Basil Cook Enterprises, Inc. v. St. Regis Mohawk Tribe

• Decision Date: 27 June 1997
• Docket Number: No. 189,D,189
• Citation: 117 F.3d 61
• Parties: BASIL COOK ENTERPRISES, INC., a New York Corporation; Basil J. Cook; and Guilford D. White, Plaintiffs-Appellants, v. ST. REGIS MOHAWK TRIBE; Norman J. Tarbell; Philip H. Tarbell, Lincoln White; Rudolph T. Hart; Douglas A. Smoke; and Alan R. White, Defendants-Appellees. ocket 96-7273.
• Court: U.S. Court of Appeals — Second Circuit

Page 61

117 F.3d 61

BASIL COOK ENTERPRISES, INC., a New York Corporation; Basil J. Cook; and Guilford D. White, Plaintiffs-Appellants, v. ST. REGIS MOHAWK TRIBE; Norman J. Tarbell; Philip H Tarbell, Lincoln White; Rudolph T. Hart; Douglas A. Smoke; and Alan R. White Defendants-Appellees.

No. 189, Docket 96-7273.

United States Court of Appeals Second Circuit.

Argued Sept. 27, 1996.

Decided June 27, 1997.

Martin E. Karlinsky, Camhy, Karlinsky & Stein, LLP (Kenneth A. Lapatine, Josephine Trovini, Camhy, Karlinsky & Stein, LLP, New York City, of counsel) for plaintiffs-appellants.

William K. Hoyt, Lehtinen, O'Donnell, Vargas & Reiner (Dexter W. Lehtinen, Samuel B. Reiner, II, Lehtinen, O'Donnell, Vargas & Reiner, Miami, FL; Michael Rhodes-Devey, Breeze & Rhodes-Devey, Slingerlands, NY, of counsel) for defendants-appellees.

Before: WALKER, McLAUGHLIN and JACOBS, Circuit Judges.

WALKER, Circuit Judge:

Plaintiffs, Basil Cook, Guilford White and Basil Cook Enterprises, Inc., appeal from an order of the United States District Court for the Northern District of New York (Thomas J. McAvoy, Chief Judge ) denying their motions to enjoin proceedings before the Tribal Court of the St. Regis Mohawk Tribe (the "Tribe") and to compel arbitration in connection with a management agreement governing the operation of a gambling establishment on tribal lands. See Basil Cook Enters., Inc. v. St. Regis Mohawk Tribe, 914 F.Supp. 839 (N.D.N.Y.1996). Plaintiffs further challenge the district court's decision on motion of defendants--the Tribe and several of its governing officials--to stay its hand pursuant to the doctrine of exhaustion of tribal remedies established in National Farmers Union Ins. Co. v. Crow Tribe of Indians, 471 U.S. 845, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985). Because we find that the district court correctly held that plaintiffs must exhaust their tribal remedies before instituting a federal challenge to the jurisdiction of the Tribal Court, we affirm.

I. BACKGROUND

This case arises from a dispute over the management of a high stakes Bingo gaming establishment on the reservation of the St. Regis Mohawk Tribe, a federally-recognized tribe whose lands are located in Franklin County, New York, along the Canadian border. Starting in 1985, Basil Cook and Guilford White, both enrolled members of the Tribe, and a New York corporation controlled by Cook and White operated the Mohawk Bingo Palace on tribal grounds. At first, pursuant to a management agreement entered into in mid-1984, the operating entity was the St. Regis Mohawk Development Corporation in which Cook and White owned an interest. In mid-1990 that agreement was superseded by the Mohawk Bingo Palace Management Agreement (the "management agreement" or "agreement") which is at the center of this dispute.

In the management agreement, the Tribe retained Basil Cook Enterprises to operate the Bingo Palace for five years from the date the agreement received the approval of the Secretary of the United States Department of the Interior, as required by statute. In addition to terms governing the management of the casino and the distribution of proceeds, the agreement provided for resolution by arbitration of disputes arising from the agreement, for a waiver of the Tribe's sovereign immunity with respect to such disputes, and for an option vested in Basil Cook Enterprises to renew the agreement at the close of its term. The contract was conditionally approved by the Interior Department's Bureau of Indian Affairs by letter dated August 10, 1990. ¹

Plaintiffs ran the Bingo Palace until August 29, 1995. On that date, after escalating tensions between tribal officials and plaintiffs over the operation of the casino, the Tribe took control of the Bingo Palace and ousted plaintiffs from the premises. The ouster, effected with the aid of tribal police but without any semblance of judicial authorization, left tribal authorities in control of the Bingo Palace, its operating records and, according to plaintiffs, other property as well, including several thousand dollars in cash. Thereafter, the Tribe has operated the Bingo Palace.

