In re Russell

Decision Date15 May 2003
Docket NumberBankruptcy No. 02-06628-PHX-RJH.,Adversary No. 02-01215.
Citation293 B.R. 34
PartiesIn re Darrell Duane RUSSELL, Debtor. Darrell Duane Russell, Plaintiff, v. Fort McDowell Yavapai Nation, Defendant.
CourtU.S. Bankruptcy Court — District of Arizona

Ronald Rosier, Fountain Hills, AZ, for Fort McDowell Yavapai Nation.

Gary L. Thomas, Phoenix, AZ, for Darrell Duane Russell.

OPINION DENYING NATION'S MOTION TO DISMISS

RANDOLPH J. HAINES, Bankruptcy Judge.

Debtor Darrell Russell received his chapter 7 discharge and then filed an adversary proceeding against Defendant Fort McDowell Yavapai Nation (the "Nation") to enforce the discharge. His complaint seeks to preclude the Nation from collecting his debt to the Nation by withholding his monthly entitlement to gaming revenues. The Nation moved to dismiss on the ground of tribal sovereign immunity, and that motion has been briefed, argued and taken under advisement. For the reasons set forth below, the Court denies the Nation's motion to dismiss.

Facts

Russell is a tribal member of the Nation. In 1998, he obtained a $200,000 business loan from the Nation's Commercial Development Fund to finance his own collection business, which his application described as the "purchase of chattel paper." He committed to repayment of the loan by 60 equal monthly payments of $3,960 each from 1999 through 2004. The loan application, signed by Russell, stated that as "additional security for the loan, [Russell] shall assign any Per-Capita payments due to [Russell] at that time that the loan is officially in default, on a pro-rata basis, for such time as is necessary to repay the loan." The promissory note also referenced this provision as security for the note.

Russell's business apparently failed. He filed chapter 7 in May 2002 and obtained his discharge in September, 2002. He listed the business loan from the Nation as an unsecured [sic] debt in his Schedule F and included the Nation as a creditor on the master mailing list. The Nation in fact received notice of the bankruptcy filing and attended the first meeting of creditors, but did not file a proof of claim, object to the debtor's discharge, or object to the scheduling of its debt as unsecured. The Nation also received notice of the Debtor's discharge.

As a tribal member, Russell is entitled to a per capita distribution from the Nation's gaming revenues, which is currently approximately $2100 per month.1 Each month, before and after the discharge, the Nation has been deducting from these per capita payments approximately $1200 per month on account of the business loan.2 Russell's adversary complaint seeks to have these deductions terminated on account of the discharge.3

The Issue

The Nation seeks dismissal of the adversary complaint on the ground the court lacks jurisdiction due to tribal sovereign immunity. The Debtor responds the sovereign immunity of "governmental units" is abrogated by 11 U.S.C. § 106(a) as to various sections of the Bankruptcy Code, including § 524(a)(2),4 which provides that the discharge "operates as an injunction against" "an act, to collect, recover or offset any such [discharged] debt as a personal liability of the debtor." The Nation replies that it, and Indian tribes generally, are not specifically identified as among the governmental units to which that abrogation applies, because the definition of "governmental unit" in Bankruptcy Code § 101(27) does not mention Indian tribes:

"[G]overnmental 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.

The Nation supports this argument by adding that any Congressional abrogation of tribal immunity "cannot be implied but must be unequivocally expressed." Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58-59, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978) (citations omitted).

Thus the issue is whether "domestic government" is an unequivocal expression that includes Indian tribes, or merely implies that.5

Analysis

It is beyond debate that tribes enjoy sovereign immunity from private suit absent waiver or abrogation by Congress. That doctrine was announced in 1940,6 withstood challenge in 1991,7 and was recently reaffirmed and applied even off the reservation.8 It is also beyond debate that Congress can abrogate tribal sovereign immunity. Martinez, 436 U.S. at 58, 98 S.Ct. 1670 ("This aspect of tribal sovereignty, like all others, is subject to the superior and plenary control of Congress."); Kiowa Tribe, 523 U.S. at 759, 118 S.Ct. 1700 ("Congress `has occasionally authorized limited classes of suits against Indian tribes' and `has always been at liberty to dispense with such tribal immunity or to limit it'"), quoting Potawatomi, 498 U.S. at 510, 111 S.Ct. 905.

