Huron Potawatomi, Inc v. Stinger

574 N.W.2d 706 (1997) 227 Mich. App. 127

HURON POTAWATOMI, INC., Plaintiff-Appellee,
v.
Kathy STINGER, Defendant-Appellant,

Docket No. 198078.

Court of Appeals of Michigan.

Submitted October 7, 1997, at Grand Rapids. Decided December 19, 1997, at 9:25 a.m. Released for Publication March 10, 1998.

Vandervoort, Cooke, McFee, Christ, Carpenter & Fisher, P.C. by Nelson Karre, Battle Creek, for Plaintiff-Appellee.

Russell & Batchelor by Walter J. Russell, Grand Rapids, for Defendant-Appellant.

Before WHITE, P.J., and MARK J. CAVANAGH and REILLY, JJ.

PER CURIAM.

Defendant Kathy Stinger appeals as of right from an order granting plaintiff, Huron Potawatomi, Inc., summary disposition pursuant to MCR 2.116(C)(7) on the basis that her counterclaim was barred by plaintiff's sovereign immunity. We affirm.

Plaintiff is an Indian tribe. Plaintiff incorporated as a Michigan nonprofit corporation in 1970. Plaintiff is administered by an elected chairman and council. Defendant is a member of the tribe.

On October 11, 1993, the parties entered into a contract. The contract provided that defendant would engage in genealogical research for plaintiff in its effort to gain formal recognition as an Indian tribe by the federal government. Subsequently, the tribe underwent a change of leadership, and in December 1993, the new leadership discharged defendant.

On March 28, 1994, plaintiff filed a claim against defendant to recover possession of the tribal membership records, which defendant still had in her possession. On May 2, 1994, defendant filed a counterclaim against plaintiff, seeking payment for services rendered.

On December 21, 1995, the Department of the Interior formally recognized plaintiff as an Indian tribe. On that date, the following notice appeared in the Federal Register:

Pursuant to 25 CFR 83.10(m), notice is hereby given that the Assistant Secretary acknowledges that the Huron Potawatomi, Inc., 221 1½ Mile Road, Fulton, Michigan 49052, exists as an Indian tribe within the meaning of Federal law. This notice is based on a determination that the group satisfies the criteria set forth in 25 CFR 83.7 as modified by 25 CFR 83.8. [60 Fed. Reg. 66315 (1995).]

Plaintiff filed a motion for summary disposition of defendant's counterclaim pursuant to MCR 2.116(C)(7) and (10). Plaintiff asserted that because it is a federally recognized Indian tribe, it is entitled to sovereign immunity. Plaintiff also moved to amend its answer to defendant's counterclaim to assert sovereign immunity as an affirmative defense. Plaintiff informed the court that it would dismiss its claim against defendant if the trial court granted its motion for summary disposition.

The trial court heard argument with regard to plaintiff's motion on June 19, 1996. On July 2, 1996, the trial court issued a written opinion granting plaintiff's motion for summary disposition pursuant to MCR 2.116(C)(7). The trial court stated:

Looking at facts in a light most favorable to the non-moving party, it is of course ironic that defendant's services for which she claims non-payment enabled plaintiff to make a credible claim of sovereign immunity, thereby defeating defendant's claim for payment. Irony aside, however, and while sympathetic to defendant's unenviable position, this court is satisfied that plaintiff is a domestic dependant [sic] nation entitled to such immunity, and that Plaintiff's Motion for Summary Disposition must be GRANTED.

The order incorporating this decision was entered on August 29, 1996.

On appeal, defendant argues that the trial court erred in holding that plaintiff was immune from suit on the basis of sovereign immunity. Defendant further contends that because plaintiff incorporated in 1970 as a Michigan corporation, it can be sued as a corporate entity.

MCR 2.116(C)(7) provides that summary disposition is proper when a claim is barred because of immunity granted by law. When reviewing a motion for summary disposition granted pursuant to MCR 2.116(C)(7), this Court must accept as true the plaintiff's well-pleaded allegations and construe them in a light most favorable to the plaintiff. The motion should not be granted unless no factual development could provide a basis for recovery. This Court reviews a summary disposition determination de novo as a question of law. MS Development, Inc. v. Auto Plaza of Woodhaven (After Remand), 220 Mich.App. 540, 545, 560 N.W.2d 62 (1996).

Suits against Indian tribes are barred by sovereign immunity absent a clear and unequivocal waiver by the tribe or congressional abrogation. Oklahoma Tax Comm. v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 509, 111 S. Ct. 905, 909, 112 L. Ed. 2d 1112 (1991); Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S. Ct. 1670, 1677, 56 L. Ed. 2d 106 (1978); Michigan United Conservations Clubs v. Anthony, 90 Mich.App. 99, 109, 280 N.W.2d 883 (1979). The Department of the Interior has recognized plaintiff as an Indian tribe. See 60 Fed. Reg. 66315 (1995). The filing of a suit by a tribe does not waive the tribe's immunity with respect to counterclaims. United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 512-513, 60 S. Ct. 653, 656-57, 84 L. Ed. 894 (1940). Accordingly, in the absence of a clear waiver or congressional abrogation, plaintiff is immune from suit.

