Inecon Agricorporation v. Tribal Farms, Inc., 79-3617
| Decision Date | 14 September 1981 |
| Docket Number | No. 79-3617,79-3617 |
| Citation | 656 F.2d 498 |
| Parties | INECON AGRICORPORATION, a California Corporation, Plaintiff-Appellee, v. TRIBAL FARMS, INC., an Arizona Corporation, Defendant-Appellant, and Fort Mojave Indian Tribe, etc., et al., Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert W. Warden, Mangum, Wall, Stoops & Warden, Flagstaff, Ariz., for defendant-appellant.
William S. Hawgood, II, Streich, Lang, Weeks & Cardon, Phoenix, Ariz., for plaintiff-appellee.
Appeal from the United States District Court for the District of Arizona.
Before GOODWIN, SCHROEDER and FARRIS, Circuit Judges.
Tribal Farms, Inc. appeals from a judgment of the district court enforcing a $169,982.87 contractual arbitration award in favor of Inecon Agricorporation. Tribal Farms contends that (1) the district court lacked subject matter jurisdiction because complete diversity of citizenship did not exist between the parties, and (2) the underlying contracts between Inecon and Tribal Farms were void ab initio because they were not approved by the Secretary of the Interior and Commissioner of Indian Affairs as required by 25 U.S.C. §§ 81 and 84. We affirm.
On August 13, 1975, Inecon Agricorporation and the Fort Mojave Indian Tribe executed agricultural land development and management contracts. The contracts received the "Conditional Approval" of the Assistant Area Director of the Bureau of Indian Affairs on November 8, 1975. The parties subsequently complied with all conditions. In 1975, the Tribe created Tribal Farms, Inc., an Arizona corporation, in order to secure private investment capital from lenders who would not provide financing unless the borrower was subject to federal and state court jurisdiction. In March 1976, the Tribe assigned all its rights and duties under the development and management contracts to Tribal Farms. The Assistant Area Director approved the assignment on October 25, 1976. On May 18, 1977, following a series of disagreements, Inecon, Tribal Farms, and the Tribe executed a "reinstatement agreement" renewing the obligations of all parties and providing for arbitration of disputes. The Bureau of Indian Affairs did not officially approve the reinstatement agreement; however, the Acting Deputy Commissioner of Indian Affairs expressed his satisfaction with the agreement in a letter dated June 14, 1977.
Another dispute arose between Inecon and Tribal Farms, and Inecon invoked the arbitration clause of the Reinstatement Agreement. On March 8, 1978, the arbitrator awarded Inecon $169,982.87 for amounts due under the development contract plus attorney fees. On June 2, 1978, Inecon filed its first amended complaint against Tribal Farms, Inc., the Fort Mojave Indian Tribe, the individual members of the Fort Mojave Tribal Council, and the Superintendent of the Colorado River Agency. On September 18, 1979, the district court entered a judgment for Inecon on its first cause of action, enforcing the arbitration award against Tribal Farms, Inc.
Tribal Farms contends that the district court lacked subject matter jurisdiction because complete diversity of citizenship did not exist between the parties. A plaintiff may not invoke the jurisdiction of the federal courts under 28 U.S.C. § 1332 unless each defendant is a citizen of a different state from each plaintiff. Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 2402, 57 L.Ed.2d 274 (1978). Plaintiff Inecon Agricorporation is a California corporation. Defendants Llewellyn Barrackman and Norvin McCord, sued in their official capacities as members of the Fort Mojave Tribal Council, are residents of Needles, California. All other defendants are residents of Arizona. Tribal Farms concludes that because, Inecon, Barrackman and McCord are residents of California, the action must be dismissed for want of subject matter jurisdiction. Subject matter jurisdiction may be challenged for the first time on appeal. M.C. & L.M. Railway Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 511, 28 L.Ed. 462 (1884).
Before we can direct the dismissal of this action because of incomplete diversity of citizenship, however, we must determine whether Barrackman and McCord are nonindispensable parties under Fed.R.Civ.P. 19(b) who can be dismissed from the action pursuant to Rule 21 to perfect subject matter jurisdiction. Anrig v. Ringsby United, 603 F.2d 1319, 1325-26 (9th Cir. 1978); Sams v. Beech Aircraft Corp., 625 F.2d 273, 277 (9th Cir. 1980). Under Rule 19(b), status as an indispensable party depends on:
"(1) the extent a judgment rendered in a person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder...." Anrig, supra, 603 F.2d at 1325-26.
We hold that Barrackman and McCord are not indispensable parties. Barrackman's and McCord's interests would not be prejudiced by their dismissal because the district court found only Tribal Farms liable to pay the arbitration award. Inecon would not be prejudiced because the judgment applies only to Tribal Farms, Inc., and Inecon is willing to accept dismissal to perfect subject matter jurisdiction. Inecon brought this problem upon itself by joining nondiverse defendants, but it would be a waste of time to bring another action against Tribal Farms in state or federal court. Accordingly, upon remand the district court will dismiss McCord and Barrackman from this action. We now turn to the merits.
Tribal Farms contends that the district court erred by enforcing the arbitration award, because the development contract,...
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