Sue/Perior Concrete & Paving, Inc. v. Lewiston Golf Course Corp.
| Decision Date | 25 November 2014 |
| Citation | 25 N.E.3d 928,2014 N.Y. Slip Op. 08218,24 N.Y.3d 538,2 N.Y.S.3d 15 |
| Parties | SUE/PERIOR CONCRETE & PAVING, INC., Respondent, v. LEWISTON GOLF COURSE CORPORATION, Appellant, et al., Defendants. |
| Court | New York Court of Appeals Court of Appeals |
Hobbs, Straus, Dean & Walker, LLP, Portland, Oregon (Edmund C. Goodman of counsel), and Phillips Lytle LLP, Buffalo (Michael B. Powers, Sean C. McPhee and Alan M. Wishnoff of counsel), for appellant.
Duke, Holzman, Photiadis & Gresens LLP, Buffalo (Gregory P. Photiadis and Elizabeth A. Kraengel of counsel), for respondent.
Christopher Karns, General Counsel, Seneca Nation of Indians Department of Justice, Salamanca (Owen Herne of counsel), Godfrey & Kahn, S.C., Milwaukee, Wisconsin (Brian L. Pierson of counsel), and Harter Secrest & Emery LLP, Buffalo (John G. Horn of counsel), for Seneca Nation of Indians, amicus curiae.
PIGOTT
, J.
Defendant Lewiston Golf Course Corporation (Lewiston Golf) is an indirect, wholly owned subsidiary of the Seneca Nation of Indians, a federally recognized Indian tribe. We are asked to decide whether that corporation is protected from suit by the Seneca Nation's sovereign immunity. Applying the factors set out in Matter of Ransom v. St. Regis Mohawk Educ. & Community Fund, 86 N.Y.2d 553, 635 N.Y.S.2d 116, 658 N.E.2d 989 (1995)
, we hold that it is not.
In 2002, the Seneca Nation's legislative body, the Tribal Council, granted a corporate charter to Seneca Gaming Corporation (Seneca Gaming), under the laws of the Seneca Nation, to develop, finance, operate and maintain gaming facilities. Seneca Gaming is wholly owned by the Seneca Nation. In the same year, again under the laws of the Seneca Nation, the Tribal Council granted a corporate charter to Seneca Niagara Falls Gaming Corporation (Seneca Niagara), created as a wholly owned subsidiary of Seneca Gaming, to develop, finance, operate and conduct the business of the Nation's gaming operations in Niagara County specifically. Seneca Gaming and Seneca Niagara are two of the most financially successful revenue-producing assets of the Seneca Nation.
Lewiston Golf was incorporated in June 2007, under the laws of the Seneca Nation, as a wholly owned subsidiary of Seneca Niagara, to develop, finance, operate and conduct the business of an 18–hole golf course in the Town of Lewiston. The following month, it acquired real property from Seneca Niagara, on which to construct the golf course. The property is not part of any Indian reservation and is not sovereign land.
On the other hand, the Boards of Directors of Lewiston Golf, Seneca Gaming, and Seneca Niagara are identical, are appointed by the Tribal Council, and during this dispute were composed entirely of enrolled members of the Seneca Nation. Lewiston Golf, like Seneca Gaming and Seneca Niagara, is required by its
charter to obtain approval from the Seneca Nation before undertaking significant expenditures of resources or personal property; adopting, amending, or repealing corporate bylaws; providing significant guarantees or incurring significant liabilities; lending money to other Seneca Nation entities; buying, selling, or encumbering real property; entering into financing arrangements involving securities; or entering into, performing, or canceling contracts with any government or government agency. Lewiston Golf, like Seneca Gaming and Seneca Niagara, must keep detailed corporate and financial records and submit for the Seneca Nation's approval an annual statement of its financial condition. And Lewiston Golf, once again like Seneca Gaming and Seneca Niagara, is required to receive consent from the Seneca Nation before taking such legal actions as commencing a lawsuit, consenting to a court's jurisdiction, or waiving a claim to sovereign immunity.
In the summer of 2007, plaintiff Sue/Perior Concrete & Paving, Inc. (Sue/Perior) entered into a contract with Lewiston Golf, whereby Sue/Perior would build a golf course on the property, for the sum of $12,700,000. However, the business relationship between Sue/Perior and Lewiston Golf deteriorated in 2009. Sue/Perior demanded payment of certain bills; Lewiston Golf insisted that Sue/Perior was seeking remuneration for work not done or exaggerating its costs. Sue/Perior filed mechanic's liens, the third of which is in the amount of $4,130,538, for materials furnished and labor performed.
Sue/Perior commenced this foreclosure action against Lewiston Golf and other defendants in June 2010, with respect to that mechanic's lien. Lewiston Golf counterclaimed for willfully exaggerated lien, fraud, breach of contract, and unjust enrichment. Sue/Perior subsequently amended its complaint to add additional defendants—Seneca Niagara, Seneca Gaming, and 15 corporate officers and directors—and to assert additional causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, quantum meruit, promissory estoppel, and fraud.2
Seneca Niagara, Seneca Gaming, Lewiston Golf and the individual defendants moved to dismiss Sue/Perior's complaint pursuant to CPLR 3211
, alleging protection from suit under the sovereign immunity of the Seneca Nation. Supreme Court denied the motion to dismiss, ruling, as pertinent here, that Lewiston Golf did not qualify as an “arm” of the Seneca Nation. Lewiston Golf appealed. For its part, Sue/Perior withdrew claims against all defendants except Lewiston Golf.
The Appellate Division affirmed Supreme Court's order, as modified in a manner not relevant here (109 A.D.3d 80, 968 N.Y.S.2d 271 [4th Dept.2013]
). In ruling that Lewiston Golf lacked sovereign immunity, the Appellate Division relied on our decision in Matter of Ransom. There, we set out factors for courts to consider when deciding whether a tribal subagency or a corporate entity affiliated with an Indian tribe is entitled to sovereign immunity, as the tribe itself is. The Appellate Division found that most of the Ransom factors, and in particular those that the Ransom court “ characterized as the ‘[m]ore important[ ]’ financial factors, weigh in favor of a determination that [Lewiston Golf] does not share in the Nation's sovereign immunity” (109 A.D.3d at 88, 968 N.Y.S.2d 271, quoting Ransom, 86 N.Y.2d at 559, 635 N.Y.S.2d 116, 658 N.E.2d 989 [] ). The Appellate Division noted, for example, that “ [Lewiston Golf]'s charter clearly provides that [Lewiston Golf] has no power to bind or otherwise obligate the funds of the Nation” and that “the record is devoid of evidence that a lawsuit against [Lewiston Golf] would adversely impact the Nation's treasury either directly or indirectly” (109 A.D.3d at 91, 968 N.Y.S.2d 271 ).
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