Defendant's assertion that the establishment of sovereignty requires more than recognition by the Bureau of Indian Affairs is without merit. The Congress of the United States has plenary authority over Indian affairs. See Hodel v. Irving, 481 U.S. 704, 734, 107 S. Ct. 2076, 2093, 95 L. Ed. 2d 668 (1987); Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 765, 105 S. Ct. 2399, 2403, 85 L. Ed. 2d 753 (1985). Congress has authorized the executive branch to issue regulations concerning Indian matters. 25 U.S.C.§§ 2, 9; James v. United States Dep't of Health and Human Services, 263 U.S. App. D.C. 152, 157, 824 F.2d 1132 (1987). The Department of the Interior has adopted procedures to determine which Indian groups exist as "tribes." Id.; 25 C.F.R. § 83.2. As the United States Supreme Court stated over a century ago:

In reference to all matters of this kind, it is the rule of this court to follow the action of the executive and other political departments of the government, whose more special duty it is to determine such affairs. If by them those Indians are recognized as a tribe, this court must do the same. [United States v. Holliday, 70 U.S. (3 Wall.) 407, 420, 18 L. Ed. 182 (1865).]

Defendant next maintains that plaintiff waived its immunity by incorporating pursuant to Michigan's Nonprofit Corporation Act, which provides that a corporation shall have the power to "[s]ue and be sued." See M.C.L. § 450.2261(1)(b); M.S.A. § 21.197(261)(1)(b). However, state laws are generally not applicable to tribal Indians on an Indian reservation except where Congress has explicitly provided that state law shall apply. McClanahan v. Arizona State Tax Comm., 411 U.S. 164, 170-171, 93 S. Ct. 1257, 1261, 36 L. Ed. 2d 129 (1973); see Holliday, supra at 419. Thus, the provisions of Michigan's corporate law do not control, and plaintiff's act of incorporating pursuant to Michigan law does not constitute an express and unequivocal waiver of sovereign immunity from suit.^[1] See Oklahoma Tax Comm., supra; Santa Clara Pueblo, supra; Michigan United Conservations Clubs, supra.

Moreover, in the present case, the entity incorporated under Michigan law, Huron Potawatomi, Inc., is the tribe that was recognized by the federal government. In the absence of any evidence that plaintiff has set up a separate corporate entity to conduct business affairs, and that this separate corporate entity was the party that contracted with defendant, defendant's argument must fail.

Defendant relies on the following language from Padilla v. Pueblo of Acoma, 107 N.M. 174, 177, 754 P.2d 845 (1988):

[F]ederal courts generally have held that the "sue and be sued" proviso of a tribal corporate charter under Section 17 of the Act constitutes a waiver of immunity for the tribe as a corporate entity, although it does not waive the sovereign immunity of the tribe as a political entity.

However, this passage specifically refers to tribes that are incorporated pursuant to the Indian Reorganization Act of 1934(IRA), 25 U.S.C. § 461 et seq. The IRA provides for the creation of two separate entities: a tribal government organized under § 16 and a tribal corporation organized under § 17. See 25 U.S.C. §§ 476-477. For business reasons, a tribe that creates a corporation pursuant to § 17 will often include a "sue and be sued" clause in the charter.^[2] However, absent the inclusion of such a clause in the corporate charter, the tribal corporation is immune from suit. Parker Drilling Co. v. Metlakatla Indian Community, 451 F. Supp. 1127, 1136 (D.Alaska, 1978); S Unique, Ltd. v. Gila River Pima-Maricopa Indian Community, 138 Ariz. 378, 385, 674 P.2d 1376 (Ariz.App., 1983). Because in the present case plaintiff was incorporated under Michigan law, an analysis of § 17 of the IRA is not applicable.

Defendant next claims that by raising the defense of sovereign immunity, plaintiff is attempting to violate her civil rights. In support of her argument, defendant cites 42 U.S.C. § 1981. However, this statute applies only to federal and state actions, not to the actions of an Indian tribe. Spotted Eagle v. Blackfeet Tribe of the Blackfeet Indian Reservation, 301 F. Supp. 85, 87 (D.Mont., 1969). Accordingly, defendant's reliance on 42 U.S.C. § 1981 is misplaced.

In her final issue, defendant argues that plaintiff is relying on federal common law. Defendant points out that, as established in Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822, 82 L. Ed. 1188 (1938), there is no separate body of federal common law. However, because as discussed above, plaintiff is not relying on federal common law, we find this issue to be without merit.

In sum, we conclude that, as a federally recognized Indian tribe, plaintiff possesses sovereign immunity. Accordingly, the trial court properly granted plaintiff's motion for summary disposition of defendant's counterclaim.

Affirmed.

NOTES

[1] Plaintiff's articles of incorporation are not part of the record, but neither party alleges that the articles contain express language providing that plaintiff waived its immunity from suit.

[2] See, e.g., Kenai Oil & Gas, Inc. v. Dep't of Interior, 522 F. Supp. 521, 528 (D.Utah, 1981), aff'd. 671 F.2d 383 (C.A.10, 1982); Parker Drilling Co. v. Metlakatla Indian Community, 451 F. Supp. 1127, 1136-1137 (D.Alaska, 1978); Brunette v. Dann, 417 F. Supp. 1382, 1385 (D.Idaho, 1976); Atkinson v. Haldane, 569 P.2d 151, 170, 173-175 (Alaska, 1977).