Grand Canyon Skywalk Dev., LLC v. ‘sa’ Nyu Wa Inc., 12–15634.

• Decision Date: 26 April 2013
• Docket Number: No. 12–15634.,12–15634.
• Citation: 715 F.3d 1196
• Parties: GRAND CANYON SKYWALK DEVELOPMENT, LLC, a Nevada limited liability company, Plaintiff–Appellant, v. ‘SA’ NYU WA INCORPORATED, also named as ‘Sa’ Nyu Wa: a tribally-charted corporation established under the laws of the Hualapai Indian Tribe; Grand Canyon Resort Corporation, a tribally-chartered corporation established under the laws of the Hualapai Indian Tribe; Richard Walerma, Sr.; Wynona Sinyella; Ruby Steele; Candida Hunter; Barney Rocky Imus; Waylon Honga; Charles Vaugh N, Sr., each individuals and members of the Hualapai Tribal Council; Wanda Easter; Jaci Dugan, each individuals and Hualapai Indian Tribe employees; Duane Yellowhawk, Honorable, individual and judge of the Hualapai Tribe Court, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

715 F.3d 1196

GRAND CANYON SKYWALK DEVELOPMENT, LLC, a Nevada limited liability company, Plaintiff–Appellant,

v.‘SA’ NYU WA INCORPORATED, also named as ‘Sa’ Nyu Wa: a tribally-charted corporation established under the laws of the Hualapai Indian Tribe; Grand Canyon Resort Corporation, a tribally-chartered corporation established under the laws of the Hualapai Indian Tribe; Richard Walerma, Sr.; Wynona Sinyella; Ruby Steele; Candida Hunter; Barney Rocky Imus; Waylon Honga; Charles Vaugh N, Sr., each individuals and members of the Hualapai Tribal Council; Wanda Easter; Jaci Dugan, each individuals and Hualapai Indian Tribe employees; Duane Yellowhawk, Honorable, individual and judge of the Hualapai Tribe Court, Defendants–Appellees.

No. 12–15634.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 19, 2012.

Filed April 26, 2013.

Troy A. Eid (argued) and Jennifer Weddle, Greenberg Traurig, LLP, Denver, CO; Tami Denise Cowden and Mark Tratos, Greenberg Traurig, LLP, Las Vegas, NV; and Pamela Overton, Greenberg Traurig, LLP, Phoenix, AZ, for Plaintiff–Appellant.

Jeffrey David Gross (argued), Paul Kipp Charlton, Glen Hallman and Christopher W. Thompson, Gallagher & Kennedy, P.A., Phoenix, AZ, for Defendants–Appellees.

Appeal from the United States District Court for the District of Arizona, David G. Campbell, District Judge, Presiding. D.C. No. 3:12–cv–08030–DGC.

Before: RAYMOND C. FISHER, RICHARD C. TALLMAN, and CONSUELO M. CALLAHAN, Circuit Judges.

OPINION

TALLMAN, Circuit Judge:

We must once again address the subject of tribal court jurisdiction over disputes arising when non-Indians choose to do business in Indian country. Underlying this jurisdictional question is a multi-million dollar development contract involving the building and operation of a tourist destination overlooking one of the world's great wonders, the Grand Canyon. The Skywalk is a glass-bottomed viewing platform suspended 70 feet over the rim of the Grand Canyon with the Colorado River flowing thousands of feet below.

Grand Canyon Skywalk Development, LLC (“GCSD”), a Nevada corporation, entered into a revenue-sharing contract with Sa Nyu Wa (“SNW”), a tribally chartered corporation of the Hualapai Indian Tribe. When a dispute arose over the contract, GCSD sued SNW in Hualapai Tribal Court to compel arbitration. While arbitration proceeded, the Hualapai Tribal Council exercised eminent domain and condemned GCSD's intangible property rights in the contract, which practically speaking left SNW, as a tribal corporation, in contract with the Hualapai Tribe.

GCSD responded by filing suit against SNW in the United States District Court for the District of Arizona seeking declaratory judgment that the Hualapai Tribe lacked the authority to condemn its intangible property rights and injunctive relief. The district court denied the temporary restraining order (“TRO”) to enjoin SNW based on the principle of comity and required GCSD to exhaust all possible tribal court remedies before proceeding in federal court. The district court relied on our decision in Water Wheel Camp Recreational Area, Inc. v. LaRance, 642 F.3d 802 (9th Cir.2011), and also concluded there was not a sufficient basis to apply the bad faith or futility exceptions. For the same reasons cited by the district court, we affirm.

I

On December 31, 2003, GCSD and SNW entered into a revenue-sharing “Development and Management Agreement” to establish a glass bridge tourist overlook and related facilities known as the Skywalk on remote tribal land. In addition, GCSD agreed to provide shuttle services from locations outside the reservation to the Skywalk. The parties signed an amended agreement on September 10, 2007, and later created a trust to manage the shared revenues on March 10, 2010.

GCSD filed a complaint in Hualapai Tribal Court on February 25, 2011, seeking to compel SNW to engage in arbitration pursuant to their agreement's dispute resolution clause. SNW objected, but nonetheless participated, and on February 1, 2012, an American Arbitration Association arbitrator set deadlines for a joint prehearing schedule and resolution of any outstanding discovery disputes, including depositions and subpoenas.

