Greene, In re

• Citation: 980 F.2d 590
• Decision Date: 25 November 1992
• Docket Number: No. 91-35491,91-35491
• Parties: , 23 Bankr.Ct.Dec. 1182, Bankr. L. Rep. P 75,030 In re Richard D. GREENE and Donna J. Greene, husband and wife, Debtors, Ross RICHARDSON, Chapter 7, Trustee-Appellee, v. MT. ADAMS FURNITURE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 590

980 F.2d 590

61 USLW 2357, 23 Bankr.Ct.Dec. 1182,

Bankr. L. Rep. P 75,030

In re Richard D. GREENE and Donna J. Greene, husband and wife, Debtors Ross RICHARDSON, Chapter 7, Trustee-Appellee, v. MT. ADAMS FURNITURE, Defendant-Appellant.

No. 91-35491.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 8, 1992.

Decided Nov. 25, 1992.

R. Wayne Bjur and Tim Weaver, Cockrill, Weaver & Bjur, Yakima, Wash., for defendant-appellant.

Ross P. Richardson, Henningsen, Vucurovich & Richardson, Butte, Mont., for trustee-appellee.

Appeal from the United States District Court for the District of Montana.

Before: ALARCON, RYMER, and T.G. NELSON, Circuit Judges.

T.G. NELSON, Circuit Judge:

Mt. Adams Furniture, a wholly-owned and operated business of the Yakima Indian Nation, appeals the district court's rejection of its claim of sovereign immunity in a bankruptcy proceeding imposing a judgment for preferential transfer by the debtor to Mt. Adams Furniture. We hold that the Yakima Indian Nation is immune from the suit by the trustee and reverse the district court.

FACTS AND PROCEDURAL HISTORY

Mt. Adams Furniture ("Mt. Adams") is a wholly-owned and managed enterprise of the Confederated Tribes and Bands of the Yakima Indian Nation ("Yakima Nation" or "Yakimas") with its place of business on Mt. Adams peaceably repossessed the furniture when the Greenes did not pay for it and took it back to Wapato. When the Greenes filed for relief under Chapter 7 of the Bankruptcy Code within ninety days, the repossession became a preferential transfer. Richardson, the trustee, filed an adversary proceeding to set aside the preferential transfer. Mt. Adams appeared, and claimed to be immune from suit. Based on the stipulated facts, the bankruptcy court rejected Mt. Adams' claim of immunity, and directed entry of judgment against Mt. Adams in the amount of $8,779. The bankruptcy court order was affirmed by the district court and this appeal followed.

                the Yakima Indian Reservation at Wapato in the State of Washington.   Mt. Adams sold furniture to Richard D. and Donna J. Greene (dba Custom Carpets) in Townsend, Montana.   The stipulated facts indicate that title to the goods passed to the Greenes, and Mt. Adams had no security interest in the furniture
                

DISCUSSION

I

The Yakima Nation argues here, as it did in the courts below, that it is a sovereign by reason of its original status as a sovereign (citing United States v. Wheeler, 435 U.S. 313, 98 S.Ct. 1079, 55 L.Ed.2d 303 (1978)). It is possessed of "the common-law immunity from suit traditionally enjoyed by sovereign powers, ... subject to the superior and plenary control of Congress.... [A] waiver of sovereign immunity cannot be implied but must be unequivocally expressed." Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 1677, 56 L.Ed.2d 106 (1978) (internal quotes and citations omitted). With these propositions we can, and indeed must, agree. However, they will not readily decide the question before us.

We turn first to the decision of the bankruptcy court affirmed by the district court. The bankruptcy court dealt initially with the question of whether it had to defer to tribal court for determination of the claims involving the Yakima Nation, under Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 107 S.Ct. 971, 94 L.Ed.2d 10 (1987), and Nat'l Farmers Union Ins. Cos. v. Crow Tribe, 471 U.S. 845, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985). Since the Yakima Nation did not contend there, or here, that this is a case requiring deference to tribal court but rather argues only that it is entitled to immunity from the suit, we need not discuss the issue of tribal court jurisdiction.

The bankruptcy court also held that Mt. Adams did not enjoy tribal immunity: "Furthermore, the Supreme Court has consistently held that the immunity enjoyed by the tribe is not enjoyed by individual members (non-tribal officials) and businesses" (citing Puyallup Tribe, Inc. v. Washington Game Dept., 433 U.S. 165, 171-73, 97 S.Ct. 2616, 2620-21, 53 L.Ed.2d 667 (1977) (Puyallup III )).

If only it were that easy. Puyallup III was a review of a judgment entered by the courts of the State of Washington. The state court judgment being reviewed recited that the court had jurisdiction to "regulate the fishing activities of the Tribe both on and off its reservation...." Id. at 167, 97 S.Ct. at 2618. The Supreme Court summarized its holding on the Tribe's claim of sovereign immunity as follows: "We hold that insofar as the claim of sovereign immunity is advanced on behalf of the Tribe, rather than the individual defendants, it is well founded...." Id. at 167-68, 97 S.Ct. at 2619.

