Grondal v. United States
| Decision Date | 13 June 2022 |
| Docket Number | 21-35507 |
| Citation | 37 F.4th 610 |
| Parties | Paul GRONDAL, a Washington resident; Mill Bay Members Association, Inc., a Washington non-profit corporation, Plaintiffs-Appellees, v. UNITED STATES of America; U.S. Department of the Interior ; Bureau of Indian Affairs; Confederated Tribes of the Colville Reservation, Defendants-Appellees, v. Wapato Heritage LLC, Defendant-Appellant, and Gary Reyes; Francis Abraham; Paul G. Wapato, Jr.; Kathleen Dick; Deborah Backwell; Catherine Garrison ; Mary Jo Garrison; Enid T. Wippel; Leonard Wapato; Annie Wapato; Judy Zunie; Jeffrey M. Condon; Vivian Pierre; Sonia W. Vanwoerkom; Arthur Dick ; Hannah Rae Dick; Francis J. Reyes; Lynn K. Benson; James Abraham; Randy Marcellay; Paul G. Wapato, Jr.; Catherine L. Garrison; Maureen M. Marcellay; Leonard M. Wapato; Mike Marcellay; Linda Saint ; Stephen Wapato; Marlene Marcellay; Dwane Dick; Gabe Marcellay; Travis E. Dick; Hannah Dick; Jacqueline L. Wapato; Darlene Marcellay-Hyland; Enid T. Marchand; Lydia A. Arneecher; Gabriel Marcellay; Mike Palmer; Sandra Covington, Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Nathan Arnold (argued), Bruce Johnston, and Emanuel Jacobowitz, Arnold & Jacobowitz PLLC, Seattle, Washington; Tyler D. Hotchkiss and Dale M. Foreman, Foreman Hotchkiss Bauscher & Zimmerman PLLC, Wenatchee, Washington; for Defendant-Appellant.
John L. Smeltzer (argued), Attorney; Todd Kim, Assistant Attorney General; Environment & Natural Resources Division, United States Department of Justice, Washington, D.C.; Vanesaa R. Waldref, United States Attorney; Joseph P. Derrig, Assistant United States Attorney; United States Attorney's Office, Spokane, Washington; for Defendants-Appellees United States of America, U.S. Department of the Interior, and Bureau of Indian Affairs.
Anna E. Brady (argued), Brian W. Chestnut, and Brian C. Gruber, Ziontz Chestnut, Seattle, Washington, for Defendants-Appellees Confederated Tribes of the Colville Reservation.
Before: Kim McLane Wardlaw, Ronald M. Gould, and Mark J. Bennett, Circuit Judges.
This is the latest in a series of appeals concerning a business lease Defendant-Appellant Wapato Heritage, LLC, once held on waterfront land within the Colville Indian Reservation in Washington State. Wapato Heritage accuses the individual beneficial owners of this land, the Confederated Tribes of the Colville Reservation (the Tribes), and the United States, specifically the Bureau of Indian Affairs (BIA), of misconduct relating to this business lease. We have previously concluded that Wapato Heritage's business lease expired in 2009 and the land at issue is still Indian land held in trust by the United States. This appeal is from the district court's dismissal of Wapato Heritage's cross-claims against the Tribes and the BIA under Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). Wapato Heritage makes four challenges to these dismissals. First, it argues that the district court misapplied tribal sovereign immunity to cross-claims asserted against the Tribes. Second, it contends that the district court erred in dismissing Wapato Heritage's cross-claims against the United States. Third, it insists that this appeal does not relate to Indian trust land. Finally, Wapato Heritage maintains that it was wrongly excluded from a damages trial between other parties. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
This case involves a dispute about a parcel of Indian land known as Moses Allotment 8 (MA-8) on Lake Chelan in Washington State. "In the 1900s, the United States originally issued title to this land to American Indian Wapato John, a member of the Moses Band of the Columbia Tribe, as an ‘allotment’ in trust." Grondal v. United States , 21 F.4th 1140, 1145 (9th Cir. 2021). This trust initially vested the legal title to MA-8 "in the United States, which was to hold the land in trust for ten years to Wapato John's sole use and benefit," and vested equitable title in Wapato John. Id. But the "trust period for MA-8 has repeatedly been extended ... such that to this day the United States continues to hold legal title to the land, in trust for Wapato John's heirs." Id. at 1145.
Today, certain descendants of Wapato John (the Landowners) and the Tribes own undivided beneficial interests in MA-8, which are held in trust by the United States and managed by the BIA. Wapato Heritage, an investment vehicle for the heirs of William Wapato Evans, Jr., separately holds a partial life estate in MA-8, which will expire when Evans's last grandchild dies. Id. at 1145 & n.1. Disputes between the Landowners, the Tribes, Wapato Heritage, the BIA, and various MA-8 sublessors led to several lawsuits in Washington State court and federal court, including the litigation underlying this appeal.
