrial states).
The Supreme Court has recognized that Indian tribes are “ ‘domestic dependent nations’ that exercise inherent sovereign authority over their members and territories.” Potawatomi, 498 U.S. at 509, 111 S.Ct. 905 (citing Cherokee Nation v. Georgia, [30 U.S. 1] 5 Pet. 1, 17, 8 L.Ed. 25 (1831)); see also, Blatchford v. Native Village of Noatak, 501 U.S. 775, 782, 111 S.Ct. 2578, 115 L.Ed.2d 686 (comparing Indian tribes to states and foreign sovereigns, and concluding that both states and Indian tribes are “domestic” sovereigns). So the category “Indian tribes” is simply a specific member of the group of domestic governments, the immunity of which Congress intended to abrogate.18
The trustees cite to two lower courts outside of the Ninth Circuit that have agreed with this analysis.
Granted, Indian tribes can and do provide certain governmental functions for their members. But the several steps needed to justify the holding in these cases is far from an unequivocal expression of Congressional intent to abrogate the tribes’ immunity, stated in explicit legislation.
The trustees’ argument based on Krystal also fails because the cases on which Krystal was based do not, in fact, support its holding. In Cherokee Nation v. Georgia
The later cases cited by the Ninth Circuit in Krystal Energy add nothing to the discussion. In Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma,
In rejecting that argument, the Supreme Court pointed out that Congress in various statutes has acted to promote the “goal of Indian self-government, including its ‘overriding goal’ of encouraging tribal self-sufficiency and economic development.”
Finally, the Ninth Circuit in Krystal relied on the Supreme Court’s decision in Blatchford v. Native Village of Noatak
In sum, the cases relied on by Krystal and the trustees here do not support the proposition that Congress can express its intent to abrogate sovereign immunity as to Indian tribes without specifically saying so. Instead, courts have been directed to adhere to the general principle that statutes are to be interpreted to the benefit of Indian tribes.
Dakota Finance Corporation’s Sovereign Immunity
The next question is whether Dakota Finance Corporation (“DFC”) is likewise
Tribal sovereign immunity extends to arms and agencies of Indian tribes.
Tribal ' sovereign immunity may extend to subdivisions of a tribe, including those engaged in economic activities, provided that the relationship between the tribe and the entity is sufficiently close to properly permit the entity to share in the tribe’s immunity.
1) The method of creation of the economic entities;
2) Their purpose;
3) Their structure, ownership, and management, including the amount of control the tribe has over the entities;
4) The tribe’s intent with respect to sharing of its sovereign immunity;
5) The financial relationship between the tribe and the entities;
6) The policies underlying tribal sovereign immunity and its connection to tribal economic development, and whether these policies are served by granting immunity to the economic entities.48
The evidence submitted supports DFC’s argument that it meets this test.
On May 5, 2010, the Lower Sioux Indian Community Tribal Council adopted Resolution 10-94 clarifying the names of Dakota Futures Inc. and the Dakota Finance Corporation. This resolution clarified that both names have no legal existence apart from Dakota Services Enterprise.
Dakota Services Enterprise (“DSE”) was created by Lower Sioux Indian Community Tribal Council Resolution 07-239. DSE (including its various assumed or business names) was created pursuant to Lower Sioux Community law. It is wholly owned by Lower Sioux as a “subordinate economic organization and an arm and instrumentality of the Community” established and doing business under the Community Constitution and exercising governmental powers.
The Lower Sioux’s express purpose in establishing DSE was “to fulfill government purposes of generating Community governmental revenues by promoting economic development and self-sufficiency through business development.” Furthermore, the Community Council clearly expressed in the Articles of Incorporation its intent that DSE be covered by the Community’s “sovereign immunity from suit to the same extent that the Community would have such sovereign immunity if it has directly engaged in the activities undertaken by DSE.”
Based on the foregoing, we cannot say that the Bankruptcy Court clearly erred in concluding that Dakota Finance Corporation is an arm or agency of the Tribe and that it is entitled to the same immunity from suit to which the Tribe is entitled.
Accordingly, we hold that the Bankruptcy Court did not err in concluding that both the Tribe and Dakota Finance Corporation are protected by sovereign immunity and are, therefore, immune from these suits against them. The orders of the Bankruptcy Court dismissing the adversary proceedings against them are, therefore, AFFIRMED.
. The Honorable Dennis D. O’Brien, United States Bankruptcy Judge for the District of Minnesota.
