Granite Valley Hotel Ltd. Partnership v. Jackpot Junction Bingo and Casino

• Decision Date: 18 February 1997
• Docket Number: No. C8-96-1024,C8-96-1024
• Citation: 559 N.W.2d 135
• Parties: GRANITE VALLEY HOTEL LIMITED PARTNERSHIP, d/b/a Granite Valley Hotel, Respondent, v. JACKPOT JUNCTION BINGO AND CASINO, a Business Enterprise of the Lower Sioux Indian Community, Appellant.
• Court: Minnesota Court of Appeals

Page 135

559 N.W.2d 135

GRANITE VALLEY HOTEL LIMITED PARTNERSHIP, d/b/a Granite Valley Hotel, Respondent, v. JACKPOT JUNCTION BINGO AND CASINO, a Business Enterprise of the Lower Sioux Indian Community, Appellant.

No. C8-96-1024.

Court of Appeals of Minnesota.

Feb. 18, 1997.

Review Denied April 15, 1997.

Syllabus by the Court

When a state district court and an Indian community's tribal court have concurrent jurisdiction over an action, the district court may properly decide issues of sovereign immunity and jurisdictional consent without deferring to the jurisdiction of the tribal court, if retention of jurisdiction does not interfere with matters of tribal self-government.

John E. Jacobson, Joseph F. Halloran, Jacobson, Buffalo, Schoessler & Magnuson, Ltd., Minneapolis, for Appellant.

Timothy W. Nelson, Nelson Personal Injury Attorneys, St. Cloud, for Respondent.

Considered and decided by RANDALL, P.J., and DAVIES and FORSBERG, JJ.

OPINION

THOMAS G. FORSBERG, Judge. ^*

This case arises from a breach of contract action filed by respondent, Granite Valley Motel Limited Partnership (Granite Valley), ¹ against appellant, Jackpot Junction Bingo & Casino (Jackpot Junction), seeking monetary damages for Jackpot Junction's alleged breach of a motel occupancy agreement. On a pretrial motion, the trial court declared that it had jurisdiction over the case and that Jackpot Junction's owner and operator, the Lower Sioux Indian Community (Community), had effectively waived its sovereign immunity. Jackpot Junction appeals the order declaring jurisdiction, arguing the trial court erred in refusing to defer to the jurisdiction of the Community's tribal court for determination of whether the Community effectively waived its sovereign immunity and consented to the jurisdiction of Minnesota courts. We affirm.

FACTS

On November 14, 1991, Granite Valley and Jackpot Junction entered into a written agreement whereby Jackpot Junction, through the Community, guaranteed occupancy of a certain number of rooms in the Granite Valley Motel (motel) in exchange for Granite Valley constructing the motel. The contract provided that if the agreed-upon occupancy percentage was not satisfied, Jackpot Junction was obligated to pay to Granite Valley an amount equal to the charter rates for the balance of the unsold rooms. Because construction of the motel would require substantial capital, and the motel's only purpose was to serve Jackpot Junction patrons, Granite Valley required safeguards in the form of contract provisions waiving sovereign immunity and consenting to jurisdiction of Minnesota courts. Allen J. Kokesch, general manager of Jackpot Junction and purported representative of the Community, initiated the contract talks and ultimately signed the contract as "General manager, on behalf of The Lower Sioux Indian Community."

Jackpot Junction performed under the contract until approximately 1993, when it refused to continue paying for unsold rooms. That same year, the Community created its own tribal court, and later began construction on a new motel located on reservation property. On October 27, 1995, Granite Valley filed a complaint against Jackpot Junction in Minnesota district court, alleging breach of contract. Jackpot Junction moved the court to dismiss the action on the grounds of sovereign immunity, invalid consent to jurisdiction, and the doctrine of comity. In response, Granite Valley moved the court for a declaration of jurisdiction, which the court granted. Jackpot Junction now appeals the order declaring jurisdiction.

ISSUE

When a state district court and a tribal court have concurrent jurisdiction over an action, does the doctrine of comity require the district court to defer to the tribal court's jurisdiction for resolution of sovereign immunity and jurisdictional consent issues?

ANALYSIS

When a trial court goes beyond the pleadings on a motion for dismissal, this court reviews the trial court's decision under a summary judgment standard. Minn.R.Civ.P. 12.03; McAllister v. Independent Sch. Dist. No. 306, 276 Minn. 549, 551, 149 N.W.2d 81, 83 (1967). On appeal from summary judgment, we determine whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). Review under this standard is appropriate here because the trial court issued its order upon consideration of both the pleadings and supporting affidavits.

