Evans Energy Partners, LLC v. Seminole Tribe of Fla., Inc.

• Decision Date: 17 September 2021
• Docket Number: Case No. 2:20-cv-978-JLB-MRM
• Citation: 561 F.Supp.3d 1171
• Parties: EVANS ENERGY PARTNERS, LLC, Plaintiff, v. SEMINOLE TRIBE OF FLORIDA, INC., Defendant.
• Court: U.S. District Court — Middle District of Florida

561 F.Supp.3d 1171

EVANS ENERGY PARTNERS, LLC, Plaintiff,

v.SEMINOLE TRIBE OF FLORIDA, INC., Defendant.

Case No. 2:20-cv-978-JLB-MRM

United States District Court, M.D. Florida, Fort Myers Division.

Signed September 17, 2021

Donald Grayson Peterson, Yarnell & Peterson PA, Yasser Lakhlifi, Willis & Davidow, LLC, Naples, FL, for Plaintiff.

Peter Winslow Homer, Howard S. Goldfarb, Homer Bonner & Jacobs, PA, Miami, FL, for Defendant.

ORDER

JOHN L. BADALAMENTI, United States District Judge

Defendant Seminole Tribe of Florida, Inc. ("STOFI") is a tribal corporation organized under section 17 of the Indian Reorganization Act, 25 U.S.C. § 5124 (formerly § 477). In 2013, STOFI contracted with Plaintiff Evans Energy Partners, LLC ("EEP") to operate a petroleum distribution business. The contract entitled EEP to a termination fee equal to fifty percent of the business's fair market value if STOFI terminated the contract. Any disputes regarding the termination fee were subject to arbitration under the American Arbitration Association's ("AAA") rules.

Three years later, amid mutual accusations of default, STOFI terminated the agreement and obtained a default judgment against EEP in tribal court for breach of contract. EEP attempted to compel STOFI to arbitrate the termination fee, but the AAA panel dismissed EEP's demand. EEP now sues STOFI in this Court and seeks: (1) a declaratory judgment that the tribal court had no jurisdiction to enter its final default judgment against EEP, and (2) an order compelling arbitration. (Doc. 1.) STOFI moves to dismiss on several grounds, including tribal sovereign immunity. (Doc. 12.) The Court has the benefit of not only EEP's opposition brief (Doc. 25) but replies from both parties (Docs. 26, 29).

After careful review, the Court holds that the parties’ agreement does not contain a clear waiver of STOFI's tribal sovereign immunity. Accordingly, STOFI's motion to dismiss (Doc. 12) is GRANTED , and EEP's claims are DISMISSED without prejudice . The Court need not consider STOFI's other arguments for dismissal and declines to hear oral argument.

BACKGROUND ¹

I. STOFI and EEP execute the M&O Agreement .

In 2013, STOFI became interested in partnering with EEP to "make a foray into the petroleum distribution business." (Doc. 1 at 4, ¶ 15.) EEP was already operating such a business, and a partnership with STOFI would provide EEP with "significant capital and tax advantages." (Id. at ¶¶ 14, 16.)

On May 31, 2013, the parties executed a Management and Operations Agreement ("M&O Agreement") under which EEP would oversee the day-to-day operation of the petroleum distribution business and provide STOFI with fifty percent of the profits. (Doc. 1-1 at 1–2, ¶¶ 1.2, 1.3.) In return, STOFI would provide capital in the form of loans and asset purchases. (Doc. 1-2 at 2–3, ¶¶ 7–8.)

Two provisions of the M&O Agreement are particularly important to this case. First, paragraph 2.4 provides that if the M&O Agreement is terminated, EEP will be entitled to a termination fee equal to fifty percent of the joint venture's fair market value. (Doc. 1-1 at 4, ¶ 2.4.) Second, paragraph 7.13 describes the process for settling any dispute arising under the M&O Agreement. That paragraph provides, in its entirety:

Any dispute, controversy, claim, question, or difference arising out of this Agreement shall be finally settled by a binding proceeding administered by the Tribal Counsel of the Seminole Tribe of Florida or as specifically delegated under the provisions of the Amended Constitution and By Laws of the Seminole Tribe of Florida. Notwithstanding what is set forth above, the Company through its parent company the Seminole Tribe of Florida, Inc., agrees to a limited waiver of its Sovereign Immunity in order to allow Evans Energy to initiate a binding arbitration proceeding administered under the rules of the American Arbitration Association for sole and exclusive purpose of terminating the Management Agreement and compelling the payment of the Termination Fee as set forth in [paragraph] 2 above and said waiver shall include a waiver of immunity for collection of any sum awarded through the binding arbitration proceeding. The parties specifically agree that in no event shall the Seminole Tribe of Florida, Inc., or any of its other affiliated entities be named a party in any arbitration or court proceeding. Evans Energy's rights under [paragraph] 7.13 shall be restricted to compelling Seminole Energy to participate in an arbitration proceeding for the express purpose set forth herein.