As arbitration proceeded, the Hualapai Tribal Council passed Resolution No. 20–2011 on April 4, 2011, enacting § 2.16 of the Hualapai Law and Order Code, which codified the Tribe's power to invoke eminent domain to condemn property for public use. On February 7, 2012, acting under § 2.16, the tribal council passed Resolution No. 15–2012 to acquire “GCSD's contractual interest in the Skywalk Agreement under the power of eminent domain and to do all things necessary to accomplish th[at] purpose.” The Hualapai Tribal Court followed by issuing a TRO against GCSD, and SNW filed a Declaration of Taking with the tribal court.

GCSD responded on two fronts: it filed an expedited motion for a TRO in district court to stop the eminent domain proceedings, and it opposed the taking in Hualapai Tribal Court. After multiple hearings, the district court denied GCSD's TRO by invoking the principles of comity and ordered GCSD to exhaust tribal court remedies prior to review in federal court. GCSD timely appealed on March 22, 2012.

II

We have jurisdiction under 28 U.S.C. § 1292(a)(1) as an appeal from denial of injunctive relief. Although TROs are not typically appealable interlocutory orders, we may review a TRO that “possessesthe qualities of a preliminary injunction” where the “district court holds an adversary hearing and the basis for the court's order was strongly challenged.” Serv. Emps. Int'l Union v. Nat'l Union of Healthcare Workers, 598 F.3d 1061, 1067 (9th Cir.2010). We review questions of tribal court jurisdiction and exhaustion of tribal court remedies de novo and factual findings for clear error. Smith v. Salish Kootenai Coll., 434 F.3d 1127, 1130 (9th Cir.2006); Philip Morris USA, Inc. v. King Mountain Tobacco Co., 569 F.3d 932, 938 n. 1 (9th Cir.2009).¹

III

SNW argues, for the first time on appeal, that collateral estoppel bars GCSD from raising similar jurisdictional questions on appeal that it raised before the district court in an earlier case dismissed without prejudice. Because GCSD's argument fails on the merits, we need not consider either whether SNW waived this argument by failing to raise it in the district court or whether collateral estoppel applies here.

IV

Federal law has long recognized a respect for comity and deference to the tribal court as the appropriate court of first impression to determine its jurisdiction. See Nat'l Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 856–57, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985); Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 15–16, 107 S.Ct. 971, 94 L.Ed.2d 10 (1987); Burlington N. R.R. Co. v. Crow Tribal Council, 940 F.2d 1239, 1244–47 (9th Cir.1991). As support for this premise, the Supreme Court cites: (1) Congress's commitment to “a policy of supporting tribal self-government and self-determination;” (2) a policy that allows “the forum whose jurisdiction is being challenged the first opportunity to evaluate the factual and legal bases for the challenge;” and (3) judicial economy, which will best be served “by allowing a full record to be developed in the Tribal Court.” Nat'l Farmers, 471 U.S. at 856, 105 S.Ct. 2447.

We have interpreted National Farmers as determining that tribal court exhaustion is not a jurisdictional bar, but rather a prerequisite to a federal court's exercise of its jurisdiction. Crow Tribal Council, 940 F.2d at 1245 n. 3. “Therefore, under National Farmers, the federal courts should not even make a ruling on tribal court jurisdiction ... until tribal remedies are exhausted.” Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1228 (9th Cir.1989). However, there are four recognized exceptions to the requirement for exhaustion of tribal court remedies where:

(1) an assertion of tribal jurisdiction is motivated by a desire to harass or is conducted in bad faith; (2) the action is patently violative of express jurisdictional prohibitions; (3) exhaustion would be futile because of the lack of adequate opportunity to challenge the court's jurisdiction; or (4) it is plain that no federal grant provides for tribal governance of nonmembers' conduct on land covered by Montana's main rule.

Burlington N. R.R. Co. v. Red Wolf, 196 F.3d 1059, 1065 (9th Cir.1999) (citations omitted). GCSD raises bad faith, futility, and plain lack of tribal governance in support of its position. We review each of these exceptions in turn but ultimately conclude that none offers a sufficient basis to avoid exhaustion of tribal court remedies in this case.

V

The Supreme Court has suggested that a federal court need not wait until tribal remedies have been exhausted to consider a case if “an assertion of tribal jurisdiction is motivated by a desire to harass or is conducted in bad faith.” Nat'l Farmers, 471 U.S. at 856 n. 21, 105 S.Ct. 2447 (internal citation omitted). Black's Law Dictionary defines bad faith as “[d]ishonesty of belief or purpose.” 149 (9th ed. 2009). National Farmers used the passive voice and neither we, nor the Supreme Court, have expressly stated who must act in bad faith for it to apply. We now hold that where, as here, a tribal court has asserted jurisdiction and is entertaining a suit, the tribal court must have acted in bad faith for exhaustion to be excused. Bad faith by a litigant instituting the tribal court action will not suffice.

A

The source of the bad faith exception in the tribal court context is National Farmers, 471 U.S. at 856 n. 21, 105 S.Ct. 2447, which imported it from Juidice v. Vail, 430 U.S. 327, 338, 97 S.Ct. 1211, 51 L.Ed.2d 376 (1977). In Juidice, the state court issued a commitment order, and the defendant was arrested after he failed to attend a deposition, appear for a hearing, and pay a fine. Id. at 329–30, 97 S.Ct. 1211....