Jackpot Junction's challenge rests on the theory that notwithstanding a valid exercise of jurisdiction by a state district court, the court must, as a matter of law, defer to the Community's tribal court for determination of whether the Community effectively waived its sovereign immunity and consented to the jurisdiction of Minnesota courts. We disagree.

When both a state court and a tribal court have jurisdiction to entertain a dispute involving questions central to the governance of an Indian tribe, the doctrine of comity generally divests state courts of jurisdiction as a matter of federal law if retention of jurisdiction by the state court would interfere with matters of tribal self-government. Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 14-15, 107 S.Ct. 971, 975-76, 94 L.Ed.2d 10 (1987); see National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 856-57, 105 S.Ct. 2447, 2454, 85 L.Ed.2d 818 (1985) (reversing exercise of jurisdiction on grounds that exhaustion of tribal remedies is required before claim can be entertained by federal court).

Deferral to a tribal court for exhaustion of remedies is not based on whether a trial court properly has jurisdiction over an action. Klammer v. Lower Sioux Convenience Store, 535 N.W.2d 379, 380 (Minn.App.1995). Rather, it is grounded in the federal policy of promoting tribal self-government. Id.; see also Iowa Mut. Ins., 480 U.S. at 16, 107 S.Ct. at 976 (holding that federal policy supporting tribal self-government "directs a federal court to stay its hand in order to give the tribal court a 'full opportunity to determine its own jurisdiction' ") (citation omitted). Thus, the question before us is whether the facts and legal theories underlying this case require analysis of issues central to the governance of an Indian tribe, which must be heard by a tribal court. We hold they do not.

Jackpot Junction contends that this case begs the question of proper delegation of authority to Kokesch, and, therefore, it is necessary to review the Community's delegation documents and procedures. However, the facts of this case present issues of contract interpretation and apparent authority, rather than actual authority. In rendering its decision, the trial court reviewed the contract, pleadings, and affidavits submitted by both parties, without having to resort to tribal documents or procedures for guidance. While examination of tribal documents may be necessary to resolve a question of actual authority, apparent authority is a question for the trier of fact to decide after considering the parties' dealings under the contract, the defendant's actions, and other outward manifestations of delegation of authority. See Hagedorn v. Aid Ass'n for Lutherans, 297 Minn. 253, 257, 211 N.W.2d 154, 157 (1973) (holding apparent authority presents question for trier of fact). Under these circumstances, we conclude the trial court's exercise of jurisdiction and determination of the Community's waiver of sovereign immunity does not "undermine the authority of the tribal courts" or "infringe on the right of the Indian[ ] [tribes] to govern themselves." See Williams v. Lee, 358 U.S. 217, 223, 79 S.Ct. 269, 272, 3 L.Ed.2d 251 (1959) (disallowing state exercise of jurisdiction that would intrude upon authority of tribal courts over reservation affairs).

Jackpot Junction next urges that this court's recent decision in Klammer is dispositive in this case. In Klammer, the Community was the defendant, and we deferred to the tribal court for resolution of jurisdictional and sovereign immunity issues. Klammer, 535 N.W.2d at 382. However, Klammer is distinguishable from this case. First, the basis of the action in Klammer was property damage that occurred on the premises of the Indian reservation, id. at 379, whereas this case involves a contract performed off the reservation. Second, unlike the situation here, the Community in Klammer did not explicitly waive its sovereign immunity or consent to jurisdiction of the Minnesota courts. See generally id. at 380. Because our determination of the Community's sovereign immunity and consent to jurisdiction in Klammer necessitated examination of tribal documents such as the "sue and be sued clause" contained in Community documents, that action involved issues of the Community's self-government. Here, however, none of these documents are at issue. Thus, Klammer does not impact our ruling today.

Finally, Jackpot Junction's interpretation of the exhaustion rule as applied to these facts would effectively render all waiver and consent provisions in this context impotent. As a result, the Community's economic independence, which forms the basis of the Community's self-determination, would most likely suffer. When the Seventh Circuit confronted a similar fact situation, it noted:

[E]conomic independence is the foundation of a tribe's self-determination. If contracting parties cannot trust the validity of choice of law and venue provisions, [the Indian business] may well find itself unable to compete and the Tribe's efforts to improve the reservation's economy may come to naught.

Altheimer & Gray v. Sioux Mfg. Corp., 983 F.2d 803, 815 (7th Cir.1993), cert. denied, 510 U.S. 1019, 114 S.Ct. 621, 126 L.Ed.2d 585 (1993). This is surely the case here, where the Community actually performed under the contract for several years before deciding to breach the contract and build its own motel. For the above reasons, we hold the trial court...