. Addison v. Seaver (In re Addison), 540 F.3d 805, 809 (8th Cir.2008).
. See Brief of Appellants Paul W. Bucher, Trustee, and Michael S. Dietz, Trustee at 4. Indian Reorganization Act, 48 Stat. 984, 25 U.S.C. § 461 et seq.
. See Rupp v. Omaha Indian Tribe, 45 F.3d 1241, 1244 (8th Cir.1995) (holding that, if the tribe possesses sovereign immunity, then the district court has no jurisdiction, and determinations of jurisdiction are subject to de novo review).
. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 1677, 56 L.Ed.2d 106 (1978); United States v. United States Fidelity & Guar. Co., 309 U.S. 506, 512-513, 60 S.Ct. 653, 656, 84 L.Ed. 894 (1940); Hagen v. Sisseton-Wahpeton Cmty. Coll., 205 F.3d 1040, 1043 (8th Cir.2000).
. Seminole Tribe of Florida v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996).
. Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. at 1677.
. See Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 756-58, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998). See also Okla. Tax Comm. v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509, 111 S.Ct. 905, 112 L.Ed.2d 1112(1991).
. See Kiowa Tribe, 523 U.S. at 754-55, 118 S.Ct. at 1703 (holding that the tribe was immune from the suit, even though the contract at issue implicated the tribe’s off-reservation commercial conduct), Hagen v. Sisseton-Wahpeton Comm. Coll., 205 F.3d 1040 (8th Cir. 2000) (holding that sovereign immunity extended to a community college which was chartered, funded, and controlled by the tribe).
. Santa Clara Pueblo, 436 U.S. at 59, 98 S.Ct. 1670 (internal quotation marks omitted). See also In re Prairie Island Dakota Sioux, 21 F.3d 302, 304 (8th Cir.1994).
. Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. 1670.
. See Kiowa Tribe, 523 U.S. at 759, 118 S.Ct. at 1705. See also Patrice H. Kunesh, Tribal Self-Determination in the Age of Scarcity, 54 S.D. L. Rev. 398, 398 (2009) ("Tribal sovereignty and the jurisdictional counterpart of tribal sovereign immunity from suit are the bedrock principles of tribal self-determination.”).
. 247 B.R. 259 (Bankr.N.D.Iowa 2000).
. 247 B.R. at 267.
. 11 U.S.C. § 106(a) (emphasis added).
. 11 U.S.C. § 101(27) (emphasis added).
. 357 F.3d 1055 (9th Cir.2004), cert. denied, Navajo Nation v. Krystal Energy Co., Inc., 543 U.S. 871, 125 S.Ct. 99, 160 L.Ed.2d 118 (2004).
. 357 F.3d at 1057-58.
. See In re Platinum Oil Properties, LLC, 465 B.R. 621, 642-44 (Bankr.D.N.M.2011); Turning Stone Casino v. Vianese (In re Vianese), 195 B.R. 572, 575-76 (Bankr.N.D.N.Y.1995). The trustees also cite In re Sandmar Corp., 12 B.R. 910, 916 (Bankr.D.N.M.1981), but that case does not deal with § 106(c). There, the tribe asserted that it was a "governmental entity” to which § 362(b)(4) of the 1978 Code applied to exempt its use of its police and regulatory powers as a governmental entity from the automatic stay. The Court "grant[ed] that the Tribe [was] a governmental entity,” but held that the eviction of the debtor was not an exercise of the tribe's police or regulatory powers. They also cite a
.See Ute Distribution Corp. v. Ute Indian Tribe, 149 F.3d 1260, 1265-66 (10th Cir. 1998) (holding that, after Santa Clara Pueblo, abrogation of tribal sovereign immunity cannot be found if the court must "glean some congressional intent to [abrogate] immunity based on an examination of the structure or purpose of the statute.”). See also Greggory W. Dalton, A Failure of Expression: How the Provisions of the U.S. Bankruptcy Code Fail to Abrogate Tribal Sovereign Immunity, 81 Wash. L. Rev. 645 n. 29 (2006).
. 492 U.S. 96, 109 S.Ct. 2818, 106 L.Ed.2d 76 (1989).
. 503 U.S. 30, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992).
. See H.R. Rep. 103-835, Section-By-Section Analysis § 113; 2 Collier on Bankruptcy ¶ 106.01 (Alan N. Resnick & Henry J. Som-mer eds., 16th ed.).
