Calvello v. Yankton Sioux Tribe

• Decision Date: 25 March 1998
• Docket Number: No. 20209,20209
• Citation: 1998 SD 107,584 N.W.2d 108
• Parties: James CALVELLO, Plaintiff and Appellant, v. YANKTON SIOUX TRIBE, Defendant and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 108

584 N.W.2d 108

1998 SD 107

James CALVELLO, Plaintiff and Appellant, v. YANKTON SIOUX TRIBE, Defendant and Appellee.

No. 20209.

Supreme Court of South Dakota.

Considered on Briefs March 25, 1998.

Reassigned May 11, 1998.

Decided Sept. 9, 1998.

A. Russell Janklow, Sioux Falls, for plaintiff and appellant.

James G. Abourezk of Abourezk Law Offices, Sioux Falls, for defendant and appellee.

KONENKAMP, Justice (on reassignment).

¶1 Today we must decide whether, in a contract dispute with one of its employees, an Indian Tribe waived its sovereign immunity in state court either by participating in arbitration or by virtue of its Tribal-State Gaming Compact. After the Tribe fired its gaming casino's general manager, the Tribal Chairman agreed to arbitrate the manager's claims, but because the Tribe's governing body had never consented to arbitrate, the Tribe repudiated the arbitrator's ruling. Following an unsuccessful attempt to enforce the award in federal court, the general manager brought suit in state court asserting claims similar to those heard by the arbitrator. Because we find no explicit waiver of sovereign immunity, we affirm the circuit court's grant of summary judgment for the Tribe.

Facts

¶2 The Yankton Sioux Tribe owns the Fort Randall Casino, located on tribal trust land near Pickstown, South Dakota. James Calvello operated the Casino for Gambler's Supply Company, a management firm hired by the Tribe. When the Tribe bought out the remainder of its contract term with Gambler's Supply, it directly hired Calvello as general manager on August 2, 1992. By oral agreement with the Tribe's Business and Claims Committee, Calvello's salary was set at $50,000 per year, together with benefits and reimbursements for business expenses.

¶3 The governing body for the Yankton Sioux is the General Council, consisting of all adult tribal members. Although the Tribe's nine-member Business and Claims Committee is authorized by the tribal constitution to negotiate agreements, only the General Council is empowered to approve them. Yankton Sioux Tribe's Amended Constitution and By-Laws, Art. IV, § 2. The Tribe's General Council, during its August 28, 1992 meeting, accepted the oral agreement with Calvello, and, in addition, voted to pay him six percent of the Casino's net profits. Until his termination, the Tribe avows that Calvello was paid according to these terms.

¶4 On November 24, 1992, Calvello and then Tribal Chairman, Steven Cournoyer, Jr., completed negotiations and signed an employment contract. ¹ By its terms, it was made retroactive to August 2, 1992. This contract, however, was never approved by the General Council. At an emergency meeting on November 30, 1992, the General Council, after considerable debate, ultimately voted to fire Calvello. Pursuant to the terms of the unapproved contract of November 24th, Calvello sought arbitration claiming the Tribe owed him unpaid salary, expenses, and a percentage of profits. ² Chairman Cournoyer agreed to arbitrate and, without the General Council's knowledge or consent, instructed the Tribe's attorney to participate. A hearing was held on September 24, 1993. Three days later, the General Council learned of the arbitration, and immediately passed a unanimous resolution stating that the tribal attorney was not authorized "to arbitrate anything" with Calvello. Minutes, General Council Meeting of September 27, 1993.

¶5 On January 7, 1994, the arbitrator issued his ruling, declaring that the Tribe had terminated Calvello's employment without good cause, but that the written employment contract was void and its terms unenforceable because the General Council had not approved it. Nonetheless, based on quantum meruit, the arbitrator concluded that Calvello was entitled to an award equal to what the General Council agreed to pay him at its August 28, 1992 meeting. The arbitrator awarded $140,664, including $76,547 for Calvello's share of net profits, $59,117 in lost compensation, and $5,000 reimbursement for the down payment on a house Calvello had made at the direction of the Tribe.

¶6 As required by the arbitration clause in the employment agreement and the Federal Arbitration Act, 9 U.S.C. §§ 1-16, Calvello applied to federal district court for confirmation and enforcement of the arbitrator's award. The Tribe moved to dismiss on the ground of sovereign immunity. Holding that the Arbitration Act, standing alone, is insufficient to confer jurisdiction, the court dismissed the case for lack of federal subject matter jurisdiction. See Calvello v. Yankton Sioux Tribe, 899 F.Supp. 431 (D.S.D.1995), appeal dismissed, 89 F.3d 840 (8th Cir.1996).

¶7 Calvello then sued the Tribe in circuit court seeking recompense based on quantum meruit, fraudulent inducement to arbitrate, and fraudulent inducement to contract. The court granted the Tribe's motion for summary judgment, holding that the suit was barred by sovereign immunity, and that, as a matter of law, it was not waived. Calvello appeals, asserting first, that the Tribe waived immunity by participating in arbitration, and second, that the Tribe's Gaming Compact with South Dakota waived sovereign immunity.