(Doc. 1-1 at 16–17) (emphasis added). To summarize, paragraph 7.13 provides that any dispute between the parties shall be resolved either by the Seminole Tribe or whatever procedure exists under the Tribe's bylaws. Notwithstanding this default procedure, "the Company" (a term defined on page one of the M&O Agreement to mean STOFI) agrees to a limited waiver of sovereign immunity for purposes of arbitrating issues regarding the termination fee in paragraph 2.4. The limited waiver contains a strange redundancy—the "parent company" of "the Company" is also STOFI. Moreover, the very next sentence provides that neither STOFI nor any affiliated entities shall "be named a party in any arbitration." Instead, EEP's rights under are "restricted to compelling Seminole Energy" to arbitrate.

"Seminole Energy" is not a defined term, although it appears in at least three more places within the M&O Agreement. (Id. at ¶¶ 3.2.1, 3.6, 4.7.) For example, in paragraph 3.2.1, EEP agrees that it will not enter into any agreements with STOFI's (i.e., the Company's) "respective Affiliates, Seminole Energy, [or] Managers or Officer[s]" without STOFI's prior approval. (Id. at ¶ 3.2.1.) This language seems to suggest that Seminole Energy may be an "affiliated entity" of STOFI under paragraph 7.13. But if that were true, then paragraph 7.13 would simultaneously permit and prohibit arbitration with Seminole Energy. Moreover, paragraph 4.3 provides, "Seminole Energy shall further refrain from intentionally taking any action that will be detrimental to the operations or financial performance of the Company." (Id. at ¶ 4.7.) This language appears to imply that STOFI and Seminole Energy are distinct entities capable of independent (or even conflicting) action.

II. STOFI terminates the M&O Agreement and obtains a clerk's default against EEP in tribal court.

On April 4, 2016, STOFI's general counsel sent a letter to one of EEP's managing members, informing him that STOFI was terminating the M&O Agreement for cause. (Doc. 1 at 6, ¶ 30; Doc. 12-2.) Nearly three months later, STOFI filed a two-count petition for relief against EEP in tribal court. (Doc. 1-2.) The petition alleged that EEP failed to perform several of its obligations under the M&O Agreement. (Id. at 3–4, ¶¶ 9–10.) Accordingly, STOFI requested: (1) a declaratory judgment that EEP was not entitled to any termination fee because the M&O Agreement was terminated for cause, and (2) damages against EEP for breach of contract. (Id. ) EEP never filed a responsive pleading in the tribal court action, which was eventually resolved with a final default judgment in favor of STOFI on May 2, 2019. (Docs. 1-3, 12-4.) Instead, EEP served a demand for arbitration to the AAA on January 18, 2019, naming itself as claimant and STOFI as respondent. (Doc. 1-4.) The complaint attached to EEP's demand alleged that STOFI breached the M & O Agreement by failing to pay the termination fee, and EEP was therefore entitled to arbitration of the termination-fee dispute under paragraph 7.13 of the Agreement. (Id. at 9.)

On September 29, 2020—more than a year after the tribal court's final default judgment—the AAA arbitration panel dismissed EEP's demand for arbitration. (Doc. 1-5.) More specifically, the panel held that it did not have unmistakable authority to decide the threshold question of arbitrability due to the nebulous language of paragraph 7.13. (Id. at 10–11.) The panel's dismissal order notes that paragraph 7.13 "contains several distinct and seemingly contradictory terms." (Id. at 4.) The order continues: "[T]he parties acknowledged that Seminole Energy, which one can infer that the parties contemplated coming into existence per their agreement, was never created. Even if it had been created, it is not clear whether it would have been considered an affiliated entity of STOFI." (Id. at 4–5.)

III. EEP commences this case against STOFI.

Two-and-a-half months after the AAA panel's ruling, EEP filed the complaint in this case, seeking: (1) a declaratory judgment that the tribal court had no jurisdiction to enter its final default judgment against EEP, and (2) an order compelling arbitration of STOFI's failure to pay the termination fee under section 4 of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 4. (Doc. 1.)

STOFI moves to dismiss on multiple grounds, including: (1) EEP failed to exhaust tribal remedies, (2) the Court lacks subject matter jurisdiction to compel arbitration, (3) STOFI is sovereignly immune, and (4) EEP's request to compel arbitration should be dismissed for failure to state a claim. (Doc. 12.) EEP has filed an opposition brief (Doc. 25), and both parties have filed replies (Docs. 26, 29).

DISCUSSION

Courts must "always address threshold jurisdictional issues first, since we cannot reach questions that we never had jurisdiction to entertain." Leedom Mgmt. Grp., Inc. v. Perlmutter, 532 F. App'x 893, 895 (11th Cir. 2013) (citing Boone v. Sec'y, Dep't Of Corr., 377 F.3d 1315, 1316 (11th Cir. 2004) ). Tribal exhaustion "is required as a matter of comity, not as a jurisdictional prerequisite." Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 16 n.8, 107 S.Ct. 971, 94 L.Ed.2d 10 (1987). Sovereign immunity, however, is "jurisdictional in nature." FDIC v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). Accordingly, "[w]hen a party raises the defenses of waiver of sovereign immunity and [t]ribal exhaustion in the same...