. 30 U.S. 1, 5 Pet. 1, 8 L.Ed. 25 (1831).
. Id. at 16.
. Id. at 18.
. Id. at 17. See also Native Am. Church of N. Am. v. Navajo Tribal Council, 272 F.2d 131, 134 (10th Cir.1959) ("Indian tribes are not states. They have a status higher than that of states. They are subordinate and dependent nations possessed of all powers [except] to the extent that they have expressly been required to surrender them by the superior sovereign, the United States.”).
. 498 U.S. 505, 111 S.Ct. 905, 112 L.Ed.2d 1112 (1991).
. Id. at 510, 111 S.Ct. at 909.
. Id. at 510, 111 S.Ct. at 909-10.
. Id. at 510, 111 S.Ct. at 910 (citing California v. Cabazon Band of Mission Indians, 480 U.S. 202, 216, 107 S.Ct. 1083, 1092, 94 L.Ed.2d 244 (1987)).
. Id.
. 501 U.S. 775, 111 S.Ct. 2578, 115 L.Ed.2d 686 (1991).
. Id. at 782, 111 S.Ct. at 2582-83.
. See Worcester v. State of Georgia, 31 U.S. 515, 6 Pet. 515, 8 L.Ed. 483 (1832).
. See, e.g., Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766, 105 S.Ct. 2399, 85 L.Ed.2d 753 (1985); McClanahan v. State Tax Comm'n of Arizona, 411 U.S. 164, 174, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973); Choate v. Trapp, 224 U.S. 665, 675, 32 S.Ct. 565, 56 L.Ed. 941 (1912). See also Greggory W. Dalton, A Failure of Expression: How the Provisions of the U.S. Bankruptcy Code Fail to Abrogate Tribal Sovereign Immunity, 81 Wash. L. Rev. 645, 649 (2006).
. Accord In re National Cattle Congress, 247 B.R. at 267. See also In re Mayes, 294 B.R. 145, 148 n. 10 (10th Cir. BAP 2003) (stating, without reaching the issue, that abrogation probably did not apply to Indian tribes because they are not “domestic governments.”).
. 247 B.R. at 267.
. Hagen v. Sisseton-Wahpeton Community College, 205 F.3d 1040, 1043 (8th Cir.2000) (holding that tribal immunity extended to a community college which was chartered, funded, and controlled by the tribe); Dillon v. Yankton Sioux Tribe Hous. Auth., 144 F.3d 581, 583 (8th Cir.1998) (tribal housing authority established by tribal counsel is a tribal agency entitled to sovereign immunity); Weeks Constr., Inc. v. Oglala Sioux Hous. Auth., 797 F.2d 668, 670-71 (8th Cir.1986) (tribal housing authority created by tribal ordinance to develop and administer housing projects on the reservation was a tribal agency entitled to sovereign immunity).
. Gavle v. Little Six, Inc., 555 N.W.2d 284, 294 (Minn. 1996); Dacotah Properties-Richfield, Inc. v. Prairie Island Indian Cmty., 520 N.W.2d 167, 170 (Minn.Ct.App.1994).
. Dacotah Properties-Richfield, 520 N.W.2d at 172-173.
. See, e.g., Kiowa Tribe, 523 U.S. at 760, 118 S.Ct. 1700.
. Id. (cataloging prior decisions). See also Klammer v. Lower Sioux Convenience Store, 535 N.W.2d 379, 383 (Minn.App.1995) (distinguishing the Lower Sioux from the Prairie Island tribe in Dacotah Properties ).
. Am. Indian Agric. Credit Consortium, Inc. v. Standing Rock Sioux Tribe, 780 F.2d 1374, 1378 (8th Cir. 1985).
. See Hagen v. Sisseton-Wahpeton, 205 F.3d at 1043.
. Allen v. Gold Country Casino, 464 F.3d 1044, 1047 (9th Cir.2006), as quoted in Breakthrough Mgmt. Group Inc. v. Chukchansi Gold Casino and Resort, 629 F.3d 1173, 1183 (10th Cir.2010).
. See J.L. Ward Assocs., Inc. v. Great Plains Tribal Chairmen’s Health Bd., 842 F.Supp.2d 1163, 1173 (D.S.D.2012) (cataloging cases from several federal and state courts).
. Breakthrough Mgmt. Group v. Chukchansi Gold Casino, 629 F.3d at 1188.