Although the Court went on to point out that the doctrine of tribal immunity did not immunize individual members of the tribe (id. at 171-72, 97 S.Ct. at 2621), it did not distinguish between tribal immunity off and on the reservation. Nor did it have any occasion to discuss immunity of businesses owned and managed directly by the Tribe itself. Therefore, Puyallup III not only does not support the bankruptcy court's analysis, the failure of the Supreme Court to distinguish between the Tribe's on and off reservation immunity can be argued as at least an implicit recognition that tribal immunity does not disappear at the boundaries of the reservation.

II

The Mt. Adams business venture involved a commercial business operated directly by the Yakimas for profit purposes, selling furniture to people located off the reservation. The first question then becomes whether tribal immunity attaches to such an enterprise.

Arizona courts have considered the immunity of a "subordinate economic enterprise," which is a tribally-owned and operated business such as Mt. Adams here. The courts of Arizona hold such enterprises to be immune from suit for torts, even when the enterprise operates outside tribal boundaries. Morgan v. Colorado River Indian Tribe, 103 Ariz. 425, 443 P.2d 421 (1968). This rule was extended to suits based on breach of contract in White Mountain Apache Indian Tribe v. Shelley, 107 Ariz. 4, 480 P.2d 654 (1971). ¹

The courts of New Mexico have considered and rejected the Arizona approach. In Padilla v. Pueblo of Acoma, 107 N.M. 174, 754 P.2d 845 (1988), cert. denied, 490 U.S. 1029, 109 S.Ct. 1767, 104 L.Ed.2d 202 (1989), the Pueblo was doing business as a roofing contractor on off-reservation projects. The New Mexico Supreme Court rejected the Pueblo's claim of immunity, saying:

Having found no provision under the supreme law of the land that prohibits a state's exercise of jurisdiction over sovereign Indian tribes for off-reservation conduct, we believe the exercise of jurisdiction over a sovereign Indian tribe for off-reservation conduct is solely a matter of comity. It is the policy of New Mexico to allow breach of written contract actions against the state. Therefore, we hold that, regardless of where the contract was executed, the district court may exercise jurisdiction over an Indian tribe when the tribe is engaged in activity off the reservation as an unincorporated association registered and authorized to do business in this state and is sued in that capacity for breach of a written contract to pay for the performance of contractual obligations accomplished or intended to be accomplished in connection with this off-reservation activity of the tribe.

754 P.2d at 850-51 (internal citation omitted).

The Padilla case starts by recognizing the general rule that tribal immunity is immunized from diminution by the states. 754 P.2d at 847 (citing Three Affiliated Tribes v. Wold Eng'g, 476 U.S. 877, 106 S.Ct. 2305, 90 L.Ed.2d 881 (1986)). It ends by stating, as quoted above, that since no provision has been found which prohibits state jurisdiction over tribes for off reservation activities, New Mexico could exercise such jurisdiction as a matter of comity. Id. at 850.

At first reading, the New Mexico court seems to have changed hands with the sword. Yet, it started its discussion of tribal immunity with the phrase: "Where a tribe's sovereign immunity obtains ..." (id. at 847), implying that the first inquiry is to determine whether tribal immunity exists in general, although it undertook no analysis of that question.

Tribal immunity has been described as "the common-law immunity from suit traditionally enjoyed by sovereign powers." Santa Clara, 436 U.S. at 58, 98 S.Ct. at 1677. A necessary first step in the analysis is determining the scope of sovereign immunity at the common law.

In Nevada v. Hall, 440 U.S. 410, 99 S.Ct. 1182, 59 L.Ed.2d 416 (1979), the case relied on by Padilla, the Supreme Court reviewed sovereign immunity at the common law. It noted there were two concepts involved, "one applicable to suits in the sovereign's own courts and the other to suits in the courts of another sovereign." Id. at 414, 99 S.Ct. at 1185.

As far as the second concept is concerned, the Court determined that immunity of one sovereign in the courts of another was a question answered under the law of It is fair to infer that if the immunity defense Nevada asserts today had been raised in 1812 when The Schooner Exchange [11 U.S. 116, 7 Cranch 116, 3 L.Ed. 287] was decided, or earlier when the Constitution was being framed, the defense would have been sustained by the California courts.

                the sovereign providing the forum.   The Court acknowledged that the extent to which comity would be extended between sovereigns had changed over the years
                

Id. at 417, 99 S.Ct. at 1186.

The question in Hall was whether there was a constitutional impediment to California's application of its own law as it existed in 1968, when the accident occurred, or whether it had to apply "the sovereign immunity doctrine as it prevailed when the Constitution was adopted." Id. at 418, 99 S.Ct. at 1187. The Court's discussion of the doctrine as it evolved from the early days of the Republic makes it clear that the states, and the...