Standard of Review

¶8 "Under our familiar standard for reviewing summary judgments, we decide only whether genuine issues of material fact existed and whether the law was correctly applied." Kobbeman v. Oleson, 1998 SD 20, p 4, 574 N.W.2d 633, 635. In making such analysis, "the evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party." Lamp v. First Nat'l Bank of Garretson, 496 N.W.2d 581, 583 (S.D.1993) (citations omitted). The burden of proof rests on the movant to clearly show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. State Dep't of Revenue v. Thiewes, 448 N.W.2d 1, 2 (S.D.1989). If there exists no genuine issue of fact, then summary judgment will be affirmed if the trial court correctly decided the legal issues. Alverson v. Northwestern Nat'l Cas. Co., 1997 SD 9, p 4, 559 N.W.2d 234, 235; Meyer v. Santema, 1997 SD 21, p 8, 559 N.W.2d 251, 254. Contract interpretation is a question of law reviewed de novo. State Farm Mut. Auto. Ins. Co. v. Vostad, 520 N.W.2d 273, 275 (S.D.1994). Jurisdictional challenges are, likewise, reviewable de novo. Bruggeman v. South Dakota Chem. Dep. Counselor Cert. Bd., 1997 SD 132, p 6, 571 N.W.2d 851, 852; Red Fox v. Hettich, 494 N.W.2d 638, 642 (S.D.1993). Lastly, we also review de novo whether an Indian tribe waived its sovereign immunity. See Rosebud Sioux Tribe v. Val-U Constr. Co., 50 F.3d 560, 562 (8thCir.1995), cert. denied, 516 U.S. 819, 116 S.Ct. 78, 133 L.Ed.2d 37 (1995) [hereinafter Val-U Constr. Co.].

Analysis and Decision

1. Tribal Sovereign Immunity

¶9 The United States Supreme Court recently held, "Tribes enjoy immunity from suits on contracts, whether those contracts involve governmental or commercial activities and whether they were made on or off a reservation." Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. ----, ----, 118 S.Ct. 1700, 1705, 140 L.Ed.2d 981 (1998). A tribe's immunity is not waived simply because it agrees to a binding contract. Sac and Fox Nation v Hanson, 47 F.3d 1061, 1063 (10th Cir.1995) (waiver of tribal sovereign immunity cannot be implied from a tribe's engagement in commercial activity), cert. denied, 516 U.S. 810, 116 S.Ct. 57, 133 L.Ed.2d 21 (1995); American Indian Agric. Credit Consortium, Inc., v. Standing Rock Sioux Tribe, 780 F.2d 1374, 1378-79 (8th Cir.1985) (tribe's sovereign immunity cannot be waived by implication in contract actions). See generally Ramey Constr. Co., Inc. v. Apache Tribe of Mescalero Reservation, 673 F.2d 315 (10th Cir.1982). "Absent an effective waiver or consent, it is settled that a state court may not exercise jurisdiction over a recognized Indian tribe." Puyallup Tribe, Inc. v. Washington Game Dep't, 433 U.S. 165, 172, 97 S.Ct. 2616, 2621, 53 L.Ed.2d 667 (1977).

¶10 "Indian tribes are 'distinct, independent political communities, retaining their original natural rights' in matters of local self-government." Santa Clara Pueblo v. Martinez, 436 U.S. 49, 55, 98 S.Ct. 1670, 1675, 56 L.Ed.2d 106 (1978) (citations omitted); see also Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 138 n. 5, 102 S.Ct. 894, 902 n. 5, 71 L.Ed.2d 21 (1982); White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 143-44, 100 S.Ct. 2578, 2583-84, 65 L.Ed.2d 665 (1980). In deference to the unique aspects of tribal sovereignty, "Indian tribes have long been recognized as possessing the common-law immunity from suit traditionally enjoyed by sovereign powers." Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. at 1677, 56 L.Ed.2d 106 (citations omitted); see also Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 14, 107 S.Ct. 971, 975, 94 L.Ed.2d 10 (1987). Only Congress has plenary authority to limit, modify, or eliminate a tribe's sovereign immunity. Santa Clara Pueblo, 436 U.S. at 56, 98 S.Ct. at 1676, 56 L.Ed.2d 106 (citations omitted); see U.S. Const. art. 1, § 8, cl. 3. The exercise of such authority must be clearly expressed and should be strictly construed. See generally United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953, 47 L.Ed.2d 114 (1976) (citations omitted).

2. Tribe's Participation in Arbitration

¶11 Calvello relies on the Tribe's supposed acquiescence or participation in the arbitration proceeding as a waiver of its sovereign immunity. This reliance directly counters the strong presumption against such waivers. A waiver of sovereign immunity "cannot be implied but must be unequivocally expressed." Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. at 1677, 56 L.Ed.2d 106 (citations omitted); see also Three Affiliated Tribes of Fort Berthold Reservation v. Wold Engineering, 476 U.S. 877, 890, 106 S.Ct. 2305, 2313, 90 L.Ed.2d 881 (1986); Rosebud Sioux Tribe v. A & P Steel, Inc....