MA-8 was unimproved until 1984. Id. That year, Evans acquired a twenty-five-year lease on MA-8 (the Master Lease) to build a recreational vehicle park (the Mill Bay RV Park) with Landowner and BIA approval. Under the lease terms, Evans had to pay the Landowners the greater of: (1) $12,000 in annual base rent, $1 per member in monthly ground rent, 7.5 percent of cash receipts, and 3.5 percent of retail sales; or (2) an alternative minimum rent. The Master Lease gave Evans the option to extend the term for another twenty-five years, or through 2034, by giving written notice to the Landowners and BIA up to twelve months before the end of the initial lease term. It also allowed Evans to sublease MA-8 with permission from the BIA.
Shortly after signing the Master Lease, Evans subleased most of MA-8 to the corporate predecessors of Wapato Heritage, developed the Mill Bay RV Park, and sold Mill Bay RV Park memberships that ostensibly gave buyers the right to use the property until 2034. Evans and the Tribes later executed the Casino Sublease, which assigned the rest of MA-8 to the Colville Tribal Enterprise Corporation (CTEC) for the operation of a tribal casino. The Casino Sublease was subject to the Master Lease, ran through 2034, and required the Tribes to pay Evans $2,500 in annual base rent plus six percent of retail sales made from the subleased premises during each year of the sublease term.
The Mill Bay RV Park was financially unsuccessful so, in 2001, Evans told members that he would close the park. Grondal , 21 F.4th at 1146. Two members, Paul Grondal and the Mill Bay Members' Association, Inc. (Mill Bay), sued Evans in Washington State court to prevent closure of the park. Evans died testate while this case was pending, and his rights under the Master Lease passed to Wapato Heritage. After mediation, the parties settled and signed the 2004 Settlement Agreement, which was subject to the Master Lease and by its terms gave Grondal and Mill Bay the right to use the Mill Bay RV Park until 2034. The BIA attended the mediation but did not intervene as a party.
One year later, the BIA hired an outside firm called the Sells Group to perform an accounting review as required by the Master Lease and Casino Sublease. The Sells Group set out its findings in a written report. This report indicates that CTEC underpaid Evans by $866,248 between 1994 and 1998 due to bookkeeping errors relating to the Casino Sublease. It also shows that accounting mistakes with regard to the Master Lease caused Evans to overpay the Landowners by $751,285 from 1994 to 2005. Per Wapato Heritage, CTEC and the Landowners owe it $1,617,533.
Shortly thereafter, the Mill Bay RV Park was the subject of a federal lawsuit concerning the Master Lease. In 1985, just one year after Evans signed the Master Lease, he mailed the BIA a letter seeking to exercise his option to extend the Master Lease for twenty-five years through 2034. For the next twenty-two years, the Landowners and the BIA operated under the assumption that this 1985 letter was sufficient to trigger Evans's option to renew the Master Lease. Mill Bay incurred certain financial commitments based on this unspoken understanding. Grondal , 21 F.4th at 1147.
The BIA later came to believe that Evans's 1985 letter was insufficient to exercise his option to extend the Master Lease because it was not transmitted to the Landowners as required by the Master Lease. In November 2007, the BIA sent Wapato Heritage a letter stating that Evans's 1985 letter did not renew the Master Lease. Upon receipt of this BIA letter, Wapato Heritage still had two months to validly extend the Master Lease by notifying the Landowners in writing. But Wapato Heritage instead sent a response letter to the BIA disputing its assessment of whether Evans's 1985 letter had triggered his option to renew the Master Lease. The ensuing litigation confirmed the BIA's position that the Master Lease expired in 2009. See Wapato Heritage, LLC v. United States , 637 F.3d 1033, 1040 (9th Cir. 2009).
After the Master Lease expired, the Landowners granted the Tribes a short-term Replacement Lease on the MA-8 casino site in 2009. Five years later, the Colville Tribal Federal Corporation (CTFC) obtained from the Landowners a new Replacement Lease that rents all of MA-8, including its gas station and waterfront, to CTFC for twenty-five years in exchange for $100,000 in annual base rent plus 4.5 percent of gross casino gaming revenue. CTFC holds a unilateral option to renew the 2014 Replacement Lease for twenty-five years.
Grondal and Mill Bay contemporaneously responded to our decision that the Master Lease expired in 2009 by bringing a second federal lawsuit seeking a declaratory judgment recognizing their right to use MA-8 through 2034. The defendants included the beneficial owners of MA-8, Wapato Heritage, and the BIA. The BIA filed a counterclaim for ejectment of Grondal and Mill Bay from MA-8 and trespass damages. In January 2010, the district court denied a request by Grondal and Mill Bay for continued access to MA-8 and rejected as potentially...
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