At the time the Bingo Palace was seized, tribal officials served plaintiffs with a complaint that instituted proceedings against them in the then newly-formed Tribal Court, a creature of recent tribal constitutional reform. The tribal complaint sought monetary damages based on fraud, theft, and conversion as well as breach of fiduciary duties. Three days later, on September 1, 1995, the Tribe served the individual plaintiffs, Cook and White, with a second tribal court complaint seeking to quiet title to the Bingo Palace and its adjoining land. On September 15, 1995, plaintiffs responded in Tribal Court to both complaints by denying the allegations and challenging the tribal court's jurisdiction over the dispute.

Meanwhile, on September 1, 1995, Cook and White countered by filing suit in New York State Supreme Court against various tribal officials and employees, including tribal legal counsel. Cook and White sought, among other things, injunctive and monetary relief pursuant to 42 U.S.C. § 1983 for unconstitutional deprivation of property under color of state law and monetary relief under the state law of trespass. On September 5, 1995, defendants removed the action to the United States District Court for the Northern District of New York pursuant to 28 U.S.C. § 1446.

After an unsuccessful effort to regain access to the Bingo Palace by preliminary injunction, plaintiffs Cook and White amended their complaint in various respects: they included Basil Cook Enterprises as a plaintiff; added allegations of entitlement to substantial damages (both compensatory and punitive) against defendants under the Indian Civil Rights Act, 15 U.S.C. §§ 1301-03, the doctrine of Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), and various state law torts; and requested an order compelling arbitration pursuant to 9 U.S.C. § 4.

In January 1996, plaintiffs moved to compel arbitration and to enjoin further tribal court proceedings. Defendants responded by moving to dismiss plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(6), and for failure to exhaust tribal remedies as required by National Farmers. On February 14, 1996, the district court denied plaintiffs' motion to compel arbitration and stayed further proceedings in federal court pending the Tribal Court's determination of jurisdiction. Basil Cook Enters., 914 F.Supp. at 842. In a pretrial order entered February 20, 1996, the district court required plaintiffs to file periodic status reports on the proceedings in tribal court. On March 8, 1996, plaintiffs appealed from the February 15, 1996, order.

On March 13, 1996, pursuant to the district court's pretrial order requiring status reports, plaintiffs informed the court that on March 4, 1996, the Tribal Court had ruled that it had jurisdiction to adjudicate the actions commenced by the Tribe. On April 1, 1996, the district court entered an order, as follows:

In accordance with this Court's Memorandum-Decision-Order dated February 14, 1996, and, the St. Regis Mohawk Tribal Court having determined that it retains jurisdiction over the above-entitled matter, it is no longer necessary for this matter to remain pending before the district court.

Basil Cook Enters., Inc. v. St. Regis Mohawk Tribe, No. 95-CV-1256 (N.D.N.Y. April 1, 1996). Apparently construing the district court's order as a dismissal of their claims on the merits, plaintiffs filed an "amended and supplemental notice of appeal" on April 10, 1996.

II. DISCUSSION

A. Exhaustion of Tribal Remedies.

The district court, in halting the progress of the federal suit pending exhaustion of tribal remedies, was following the doctrine of exhaustion of tribal remedies spelled out by the Supreme Court in National Farmers, 471 U.S. 845, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985). ² In National Farmers, a state school district challenged in federal court a tribal court's default judgment entered in favor of a tribal member who had been injured in a parking lot of a state school located on reservation territory. The Supreme Court held that "[t]he question whether an Indian tribe retains the power to compel a non-Indian property owner to submit to the civil jurisdiction of a tribal court is one that must be answered by reference to federal law and is a 'federal question' under § 1331." Id. at 852, 105 S.Ct. at 2452. The Court reasoned that a tribal court exceeds its authority only when federal plenary power over Native American affairs has divested the tribal court of such authority, a matter that must be decided with reference to federal law. See id. at 852-53, 105 S.Ct. at 2451-52. However, to mitigate the intrusive and disruptive potential of this holding on tribal determinations, the Court added to its broad view of federal question jurisdiction the requirement that determinations of the reach of tribal court jurisdiction "be conducted in the first instance in the Tribal Court itself." Id. at 856, 105 S.Ct. at 2454. See also Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 17-19, 107 S.Ct. 971, 977-78, 94 L.Ed.2d 10 (1987) (exhaustion required where federal jurisdiction is based on diversity of citizenship); Strate v. A-1 Contractors, --- U.S. ----, ---- - ----, 117 S.Ct. 1404, 1412-13, 137 L.Ed.2d 661 (1997) (reaffirming the exhaustion requirement).

Although the application of the doctrine of exhaustion of tribal remedies has not been uniform among the circuits, see Laurie Reynolds, Exhaustion of Tribal Remedies: Extolling Tribal Remedies While Expanding Federal Jurisdiction, 73 N.C. L.Rev. 1089, 1107-08 (1995), the general principle can be easily stated: parties who challenge, under federal law, the jurisdiction of a tribal court to entertain a cause of action must first present their claim to the tribal court before seeking to...