Arrow Midstream Holdings, LLC v. 3 Bears Constr., LLC

• Citation: 873 N.W.2d 16
• Decision Date: 29 December 2015
• Docket Number: No. 20150057.,20150057.
• Parties: ARROW MIDSTREAM HOLDINGS, LLC, Arrow Pipeline, LLC, Plaintiffs, Appellants, and Cross–Appellees v. 3 BEARS CONSTRUCTION, LLC, Defendant, Appellee, and Cross–Appellee and Tesla Enterprises, LLC, Defendant, Appellee, and Cross–Appellant.
• Court: United States State Supreme Court of North Dakota

873 N.W.2d 16

ARROW MIDSTREAM HOLDINGS, LLC, Arrow Pipeline, LLC, Plaintiffs, Appellants, and Cross–Appellees

v. 3 BEARS CONSTRUCTION, LLC, Defendant, Appellee, and Cross–AppelleeandTesla Enterprises, LLC, Defendant, Appellee, and Cross–Appellant.

No. 20150057.

Supreme Court of North Dakota.

Dec. 29, 2015.

Rehearing Denied Mar. 21, 2016.

Monte L. Rogneby (argued) and Diane M. Wehrman (on brief), Bismarck, ND and Caren W. Stanley (on brief), Fargo, ND, for plaintiffs, appellants, and cross-appellees.

John Fredericks (argued), Mandan, ND and Thomas W. Fredericks (on brief), Louisville, CO, for defendant, appellee, and cross-appellee 3 Bears Construction, LLC.

Thomas M. Disselhorst, Bismarck, ND, for defendant, appellee, and cross-appellant Tesla Enterprises.

VANDE WALLE, Chief Justice.

[¶ 1] Arrow Midstream Holdings, LLC and Arrow Pipeline, LLC (collectively "Arrow") appealed, and Tesla Enterprises, LLC ("Tesla") cross-appealed, from a judgment dismissing without prejudice for lack of jurisdiction its action against 3 Bears Construction, LLC ("3 Bears") and Tesla for breach of contract and a declaration that Tesla's pipeline construction lien is invalid. We reverse and remand, concluding the district court has jurisdiction over this lawsuit.

I

[¶ 2] In 2013, Arrow, a Delaware limited liability company, hired 3 Bears, a North Dakota limited liability company, to be the general contractor for the construction of a pipeline located on a right-of-way easement acquired by Arrow from the Bureau of Indian Affairs over Indian trust land on the Fort Berthold Indian Reservation. See 25 U.S.C. §§ 321 and 323. The easement was "for the purpose of installing oil, gas and water lines" and described the right-of-way as "11,882.77 feet in length and 13.520 acres in area (34.206 acres during construction), more or less, ... and shall be buried a sufficient depth below the surface of the land so as not to interfere with cultivation." 3 Bears, which has its principal place of business in New Town, entered into a subcontract with Tesla, an Alaska limited liability company, to supply materials and labor for the construction. 3 Bears is owned by two members of the Three Affiliated Tribes ("Tribe") and is certified under the Tribal Employment Rights Ordinance ("TERO"). 3 Bears claims Arrow was a covered employer who was required to comply with TERO rules.

[¶ 3] After the pipeline was completed, a dispute arose between 3 Bears and Tesla concerning amounts Tesla claimed it was owed by 3 Bears for work Tesla performed. In mid–2014, Tesla sent Arrow a notice of right to file a pipeline lien under N.D.C.C. ch. 35–24. Tesla recorded the pipeline lien against Arrow in the Dunn County recorder's office in June 2014. In July 2014, Arrow commenced this action in state district court challenging the validity of the pipeline lien, seeking indemnification, and claiming 3 Bears breached the parties' contract. In August 2014, 3 Bears moved to dismiss for lack of subject matter jurisdiction. In November 2014, 3 Bears filed a complaint against Tesla and Arrow in Fort Berthold Tribal Court. 3 Bears sought a declaration that the pipeline lien was invalid, alleged Arrow had breached the master service contract, and requested an award of damages.

[¶ 4] In December 2014, the state district court agreed with 3 Bears' argument that it lacked subject matter jurisdiction over the lawsuit. The court concluded "exercising jurisdiction over this action under the circumstances presented here would infringe upon Tribal sovereignty." The court further concluded, "at the very least, Arrow and Tesla, as a matter of comity, should be required to exhaust their tribal court remedies before this Court exercises jurisdiction." The court dismissed the action "without prejudice to allow any of the parties to re-open the case without payment of another filing fee should it become necessary for purposes of enforcing the Tribal Court action or for any other reason."

II

[¶ 5] 3 Bears argues this Court lacks jurisdiction to hear the appeal because the district court dismissed the action without prejudice.

