Babbitt Ford, Inc. v. Navajo Indian Tribe

Decision Date15 July 1983
Docket NumberNos. 81-6054,82-5002 and 81-6052,s. 81-6054
Citation710 F.2d 587
Parties36 UCC Rep.Serv. 1809 BABBITT FORD, INC., an Arizona corporation, Plaintiff-Appellant, v. The NAVAJO INDIAN TRIBE, through its Chairman, Peterson Zah, et al., Defendants-Appellees, and Tom and Lorraine Sellers, et al., Defendants-Cross-Appellants. GURLEY MOTOR COMPANY, a New Mexico corporation, Plaintiff-Appellant, v. Peterson Zah, individually and in his capacity as Chairman of the Navajo Tribal Council, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Gerald W. Nabours, Mangum, Wall, Stoops & Warden, Flagstaff, Ariz., Alvin H. Shrago, Evans, Kitchel & Jenckes, Phoenix, Ariz., for plaintiffs-appellants.

Elizabeth Bernstein, Window Rock, Ariz., John MacKinnon, Tuba City, Ariz., for defendants.

Appeal from the United States District Court for the District of Arizona.

Before MERRILL, CHOY, and ALARCON, Circuit Judges.

ALARCON, Circuit Judge:

In these consolidated appeals, Babbitt Ford, Inc. (Babbitt), and Gurley Motor Company (Gurley), seek reversal of an order of the district court denying declaratory and injunctive relief from enforcement of certain of the Navajo Tribe's (the Tribe)

vehicle repossession regulations. In their cross-appeal, Tim and Lorraine Sellers (Sellers) and Barney and Alice Joe (Joes) seek reversal of that portion of the district court's order enjoining the enforcement of the liquidated damages provision of the Navajo Tribe's regulation. We are asked to decide whether the Tribe has the sovereign power to enact and enforce civil laws regulating the conduct of non-Indians who come upon tribal land to repossess vehicles purchased outside reservation boundaries. We conclude that such power exists.

I.

Babbitt and Gurley raise the following issues on appeal: (1) the Navajo Tribe has been divested, by treaty and federal common law, of the power to regulate non-Indian repossessions conducted on the reservation; (2) the Navajo Tribe may not exercise tribal authority over non-Indians because the Tribe has neither adopted a constitution nor organized under the Indian Reorganization Act; and (3) the district court lacked the authority to reform the Navajo repossession regulation by severing the liquidated damages provision from the rest of the statute. In their cross-appeal, the Sellers and Joes contend that (1) the Navajo Tribe has jurisdiction to regulate the conduct of non-Indians on the reservation and (2) the civil damage provision of the Navajo law is a legitimate exercise of tribal power.

PERTINENT FACTS

Babbitt is an Arizona car dealership doing business in Page and Flagstaff, Arizona. Gurley is a New Mexico Corporation doing business in Gallup, New Mexico. Both automobile dealerships are located within close proximity to the Navajo Indian Reservation. Each derives a substantial part of its income from sales to members of the Tribe. All automobile sales contracts with the Indians are negotiated at the dealership. Delivery of the automobiles also occurs off the reservation. The majority of these sales involve loan contracts that give the dealer the right to repossession by self-help upon default. Babbitt states it exercises this right approximately ten times per month upon vehicles owned by members of the Tribe and kept within reservation boundaries.

In 1968, the Navajo Tribal Council enacted regulations governing self-help vehicle repossessions on the reservation. Sections 607 through 609 of the Navajo Tribal Code, 7 N.T.C. Secs. 607-609 provide that (1) written consent is required for repossession from either the owner of the vehicle or the tribal court; (2) any party who wilfully violates Sec. 607 can be excluded from the reservation; and (3) liquidated damages may be granted to any owner whose personalty is repossessed on the reservation in violation of 7 N.T.C. Sec. 607. 1

In 1980, Babbitt entered the Navajo reservation and repossessed the vehicles belonging to the Sellers and the Joes. In neither case did Babbitt attempt to comply with the consent requirement of Sec. 607. Both the Sellers and the Joes brought suit in the tribal court for violation of Sec. 607.

The tribal court found Babbitt to be in violation of 7 N.T.C. Sec. 607, and granted the Sellers and the Joes damages in accordance with 7 N.T.C. Sec. 609. 2 Babbitt appealed this decision to the Navajo Appeals Court before bringing this action in the district court. Although Gurley's repossessions had not been challenged in Navajo Court, the district court concluded that the litigation threatened by the Tribe against Gurley's manner of repossession was sufficiently imminent so as to be ripe for review. Gurley and Babbitt agreed to have their claims consolidated and the district court so ordered on December 1, 1980.