Any Congressional abrogation, however, "cannot be implied but must be unequivocally expressed." Martinez, 436 U.S. at 58-59, 98 S.Ct. 1670. Case law provides examples of purported waivers that have been found to be either by implication only or by equivocal expression.9

Martinez is an example of an attempt to imply an abrogation of sovereign immunity. It dealt with the Indian Civil Rights Act of 1968. The plaintiff sued the Santa Clara Pueblo for violation of its equal protection clause by denying tribal membership to children of female members who marry outside the tribe, but not to children of male members who do so. Because nothing in the Indian Civil Rights Act "purports to subject tribes to the jurisdiction of the federal courts in civil actions for injunctive or declaratory relief," the Court concluded that Congress had not abrogated tribes' sovereign immunity from such suits. 436 U.S. at 59, 98 S.Ct. 1670. It was not that a purported abrogation was equivocal, as there was not even an arguably equivocal attempt at abrogation. Rather, the argument for abrogation was solely based on implication, that Congress would not have imposed legal obligations on tribes to recognize their members' civil rights without also authorizing private suits to enforce those rights. In fact, the plaintiff's argument really rested on two inferences, because the Court also found that the Act implied no private right of action at all, not even against a tribal officer who was "not protected by the tribe's immunity from suit." Id. at 59, 98 S.Ct. 1670.10

The best example of an "equivocal" abrogation of immunity is United States v. Nordic Village, Inc., 503 U.S. 30, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992). In that case Justice Scalia explained why Bankruptcy Code § 106(c), the direct ancestor of the current § 106(a) prior to its amendment in 1994, failed to satisfy the "unequivocal expression" requirement — because "It is susceptible of at least two interpretations that do not authorize monetary relief." Id. at 34, 112 S.Ct. 1011 (emphasis in original). So according to the "plain meaning" of "unequivocal," to be equivocal the statute purporting to abrogate sovereign immunity must be susceptible of an alternative interpretation that does not do so.

Here there is no purported abrogation of the first type, by implication. The Bankruptcy Code does not merely define the right — the right to a discharge like the right to equal protection in the Indian Civil Rights Act — but also the available remedies to enforce and protect that right, here § 524's express injunctive relief. So the availability of private judicial relief is not implied, but express. The next step is to determine whether the ability to assert it against a sovereign is also express or only implied. That is answered by the current § 106(a), which expressly abrogates sovereign immunity as to any governmental unit, with respect to the private judicial remedies that the Code provides.

"Governmental unit" is expressly defined to include the United States, a State, a foreign state, or "other foreign or domestic government." § 101(27). The Nation argues that because "there is no mention of Indian tribes" in that definition or elsewhere in the Code, it would only be by implication that they could be included, and sovereign immunity cannot be abrogated by implication.

Resolution of the Nation's argument hinges on the meaning of "implied" in the Supreme Court's admonition that abrogation of tribal immunity cannot be implied. As noted by the premier lexicographer of modern legal usage, there are three possible meaning of "imply,"11 but only the third, incorrect usage gives us any pause.

The first possible meaning is "to impute or impose on equitable or legal grounds."12 This usage is unique to legal writing, and very common in legal writing, and is therefore is the most likely usage the Court intended. This is the usage when courts imply a contract, a trust, or a promise that was never actually made or even suggested. Perhaps the usage closest to the present context is when courts imply a private right of action in a statute. When they do so, they are not using the term in its ordinary English usage, because the court's holding is express rather than implied, and usually the court is not suggesting that the Congress or legislature consciously intended there to be a private right of action but only indicated it by implication. Instead, the court is imposing it because it is equitable to do so, just as a promise or a contract may be implied when a party acts to its detriment in reliance on another's statement or conduct. That is a particularly apt meaning in this context, because it means the Court is saying that abrogation of sovereign immunity cannot be implied in the same way a right of action might be implied even when the statutory language is silent on the subject. Under that meaning, however, there can be no argument that application of § 106(a) to...