[¶ 6] "Before we consider the merits of an appeal, we must have jurisdiction." Choice Fin. Grp. v. Schellpfeffer, 2005 ND 90, ¶ 6, 696 N.W.2d 504. The situation here is similar to the circumstances in Winer v. Penny Enters., Inc., 2004 ND 21, ¶¶ 1, 4–5, 674 N.W.2d 9, in which the district court dismissed without prejudice for lack of subject matter jurisdiction an action brought by a non-Indian plaintiff against Indian defendants for damages resulting from a motor vehicle accident occurring on a state highway on an Indian reservation. Concluding this Court had jurisdiction over the appeal, we explained:

Ordinarily, an order dismissing a complaint without prejudice is not appealable because either side may commence another action after the dismissal. State v. Gwyther, 1999 ND 15, ¶ 10, 589 N.W.2d 575. However, a dismissal without prejudice may be final and appealable if it has the practical effect of terminating the litigation in the plaintiff's chosen forum. Rodenburg v. Fargo–Moorhead YMCA, 2001 ND 139, ¶ 12, 632 N.W.2d 407 ; Triple Quest, Inc. v. Cleveland Gear Co., 2001 ND 101, ¶ 8, 627 N.W.2d 379. In this case, the order and judgment effectively foreclose litigation of Winer's action in the courts of this state. Consequently, we conclude the dismissal is appealable.

Id. at ¶ 6.

[¶ 7] We likewise conclude in this case that the judgment dismissing the action without prejudice is appealable.

III

[¶ 8] Arrow argues the district court erred in concluding it lacked jurisdiction, and the Fort Berthold Tribal Court had exclusive jurisdiction, to decide the validity of the pipeline lien and the parties' contractual disputes.

[¶ 9] There is no dispute about the facts relevant to a determination of the jurisdictional issue in this case. " ‘When the jurisdictional facts are not in dispute, the question of subject-matter jurisdiction is a question of law, and we review the jurisdiction decision de novo.’ " Gustafson v. Estate of Poitra, 2011 ND 150, ¶ 9, 800 N.W.2d 842 (quoting Rolette Cty. Soc. Serv. Bd. v. B.E., 2005 ND 101, ¶ 6, 697 N.W.2d 333 ).

[¶ 10] While tribal court jurisdiction is determined under the test set forth in Montana v. United States, 450 U.S. 544, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981), state court jurisdiction is determined under the test set forth in Williams v. Lee, 358 U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d 251 (1959). See Winer, 2004 ND 21, ¶ 16, 674 N.W.2d 9. In Cohen's Handbook of Federal Indian Law, § 6.03[2][c], at pp. 528–29 (Nell Jessup Newton ed., 2012) (footnotes omitted), the authors explain:

State jurisdiction and tribal jurisdiction in Indian country raise two separate legal questions. For example, if application of the Montana test results in a finding that a tribe lacks jurisdiction over a non-Indian on non-Indian land in Indian country, it does not necessarily follow that the state can enter Indian country and impose its laws by prosecuting or controlling the non-Indian behavior. Whether state law can apply in Indian country remains subject to the Williams test, even as the Montana analysis considers whether tribal authority is necessary to protect vital tribal interests. How that preemption/infringement test is applied, however, may take into account, as one factor, the absence of tribal jurisdiction. Thus, for example, in Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Engineering, P.C., [467 U.S. 138, 104 S.Ct. 2267, 81 L.Ed.2d 113 (1984),] the Court considered the tribes' decision not to assert jurisdiction over suits against non-Indians, together with the fact that the tribes themselves sought to invoke the state court's jurisdiction, as weighing in favor of state authority over those actions.

See also Winer, 2004 ND 21, ¶¶ 13–18, 674 N.W.2d 9 (declining to apply Supreme Court precedent interpreting Montana in case involving state court jurisdiction).

[¶ 11] We analyze the jurisdictional question with these principles in mind.

A

[¶ 12] Generally, "absent a different congressional direction, Indian tribes lack civil authority over the conduct of nonmembers on non-Indian land within a reservation." Strate v. A–1 Contractors, 520 U.S. 438, 446, 117 S.Ct. 1404, 137 L.Ed.2d 661 (1997). In Montana, 450 U.S. at 565–66, 101 S.Ct. 1245 (citations omitted), the United States Supreme Court explained the two exceptions to the general rule:

[T]he inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe. To be sure, Indian tribes retain inherent sovereign power to exercise some forms of civil jurisdiction over non-Indians on their reservations, even on non-Indian fee lands. 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.

[¶ 13] The district court ruled the first Montana exception on consensual relationships between nonmembers and tribal members did not apply because, although 3 Bears is owned by two tribal members, 3 Bears is a limited liability company organized under North Dakota law, see N.D.C.C. ch. 10–32.1, and therefore, 3 Bears is not a member of the Tribe.

[¶ 14] The district court's conclusion on the first Montana exception is supported by this Court's decision in Airvator, Inc. v. Turtle Mountain Mfg. Co., 329 N.W.2d 596 (N.D.1983). In that case, Airvator brought a breach of contract action in state court against a corporation incorporated under North Dakota law in which 51 percent of the corporation's stock was held by Indians. Id. at 597. The district...