JURISDICTION

The district court premised subject matter jurisdiction upon the presence of a federal question pursuant to 28 U.S.C. Sec. 1331. We agree with the district court's analysis. The question presented by these claims--the extent to which treaties and federal case law divest the Navajo tribe of the power to exercise civil jurisdiction over non-Indians conducting repossessions on reservation land--is a sufficient basis for Sec. 1331 jurisdiction. See Cardin v. De La Cruz, 671 F.2d 363 (9th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 293, 74 L.Ed.2d 277 (1982). Cf. Trans-Canada Enterprises, Ltd. v. Muckleshoot Indian Tribe, 634 F.2d 474, 476 n. 4 (9th Cir.1980) (this court affirmed dismissal on jurisdictional grounds but instructed district court to grant leave to plead Sec. 1331 jurisdiction).

INHERENT POWER TO EXERCISE CIVIL JURISDICTION OVER NON-INDIANS

Indian tribes have long been recognized as sovereign entities, "possessing attributes of sovereignty over both their members and their territory...." United States v. Wheeler, 435 U.S. 313, 323, 98 S.Ct. 1079, 1086, 55 L.Ed.2d 303 (1978) (citations omitted). This sovereignty is not absolute. Tribal sovereignty is subject to limitation by specific treaty provisions, 3 by statute at the will of Congress, 4 by portions of the Constitution found explicitly binding on the tribes, 5 or by implication due to the tribes' dependent status. 6

Consequently, Indian tribes are "no longer 'possessed of the full attributes of sovereignty' ..." Santa Clara Pueblo v Martinez, 436 U.S. 49, 55-66, 98 S.Ct. 1670, 1675, 56 L.Ed.2d 106 (1978) (citations omitted). Nevertheless, Indian tribes "remain a 'separate people, with the power of regulating their internal and social relations,' ... [making] their own substantive law in internal matters, ... and ... [enforcing] that law in their own forums[.]" Id. (citations omitted).

Indian tribes also retain the inherent sovereign power to exercise "some forms of civil jurisdiction over non-Indians on their reservations ..." Montana v. United States, 450 U.S. 544, 565, 101 S.Ct. 1245, 1258, 67 L.Ed.2d 493 (1981). The Supreme Court has repeatedly recognized tribal courts "as appropriate forums for the exclusive adjudication of disputes affecting important personal and property interests of both Indians and non-Indians." Santa Clara, 436 U.S. at 65, 98 S.Ct. at 1681 (footnote and citation omitted). Tribal law-making institutions also have been recognized as competent legislatures. Id. at 66, 98 S.Ct. at 1681.

A tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.... A tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe....

Montana, 450 U.S. at 564-65, 101 S.Ct. at 1257-58 (1981) (emphasis added) (citations omitted).

The power to exercise tribal civil authority over non-Indians derives not only from the tribe's inherent powers necessary to self-government and territorial management, but also from the power to exclude nonmembers from tribal land. See Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 141-44, 102 S.Ct. 894, 903-05, 71 L.Ed.2d 21 (1982). This "limited authority" over nonmembers "does not arise until the nonmember enters the tribal jurisdiction ... [by entering] tribal lands or [conducting] business with the tribe." Id. at 142, 102 S.Ct. at 904. Nonmembers lawfully entering tribal lands--for example, pursuant to contract with the tribe--nonetheless remain "subject to the tribe's power to exclude them." Id. at 144, 102 S.Ct. at 905 (emphasis in original). A tribe has the power "to place conditions on entry, on continued presence, or on reservation conduct ..., [and] nonmember[s] who [enter] the jurisdiction of the tribe [remain] "subject to the risk that the tribe will later exercise [this] sovereign power." Id. at 144-45, 102 S.Ct. at 905 (footnote omitted).

Thus, in Merrion the Supreme Court concluded that the Jicarillo tribe had the power to impose a severance tax on non-Indians conducting mining activities on the reservation pursuant to a contract with the tribe. In Montana, the Court concluded that a tribe may exclude nonmembers from hunting on reservation land or condition permission to hunt by charging a fee or establishing limitations. 450 U.S. at 557, 101 S.Ct. at 1254. The Montana Court held, however, that the tribe could not prohibit nonmembers from hunting on fee lands located within reservation boundaries that were owned by nonmembers. Id. at 566-67, 101 S.Ct. at 1258-59.

The Montana Court offered three reasons for this distinction. First, the non-Indians, who were hunting and fishing on non-Indian fee lands, had not "[entered into] any agreements or dealings with the Crow Tribe so as to subject themselves to tribal civil jurisdiction." Id. at 566, 101...

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