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6 cases
  • In re Platinum Oil Props., LLC
    • United States
    • U.S. Bankruptcy Court — District of New Mexico
    • August 12, 2011
    ...governments.... Congress expressly abrogated the immunity of Indian tribes.”) (citations omitted); Russell v. Fort McDowell Yavapai Nation (In re Russell), 293 B.R. 34, 44 (Bankr.D.Ariz.2003) (holding that “[t]he term ‘other foreign or domestic government’ in § 101(27) unequivocally, and wi......
  • Buchwald Capital Advisors, LLC v. Papas (In re Greektown Holdings, LLC)
    • United States
    • U.S. District Court — Eastern District of Michigan
    • June 9, 2015
    ...government.” Indian tribes are domestic governments. Therefore, Congress expressly abrogated the immunity of Indian tribes. See In re Russell, 293 B.R. 34, 44 ( [Bankr.] D.Ariz.2003) (concluding that § 106(a) abrogates tribal sovereign immunity “unequivocally[ ] and without implication”); s......
  • Buchwald Capital Advisors, LLC v. Sault Ste. Marie Tribe of Chippewa Indians (In re Greektown Holdings, LLC)
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • February 26, 2019
    ...as to all governments. Indian tribes are governments. Hence sovereign immunity is abrogated as to Indian tribes. See In re Russell , 293 B.R. 34, 40 (Bankr. D. Ariz. 2003) (explaining that logical deduction from express statutory language satisfies a standard of unequivocality). Taken toget......
  • Buchwald Capital Advisors, LLC v. Papas (In re Greektown Holdings, LLC)
    • United States
    • U.S. Bankruptcy Court — Eastern District of Michigan
    • August 12, 2014
    ...the abrogation of sovereign immunity as to all domestic governments is not equivocal. It could hardly be more absolute.In re Russell, 293 B.R. 34, 41 (Bankr.D.Ariz.2003) (emphasis original) (footnote omitted). Similarly, one thoughtful dissent5 stated:An important statutory maxim of interpr......
  • Request a trial to view additional results
2 firm's commentaries
  • Tribal Casino Bankruptcies - The Train Is Leaving The Station
    • United States
    • Mondaq United States
    • August 24, 2012
    ...as to tribes. In support are two lower court decisions holding the same that were rendered by bankruptcy courts in Arizona (In Re Russell, 293 B.R. 34, 40 (Bankr. Ariz. 2004)) and New York (In re Vianese, 195 B.R. at While the Ninth Circuit is standing somewhat alone on the jurisdiction iss......
  • Tribal Corporate Bankruptcy Petition Raises Issues Of First Impression For Bankruptcy Court
    • United States
    • Mondaq United States
    • March 15, 2013
    ...2011) reconsideration denied, 11-09-10832 JA, 2011 WL 6293132 (Bankr. D.N.M. Dec. 12, 2011); Russell v. Ft. McDowell Yavapai Nation, 293 B.R. 34 (Bankr. D. Ariz. 2003); Davis Chevrolet Inc. v. Navajo Nation, 282 B.R. 674 (Bankr. D. Ariz. 2002); Turning Stone Casino v. Vianese, 195 B.R. 572 ......
2 books & journal articles
  • Brewing Disharmony: Addressing Tribal Sovereign Immunity Claims in Bankruptcy.
    • United States
    • American Bankruptcy Law Journal Vol. 96 No. 1, January 2022
    • January 1, 2022
    ...or domestic government found in [[section] 101(27)] includes Indian tribes."); Russell v. Fort McDowell Yavapai Nation (In re Russell), 293 B.R. 34, 44 (Bankr. D. Ariz. 2003) ("[O]ther foreign or domestic governments in [section] 101(27) unequivocally, and without implication, includes Indi......
  • Beyond the Bankruptcy Code: a New Statutory Bankruptcy Regime for Tribal Debtors
    • United States
    • Emory University School of Law Emory Bankruptcy Developments Journal No. 35-2, June 2019
    • Invalid date
    ...foreign or domestic government found in [§ 101(27)] includes Indian tribes."); Russell v. Fort McDowell Yavapai Nation (In re Russell), 293 B.R. 34, 44 (Bankr. D. Ariz. 2003) ("[O]ther foreign or domestic governments in § 101(27) unequivocally, and without implication, includes Indian tribe......

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